Issa Arnita, a spokesman for Management and Training Corporation, expressed disappointment in the administration’s move and pushed back. He wrote in an email that if the decision was “based solely on declining inmate populations, there may be some justification, but to base this decision on cost, safety and security, and programming is wrong.”

He cited a 2015 Bureau of Prisons report showing that it costs about $63 a day to house an inmate in a privately operated prison, compared with about $80 a day to house an inmate in a low-security public prison.

While acknowledging the inspector general’s finding that private prisons have had a higher rate of violent episodes, Mr. Arnita said that was misleading “because it doesn’t take into account the vastly different inmate populations in contract and public prisons.” The bureau has tended to house in private prisons noncitizen inmates linked to gangs, he said.

Jonathan Burns, the director of public affairs for Corrections Corporation of America, also criticized the impression left by the inspector general report, saying it “failed to account for the impact of elements such as population demographics or the scope and efficacy of efforts to mitigate contraband.”

“The findings,” he added, “simply don’t match up to the numerous independent studies that show our facilities to be equal or better with regard to safety and quality, or the excellent feedback we get from our partners at all levels of government.”

But David Fathi, the director of the National Prison Project at the American Civil Liberties Union, called the policy change “an important and groundbreaking decision,” and he called on state prison agencies “to stop handing control of prisons to for-profit companies” as well.

The step joins previous efforts the Obama administration has made to overhaul the criminal justice system. A generation ago, amid a rise in crime rates, state and federal lawmakers began passing “tough on crime” laws, including mandatory minimum sentences for drug possession.