In December 1993 the Victorian Government announced the New Prisons Project, which is designed to produce private-sector involvement in the delivery of three new prisons to replace three antiquated facilities. Under project guidelines, the private contractor provides new facilities and their ongoing maintenance, such that the performance of the facilities is maintained over the life of the prison. The contractor also provides correctional services and programs for the contract period; these services and programs are expected to maintain or improve the standard of those available through traditional public-sector delivery. The contractor assumes all risks of development, ownership, and service delivery. Contractors also carry the risk of ensuring the ongoing usefulness of the buildings and services in the event of changes in policy, standards, demographics, prisoner mix, and a need to expand to the designated capacity. Contractual payments for both the provision of facilities and services are performance based. The contractor is responsible for the ongoing probity of private-sector participation. The project has proven attractive for private-sector investment, has had a positive cost impact for government, and should result in improved methods and new perspective on inmate management and prison design. This article also outlines government safeguards to ensure that contractors deliver the best possible correctional facilities and services.