Facility management is the traditional arrangement most people associate with prison privatization: A for-profit corporation is awarded a contract with a city, county, state, or federal government agency to manage the daily operations of a jail, prison, or detention center.
Half of the US government’s immigrant detention centers are privately operated. State levels vary widely, with a total of 5 to 7% of state prisoners held in private facilities each year. The two largest private prison companies, CoreCivic, Inc. and GEO Group together generated over $3.3 billion in revenue in 2014, and represent more than half of the private prison business.
The main companies involved in this sector are:
CoreCivic, Inc., of Nashville, TN (NYSE: CXW)
The Geo Group, Inc., of Boca Raton, FL (NYSE: GEO)
G4S plc, of Crawly, U.K. (LON: GFS, OMX: G4S)
Sodexo SA, of Issy-les-Moulineaux, France (EPA: SW)
Management and Tarining Corporation, of Centerville, UT (Private)
Emerald Corrections Management, of Lafayette, LA (Private)
LaSalle Management Company, of Ruston, LA (Private)
Community Education Centers, Inc. (CEC), of West Caldwell, NJ (Private)
Increasingly, other countries are importing the private corrections model. Global giant G4S operates juvenile detention centers in the US, prison and immigrant detention centers in the UK and in South Africa. GEO Group operates 7 facilities in Australia, South Africa, and the UK.
CoreCivic, Inc., the oldest and largest such corporation recently celebrated its 30th anniversary in the business of prison management. CoreCivic, Inc. was founded in January 1983, when co-founders Tom Beasley, T. Don Hutto and Doctor Crants, backed by venture capitalist Jack Massey (who helped finance Kentucky Fried Chicken and Hospital Corporation of America), filed papers to incorporate the company. According to Beasley, the company was founded on the principle that you could sell prisons "just like you were selling cars, or real estate, or hamburgers".
Since the company’s founding, the incarcerated population has risen by more than 500 percent to more than 2.2 million people. Meanwhile, the number of people held in immigration detention centers has exploded from an average daily population of 131 people to over 32,000 people on any given day.
Naturally, other corporations have emerged to take advantage of this burgeoning market. For a time, this lead to a great deal of competition, but more recently the trend has shifted to market consolidation as the larger companies have gobbled up the “smaller fish” through mergers and acquisitions.
Today there are essentially three top corporations in the field, with a handful of smaller ones doing business in a few select states. Two of the top three are publicly traded CoreCivic, Inc. and GEO Group, which rank as numbers one and two in terms of size, respectively. The third is Management and Training Corporation, which is privately held. The two others are LaSalle Southwest Corrections and Emerald Correctional Management, both of which are private.
As this industry has grown and the political and economic influence of the companies has increased, so have the numbers of controversies and problems emerging from privatized facilities. The most common include: Medical neglect, suicide, and wrongful death lawsuits; physical and sexual abuse of prisoners by both staff and other incarcerated people; fights, riots and other “disturbances”; lack of vocational programming, treatment services, and jobs; understaffing and high staff vacancy rates; poor facility audits and lost contracts; and staff misconduct including bringing drugs into the prisons and staff arrested for crimes committed within and outside the prison walls.
Larger ethical concerns have been raised not only about the morality of profiting from depriving human beings of their liberty, but also about the “perverse incentive” created by the for-profit incarceration model. If a company’s bottom line is based on securing more and larger contracts, then recidivism is good for business. To actually rehabilitate prisoners would be against their financial self interest.
A study from the University of Washington found that inmates in private prisons are likely to serve as many as two to three more months behind bars than those assigned to public prisons and are equally likely to commit more crimes after release, despite industry claims to lower recidivism rates through high-quality and innovative rehabilitation programs.
Additional concerns have been raised regarding the lobbying and campaign contributions doled out by the corporations in order to secure contracts and, in some cases, promote legislation that results in higher rates of incarceration and/or immigrant detention. Most of the “tough on crime” legislation of the 1990’s came out of the American Legislative Exchange Council (ALEC). During that time, the Private Sector Chair of ALEC’s Public Safety Taskforce was Corrections Corporation of America.
Major religious denominations have denounced the immoral practice of incarcerating people for profit. Many have formal statements against for-profit incarceration. The Methodist Church USA famously divested itself of private prison holdings in 2012.
A national Prison Divestment Campaign was launched against CoreCivic, Inc. and GEO Group in 2011 by a coalition of immigrant rights, community groups, and unions. In a huge victory, Scopia Capital Management, DSM North America, and Amica Mutual Insurance pulled nearly $60 million in investments from CoreCivic, Inc. and GEO Group in the final quarter of 2013, marking full divestment for DSM and Amica and a 27 percent decrease in shares for Scopia. (Scopia has decreased its private prison stock by 59 percent since December 2012). In 2015, Columbia University became the first US college to divest from private prisons.