One of GEO Group's privately-run prisons. Photo by GEO Group.

US Department of Homeland Security US Immigration and Customs Enforcement

This announcement follows the Justice Department's decision earlier this month to phase out or significantly limit its use of privately-run correctional facilities.

Homeland Security Secretary Jeh C. Johnson said the Justice Department's decision was the impetus for his own move in this area. According to his released statement:

On August 18, the Department of Justice announced that the Bureau of Prisons will reduce and ultimately end its use of private prisons. On Friday, I directed our Homeland Security Advisory Council, chaired by Judge William Webster, to evaluate whether the immigration detention operations conducted by Immigration and Customs Enforcement should move in the same direction.

Specifically, I have asked that Judge Webster establish a Subcommittee of the Council to review our current policy and practices concerning the use of private immigration detention and evaluate whether this practice should be eliminated. I asked that the Subcommittee consider all factors concerning ICE's detention policy and practice, including fiscal considerations.

A subcommittee of the HSAC will undertake this review, and the full HSAC will provide to me and the Director of U.S. Immigration and Customs Enforcement its written report of its evaluation no later than November 30, 2016.

The three major companies that run these facilities -- the Corrections Corp. of America, the GEO Group, and Management and Training Corp. -- were somewhat sanguine about the Justice Department's decision but now that another agency suggests it could follow suit, warning bells are surely starting to ring at these providers.

Federal inmates and their related revenues comprise only a small percentage of these companies' total revenues. As of December 2015, contract prisons housed roughly 22,660 federal inmates, or approximately 12% of the Bureau of Prison's total inmate population. In response to the Justice Department announcement, CCA told investors the Bureau of Prisons' three contracts with the REIT were worth approximately $131.2 million in annual revenues, or 7% of CCA's total annual revenue. For GEO Group, that percentage was 15% of total revenues for 2015, according to regulatory filings. Other revenue sources come from the US states and such federal clients as the Immigration and Customs Enforcement and the US Marshals Service.

But while these companies might be able to afford the loss of one client, two or more may cause difficulties -- last year various federal government agencies contributed just over half of Corrections' revenue. At GEO, federal clients equaled about 45% of total revenues.

GEO Says It Is Confident About Its Facilities

GEO's Chairman and CEO George Zoley issued a statement saying he welcomed Homeland Security's review.

During the most recent independent audits commissioned by ICE, all of GEO's facilities were found to be in compliance with the Federal Government's national standards. Additionally, during the most recent American Correctional Association's independent accreditation reviews, GEO's facilities scored an average greater than 99.5%, with about two-thirds receiving perfect accreditation scores of 100%. GEO's facilities are also independently accredited by the National Commission on Correctional Health Care.

We are confident that this independent review will show that GEO has provided needed, cost-effective services that have resulted in significantly improved safety outcomes for the men and women in ICE's care and custody.

California State Weighs a Similar Move

Meanwhile, though, some lawmakers at the state level are starting to look askance at privately-run detention facilities.

Dignity Not Detention Act

Instant Insights /

Homeland Security May Stop Its Use of Private Prisons for Immigration

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