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The decision comes after a damning investigation found that for-profit facilities consistently performed less well than the publicly run prison system.
Speaking at the announcement, US Deputy Attorney General Susan Yates said privatized prisons “simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and… they do not maintain the same level of safety and security.”
The announcement sent shock waves through the industry, with private prison company shares plummeting by up to 50%, even as they prepared to push back against the decision.
However, Unions representing correctional service workers praised the DOJ’s commitment to change.
“Private prison operations have long been a stain on our nation’s criminal justice system. Corporate prisons have profited off of the suffering of our communities and have led the way to mass incarceration,” said Lee Saunders, President of the American Federation of State, County and Municipal Employees which represents approximately 62,000 corrections officers and 23,000 corrections employees.
American Federation of Government Employees (AFGE) National President J. David Cox Sr. and AFGE Council of Prison Locals President Eric Young said "we are thrilled that the Department of Justice announced an end to the use of private prisons, and applaud the DOJ”.
“This is a decision that curtails the attempts of private interests to corrupt the US judiciary system. This is indeed a huge victory for social justice in the USA,” says Rosa Pavanelli, PSI General Secretary.
The USA is the country with the highest rate of incarceration in the world; in-part a result of the skewed incentives created by privatized prisons, who see profits rise when sentences are longer and incarceration rates are higher.
This has created rife opportunity for corruption, with one private prison operator recently sentenced for bribing a judge to send more juveniles to their private correctional facilities.
Unions say that the move marks a turning point in the wider debate about privatization.
“The DOJ’s decision confirms what we know about privatization - it does not save money, it does not provide the same level of services, and it does not ensure either social justice or equity,” says Pavanelli.
These results were confirmed in a recent PSI study which found that Public-Private Partnerships show no evidence of cost savings or increased efficiency and create more opportunity for corruption.
While PSI has consistently fought efforts by the USA and other countries to extend the privatized model of services through international organisations such as the World Bank and IMF and trade agreements such as TiSA, this landmark decision provides a valuable example of how privatization simply does not live up to the hype.
The announcement will be watched closely by government officials, unions and civil society activists across the world and in different sectors where private corporations are continuing their attempts to profit from public services.
“We will share this with other countries experimenting with prison privatizations, notably South Africa and Australia. For-profit corporations have no business running correction services,” concludes Pavanelli.