REPORT TITLE:
Privatized correctional
facilities


DESCRIPTION:
Allows the governor to contract for private sector operation of
correctional facilities.  Establishes criteria necessary for an
acceptable contract for privatized operation of a correctional
facility.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2741
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO PRIVATELY-OPERATED CORRECTIONAL FACILITIES.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that privatized
 
 2 correctional facilities present an opportunity to attempt a bold,
 
 3 new approach to corrections in the State.  This new approach will
 
 4 attempt to exploit the strengths of privately-operated facilities
 
 5 and to minimize issues that have emerged as widespread concerns
 
 6 throughout the rapidly growing corrections industry.
 
 7      This new approach will feature a shift in focus such that
 
 8 corrections will not be seen as the end in and of itself, but
 
 9 rather as the means to the new focus; a new focus on positive
 
10 outcomes for public safety and for those incarcerated.
 
11      In other jurisdictions, privately operated correctional
 
12 facilities provide a service often analogized to a hotel
 
13 operator.  This analogy is not without flaws, however it is
 
14 accurate insofar as the private operator is paid by the state a
 
15 certain rate per inmate per day.  Under this type of contractual
 
16 arrangement, the state and the private operator have conflicting
 
17 desires.  The state is interested in having as few people as
 
18 possible incarcerated beyond their initial eligibility for
 
19 parole.  Not only is this fiscally prudent for the State, as
 
20 incarceration is costly, but moreover it is in the larger
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 interest of the state to ensure the timely return of inmates to
 
 2 free society where they may assume a productive role.  The
 
 3 private operator, in contrast to the State's interest, enjoys
 
 4 profits directly proportional to the length of stay for each
 
 5 inmate.
 
 6      The legislature finds that a contract should be designed
 
 7 between the state and those that operate private correctional
 
 8 facilities to better align these motivations.  For too long, 
 
 9 private correctional facilities have been stagnant in the "hotel"
 
10 format.  A new, outcome-oriented privatized prison has the
 
11 potential to not only improve public safety, but also to reign in
 
12 the exploding need for prison space.
 
13      Under this regime, the financial incentive, i.e., the profit
 
14 motive, facing the private operator will be the effort to make
 
15 inmates ready to earn parole as soon as possible.  The profit
 
16 margin returned to the private operator for each inmate paroled
 
17 under this plan is much higher, thus it would no longer be in the
 
18 interest of the private operator to house inmates for as long as
 
19 possible.  Once the inmate earns parole, the private operator
 
20 will have another profit motive to help the parolee fulfill the
 
21 terms of the parole, and the private operator will have a
 
22 financial penalty to face if the inmate's parole is revoked.  In
 
23 short, the State will be able to better direct its moneys to
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 support the private operator's efforts to make inmates ready to
 
 2 re-enter society in a productive capacity and, once there, to
 
 3 help them remain productive.  The legislature finds that an
 
 4 outcome-oriented private correctional facility is in the best
 
 5 interests of public safety, fiscal responsibility, and the
 
 6 inmates.  The legislature believes this type of contractual
 
 7 agreement is is a much better idea than the more typical private
 
 8 prisons which have a reputation for warehousing people and for
 
 9 rewarding private correctional facility operators for what are
 
10 socially less-desirable outcomes.
 
11      SECTION 2.  Chapter 353, Hawaii Revised Statutes, is amended 
 
12 by adding ten new sections to be appropriately designated and to
 
13 read as follows:
 
14      "§353-     Contracts for the operation of correctional
 
15 facilities by private entities.  The governor may enter into and
 
16 execute contracts in the name of the State with any private
 
17 entity to operate minimum security correctional facilities at
 
18 sites selected by the governor within the state for the benefit
 
19 of the State; provided that:
 
20      (1)  Contracts shall ensure around-the-clock contract
 
21           compliance monitoring by a state employee;
 
22      (2)  An individual, corporation, partnership, association,
 
23           or other private organization or entity may not
 

 
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 1           construct or operate a private correctional facility
 
 2           unless licensed by the department.  A license shall not
 
 3           be transferrable;
 
 4      (3)  A person convicted in another state may not be confined
 
 5           in a private correctional facility in this state;
 
 6      (4)  Contracts shall follow the requirements established in
 
 7           section 353-     regarding outcome-oriented
 
 8           correctional facilities;
 
 9      (5)  The correctional facility shall be designed for and
 
10           operated as an intensive treatment facility.  The
 
11           facility shall specialize in treating those inmates in
 
12           need of substance abuse treatment in a therapeutic
 
13           community.  According to each inmate's needs, the
 
14           facility shall also provide a wide array of culturally
 
15           and gender appropriate programs, mental health
 
16           services, group counseling, anger management programs,
 
17           transitional programs, cognitive restructuring,
 
18           remedial education, and vocational training; and
 
19      (6)  Contracts shall comply with the requirements
 
20           established in section 353-     regarding a citizens
 
21           oversight committee.
 
22      §353-     Department duties and responsibilities; rulemaking
 
23 authority.  (a) The department shall adopt rules pursuant to
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 chapter 91 that include the minimum applicable standards for the
 
 2 siting, construction, operation, and physical condition of a
 
 3 private correctional facility and for the security, safety,
 
 4 health, treatment, and discipline of persons confined in a
 
 5 private correctional facility.
 
 6      (b)  The rules shall require that a private correctional
 
 7 facility conform to applicable American Correctional Association
 
 8 and National Commission on Correctional Health Care standards for
 
 9 the facility and achieve accreditation from the American
 
10 Correctional Association and National Commission on Correctional
 
11 Health Care within three years from the date the facility begins
 
12 operation.
 
13      §353-     Requirements of request for proposals.  (a) Prior
 
14 to contracting for services with a private correctional facility,
 
15 the department shall publish a request for proposals.  The
 
16 request for proposals shall include a description of the long-
 
17 range correctional needs, objectives, and goals of the department
 
18 and of the state.
 
19      (b)  The request for proposals shall include and identify
 
20 the services requested and required and other information,
 
21 including but not limited to:
 
22      (1)  The physical plant, facility, and perimeter including:
 
23           (A)  The facility capacity and inmate population,
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1                including classification levels accepted;
 
 2           (B)  Inmate housing; and
 
 3           (C)  Security, safety, and emergency procedures;
 
 4      (2)  Who is responsible for transportation of inmates:
 
 5           (A)  Among facilities;
 
 6           (B)  Upon an inmate's release, including discharge or
 
 7                parole;
 
 8           (C)  For court and administrative proceedings such as
 
 9                parole hearings and inmate participation as a
 
10                witness;
 
11           (D)  For medical transportation; and
 
12           (E)  For security;
 
13      (3)  Administration of the facility, including but not
 
14           limited to:
 
15           (A)  The organizational structure and staffing; and
 
16           (B)  A policy and procedures manual addressing:
 
17                (i)  Inmate discipline;
 
18               (ii)  Incident reporting;
 
19              (iii)  Grievance procedures;
 
20               (iv)  Searches;
 
21                (v)  Drug testing;
 
22               (vi)  Monitoring of facility standards; and
 
23              (vii)  The retention and maintenance of inmate and
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1                     facility records by the private correctional
 
 2                     facility;
 
 3      (4)  Staffing issues regarding:
 
 4           (A)  Management;
 
 5           (B)  Security;
 
 6           (C)  Administrative personnel;
 
 7           (D)  Qualifications and requirements;
 
 8           (E)  Training; and
 
 9           (F)  Staff-to-inmate ratios;
 
10      (5)  Inmate needs such as food, clothing, sanitation,
 
11           hygiene, and laundry;
 
12      (6)  Programs and services to be required such as vocational
 
13           and educational training, religious services or
 
14           customs, counseling, recreation, and canteen;
 
15      (7)  Medical, dental, optical, pharmaceutical,
 
16           psychological, and other medical-related care;
 
17      (8)  Insurance requirements;
 
18      (9)  Indemnification;
 
19     (10)  A performance bond that is sufficient to protect the
 
20           state from damages upon default or nonperformance and
 
21           that may not exceed the biennial amount of the
 
22           compensation to be paid the contractor;
 
23     (11)  A requirement that proposers:
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           (A)  Provide evidence or documentation demonstrating an
 
 2                ability to provide the services;
 
 3           (B)  Comply with acceptable services; and
 
 4           (C)  Comply with the rules, regulations, and contract
 
 5                requirements;
 
 6     (12)  A requirement that proposers provide documentation of
 
 7           financial stability or security; and
 
 8     (13)  Monitoring of facility operations.
 
 9      (c)  The department shall release separate requests for
 
10 proposals or contracts for specific services such as
 
11 transportation of inmates, substance abuse treatment programs,
 
12 vocational and educational programs, medical, dental, vision, and
 
13 sick call services.  Each contract shall include a detailed
 
14 explanation of the services to be provided.
 
15      (d)  The department shall maintain a list of qualified
 
16 applicants and all proposal responses.  The department shall
 
17 retain all records related to the evaluation process and the
 
18 awarding of the contract.
 
19      §353-     License; inspection.  (a)  The department shall
 
20 grant a license to a private correctional facility determined by
 
21 the department to conform to this part and rules adopted by the
 
22 department pursuant to chapter 91.
 
23      (b)  The department may not grant a license unless the
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 contractor conforms to all state and federal statutes, applicable
 
 2 American Correctional Association and National Commission on
 
 3 Correctional Health Care standards, rules, and other requirements
 
 4 as defined by rule.  During the initial three-year period of a
 
 5 contract, a private correctional facility shall not be required
 
 6 to be accredited by the American Correctional Association or the
 
 7 National Commission on Correctional Health Care to be granted a
 
 8 license by the department.
 
 9      (c)  The department may not grant a license to a private
 
10 correctional facility until the owner or operator of the facility
 
11 has provided the department with proof of indemnity insurance
 
12 that appropriately indemnifies the State and that is acceptable
 
13 to the department.
 
14      (d)  The department may not grant a license to a private
 
15 correctional facility unless the facility has promulgated and
 
16 implemented a policy to provide access to the facility by
 
17 representatives of the public media.
 
18      (e)  The department may not grant a license to a private
 
19 correctional facility unless the facility has entered into an
 
20 agreement with local and state law enforcement authorities.  The
 
21 private correctional facility shall demonstrate an adequate
 
22 response for the mutual aid, assistance, and notification in the
 
23 event of an escape, riot or disturbance, natural, or human-caused
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 event, or other act that may potentially affect public safety.
 
 2      (f)  The department may not grant a license to a private
 
 3 correctional facility unless the legislature has appropriated
 
 4 funds for the housing of state inmates in private correctional
 
 5 facilities.
 
 6      (g)  The department shall at least annually inspect each
 
 7 private correctional facility to determine compliance with
 
 8 licensure requirements and rules.  Members of the public media
 
 9 shall be:
 
10      (1)  Given notification of these inspections;
 
11      (2)  Allowed to accompany the inspectors; and
 
12      (3)  Allowed to report on the inspection.
 
13      §353-      Contracts with owners or operators of private
 
14 correctional facilities.  (a)  Upon request of the legislature,
 
15 the legislative auditor shall review the procedures by which a
 
16 contract was awarded and shall review each contract prior to
 
17 execution to determine if the contract includes the requirements
 
18 provided in this chapter.
 
19      (b)  A contract shall specify the type and level of services
 
20 to be provided by the contractor.  The contract shall provide
 
21 that a private contractor shall not:
 
22      (1)  Choose the correctional facility to which an inmate is
 
23           initially or subsequently assigned.  A contractor may
 

 
Page 11                                                    
                                     H.B. NO.           
                                                        
                                                        

 
 1           request the department to transfer an inmate to another
 
 2           correctional facility;
 
 3      (2)  Develop or adopt disciplinary rules that differ from
 
 4           the disciplinary rules, penalties, and policies of the
 
 5           department;
 
 6      (3)  Make a decision that affects the sentence imposed on an
 
 7           inmate or the time served by an inmate;
 
 8      (4)  Make recommendations to the Hawaii paroling authority
 
 9           with respect to the denial or granting of parole or
 
10           release, except to submit reports to the Hawaii
 
11           paroling authority and to respond to requests by the
 
12           department or the Hawaii paroling authority;
 
13      (5)  Develop or implement requirements that inmates engage
 
14           in any type of work, except to the extent that those
 
15           requirements are accepted by the department;
 
16      (6)  Determine inmate eligibility for any form of release
 
17           from a correctional facility; or
 
18      (7)  Use an inmate classification system unless it is
 
19           approved by the department.
 
20      (c)  Contracts may not exceed a term of thirty years and
 
21 shall contain provisions for renegotiation after five years.
 
22      (d)  The contract shall specify that the private
 
23 correctional facility shall grant access to the auditor or a
 
24 person contracting with the auditor for compliance auditing.  The
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 contractor shall provide access to all areas of the facility and
 
 2 to all records maintained onsite or offsite that pertain to all
 
 3 aspects of the facility, including but not limited to operation,
 
 4 financial, and inmate records.
 
 5      §353-     Contractor costs responsibility.  (a)  The
 
 6 contractor shall be responsible for costs incurred by the State
 
 7 or any political subdivision of the State for legal costs
 
 8 relating to escapes, riots or disturbances, or other natural or
 
 9 other human-caused events that occur at the facility because of
 
10 the contractor's negligence, errors, omissions, intentional acts,
 
11 or failure to comply with the terms of the contract.
 
12      (b)  The contractor shall be responsible for all reasonable
 
13 costs and expenses incurred by the State or a political
 
14 subdivision of the State for defense of causes of action brought
 
15 by or on behalf of an inmate that accrue while an inmate is
 
16 incarcerated at a private correctional facility.
 
17      (c)  This chapter shall not be intended to create a private
 
18 or public cause of action for any person, partnership,
 
19 corporation, or other entity, including any inmate housed within
 
20 any private correctional facility or any inmate housed within the
 
21 State of Hawaii.
 

 
 
 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      §353-     Restrictions on inmate movements.  An inmate may
 
 2 not leave the secure premises of a private correctional facility
 
 3 except:
 
 4      (1)  To comply with a court order;
 
 5      (2)  To receive medical care that is not available at the
 
 6           private correctional facility; or
 
 7      (3)  As part of a work program,
 
 8 without the express written approval of the department.  Any
 
 9 movement of an inmate outside of the secure premises of the
 
10 private correctional facility must be in compliance with approved
 
11 policies and procedures established by the department.
 
12      §353-     Failure to comply with law; action by department.
 
13 (a)  A contractor shall remain in strict compliance with this
 
14 part, established applicable American Correctional Association
 
15 and National Commission on Correctional Health Care standards,
 
16 and contract requirements.
 
17      (b)  If the department determines at any time that a private
 
18 correctional facility does not conform to this part, applicable
 
19 American Correctional Association and National Commission on
 
20 Correctional Health Care standards, rules, and contract
 
21 requirements, the department shall notify the chief executive
 
22 officer and the owner or operator, or both the owner and the
 
23 operator, of the private correctional facility.  The notice shall
 

 
Page 14                                                    
                                     H.B. NO.           
                                                        
                                                        

 
 1 state the deficiencies and order that they be remedied within a
 
 2 specified period of time not to exceed one year.  If the
 
 3 deficiencies are not remedied within that time, the department
 
 4 may hold a contested case hearing under chapter 91, and if the
 
 5 department finds that suspension or revocation is warranted by
 
 6 nonconformance with this part, applicable American Correctional
 
 7 Association and National Commission on Correctional Health Care
 
 8 standards, rules, and contract requirements, the department may
 
 9 suspend or revoke the facility's license.
 
10      (c)  If a private correctional facility fails to comply with
 
11 this part, applicable American Correctional Association and
 
12 National Commission on Correctional Health Care standards, rules,
 
13 or contract requirements within the specified time period, the
 
14 state may assume control of the facility for the purpose of
 
15 protecting the inmates, facility staff, or the public.  If the
 
16 state assumes control of the facility, the department shall
 
17 suspend payment for any services, and the department assumes the
 
18 costs of assuming control.
 
19      (d)  The department may assume emergency control of a
 
20 private correctional facility if substantial violations exist
 
21 that affect the life, health, or safety of the inmates, facility
 
22 employees, or the public, or that otherwise substantially impact
 
23 the security of the private correctional facility.
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      (e)  In the event that a contractor fails to comply with
 
 2 this chapter, applicable American Correctional Association and
 
 3 National Commission on Correctional Health Care standards, rules,
 
 4 or contract requirements, the state may retain the option of
 
 5 purchasing or leasing the facility.
 
 6      (f)  If either the state or the contractor fails to renew a
 
 7 contract, the state may retain the option of purchasing or
 
 8 leasing the facility.
 
 9      §353-     Outcome-oriented private correctional facilities.
 
10 The private operator of a correctional facility shall be paid a
 
11 per diem rate for each sentenced offender; provided that:
 
12      (1)  The regular per diem rate charged is equal to the
 
13           operator's portion of daily operating expenses, plus a
 
14           mutually agreed profit margin;
 
15      (2)  When that inmate meets inmate's requirements for parole
 
16           and is paroled, the per diem rate paid to the private
 
17           operator shall continue at that regular rate until such
 
18           time as the inmate is discharged from parole or the
 
19           inmate's parole is revoked;
 
20      (3)  If an inmate's parole is revoked and the inmate is
 
21           directed to return to the private facility, then the
 
22           private operator shall resume custody of that inmate
 

 
 
 
Page 16                                                    
                                     H.B. NO.           
                                                        
                                                        

 
 1           and shall be paid a per diem rate equal to the inmate's
 
 2           portion of operating expenses, minus a mutually agreed
 
 3           daily penalty.  This penalty rate will remain in force
 
 4           throughout any subsequent release to parole;
 
 5      (4)  If an inmate's parole is revoked and the inmate is
 
 6           directed to return to another state-operated or state-
 
 7           contracted facility not operated by the private
 
 8           operator, then the private operator shall pay that
 
 9           inmate's portion of daily operating expenses at the
 
10           directed facility; and
 
11      (5)  When an inmate earns discharge from parole or is
 
12           pardoned, a bonus may be paid to the private operator
 
13           if discharge is earned before the end of the inmate's
 
14           maximum term.  The amount of the bonus paid to the
 
15           private operator shall be determined according to a
 
16           mutually agreed formula that allows for proportionally
 
17           larger bonus payments according to how much time
 
18           remains before the maximum term expires.
 
19      §353-     Citizens oversight committee.  (a)  For each
 
20 proposed new correctional facility within the state of Hawaii,
 
21 regardless of whether public or private in nature, there shall be
 
22 a committee known as the citizens oversight committee.  This
 
23 oversight committee shall be consulted during site selection and
 

 
Page 17                                                    
                                     H.B. NO.           
                                                        
                                                        

 
 1 facility design.  If the proposed facility is not built, the
 
 2 committee shall be dissolved.  If the new correctional facility
 
 3 begins operation, the committee shall meet at least quarterly to
 
 4 be informed of (or report on) progress or problems at the
 
 5 facility.  The committee shall be allowed full access to the
 
 6 facility for inspections as deemed necessary by the committee.
 
 7      (b)  The oversight committee shall consist of eight members.
 
 8 Two members shall be appointed by the governor, two members shall
 
 9 be appointed by the county council of the county hosting the
 
10 facility, one member shall be appointed by the governor selected
 
11 from a list of social service professionals nominated by the
 
12 public, and the house speaker and the senate president shall each
 
13 appoint one member selected from a list of concerned community
 
14 residents nominated by the public.  Each member shall serve two
 
15 years.  The co-chairs of the committee shall be the community
 
16 residents.  The members shall serve without compensation but
 
17 shall be reimbursed for expenses, including travel expenses that
 
18 are necessary for the performance of their duties.
 
19      (c)  The department or, if applicable, the contractor shall
 
20 respond to the written comments and suggestions of the committee
 
21 within thirty days.  These communications shall be available for
 
22 public inspection upon request to the department."
 

 
 
 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 3.  Chapter 103, Hawaii Revised Statutes, is amended 
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "§103-     Contract with private provider for correctional
 
 5 facility operation.  Nothing in chapters 76 and 77, and section
 
 6 46-33, including the merit principles, the classification system,
 
 7 or historical past practices, shall be deemed to prevent,
 
 8 restrict, diminish, condition, limit, or otherwise qualify the
 
 9 authority of a department or agency of the State or a county to
 
10 enter into a contract with a private provider in accordance with
 
11 chapter 353 to operate a correctional facility including
 
12 contracts:
 
13      (1)  To disburse appropriations for grants, subsidies, or
 
14           purchases of service as those terms are defined in
 
15           chapters 42D, 42F, and 103F, pursuant to chapters 42D,
 
16           42F, and 103F or any other law, charter, or ordinance
 
17           authorizing grants, subsidies, or purchases of service,
 
18           as those terms are defined in chapters 42D, 42F, and
 
19           103F;
 
20      (2)  For goods and real property or for construction entered
 
21           into pursuant to this chapter or chapter 103D or 107,
 
22           or any other law, charter, or ordinance where services
 
23           are provided incidentally to the acquisition of the
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           goods or real property, or for construction; and
 
 2      (3)  For services which the department or agency is
 
 3           otherwise authorized by statute, charter, or ordinance
 
 4           to obtain or provide without regard to the provisions
 
 5           of chapter 76 or 77, or section 46-33."
 
 6      SECTION 5.  New statutory material is underscored.
 
 7      SECTION 6.  This Act shall take effect upon its approval.
 
 8 
 
 9                       INTRODUCED BY:  ___________________________