HB1686 • 2026

Correction, Dept. of

AN ACT to amend Tennessee Code Annotated, Title 41, relative to performance-based contracting.

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: Davis, Gardenhire
Last action: 2026-01-21
Official status: Assigned to s/c Departments & Agencies Subcommittee
Effective date: Not listed

Plain English Breakdown

The bill summary text does not explicitly state that the comptroller must recommend conducting audits, but it mandates the division of state audit to do so.

Tennessee Act for Performance-Based Contracting in Corrections

This act requires Tennessee's Department of Correction to develop a performance-based contracting program that incentivizes improved outcomes from contractors providing correctional services, with specific measures and audits.

What This Bill Does

Requires the Department of Correction to create a program for each contractor providing correctional services to inmates.
Makes 25% of annual funds paid to contractors conditional on meeting performance goals set by the department.
Specifies that subcontractors are not held responsible for these conditions or outcomes.
Recommends the comptroller conduct quarterly audits and publish findings publicly.
Requires the Department of Correction to collect data and report progress quarterly.

Who It Names or Affects

Contractors providing correctional services in Tennessee prisons.
The Department of Correction, which must develop and enforce these programs.
Subcontractors who are not held responsible for performance measures under this act.

Terms To Know

Performance-based contracting: A system where payments to contractors depend on achieving specific goals or outcomes.
Conditional funds: Funds that are only released if certain conditions, such as performance measures, are met.

Limits and Unknowns

The exact impact of improved recidivism rates and inmate safety on state expenditures is uncertain.
Details about the specific contractors affected by this act are not provided in the source material.

Bill History

2026-02-02 Tennessee General Assembly
Refer to Senate State & Local Government Committee
2026-02-02 Tennessee General Assembly
Recalled from Senate Judiciary Committee
2026-01-27 Tennessee General Assembly
Placed on Senate Judiciary Committee calendar for 2/3/2026
2026-01-21 Tennessee General Assembly
Assigned to s/c Departments & Agencies Subcommittee
2026-01-21 Tennessee General Assembly
P2C, ref. to State & Local Government Committee
2026-01-21 Tennessee General Assembly
Passed on Second Consideration, refer to Senate Judiciary Committee
2026-01-15 Tennessee General Assembly
Intro., P1C.
2026-01-15 Tennessee General Assembly
Introduced, Passed on First Consideration
2026-01-14 Tennessee General Assembly
Filed for introduction
2026-01-14 Tennessee General Assembly
Filed for introduction

Official Summary Text

This bill requires the
department
of correction ("department")

to
develop and implement a program for each contractor with which it contracts to
provide correctional services to inmates under the custody of the department to
incentivize improved performance and outcomes from the contractor.

Only a contractor holding the primary contract for the contracted services is subject to the program, and such contractor assumes all risk of losing the conditional funds. A subcontractor of the primary contractor mus
t not be held at risk for the outcomes under the program and payment of conditional funds, and must not be held at risk for declining performance and subsequent consequences throughout the program.

This bill requires the department to
develop the program no later than six months from the effective date of this
bill.
The department
must
include provisions requiring the contractor to adhere to the program in each contract entered into or renewed after the program is developed

The division

of state audit of the comptroller
of the treasury ("division") must
conduct an audit of the program no less than quarterly to ensure that the department has implemented the program to fidelity.

The comptroller
of
the treasury ("comptroller") must
deliver the findings of the audit to the general assembly and make the findings available to the public on the comptroller's website.

PROGRAM DESIGN

P
ursuant to the program developed by the department,
this bill requires
the department
to
make the payment of an amount equal to 25% of the total funds appropriated to the contractor during a fiscal year conditional upon yearly performance improvements based upon a set of performance measures, including
14 such measures described in the bill.

This bill requires the program to
condition the release of the conditional funds to the contractor based on the contractor's measurable improvements for each performance measure relative to a baseline performance.

The department
must
remit the conditional funds to the general fund in proportion to allocated amounts outlined
below
if the contractor does not achieve its targeted improvements.

In developing the program,
this bill requires
the department
to (i) i
ncorporate nationally recognized performance measures within each selected performance domain and
(ii) d
evelop relevant performance measures that directly improve operations and outcomes in the instance where there are no nationally recognized performance measures.

This bill requires the department to
collect and maintain the data necessary to measure and monitor performance measures under the program and to enable an independent and rigorous evaluation of the program, including
data as described in the bill. The department may
collaborate with the necessary departments, agencies, or community partners to obtain the necessary data to measure and monitor relevant performance outcomes under the program
.

In the first two years of the program,
this bill requires
the department
to
determine how to allocate the conditional funds based on performance across all measures, subject to the review and approval of the comptroller.

Beginning in the third year of the program
, (i) t
he department
must
allocate no less than 50% of the conditional funds based upon improved recidivism
, (ii) the
department
must
allocate no less than 15% of the conditional funds based upon measures pertaining to improved inmate safety
,
and
(iii) the
department
must
allocate the remaining 35% of the conditional funds based upon the remaining measures.

This bill requires the department to
update the program and its performance measures as necessary and in collaboration with the comptroller
. H
owever, the domains of recidivism and inmate safety must remain in the program regardless of its iteration.

This bill authorizes the department to
implement the phase-in period outlined
above
if a new contractor assumes the full responsibility for the respective contracted services during the middle of or at the beginning of a procurement cycle.

This bill authorizes the department to
cancel the respective contract following three years, successive or intermittent, of declining performance outcomes on recidivism or inmate safety under the program.

PROGRAM MANUAL

This bill requires the commissioner of correction ("commissioner") to
develop and provide the manual to the comptroller no later than six months from the effective date of this
bill.
The commissioner
must
submit updates to the manual to the comptroller no later than one month after finalizing the updates.

The commissioner
must
publish on the department's website the manual and any subsequent updates no later than one month after finalizing the most current version of the manual.

PROGRAM ACCOUNTABILITY

This bill requires the commissioner to
report to the comptroller and the fiscal review committee on the overall progress and outcomes of the program no less than quarterly.

The report must include quantitative data on performance measures and qualitative data on the operational adjustments made to improve performance.

The department
must
publish data on programmatic measures no less than quarterly on the department's website.

The department
must
publish progress reports and any external evaluations of t
he program no less than once annually on the department's website.

PROGRAM EVALUATION

This bill requires the department to
use an evaluator to independently evaluate the progress and outcomes of the program.

The evaluation
so
required must, to the extent feasible and appropriate, make use of experimental or quasi-experimental designs that allow for the strongest possible causal inferences with respect to program outcomes.

The evaluator
must
have access to all data necessary to conduct a rigorous and independent evaluation of the program.

The evaluator
must
submit a report to the departme
nt, comptroller, and chair of the fiscal review committee summarizing the results of the evaluation no later than three years following the implementation of the program.

The department
must
publish the evaluation report available on the department's website.

As used in the paragraph above, an "evaluator"
means an external evaluator with demonstrated and substantial experience and training in conducting rigorous impact evaluations of program effectiveness such as the use of either well-implemented randomized controlled trials or other evidence-based resear
ch methodologies that allow for strong causal inferences, including difference-in-differences, instrumental variable, or regression discontinuity approaches
.

Current Bill Text

Read the full stored bill text

SENATE BILL 1686
By Gardenhire

HOUSE BILL 1686
By Davis
HB1686
010492
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 41,
relative to performance-based contracting.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 41, Chapter 1, is amended by adding
the following as a new part:
41-1-301. Part definitions.
As used in this part:
(1) "Commissioner" means the commissioner of correction;
(2) "Comptroller" means the comptroller of the treasury;
(3) "Contractor" means an entity, public or private, entering a contractual
agreement with the commissioner to provide correctional services, as defined in
§ 41-24-102(2)(F), to inmates under the custody of the department;
(4) "Department" means the department of correction;
(5) "Division" means the division of state audit of the comptroller;
(6) "Evaluator" means an external evaluator with demonstrated and
substantial experience and training in conducting rigorous impact evaluations of
program effectiveness such as the use of either well-implemented randomized
controlled trials or other evidence-based research methodologies that allow for
strong causal inferences, including, but not limited to, difference-in-differences,
instrumental variable, or regression discontinuity approaches;
(7) "Manual" means the operating manual of the program;
(8) "Program" means the performance-based contracting program
established under this part; and

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(9) "TOMIS" means the Tennessee offender management information
system.
41-1-302. Performance-based contracting.
(a) The department shall develop and implement a program for each contractor
with which it contracts to incentivize improved performance and outcomes from the
contractor.
(b) Only a contractor holding the primary contract for the contracted services is
subject to the program, and such contractor assumes all risk of losing the conditional
funds. A subcontractor of the primary contractor must not be held at risk for the
outcomes under the program and payment of conditional funds, and must not be held at
risk for declining performance and subsequent consequences throughout the program.
(c) The department shall develop the program no later than six (6) months from
the effective date of this act.
(d) The department shall include provisions requiring the contractor to adhere to
the program in each contract entered into or renewed after the program is developed
pursuant to subsection (c).
(e) The division shall conduct an audit of the program no less than quarterly to
ensure that the department has implemented the program to fidelity.
(f) The comptroller shall deliver the findings of the audit described in subsection
(e) to the general assembly and make the findings available to the public on the
comptroller's website.
41-1-303. Program design.
(a) Notwithstanding §§ 41-24-103, 41-24-104, and 41-24-105, or another law to
the contrary, pursuant to the program developed by the department, the department
shall make the payment of an amount equal to twenty-five percent (25%) of the total

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funds appropriated to the contractor during a fiscal year conditional upon yearly
performance improvements based upon a set of performance measures, including, but
not limited to:
(1) The annual turnover rate for all staff;
(2) The annual turnover rate for healthcare staff;
(3) The percentage of offenders completing orientation upon entering a
facility;
(4) The number of preventable offender deaths;
(5) The mortality rate for offenders by facility;
(6) The number of episodes of sexual violence;
(7) The implementation of evidence-based rehabilitation and reentry
programming, including vocational and educational training;
(8) The percentage of offenders participating in evidence-based
rehabilitation and reentry programming, including vocational and educational
training;
(9) The percentage of offenders with an annual physical and behavioral
health visit;
(10) The percentage of offenders with appropriate medications;
(11) The percentage of offenders with a valid state identification card
upon release;
(12) The percentage of offenders with a behavioral healthcare visit within
two (2) weeks of release;
(13) The percentage of offenders employed within three (3) months of
release; and
(14) The three-year recidivism rate.

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(b) The program must condition the release of the conditional funds to the
contractor based on the contractor's measurable improvements for each performance
measure relative to a baseline performance.
(c) The department shall remit the conditional funds to the general fund in
proportion to allocated amounts outlined in subsection (g) if the contractor does not
achieve its targeted improvements.
(d) In developing the program, the department shall:
(1) Incorporate nationally recognized performance measures within each
selected performance domain; and
(2) Develop relevant performance measures that directly improve
operations and outcomes in the instance where there are no nationally
recognized performance measures.
(e) The department shall collect and maintain the data necessary to measure
and monitor performance measures under the program and to enable an independent
and rigorous evaluation of the program, including but not limited to:
(1) Staff employment records;
(2) Orientation records;
(3) Episodes of inmate deaths and sexual violence;
(4) Policies and procedures for evidence-based rehabilitation and reentry
programming;
(5) Participation records for evidence-based rehabilitation and reentry
programming;
(6) Health care records;
(7) Policies and procedures to obtain valid state identification cards;

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(8) Community health care utilization, which may be self-reported by
individuals released or from interagency data sharing agreements with
community-based healthcare providers or peer executive agencies;
(9) Community employment verification, which may be self-reported from
individuals released or from interagency data sharing agreements with employers
or peer executive agencies;
(10) Public safety records; and
(11) Any other relevant data housed in TOMIS.
(f) The department may collaborate with the necessary departments, agencies,
or community partners to obtain the necessary data to measure and monitor relevant
performance outcomes under the program, as required in subsection (e).
(g)
(1) In the first two (2) years of the program, the department shall
determine how to allocate the conditional funds based on performance across all
measures, subject to the review and approval of the comptroller.
(2) Beginning in the third year of the program:
(A) The department shall allocate no less than fifty percent (50%)
of the conditional funds based upon improved recidivism;
(B) The department shall allocate no less than fifteen percent
(15%) of the conditional funds based upon measures pertaining to
improved inmate safety; and
(C) The department shall allocate the remaining thirty-five percent
(35%) of the conditional funds based upon the remaining measures.

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(h) The department shall update the program and its performance measures as
necessary and in collaboration with the comptroller; provided, however, the domains of
recidivism and inmate safety must remain in the program regardless of its iteration.
(i) The department may implement the phase-in period outlined in subdivision
(g)(1) if a new contractor assumes the full responsibility for the respective contracted
services during the middle of or at the beginning of a procurement cycle.
(j) The department may cancel the respective contract following three (3) years,
successive or intermittent, of declining performance outcomes on recidivism or inmate
safety under the program.
41-1-304. Program manual.
(a) The commissioner shall develop and provide the manual to the comptroller
no later than six (6) months from the effective date of this act.
(b) The commissioner shall submit updates to the manual to the comptroller no
later than one (1) month after finalizing the updates.
(c) The commissioner shall publish on the department's website the manual and
any subsequent updates no later than one (1) month after finalizing the most current
version of the manual.
41-1-305. Program accountability.
(a) The commissioner shall report to the comptroller and the fiscal review
committee on the overall progress and outcomes of the program no less than quarterly.
(b) The report must include quantitative data on performance measures and
qualitative data on the operational adjustments made to improve performance.
(c) The department shall publish data on programmatic measures no less than
quarterly on the department's website.

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(d) The department shall publish progress reports and any external evaluations
of the program no less than once annually on the department's website.
41-1-306. Program evaluation.
(a) The department shall use an evaluator to independently evaluate the
progress and outcomes of the program.
(b) The evaluation required under subsection (a) must, to the extent feasible and
appropriate, make use of experimental or quasi-experimental designs that allow for the
strongest possible causal inferences with respect to program outcomes.
(c) The evaluator shall have access to all data necessary to conduct a rigorous
and independent evaluation of the program.
(d) The evaluator shall submit a report to the department, comptroller, and chair
of the fiscal review committee summarizing the results of the evaluation no later than
three (3) years following the implementation of the program.
(e) The department shall publish the evaluation report available on the
department's website.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.