In the past decade, U.S. Federal inmate and detainee populations have skyrocketed. In addition, the Immigration and Naturalization Service (INS) and the U.S. Marshals Service (USMS) are facing a management challenge with a lack of detention space. By the end of 2002, the U.S. Department of Justice will increase its need for detention space from 31,966 beds in 1996 to 50,856 beds. This article explores the conflict between traditional service contracts and the procurement of private prison services, as well as the congressional legislation authorizing the Department of Justice (DOJ) to obtain private prison services outside the current regulations. Routinely, to alleviate prison and detention bed shortages, the DOJ turns to State, local, and private providers. However, this practice has not been without controversy as far as intergovernmental agreements and private contracts. In 2001, the Congressional Department of Justice Appropriations Act allowed the DOJ to enter into innovative private prison contracts with terms that were now more flexible than standard service contracts. This has afforded both the Government and the private prison providers the opportunity to be innovative when it comes to procuring private prison services and be on the cutting edge of reforming the Federal procurement process.