The Future of Federal Prison Privatization is Bleak… Or Is It?
By: Anna Gunderson
Tags: Joe Biden, Private Prisons, Criminal Justice, Prison Reform, Attorney General

Criminal Justice

The Future of Federal Prison Privatization is Bleak… Or Is It?

New research explains why private prisons may survive

President-elect Joe Biden is expected to announce his pick for attorney general this week. This pick is significant for several reasons — including the fact that the attorney general (AG) heads the Department of Justice — but it is perhaps most important to an industry deeply dependent on government partnerships: the private prison industry.

The federal government began contracting out to private prison companies in the 1980s to manage and operate federal prisons and immigration detention facilities. In 2017, over 27,000 people were held in private federal prison facilities, an increase of 77% from 2000 (see here).

In that same year, over 26,000 immigrant detainees were held in privately run facilities, 73% of the total detained population and an increase of 442% since 2002. The federal government comprised a majority of both CoreCivic and GEO Group’s business in 2019, the two largest private prison operators in the United States. The choice of not only AG, but their deputies and staff beneath them, will have significant consequences for the future of private prisons at the federal level.

After the 1980s, the federal government steadily ramped up prison privatization, though that growth came to an abrupt stop in 2016. That’s when former deputy attorney general Sally Yates released a memo indicating that the federal government would begin phasing out the use of private prisons, “the first step in the process of reducing — and ultimately ending — our use of privately operated prisons.” Private prison companies’ stocks immediately plummeted as stockholders feared the end was near for private federal facilities (see below). This concern was not long lived, however, as the election of Donald Trump in November 2016 sent private prison companies’ stock levels back to pre-Yates memo levels.

Closing prices of CoreCivic and GEO Group’s stock, 2016–2017. The first dotted line reflects the Yates memo, and the second dotted line is Donald Trump’s election as president. Graph from the draft of Captive Market book manuscript.

Trump’s administration was a boon for private prison companies, as stocks rebounded and Trump announced Jeff Sessions as his pick for AG. Less than two weeks into Sessions’ tenure, he rescinded the Yates memo as it “impaired the Bureau’s ability to meet the future needs of the federal correctional system.”

Since then, CoreCivic and GEO Group have made millions in contracts with the federal government (and state and local governments as well), though their business was somewhat adversely affected with the revelation that they were housing migrant children and their families in the Trump administration’s controversial family separation policy.

The election of Joe Biden puts the private prison industry back in flux, as these companies are totally dependent on the government to continue contracts with them.

For instance, the most recent annual report from CoreCivic laments, “we are dependent on government appropriations … Resistance to privatization … could result in our inability to obtain new contracts … We depend on a limited number of governmental customers for a significant portion of our revenues.” This is particularly of concern for these companies as Biden’s platform suggests he “will end the federal government’s use of private prisons … the federal government should not use private facilities for any detention.”

On the other hand, my research (published in the journal Perspectives on Politics) and book draft, Captive Market, highlights the bipartisan nature of support for prison privatization, and suggests that desires to limit legal and political accountability are at the forefront of privatization decisions, at least at the state level.

It is difficult to know how the Biden administration will eliminate federal private prisons — as those inmates will need to be housed elsewhere — or the speed at which that will happen. And perhaps most importantly, though the federal government is a large source of revenue for these companies, state and local governments continue multi-million dollar contracts with private firms. Will lower-level governments follow suit if and when the federal government ends their contracts with private companies? There is still much money to be made in American corrections and private companies are also constantly diversifying and expanding their portfolio above and beyond physical incarceration to other programs, like healthcare, prisoner transport, parole or probation, among dozens of other services.

And, if Biden sticks to his plan to end federal private prisons, there are three options: (1) permanently release all the individuals currently held within them (likely politically unrealistic); (2) end contracts early (and potentially be on the hook for any remaining money due); or (3) wait out the contract, though companies have recently inked long, 10-year contracts with Immigrations and Customs Enforcement (ICE) to maintain the private facilities even in the face of the Biden transition. Either way, the path forward is unclear and by no means can these facilities (or the companies that operate them) disappear overnight.

Biden’s pick for AG will determine the speed and method by which the federal government may finally start moving away from private prisons and is extremely consequential for the future of the American criminal legal system. Outside of the AG position, the deputy attorneys general and those below them can also influence federal privatization policy (as Sally Yates did in 2016). Though this pick may spell the beginning of the end of private companies’ involvement in at least federal prison privatization, my book project suggests that profit will always play a role in American corrections and these companies will adapt to fill the needs of carceral policymakers.