A review of the literature, telephone contacts with all State departments of corrections (DOC's), and discussions with researchers and private contractors formed the basis for a 6-week data collection effort that occurred between January and mid-February 1984. Results reveal that about 34,000 State prison inmates were involved in prison industry programs. The most common model of private sector participation has involved the use of inmates who remained under DOC supervision but produce goods or services for private industry. Analysis indicates that State and local governments are seeking alternatives for traditional ways of meeting prisoner housing needs. Lease/purchase agreements are being considered in a number of States, including Arizona and Missouri. Confinement service contracts are another way of expanding corrections capacity. In these arrangements, vendors are responsible for locating suitable sites, leasing or constructing appropriate buildings, and providing the staff and services necessary for operation. Methods of financing correctional facilities include revenues, general obligation bonds, leases, and lease/purchase agreements. Rationales for private sector involvement in corrections include the prospect of superior service. However, issues such as quality and accountability surround proposals to contract the operations of State and local facilities. Caution in further privatization is urged. Included are 176 notes and 11 tables.