What we know about the debate concerning the privatization of prisons in our state is that it is a hotly debated and contentious issue. In Michigan the limit of privatization has been, with the exception of one facility, contained to prison food services. The move for this switchover happened in 2013 and the vendor took over in the 32 state prisons The basics of the working agreement was that the vendor would provide service and MDOC would send out contract monitors to ensure that contract compliance was occurring.
We can look into a US Government Accountability Office (GAO) report from 1996 to define and see why there is still so much debate over policy that took the nation by storm in the mid-1980’s. That report found that there was no conclusive evidence that there were actual savings associated with the change in policy. What Kim and Price found in 2012 was that conclusive evidence could not be found. Additionally in their empirical analysis, they found that prison privatization tended to become institutionalized and growth of privatization practices in the area was by an effect of prison magnitude and expenditure, and not by political pressures, government ideology or unionization. They go on to say that as this institutionalization occurs, the governing bodies attention should be given to effective evaluation practices.
. In recent Michigan news, Progress Michigan, which the press has termed a “liberal watchdog group”, has come out with a report concerning the ability of contract monitors to ensure the proper levels of service have been maintained. What they found was that over an 8 month period, 3,707 issues were identified by contract monitors and 1,791 of those issues were unoriginal in that they persistently occurred or reoccurred. They argue that there was a lack of accountability in this setup and that the ability of contract monitors to draw positive change was severely dampened by the governing “culture”.
On the other side of the debate, an MDOC spokesman defended the contract monitors. He said that they provided a large amount of documentation and saw exactly where the vendor was not meeting contract requirements. Then later in the night, limited financial numbers were released to show that the private vendor was much more cost-effective than the previous public service by approximately $10 million per year.
The issue giving Progress Michigan clout in this debate was that the 3 year contract for this original vendor was terminated early and a second was chosen in less than one month. Additionally, the three year contract increased to $158 million over the original $145 million. That calls into question the series of numbers reported in defense of this service changeover. The numbers citing MDOC projected expenditures shows that the new vendor will only cost $.1million more per year when in other sources the state is spending $13 million more over a three year period. If the MDOC projected increase has been properly cited, then perhaps there is a shifting of costs away from the actual contract into other areas of expenditure, or there are hidden costs associated with not effecting change in a timely manner.
This newfound punctuated debate returns back to Kim and Young’s paper calling for effective evaluation. To give credit to MDOC it appears that the contract monitors did do an excellent job of monitoring, but also, to give credit to Progress Michigan, their statistics do suggest that monitoring alone does not keep the vendor providing necessary services. As Rossi Lipsey and Freeman point out in their excellent overview of Program Evaluation, it is necessary that cost benefit or cost effectiveness analysis be conducted. While the whole privatization in Michigan debate would take an army of evaluators some time to complete effectively, we do see a nestled program that could change this relationship for the better. MDOC could alter the contract monitoring process for the better.
Kim & Price
1996 US Government and Accountability Office
Change in service
Progress Michigan report
Gongwer & rebuttal costs per year
Freep & cost of total contract