Homeland Security to Review Use of Private Prisons

On the heels of the United States Department of Justice announcing that it will end future use of private for-profit prisons based on the failure of these prisons to deliver promised efficiencies and safe conditions, the Department of Homeland Security has recently announced that it too will review its use of private prisons.  With Homeland Security using private prison facilities as immigration detention centers, the profit motive for private prisons has inspired a wave of crimmigration laws in recent years.  Once again, this review is bad news for private for-profit prison giants Corrections Corporation of America (CCA) and the the GEO Group as federal contracts for prisoner warehousing is a large part of their business and profit model.

According to the Wall Street Journal: “The Department of Homeland Security will review whether private prison operators will continue to run immigration and customs enforcement’s immigration detention centers, the latest sign that the federal government is turning away from using these private contractors.  The move comes 11 days after the Justice Department said it planned to eventually stop using private facilities and operators to house federal prisoners.  Homeland Security Secretary Jeh Johnson said Monday that he directed an internal council to determine whether the use of private immigration detention centers should be eliminated.”

As federal contracts have increasingly made up a larger and larger portion of the GEO Group and CCA’s revenue, a future finding by Homeland Security that it will end its reliance on private prison facilities would be a devastating blow to those companies and shareholders that seek to profit off of the incarceration business.  Again, according to the Wall Street Journal:  “Since 2001, GEO and Corrections Corp. have become increasingly reliant on federal government revenue to drive results. In 2015, just over half of Corrections’ revenue came from various federal government agencies. For GEO, that figure was 45%.” 

Stock prices for both companies dropped (even further) on the news of the Homeland Security review.