The authors review some of the controversial issues of the privatization of prisons and analyzes an alternative arrangement in which confinement facilities are operated by local governments for profit, under contract with a State department of corrections, with the primary goal being to alleviate crowding in State institutions. This article refers to these institutions as "public proprietary" facilities, because they are operating with the intent of profit-making, although they are owned (or leased) and managed by local governments that receive the profits made by their operation. Although public entities have advantages, they may also present new problems for contracting agencies. Contracts may differ from those used traditionally with private vendors. Local governments may be more difficult to deal with than are private proprietary companies in terms of revocation of contracts, change of contractors, etc. Problems of accountability may prove more difficult to resolve. Political influence can become a factor in dealing with local governments, because politicians are determined to protect their constituents and to carve out benefits for their districts without full consideration of the implications of their actions. There are indications that local governments can be inventive and in many instances can outperform private companies both in service and in cost- effectiveness. The contracting of the operation of correctional facilities, both to private corporations and to public entities, raises many issues in areas such as liability, monitoring, ethics, symbolism, and the intrusion of private interest into punishment policies. The authors advise that given the problematic nature of this issue, it would be more beneficial to place a greater emphasis on efforts to upgrade State prison operations than to seek opportunities to delegate them to either public or private proprietary entities. 70 references