The private prison industry began in 1983 with the formation of Corrections Corporation of America. The company's first contract in that same year was to design, build, and manage a 350-bed minimum security detention facility in Houston for the Immigration and Naturalization Service. From this starting point, the private corrections industry ended the decade with 10,900 beds under contract. The 1980s was a formative period for the private corrections industry, during which it began to establish political and economic credibility with government officials at all levels. Since 1990, the budgetary pressures faced by all government levels, continued growth in incarceration rates, and the emergence of well-capitalized, private-sector prison management companies have created an environment that has resulted in robust growth in beds contracted to the private sector. From the 10,900 beds under contract at the end of 1989, the industry's contract capacity increased to 85,201 beds in 1996. The primary reasons for government agencies to privatize are upfront reduction in construction and capital costs, reduced labor costs, the expansion of bed capacity in jurisdictions that are subject to State and Federal employment caps, lower operating costs, relief from additional government bureaucracy, and the ability to plan and control costs over a longer term (contractual prices are known and fixed). States account for 76 percent of the inmates in privately managed facilities; the Federal Government, 14 percent; and local authorities, 10 percent. 5 tables