three different models of private sector participation that have been employed.
These are the UK PFI design, construct, maintain and finance (DCMF model), the French mixed management, design, construct and finance (DCF) model, and the serviced infrastructure model in the State of Victoria in Australia.
The DCMF model is the one most widely adopted in recent times for private sector involvement in prisons and has been used in the UK, the US and certain states of Australia for numerous correctional facilities. Under this model, the private sector designs, constructs, finances and manages the prison.
The state may or may not own the prison site. The distinguishing feature of this approach is the transfer of all prison services to the private sector and the management of prison operations by a private firm. In the UK context, a number of features apply. Typically, there is a contract of up to 25 years between the Minister for Corrections and a shelf company established by the private sector entities as a special purpose vehicle (SPV) to deliver the project.
A Crown lease for the site is usually granted for the term of the contract. The SPV enters into a turnkey fixed-price, fixed-term design and construct (D & C) contract with the construction company, and also negotiates a fixed- price, fixed-term operating contract with the prison operator. The capital costs of the construction works are raised by means of non-recourse debt on the basis of payments made by the government for prisoners handled. No payments are made until the prison is commissioned, and certain service stan- dards must be met. If these specifications are not reached, deductions are made according to a points accrual mechanism for poor performance against key performance indicators such as temporary release, items smuggled in, prisoner self-harm in custody, and so on. Note that government duty of care responsi- bilities are not compromised within a private prison, for sentences of punish- ment of inmates are normally administered by a public servant. It is important when considering the payment regime not to mix up the duty of care itself, which is held by the state, with the financial consequences of breaches of duty of care that can be delegated and borne by the private prison operator.
The French mixed management model provides a more limited role for private sector involvement than the DCMF model. Under this model, the private sector designs, constructs and finances the prisons and manages the provision of a limited range of prison services, but excluding prison operations and custodial services. When the programme began, private sector operators were initially invited3to tender for the building of 25 new prisons on a design and build basis along with the operation of specific prison services over a 10- year period. The sites remained in state ownership. The specific prison services to be provided by the private sector included industries, education, catering (including staff facilities), medical, maintenance, work and vocational training, and transport. Public sector employees were to provide all custodial services, including inter-prison transfers, while the police provided prison-to-
court transfer services. In relation to design of the prisons, design innovation was organized through architectural competitions, with bidders responding to standard briefs for different kinds of prisons. The state guaranteed the financ- ing of the construction and the management and security functions. At the end of the 10-year period, the government retained the option of selecting between new private sector competition, extending the original tenders or returning to full public sector operation.
The serviced infrastructure model was developed under the Partnerships Victoria programme in 2001 when, because of dissatisfaction with the opera- tion of private prisons under the previous government, it was decided that all new prisons in Victoria were to be managed and operated by public sector resources. Accordingly, prison services were divided into three categories:
• Core services under public sector control and excluded from the contract; that is, billets (cleaning/laundry/catering), industries, and custodial operations.
• Services provided by a private sector partner (infrastructure plus ancil- lary services); that is, accommodation, security systems, estate manage- ment, transport, and information systems management.
• Those services with the potential for private sector provision but excluded from the contract at the outset, namely medical, education, works and vocational training.
Under the contract term of up to 40 years, the public sector operator is responsible for specifying in output terms the custodial aspects of the design of the facilities; that is, functional content/adjacencies, but without extending this to engineering and construction responsibility for any aspect. Other than this, the SPV is responsible for all aspects of the design and construction works as a whole, including structural integrity, circulation space, foundations, air conditioning, and so on, with payments linked directly to performance and other criteria.
There are obvious differences between the models in terms of the range of services covered. Another important difference between the ‘serviced infra- structure’ and the ‘DCMF’ model relates to the encompassing framework, specifically the extent of the partnering arrangements. Under the DCMF model the contract structure has tended to be rigid and there is therefore limited flexibility for the government to vary its requirements. Under the part- nership framework, the serviced infrastructure model can be structured so that flexibility is an inherent feature of the contractual arrangements. For example, contractual mechanisms could provide for upside benefit sharing where the introduction of new technology results in a reduction in cost of either core services (custodial) or those services provided under the PPP arrangements.
There could also be scope for risk-sharing in relation to prison capacity and prisoner mix within defined boundaries. The DCMF or BOOT-type approach can often be more contractual than cooperative.