Private prison .A private prison or for-profit prison, jail, or detention center is a place in which individuals are physically confined or interned by a third party that is contracted by a government agency. Private prison companies typically enter into contractual agreements with governments that commit prisoners and then pay a per diem or monthly rate for each prisoner confined in the facility. Today, the privatization of prisons refers both to the takeover of existing public facilities by private operators and to the building and operation of new and additional prisons by for-profit prison companies. operate under 5 year contracts. Soon private prisons were established under the government's Private Finance Initiative, where contracts are awarded for the entire design, construction, management and finance of a prison under 25 year contracts. Later, Government attempted to 'market test' prisons operated by the public sector, though no prison transferred from public to private operation through this route until Birmingham in 2011. 2] Prisons operated by the private sector are subject to re-competition at the end of the contract, when the public sector may bid, and on 3 occasions has done so successfully. Privately run prisons are run under contracts which set out the standards that must be met.