Private prison firm preps for 2020 ‘worst case scenario’

NASHVILLE, Tenn. — The head of a giant private prison company says his firm is prepared for the “worst case scenario” should a Democratic presidential candidate win the 2020 election and attempt to abolish private involvement in the prison sector.

CoreCivic CEO Damon Hininger addressed such a potential scenario in the company’s latest earnings conference call last week, noting the number of top Democratic presidential candidates who favor ending federal private prisons. He said Tennessee-based CoreCivic remains upbeat that the company would continue to earn money in such a scenario and noted the federal government currently does not have the infrastructure to house inmates without relying on private facilities.

“As we think about (a) kind of worst case scenario, we think that the need for capacity does not change and also the alternative ... is not available,” Hininger said.

He added that CoreCivic would still earn money should the federal government ever end its contract, saying his company would be able to sell or lease its real estate if that were to occur. The company touts itself as the largest private owner of real estate used by U.S. government agencies.

CoreCivic currently owns an estimated 59% of all private-owned prison beds in the U.S. and manages nearly 39% of the country’s privately managed prison beds. The company operates 51 correctional and detention facilities, 44 of which they own, with a total capacity of roughly 73,000 beds.

“We think that an option could be if there is a big push not only at federal but at state level to eliminate use of the private sector to provide real estate and services,” Hininger said. “That maybe the option that they ask us to consider is to either buy our existing assets or capacity or lease our facilities.”

Top private prison firms across the country have been closely watching the growing backlash from the top Democratic presidential contenders — ranging from former Vice President Joe Biden, Massachusetts Sen. Elizabeth Warren and Vermont Sen. Bernie Sanders — who strongly favor ending federal private prisons.

These companies recently formed an advocacy group known as the Day 1 Alliance to rebut the criticism. Meanwhile, unease in the industry continues to linger about negative public opinion on private prisons.

For example, in a recent SEC filing, Florida-based GEO Group noted that resistance to private prisons “could result in our inability to obtain new contracts or the loss of existing contracts, impact our ability to obtain or refinance debt financing or enter into commercial arrangements.”

Hininger also noted on the call that the U.S. Immigration and Customs Enforcement and the U.S. Marshals do not own or operate any detention centers, making them completely reliant on private companies like CoreCivic to house detainees.

CoreCivic’s involvement with ICE, however, has come under fire from the left as one of two private companies that operate migrant detention centers for ICE. According to CoreCivic's financial statements, ICE detention accounted for 25 percent of the company's $1.8 billion in total revenue in 2018.

CoreCivic has defended contracting with ICE by countering that it doesn’t run facilities for immigrant children separated from parents, but it does have ones that detain adult immigrants, as well as one center that houses migrant mothers and their children together.

In 2016, then President Barack Obama’s administration announced the Federal Bureau of Prisons would no longer use private prisons and unveiled a plan to phase-out of the contracts. That decision was quickly overturned after President Donald Trump took office.