Public Private Partnerships for Prisons: Another Crossroad?

7th September 2010 By: ISS, Institute for Security Studies

The decision to substantially outsource any core activity of the state to the private sector, particularly criminal justice system functions, is not uncontroversial, nor is it a matter to be taken lightly. Ten years ago the Department of Correctional Services (DCS) in South Africa concluded its first public private partnership agreement (PPP) for the construction and running of two prisons to securing additional prison space as an attempt to address chronic prison overcrowding.

Recently the Minister of Correctional Services, Nosiviwe Mapisa-Nqakula, quietly let it be known that she was undertaking a review of the Department's policy in relation to public private partnerships for prisons. The result was to place on indefinite hold the processes to acquire four more PPP prisons that had been underway for several years. This has hurt the private sector bidders, which had developed proposals at great cost (estimated to be around R40m per proposal) at the request of the Treasury and the Department of Correctional Services.

There has been no public announcement of the policy review, nor is it possible to determine with any certainty what the motivation for the review is; how long it will take; whether there will be provision made for public comment; or what change might ultimately be expected. Nevertheless, is it worthwhile reflecting on some of the key issues relating to such partnerships.

For over a decade the Treasury has refined its tools to assess whether a service or project that may have been performed by a government entity would be better performed by the private sector. Decisions of this nature are guided by three key criteria namely value for money, affordability and risk transfer. What this means is that if the private sector can offer a better service than a state entity; at a price the taxpayer can afford and where the risk associated with the service provision is largely carried by the private entity; the project may be assessed to be suitable for a public private partnership (PPP). The process of assessment is long, resource intensive and rigorous. There are numerous examples of such PPPs in South Africa providing essential services including water, health care, transport and even land reform.

There are several advantages to the taxpayer of such partnerships. One of these is that the state can set the service provision criteria and hold the service provider to account if the service does not meet these criteria; thereby ensuring the quality of the service provided. In a private prison setting this means for example, that the service provider is required to ensure that all inmates take part in a at least 40 hours of some form of educational or vocational training each week. If one inmate in a private prison is not afforded the opportunity to do so, the service provider will have to pay a hefty fine. This creates a strong incentive for the prison to ensure that all the prisoners benefit from the programmes. Unfortunately there is no similar mechanism by which to hold state prisons to account. There is no dispute about the fact that the existing two PPP prisons provide a service substantially better than most state prisons. So what are the issues that require review?

The first might be that it is not sufficient to outsource core state functions just because service provision is guaranteed by doing so. Another serious consideration is whether, in principle, building more prisons is the solution to overcome the problem of overcrowding.

Civil society organisations and indeed members of the Parliamentary Portfolio Committee on Correctional Services have repeatedly stated that South Africa cannot and should not build itself out of overcrowding. Rather a thorough assessment should be undertaken of who we incarcerate and why.

There is no dispute that violent criminals should be behind bars. There is also generally no dispute that the period spent in prison by those awaiting trial should be kept to a minimum. Few would argue that petty offenders should be incarcerated simply because they can't afford bail of under R1000. These are just two of the issues that have been raised and discussed ad nauseum over the years without being adequately resolved.

The Judicial Inspectorate of Correctional Services has also argued for several years that overcrowding could be reduced if the number of hours prisoners spend in their cells was reduced by keeping them productively busy during most of the day. This could remove the need altogether for new facilities to be built.

There is also the fact that the current PPP prison agreements span a 25 year period. That is a very long time to tie up a significant proportion of the budget available to the Department (currently at 5%). However, while the two existing contracts will have to run their course, there is no reason why any new contracts should be as long. Nor is there any reason why the existing contracts could not be renegotiated, to for example allow for a change in the profile of prisoners at these institutions.

The argument goes that there is little point in sending our most hardened violent criminals who are serving lengthy sentences to the two facilities that are most able to provide vocational training and rehabilitation services as is currently the case. It is legitimate to ask whether those services should not be available to those for whom there is a greater chance of success in rehabilitation, such as younger and less violent offenders?

While these are all very important issues, they are not new. They have been raised repeatedly over a number of years and yet have not been addressed. The Department of Correctional Services has also had over ten years to learn from the two PPP facilities that provide a service rating amongst the best in the world. Prisoners spend most of the day engaged in productive activities. Every inmate receives three meals a day and eats with a knife and fork - something that does not happen in state-run prisons. Inmates learn life skills, take part in sport, have access to high quality health care, including mental health care. All at more or less the same cost per inmate per day as it costs to house inmates in inferior conditions in state-run prisons. The key seems to lie in efficient management and incentive systems. The Department of Correctional Service however, has not yet been able to match what the private prisons are able to achieve by drawing on the lessons offered by these two facilities.

Indeed there are many questions still to be answered about the best way to handle our prisoner population, and a policy review may not necessarily be a bad place to start. However, by calling for the policy review at this time the Minister risks losing the investment made by both the Department and Treasury, and thereby risks losing private sector confidence. It is thus not unreasonable to require that the Minister is transparent about the nature, duration and format of the policy review and insist that positive change takes place in the Department under her watch.

Written by: Chandré Gould, Senior researcher, ISS Crime and Justice Programme, Pretoria