Wednesday, 19 October 2016

Private prison companies are fighting the federal government to survive

private prison ice facility

After nearly two months of turmoil, America's private prison industry is fighting to stem the tide of bad news that keeps flowing its way.

The trouble started in mid-August, after the Department of Justice announced it would begin phasing out its contracts for private prison operators.

Immediately, stocks for Corrections Corporation of America (CCA) and GEO Group — the two largest such companies — plunged, while prison reform advocates celebrated.

Next, the Department of Homeland Security scrambled to follow suit, announcing it would evaluate its Immigration and Customs Enforcement agency's use of for-profit companies to run its detention centers.

Democratic presidential nominee Hillary Clinton even piled on, praising the DOJ's directive during her first debate with Donald Trump on Sept. 27.

"You shouldn't have a profit motivation to fill prison cells with young Americans," she said. "I'm glad that we're ending private prisons in the federal system; I want to see them ended in the state system."

That same day, CCA announced layoffs of more than 50 employees from its Nashville headquarters as part of a "restructuring" effort to reduce costs.

'The need is still there'

Since the DOJ's memo, the companies have sprung into action to prevent a full-fledged disaster, vigorously lobbying Capitol Hill lawmakers to prevent the phase-out. Earlier this month, GEO Group filed a formal protest with the Government Accountability office arguing that reducing a private prison contract would be an "improper and illogical change."

"We believe the need is still there, because the Bureau of Prisons is still overcrowded, and these communities have extended themselves financially," chairman and CEO George Zoley told the Washington Post.

GEO Group has also thrown its support behind Republican nominee Donald Trump, who has previously praised the private prison industryThe company donated $150,000 to a pro-Trump super-PAC just one day after the DOJ's announcement, Mother Jones reported.

"I do think we can do a lot of privatization and private prisons. It seems to work a lot better," Trump said at a town hall in March.

There are signs the companies' efforts may be working. Earlier in September, six Republican lawmakers urged the DOJ to "step back" from its plan to phase out private prison contracts, according to the Post.

"We are concerned that the DOJ's instructions put politics ahead of policy when it comes to maintaining flexibility in our prison system, encouraging vital criminal alien law enforcement, and providing the best value for our taxpayers," the representatives wrote.

The companies won a small victory on Tuesday, when CCA announced it had renewed a contract for an ICE detention center in Dilley, Texas, despite the DHS' ongoing review. Shares for the company spiked in the wake of the news.

"We think we have a great, great story to show, what we've done historically, and they'll come to the same conclusion that we've been a really, really good tool for (Immigration and Customs Enforcement)," Damon Hininger, the CEO of CCA, told media Tuesday.

SEE ALSO: Here's what Hillary Clinton and Donald Trump think about criminal justice

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