America Service Group Announces Extension of Commonwealth of Pennsylvania, Department of Corrections Contract Through August 31, 2013.

BRENTWOOD, Tenn. -- America Service Group Inc. (NASDAQ:ASGR) announced today that the Company's operating subsidiary, Prison Health Services, Inc. (PHS), and the Commonwealth of Pennsylvania, Department of Corrections (Department) have agreed to extend by five years the term of the current contract under which PHS provides general healthcare and specialized medical services to the approximately 44,000 inmates in the custody of the Department.

PHS began providing medical services to the Department under the current contract on September 1, 2003. The current contract would have expired on August 31, 2008. The contract will now expire on August 31, 2013.

Annual revenues under the contract for the year ended December 31, 2006, were $68.5 million.

Commenting on today's announcement, Richard Hallworth, president and chief executive officer of PHS, stated "PHS is deeply gratified to have the opportunity to build upon our solid foundation of clinical excellence and operational efficiency for the Commonwealth of Pennsylvania. I am especially proud of our PHS staff, who have worked so well in partnership with the Department. With the implementation of the PHS Catalyst(SM) electronic health record, our working partnership with the Department and commitment to quality care will further advance a national model for providing correctional healthcare in the United States."

America Service Group Inc., based in Brentwood, Tennessee, is a leading provider of correctional healthcare services in the United States. America Service Group Inc., through its subsidiaries, provides a wide range of healthcare programs to government agencies for the medical care of inmates. More information about America Service Group can be found on the Company's website at www.asgr.com.

Cautionary Statement

This press release contains "forward-looking" statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements in this release that are not historical facts, including statements about the Company's or management's beliefs and expectations, constitute forward-looking statements and may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to, the following:

* the Company's ability to retain existing client contracts and obtain new contracts at acceptable pricing levels;

* whether or not government agencies continue to privatize correctional healthcare services;

* the possible effect of adverse publicity on the Company's business;

* increased competition for new contracts and renewals of existing contracts;

* the Company's ability to locate and/or execute on acquisition opportunities;

* risks arising from the possibility that the Company may be unable to collect accounts receivable or that accounts receivable collection may be delayed;

* the Company's ability to limit its exposure for catastrophic illnesses, injuries and medical malpractice claims in excess of amounts covered under contracts or insurance coverage;

* the Company's ability to maintain and continually develop information technology and clinical systems;

* the outcome or adverse development of pending litigation, including professional liability litigation;

* risks arising from the possibility that the acquirer of certain assets of SPP cannot provide pharmaceuticals or related services at either a cost or service level sufficient to allow the Company to meet its contractual obligations with its customers without negatively impacting financial performance;

* the Company's dependence on key management and clinical personnel;

* risks arising from potential weaknesses or deficiencies in the Company's internal control over financial reporting;

* risks associated with the possibility that the Company may be unable to satisfy covenants under its credit facility;

* the risk that government entities (including the Company's government customers) may bring enforcement actions against, seek additional refunds from, or impose penalties on, the Company or its subsidiaries as a result of the matters investigated by the Audit Committee in prior years or the previous restatement of the Company's financial results; and the risks arising from shareholder litigation as a result of the matters investigated by the Audit Committee in prior years or the previous restatement of the Company's financial results.

A discussion of important factors and assumptions regarding certain statements and risks involved in an investment in the Company is contained in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this release and you should not place undue reliance on any forward-looking statement. The Company assumes no obligations to update or revise them or provide reasons why actual results may differ.