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Marketplace

Why two companies dominate the private prison industry

Marketplace Contributor Mar 4, 2015
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On Tuesday, the U.S. House of Representatives approved funding for the Department of Homeland Security until next fiscal year. Republicans had held up funding for DHS in an attempt to overturn President Obama’s executive action to give up to five million undocumented immigrants a reprieve from deportation. A federal judge blocked the President’s order, but the administration has vowed to appeal the decision.

No matter what happens with President Obama’s executive action, Immigration and Customs Enforcement, or ICE, will still detain up to 34,000 immigrants. ICE partners with private prison companies to house undocumented immigrants in prison-like facilities around the country.

One such facility is the Northwest Detention Center in Tacoma, WA, run by a corporation called the Geo Group. Detainees there complain of low wages, abuse from guards, even maggots in their food. They staged three hunger strikes in the past year. Byron Hernandez Lopez, a 26-year-old man from Guatemala, claims a guard assaulted him, grabbing his wrist and leaving marks on his arm.

The entrance to the Northwest Detention Center in Tacoma, WA.

ICE doesn’t officially acknowledge these allegations. ICE Spokesman Andrew Munoz says the Northwest Detention Center remains in compliance with the agency’s 2011 detention standards. But ICE’s own audit inspection found the Northwest Detention Center violated almost half of the standards it reviewed last year.

At the same time, ICE sees few alternatives. Geo only has one major competitor, Corrections Corp. of America. The two of them claim they control around three-quarters of the private prison industry.

Ryan Meliker, an analyst with MLV and Company, says the main reason is because, unlike their competitors, Geo and CCA are publicly traded.

“There’s more transparency surrounding their business, government entities feel a little more comfortable selecting them from a contracting standpoint.”

Meliker says ICE can inspect their financial records and confirm they have sufficient credit.

He adds that ICE likes to work with companies it has contracted with in the past. They know Geo and CCA are capable of building, staffing and operating a detention center – not an easy task.

Activists see a different reason why Geo and CCA dominate the market. Jamie Trinkle of the Enlace Private Prison Divestment Campaign, claims that “In the last decade, CCA and Geo have spent $45 million lobbying the federal government.”

Trinkle concedes that Geo is very likely to re-win the contract at the Northwest Detention Center. 

Inside the center, many detainees sense whichever company runs the center, conditions will remain poor. Cipriano Rios, a 55-year-old man from Mexico, says “We’re a captive population, hidden from the public. If the company’s motive is profit, it spends as little as possible. Geo can leave and when the next one arrives, everything will be the same.”

The contract for the NWDC will be awarded later this month.

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