Privatization of Security Services: Comparing Approaches to Policing and Prisons across the Atlantic
Brandenburg Institute for Society and Security
Dr. Johannes Rieckmann was a DAAD/AICGS Research Fellow in March and April 2017. He is a Senior Research Fellow at BIGS, the Brandenburg Institute for Society and Security in Potsdam, Germany. His main field of research there is the multidisciplinary conceptualization of a guideline on boundaries and potentials of privatization of security services.
Previously, he was postdoc research associate at DIW, the German Institute for Economic Research located in Berlin. There he worked in a team developing the WISIND crime indicator and collected household and geospatial data from semi-nomadic herders in Kyrgyzstan for a development economics survey. He earned his doctorate at the Chair of Development Economics in Göttingen, Germany, evaluating a water and sanitation program in Yemen. Before that, he worked for a large management consultancy in Belgium. In addition to his native German, Dr. Rieckmann speaks English and French.
While at AICGS, Dr. Rieckmann will be working on a project exploring the drivers, root causes, and regulatory aspects of diverging approaches regarding privatization of security services on both sides of the Atlantic. Some of the activities and tasks considered to constitute exclusive responsibilities of public administration in Germany are handled quite differently in the United States—to name but two, policing of university campuses and the operating of prisons. In other fields, one can observe gradual disparities or differences in scale or scope.
Credos regarding main threats, roots, and mitigation strategies sometimes diverge, and balancing civil liberties with civil—and national—security leads to varying solutions and approaches on both sides of the Atlantic. Public resource allocation and regulatory policy concerning the market of civil security lead to remarkable regional distinctions. Budget volumes and decisions of public administration on contracting private suppliers of security services reflect deviating constructs of ideas and schools of thought. Decisions to outsource certain tasks on the one hand, and to concentrate governmental resources and human capital on core business areas on the other hand, undergo a new dynamic considering current threats gaining ground—be it cybercrime, terrorism, or hate crimes in the wake of migrant flows.
The project will be helpful in highlighting common denominators, and defining and delineating additional areas of bilateral and international cooperation. It will inform the on-going discussion regarding conceivable business models and private-public partnerships in the civil security market, shed light on the underlying reasons of deviating approaches, and depict political and judicial limits of transferability as well as aspects of institutional economics.
For the past several decades there has been a trend of privatization of services that were previously firmly in the hands of public entities. Happening in both the United States and in Germany, this trend spans numerous parts of the economy; for instance, San Francisco began contracting with private companies as early as in 1932 for garbage collection, the U.S. Forest Service contracted out the majority of its workforce during the presidency of George W. Bush, the German national railway was privatized in 1994, and the Deutsche Bundespost in 2000—to name but few examples.
The transfer of public security responsibilities away from government actors is an evolving matter of public debate—influenced by social norms and the history of law and institutions—and is sometimes emotionally disputed when it comes to balancing liberty with security.
Trend of Privatization in Security and Safety
We also observe this trend of privatization in the realm of security and safety. German private contractors began to frisk air passengers and screen their luggage in Fuhlsbüttel Airport in 2005. Today, public-private partnerships between federal police—typically standing by in the background, providing armed policing—and employees of commercial service providers—usually the ones interacting with and screening passengers—are common in many German airports. Escorting heavy-duty transports in Germany used to be a task for squad cars; now it is regularly assigned to specialized companies. In the aftermath of the 2010 Love Parade incident in Duisburg in which a human stampede killed twenty-one people, political demands have grown for private event organizers to shoulder a bigger proportion of safety responsibilities. Moreover, we see the trend on the more militarized side of security as well: the German merchant marine hires anti-pirate guards on certain routes; the U.S. State Department hires private military and security companies (PMSC) for personal protection of its staff and guard services in countries like Afghanistan, Iraq, Israel, and Pakistan.
Much of this trend can be linked to financial considerations and budget issues: governments, strapped for cash, look for ways to spend tax money more efficiently and are required to economize the funds they have (“Sparzwang”).
Privatization of security services is growing in both the United States and Germany. But credos regarding main threats, roots, and mitigation strategies sometimes diverge, and balancing civil liberties with security leads to varying solutions and approaches on both sides of the Atlantic. Public resource allocation and regulatory policy concerning the market of security services lead to remarkable regional distinctions. Budgets and decisions by public administration on contracting private suppliers of security services reflect deviating constructs of ideas and schools of thought. Decisions to outsource certain tasks on the one hand and to concentrate governmental resources and human capital on core business areas (German “Aufgabenkritik”) on the other hand, undergo a new dynamic considering current threats gaining ground—be it cybercrime, terrorism, or hate crimes in the wake of migrant flows.
Although the two countries share a similar trend, there are some diverging approaches to the field of security. In some instances, like personal protection or cash and valuable transport, we see gradual disparities or differences in scale or scope. However, in others cases, like policing of university campuses and prison operation, the differences are more striking.
Two Fields of Diverging Approaches
Whereas in Germany, policing in general (with powers of arrest and warrant to use firearms) and enforcement of sentences are considered the exclusive responsibility of the state, in the United States, private contractors increasingly handle these functions. In the U.S., private police forces are widespread on university and college campuses, in think tanks and research institutes, in gated communities, and today can even be found in high schools (as so-called school resource officers). Sometimes, they come as non-sworn security officers, sometimes they come as sworn-in special police officers. The latter typically have full powers of arrest—at least on the employing entity’s owned or leased property (in case of hot pursuit after felonies, the powers often extend beyond, and depending on the particular state and its regulation, some can have city, county, or state wide jurisdiction)—and often are equipped with sidearms. In some places, you may see slightly more impressive armament-like shotguns, and there are higher education facilities that—just in case—stock assault rifles and mine-resistant, ambush-protected vehicles obtained from the Defense Department’s surplus equipment program.
In Germany, you may see private security guards in shopping malls, in railway and subway stations and on trains, as security at events like soccer matches and festivals, and in a few places even see some patrolling of public streets and neighborhoods. Almost never, though, do these guards have any weapons beyond batons or mace, and never do they have special enforcement competencies. While they do have the power of provisional arrest granted by § 127 of the code of criminal procedure, this is conditional on very narrow preconditions, and granted to every citizen. And they can exercise (transferred) property rights, asking disrupters to leave the premises, but that is basically it. Beyond that, the guards are entitled only to observe and report, and have to call the police in situations of imminent danger. There are, however, lobbying efforts to influence policy and widen the competencies of private security service providers. The federal association of German companies active in the security business, the Bundesverband der Sicherheitswirtschaft (BDSW), presented a position paper on May 18, 2017, on the occasion of the upcoming federal elections, in which it stipulates regulations for warrants for checking identity papers and sending-off of disrupters from public places.
And while there is very limited involvement of entrepreneurs in the German prison regime, it is commonplace and widespread in the U.S. (although not without its vocal critics). In 2012, there were 137 state-contracted private for-profit prisons in the U.S. At the federal level, there are currently eleven. In 2015—the year with the most recent comprehensive data available—detention facilities were operated by private contractors under jurisdiction of twenty-nine U.S. federal states and the Federal Bureau of Prisons, with about 126,000 inmates. Today, a handful of large companies share the market. The biggest for-profit prisons are Core Civic Inc. (formerly the Corrections Corporation of America, CCA), Geo Group Inc., and the Management and Training Corporation (MTC). Frequently, the unobtrusive names of companies and detention facilities do not give a clue about the nature of their business—for instance, the largest immigrant detention center in the U.S. is euphemistically named “South Texas Family Residential Center.”
In Germany, private contractors are currently operating in five penitentiaries in four different states, and in one instance, a private company constructed a prison and then leased it to the authorities. However, in the penal system in Germany, private contractors do not carry out any activities of enforcement, guarding, or handling prisoners. Instead, they handle activities such as maintenance and operation of kitchens and workshops. Put concisely, the role of private prisons in Germany is different from and much smaller than their role in the U.S.
The Reasons behind the Differences
So, what can explain these stark differences in the fields of privatization of police and prisons? Let us look at the two fields separately, after a general remark: there is a higher baseline readiness in the U.S. than in Germany to assign public services to private entities. As a senior interview partner from a transatlantic think tank based in Washington highlighted, the German concept of “Vater Staat” (the benevolent and fatherly caring state) is rather uncommon in the U.S., where a subliminal suspiciousness is rife in everything federal, in combination with an inclination to prefer decentralized and private solutions.
Why Are Campus Police Common in the U.S., but Not in Germany?
Law enforcement officers respond to various threats in both countries, and their roles are adjusted accordingly. Demand and supply factors differ, which is also the case on premises of facilities of higher education.
Demand for a dedicated campus police emerged as early as 1894. Violent tensions between “town and gown” sparked by rumors about Yale Medical School removing corpses from graves for dissections led to a permanent assignment of police officers. Today, universities face other challenges.
For example, active shooter incidents are a pressing threat in the U.S. (160 recorded incidents between 2000 and 2013) but do not often occur in Germany (roughly ten comparable incidents in German schools since 1871, six of them after 2000), and certainly not on such a scale. Due to response times of local police and the critical nature of active shooter events, there has been a greater demand in the U.S. for sub-local armed private police forces, for example, on university campuses.
Besides their inherent concerns to protect human life, universities have to take into account the judicial risk of their resource allocation decisions. Due to particularities of the legal framework in the U.S., civil suits filed by relatives of victims can become serious financial liabilities even in case of acquittal. This is not the case in Germany. As the Chief of Police of a renowned Washington-based university pointed out, risk precaution by university steering committees considers adverse effects on brand and reputation, which plays a larger role for institutions of education dependent on tuition fees (in the U.S.) than those mainly financed by tax money (in Germany).
Sexual offenses on campuses similarly threaten university reputation. Furthermore, legal norms in the U.S., including Title IX of the Education Amendment of 1972, and the Safe Campus Act of 2013, require education facilities to go the extra mile to protect their students from sexual assaults in the widest sense. Failure to do so sufficiently entails the risk of losing federal funding. This is different from Germany, where there are no special norms for higher education facilities in this regard.
Campus police in the U.S. therefore train specifically for sexual assault response, investigation, and victim protection. Other task areas addressing special needs include protecting controversial speakers and dignitaries, crisis intervention (e.g., talking suicidal students out of jumping off a bridge into the Potomac River), access control in dormitories, defense classes, bike beats, and community liaison.
On the supply side, universities staff their private security differently in the U.S. and Germany. In the U.S., they often hire retired police officers or former military. In Germany, people are typically trained for the particular job and do not come from these previous positions. This difference is not only rooted in varying job descriptions, but also in the available personnel pool. As the head of security of a distinguished think tank in Washington (himself a former lieutenant of the Metropolitan Police Department) explained, police officers in the U.S. reach their full right to a pension after twenty to thirty years of active duty. They then can move into the private sector, while German police officers typically remain in public service until they reach retirement age.
And What About the Prisons?
On the supply side regarding for-profit detention facilities, privatization of prisons strictly speaking began as early as in the 1850s with prison ship Waban—the predecessor of San Quentin prison—acquired by sheriff Jack Hays in San Francisco County. It found its continuation in the convict lease system after the abolition of slavery in 1865, but the modern form of private operation of prisons emerged rather recently: in 1984, CCA won a contract to operate a detention facility in Hamilton County, Tennessee.
The reason for this recent development lies in the development of “demand for prisons.” The U.S. has only about 5 percent of the world population, but about 25 percent of the prisoner population. With the population of prisoners exploding in the wake of the war on drugs and changes in legislation since the 1980s, it exceeded existing public facilities’ capacity to accommodate inmates. Prisons were increasingly privatized in the U.S. to keep up with what was expected to be a temporary increase in demand for cells and beds. Another factor influencing demand is the political appetite for risk—risk which has to be accepted in order to cut costs and save tax dollars. It appears that southern U.S. states tend toward a more daring approach than the northern ones.
In 2016, the Obama administration published the results of a study scrutinizing conditions in private prisons. It pointed out that many issues have arisen, including lack of oversight and transparency, quality control, and prisoner and pubic well-being, as well as spectacular cases of corruption, riots, and security problems including jailbreaks. The industry’s ambitions to boost shareholder value by saving costs obviously led to cutting corners and lower quality of service than requested by standards set by the American Correctional Association (ACA). Furthermore, more tax money had to be spent than initially hoped for. Private contractors sometimes increased prices after winning assignments based on lowball bids, and often the contracts included guaranteed minimum occupancy rates of 80 to 90 percent of available bed space, which the taxpayer had to pay for regardless of the actual number of inmates. The industry was accused of cherry picking the more profitable minimum-security prisoners, leaving the costlier tasks to pubic authorities. In light of a slowly declining inmate population, on August 18, 2016, the Justice Department announced its decision to reduce the use of private prisons at the federal level, causing the stocks of Core Civic and Geo Group to plummet by more than 40 percent.
This trend is now being reversed by the current administration. President Trump’s deportation policy has seemed to boost stock values of the detention industry. According to Bloomberg, Core Civic’s stock jumped by 78 percent since Trump’s election, Geo Group Inc. by 53 percent. New contracts have been issued. While absolute numbers of state inmates in private detention facilities exceed those of federal inmates by approximately a factor of three, it is informative to take a closer look at the placement of inmate populations at the federal and state level. The proportion of federal inmates being detained in private detention facilities, about 19 percent, was already more than double that of state inmates in private facilities. As detention of unauthorized immigrants is federal business, this will probably be the future growth market for the prison industry in this political climate.
In Germany, the legal framework precludes the employment of private contractors in the enforcement of sentences. Considerations to increase the involvement of private contractors in detention facilities outside the penal system—namely, detention facilities for custody pending deportation in the wake of the refugee crisis—currently have little support in Germany. Operation of halfway houses and provision of services in support of resocialization, though, may be a growing field of business for German companies.
We see that differences in privatization of security services between Germany and the U.S. can partially be traced to differences in legislation and jurisprudence, and their financial consequences and knock-on effects. Political and judicial limits of transferability as well as aspects of institutional economics define some red lines on the German side. A look across the Atlantic, though, might be useful for both countries to swap ideas regarding conceivable business models and developable private-public partnerships, in order to pursue the over-arching goal of release of resources of overstretched public authorities.
 See, for instance, Dan Baumann, “Campus Police Acquire Military Weapons,” The New York Times, 21 September 2014, https://www.nytimes.com/2014/09/22/world/americas/campus-police-acquire-military-weapons.html?_r=0
 BDSW, “Deutschland sicher machen: Sicherheitswirtschaft stärken und Eigenvorsorge fördern. Positionen und Forderungen des BDSW | Bundesverband der Sicherheitswirtschaft zur Bundestagswahl 2017 und für die 19. Legislaturperiode des Deutschen Bundestages,” 2017.
 Abigail Geiger, “U.S. private prison population has declined in recent years,” Pew Research Center Facttank, 11 April 2017, http://www.pewresearch.org/fact-tank/2017/04/11/u-s-private-prison-population-has-declined-in-recent-years/
 Jonas Mueller-Töwe, “Geheime Verträge, versteckte Kosten. Warum private Dienstleister Deutschlands Gefängnisse nicht billiger, sondern teurer Machen,” Correctiv, 12 November 2015, https://correctiv.org/recherchen/stories/2015/11/12/teilprivatisierte-gefaengnisse-der-staat-zahlt-drauf
 Yale University, “History of YPD,” https://your.yale.edu/community/public-safety/police/history-ypd
 Federal Bureau of Investigations, “A Study of Active Shooter Incidents in the United States Between 2000 and 2013,” 2013.
 Sally Q. Yates, Memorandum for the Acting Director Federal Bureau of Prisons, 18 August 2016, https://www.justice.gov/archives/opa/file/886311/download
 Evelyn Cheng, “Prison stocks plunge after report Justice Department will end use of private prisons,” CNBC, 18 August 2016,http://www.cnbc.com/2016/08/18/prison-stocks-plunge-after-report-justice-department-will-end-use-of-private-prisons.html
 Lauren Etter, “America’s Private Prisons Are Back in Business,” Bloomberg, 10 January 2017, https://www.bloomberg.com/news/articles/2017-01-10/trump-deportation-plan-to-hand-windfall-to-a-dying-u-s-industry