December 7, 2012

New Zealand pioneers P3 prison concept

While the Correctional Service of Canada has mulled over the possibility of contracting out specific prison services, such as cleaning and food preparation, New Zealand has entered into a comprehensive public-private partnership (P3) in which a consortium will design, finance, build, operate and maintain a 960-bed men’s prison at Wiri, South Auckland.

The SecureFuture consortium was made up of Fletcher Construction, essential service provider Serco, Spotless Facility Services, infrastructure finance company John Laing, and the country’s Accident Compensation Corporation.

The 25-year contract totals NZ$840 million, including the NZ$300 million design and construction portion.

While many P3 contracts stake their value on on-time, on-budget performance, Wiri Prison features a different metric. The operator will face stiff financial penalties if its prisoner rehabilitation programs fail to reduce incidents of reoffending by more than 10 per cent, as compared to government-run prisons.

“We procured it under a maximum flexibility, minimum constraints model,” says Fiona Mules, head of PPP Programme, National Infrastructure Unit (NIU), New Zealand Treasury.

“We went to the market with a blank sheet of paper. No standard design. No policies, procedures or operating manuals. The operator works with the consortium to determine how they want the prison to be designed to exceed current rehabilitation outcomes.”

Mules says that the market initially responded with a sense of excitement — then concern that the open-ended project provided too little direction.

“What we ended up with was people around the table asking us how we thought things should be done,” says Mules.

“We told them that wasn’t what we were buying. We had no interest in replicating what we were already doing. They needed to do the thinking on their side of the table.”

The NIU short-listed applicants based on their presentations of an innovative proposal in their area of expertise.

“We’re trying to build models that the public sector can learn from,” says Mules.

“If the operator meets its own goal, it can help the Department of Corrections to lift its own game. The way we calibrated it is that the operator can lose 100 per cent of its margin for average performance against the department.”

For its part, Fletcher Construction drew on international research and expertise and its own experience in building prisons to ensure that its construction program reflected a world-class approach to reducing recidivism in a safe, secure and humane setting.

Cells were also designed to allow inmates to take advantage of the latest technology to maximize educational opportunities.

Mules notes that evaluating the design and construction portion of the proposal was as difficult as evaluating the operations portion.

“People were generally comfortable to go out to the market and say ‘let’s see what we get back,’ but they’d already seen 30 or 40 other prisons and knew what they looked like,” she says. “When we’re evaluating, it’s really hard not to have that start to infiltrate and say ‘we wouldn’t do it that way.’”

Mules notes that if recidivism is reduced, it will also reduce costs in the country’s corrections, police and court operations.

“If we succeed at reducing prison populations, I’m sorry for Serco, but that’s what we’re aiming for,” she says.

Ground was broken on the project in September of this year.

The facility is expected to be fully operational by 2015.

Mules spoke at the national conference of the Canadian Council for Public-Private Partnerships in Toronto.

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