Advantages of privatization contracting include lower costs, increased efficiency, improved management, greater flexibility and speed of response, improved services, and increased supply of prison space. While there are some legal obstacles in the commercialization of imprisonment, contracting in some form seems assurred in the future of corrections, and many prison services already are supplied by contract on a piecemeal basis. Although governmental regulations will limit the operation of the free market model which underlies the concept of privatization, movement in the direction of providing services under competitive free market conditions should result in improvement. The main function of contracting is to provide a market test of costs and to serve as a comparative standard against which to measure the effectiveness and efficiency of Government services. The best test of whether Government is doing a good job running prisons is to see if private enterprise can do it better. Policies and legislation should be formulated to permit and encourage this test on a regular basis. Tabular data, including a summary of privately contracted penal facilities, and 39 references are provided.