Private security firm G4S has lost its contract to run Wolds prison in East Yorkshire and failed to win a number of other private jail contracts.
A report by HM Inspectorate of Prisons in August said HMP Wolds had "clear weaknesses", with poor behaviour and high levels of drug use among inmates.
G4S said it was "disappointed".
The firm was heavily criticised for its handling of the Olympic Games security contract in the summer, but sources said the jail decision was unrelated.
http://www.bbc.co.uk/news/uk-20252359