"I'm concerned", one sheriff told me, "about what would happen if a prisoner escaped from a privately operated jail." His concern, though not explicitly stated, was about the use of deadly force. The analysis done on this issue for MSA by PSC states the issue as follows "in a democratic society, the rights to imprison citizens against their will, to exercise force to prevent escapes, and to impose penalties on those who violate penal rules and regulations are powers vested in government ...the degree to which such powers can be delegated remains under litigation in the courts even to this day ...to the extent that private firms cannot exercise these powers, the effectiveness of their detention efforts is gravely diminished ...Conversely, to the extent that such powers are abused, the contracting government as well as the private offender remain liable." (PSC, page 8).
All secure jail facilities are facilities to which people who are expecting to serve an extended period of time will be assigned. Such people will want to escape if they can. What would happen if such a prisoner were to escape from a government-operated jail – and such escapes happen all over the country all the time? The answer is that every element of law enforcement – state, county, and municipal – would be brought to bear to apprehend the escapee. When apprehended, he would be brought back to jail. What would happen if someone escaped from a secure privately-operated jail? Exactly the same thing!
The real issue here is not whether or not someone might escape or whether or not all that which usually attends the daily operation of a secure facility and which characterizes a government operated facility will be allowed to characterize the daily operation of a private-firm facility. The issue is the power to delegate. If that power is legal, then all the issues noted above can, and should be, carefully addressed in the contract between the unit of government and the private vendor. If the power to delegate is not present, the issue is irrelevant and all private corrections facilities are illegal.
Presumably, no government entity can, in the final sense, "delegate' ,.s corrections responsibilities since it is prohibited from alienating entirely its police powers.  In practice, governments are already able to "dodge" this responsibility since individuals acting in their capacities as government employees are granted a qualified immunity against claims arising out of their "official" actions, depending on the discretion allowed, and the responsibility of, the official.  At the present time, no such immunity appears available to private corrections firms and several states have incorporated specific, and more stringent, provisions concerning liability. Private corrections firms understand this and have written specific provisions into their contracts with government units to indemnify government for any lawsuits brought relative to the operation of facilities.
Some argue that the issue is not whether or not government can delegate the operation of a jail to a private firm, with all the activities which attach to such operation, but where ultimate responsibility far what goes on in the jail lies. In the case often cited by those who oppose privatization – Medina v. 0'Neill – the INS's defense of no-state action was denied when a guard from a privatized security firm accidentally but negligently shot and killed one inmate and wounded another. But what was not questioned by the court was the power to delegate the operation of the facility to a private firm. Delegation was accepted as a given. (emphasis intended) What was at stake in this case was where ultimate responsibility lies. The court ruled that it lies with the state.  The solution to such potential problems lies in contracting which assures indemnification by the private contractor. Such language is standard in all current contracts and moves the legal delegation issue of jail operation to the status of no issue at all.
One final note on the delegation question: Professor Ira Robbins of the American University School of Law is a strong opponent of prison and jail privatization. Yet, as he has noted in this general context, the delegation of central state authority to subagencies, both public and private, is one of the most common and unavoidable features of modem government and that no such delegation has been invalidated by the United States Supreme Court, nor any lower courts, in over 50 years.  The question, therefore, is what is so special about delegating the operation of a corrections facility? The answer may lie less in questions of law than it does in questions of political philosophy.
Many of the moral-social control arguments against privatization sound a lot like simple, old-fashioned, prejudice against private, for-private, activities in general. Far example, in its analysis of the issue for MSA, PSC offered the following argument.- "A penal system predicated on profit, with no incentives to reduce overcrowding or to consider alternatives to incarceration, might actually provide incentives to build more jails and fill them to capacity ...a low occupancy rate, with greater rehabilitative services, on the other hand, could be inconsistent with the goals of a well conceived business plan" (PSC, page 13). Prisoners, rights groups, the ACLU, and the American Federation of State, County and Municipal Employees Union have made similar arguments. It is worth noting, however, that those who would make this class of argument virtually never suggest that those who support expanded government support of day care facilities would find it in their economic interest to join the fight against abortion on the grounds that fewer babies born would mean less need for government funding of day care facilities. Therefore it is hard not to believe that this argument covers what may fairly be called the simple "self-interests" of certain groups which do not like the prospect of private-sector economic competition in corrections facilities. 
PSC offers another popular and vaguely disguised anti-private-firm argument to the effect that government would be subject to "low-balling' by private firms in order to destroy the capacity of government to supply future prison services in competition with private firms: "Safeguards must be raised adequate to prevent a contractor from making an initially low bid to obtain a contract and then raising his prices after local government can no longer expeditiously resume the task of jail operation" (PSC, page 15). Putting the case in its correct economic context reveals the absurdity of the argument. " A private firm knowingly offers a bid which fails to cover its costs over the three-or-more-year life of the contract. During this time of financial loss the firm has to go into continual debt to cover its operating expenses. When the contract comes up for renewal, the firm will demand a price sufficiently high enough to guarantee not only a profit over the life of the new contract, but high enough to cover all the losses incurred in the old contract so that far the full period of both contracts, the firm will have shown a profit sufficient to satisfy its creditors and shareholders."
Of course the obvious problem with this argument is that when the contract comes up for renewal, the price the firm would have to extract would be so high that other firms in the industry would find it easy to outbid the firm and win the contract. Thus the firm would never be able to cover its costs and earn a profit sufficient to attract capital and remain in business. The moral of this story – as even those who find it difficult to understand why firms cannot afford to go an for years losing money in the hopes of being able to make it back in a distant future they can not possibly envision – is that while private entrepreneurs may be greedy, they are certainly not stupid. And neither are those who lend them money to finance their operations.