The most common arrangement for prison facility management in the United States is through public-private partnership. The city, county, state, or federal government contracts with a for-profit corporation to operate jails, prisons, or detention centers. In the United States, an estimated 8.5% of people in federal and state prisons are incarcerated in private prisons, and nearly three-quarters of all people in immigrant detention are held in privately-run facilities.
Prison facilities are becoming increasingly privatized. Daily services within prison and detention facilities are commonly outsourced to other for-profit companies. Since 2013, companies that had previously only managed government prison facilities are now entering the business of building and owning these prison facilities.
Three corporations dominate the private prison industry: CoreCivic, Inc., The GEO Group, and G4S, all publicly traded. While other companies have emerged to take advantage of this burgeoning market, the trend has shifted to market consolidation as the larger companies have bought up many smaller companies. Other major companies in this sector are privately owned.
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)
Management and Tarining Corporation, of Centerville, UT (Private)
LaSalle Corrections, of Ruston, LA (Private)
Community Education Centers, Inc. (CEC), of West Caldwell, NJ (Private)
Corporate Interests in Prison Management
In 1984, CoreCivic opened the first private prison. The company was founded on the principle that one could sell prisons “just like selling hamburgers.” In the thirty years since, the incarcerated population has increased by more than 500 percent, with over 2.3 million people incarcerated today. From 1999 to 2015, while the prison population increased by 12 percent, there has been an 83 percent increase in prisoners held within private prisons. The bulk of CoreCivic and GEO’s revenue comes from contracts with states, with CoreCivic operating facilities in 20 states and GEO operating facilities in 33 states. In August 2016, the Obama administration stated that the Bureau of Prisons (BOP) would begin phasing out private prisons, a decision that was ultimately reversed by the Trump administration in February 2017.
As the industry has grown, political and economic interests have converged to contribute to a growing “Prison-Industrial Complex.” The privatization of prison facilities has sparked ethical concern and debate over the morality of profiting from holding people in captive and the “perverse incentive” created by the for-profit incarceration model. For the majority of these contracts, the corporations are paid based upon how many beds are occupied in any given facility and therefore, incentivized to incarcerate more people. It is not in these companies’ financial interest to actually rehabilitate prisoners or reduce recidivism rates. The prison industry claims to work towards lowering recidivism rates through high-quality and innovative rehabilitation programs. However, one study found that incarcerated people in private prisons are likely to serve two or three months more behind bars than those in public prisons and to commit more crimes after release.
Additionally, these corporations dedicate significant resources to lobbying and donating to electoral campaigns in order to receive contracts and promote legislation that results in higher rates of incarceration. Since 1989, GEO and CoreCivic have spent over $35 million in lobbying efforts and candidate donations. Most of the “tough on crime” legislation in the 1990’s came from the American Legislative Exchange Council (ALEC) when CoreCivic (formerly Corrections Corporation of America, CCA) served as the Private Sector Chair of ALEC’s Public Safety Task Force. CoreCivic continued serving on the Task Force until 2011. In 2012, ALEC announced the disbanding of the Task Force due to public pressure and the departure of multiple corporate members.
Changing Finance Models
Governments have traditionally used municipal bonds to finance the construction of correctional facilities. However, private prison companies have been advocating for governments to adopt a private financing model. In 2013, private prison companies, specifically GEO and CoreCivic, began converting to Real Estate Investment Trusts (REITs). By creating an entity called a Taxable REIT Subsidiary (TRS), private prison companies can separate the operational side of their private prison management from the real estate side of owning and generating income from correctional facilities. As REITs, these companies are able to largely avoid corporate-level taxation.
Through conversion to REITs, owning prisons and immigrant detention centers is more profitable for private prison companies than managed-only contracts. Private prison companies have been expanding more quickly into owned and leased prison facilities. Between 2013 and 2017, the number of facilities that GEO manages without owning increased by ten facilities, whereas the number of facilities it owns or leases has increased by 37 facilities.
The growing demand for additional prison and jail capacity - due to changes in federal immigration and criminal justice policies - coupled with the potential of real estate as a business strategy, makes private financing for new facility construction more appealing. According to a 2018 report by In the Public Interest, public-private pose serious implications for policymaking. Private prison construction embeds private interests in the criminal justice system, providing incentive for higher rates of mass incarceration. Public-private partnerships also result in higher costs for the public while limiting government and public stakeholder input.
Immigration Detention Centers
The number of people held in immigration detention centers has also increased significantly from the 1980s, rising from a daily average of 131 people detained to over 39,000 in 2017. The annual cost of detention alone is two billion dollars. In 2016, over 65 percent of detainees are held within private facilities, and immigration is a growing sector for corporations like CoreCivic and GEO. In 2017, the single largest source of revenue for CoreCivic came from ICE, accounting for 25 percent of total revenue. This is an increase from 2014, when ICE contracts accounted for only 14 percent of the company’s revenues.
In February 2017, the Trump administration prioritized expanding ICE’s operations, including deportations and detentions, and two new private detention centers opened in Georgia and Texas, and another one expected to open in 2018.
There are numerous human right abuse allegations against private detention centers. These allegations are similar to those facing prison facilities, including medical neglect, abuse at the hands of guards and detainees, and self-harm. Critics also claim that there is little oversight of these corporations or, when abuses are publicized, the allegations are ignored. In 2016, a CoreCivic-owned detention center in New Mexico was reported to be severely neglecting those detained within the facility, including operating without a medical doctor and failing to provide basic care. When the allegations were made public, the federal government terminated the contract with CoreCivic. However, less than a month after the termination, ICE negotiated a new contract with CoreCivic at the same facility. As of February 2017, the facility currently holds 400 detainees, with space for 800 more.
Controversies and Public Response
These corporations have also faced numerous controversies. The most common problems include understaffing, medical neglect, suicide and self-harm, wrongful death lawsuits, physical and sexual abuse of prisoners by staff and other incarcerated people, fights and riots, poor facility audits and lost contracts, staff misconduct such as bringing drugs into the prisons and other crimes, and lack of vocational programming, treatment services, and jobs.
In 2011, Enlace launched a national Prison Divestment Campaign against CoreCivic and GEO with a coalition of unions and immigration rights and community groups. In 2012, the United Methodist Church, which has the largest faith-based pension fund in the U.S., divested $180 million from prisons. More churches and religious groups, colleges and universities, and cities followed suit. In addition, companies such as Wells Fargo, Scopia Capital Management, DSM North America, and Amica mutual Insurance pulled investments from CoreCivic and GEO.
Private Facilities Outside the U.S.
Increasingly, other countries have imported the U.S. private prison model. While the U.S. outpaces the world in prison privatization, Australia, New Zealand, and the U.K. have higher percentages of incarcerated people within private prisons than the U.S. The major corporations involved in private prison facilities outside the U.S. are The GEO Group, G4S, Serco Group, Sodexo SA, Broadspectrum (a subsidiary of Ferrovial SA), Mitie Group, Reliance Security, and Corbel Management Corporation. Our research on the private prison industry outside the U.S. can be found here.