The most common arrangement for prison facility management in the United States is through public-private partnerships. 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)
Management and Training Corporation (MTC), 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 1990s 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 partnerships pose serious implications for policymaking. Private prison construction embeds private interests in the criminal justice system, providing an 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 increased significantly since the 1990s, rising from a daily average of 6,785 people detained in 1994 to over 52,000 in 2019. In 2018, U.S. Immigration and Customs Enforcement (ICE) detained nearly 400,000 people, of whom 67 percent were held in privately operated facilities. Private facility operators have profited greatly from the rise in the number of ICE arrests. In 2019 alone, ICE’s detention budget was $3.3 billion dollars. Private prison companies GEO Group and CoreCivic were the largest recipients of ICE detention contracts, receiving from ICE $541 and $444 million, respectively, from ICE in 2017 alone. In 2019, ICE contracts represented the single largest source of revenue for both GEO Group and CoreCivic, representing 28% and 27% of their respective total revenues.
In February 2017, the Trump administration prioritized expanding ICE’s operations, including deportations and detentions. At the time, former Department of Homeland Security (DHS) Officer of Civil Rights Margo Schlanger warned that the rapid expansion of ICE facilities could lead to deteriorating facility conditions “without appropriate controls, monitoring, supervision, and care.” She concluded by saying, “That means detainees could die.” As of July 2019, 26 people have died in ICE detention during the Trump administration.
Similar to those facing other private prison facilities, there are numerous human rights abuse allegations against private detention centers 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. Private ICE detention facilities have significantly higher numbers of reported grievances than publicly operated facilities. Privately-operated facilities detain people for significantly longer periods of time and receive a much higher number of grievances than publicly-operated facilities. While unsanitary and unsafe conditions are repeatedly reported at privately operated facilities, facility operators face little to no consequences for inadequate facility standards. In September 2018, DHS inspectors published a report detailing serious violations of ICE’s own detention standards at the Adelanto, California ICE detention facility operated by GEO Group. The report described that the facility’s unsafe and unsanitary conditions posed significant risks to detainees' safety including finding nooses in detainee cells, inadequate or absent medical care and improper segregation. In June 2019, DHS inspectors conducted another report on conditions in four ICE facilities, including the Adelanto Detention Center. All inspected facilities were serving expired food and placing detainees at risk of food-borne disease. Inspectors reported “egregious violations” at the Adelanto facility, including the arbitrary and excessive use of solitary confinement on detainees. Despite repeated violations, Adelanto and other privately operated facilities look to face no consequences for failing to meet basic facility standards.
Private Prisons and Detention Centers 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. Our research on the private prison industry outside the U.S. can be found here.