For the last year or so, the future of private prisons has been marked by uncertainty. Officials of the Obama Administration pushed to wean off contractors as overflow of federal inmates diminished, before the Trump Administration thrust support behind the private model.
But it seems the contracted companies will live to see another day.
On Friday, the U.S. Department of Justice awarded The GEO Group Inc (NYSE: GEO) $345,849,936 for the 1,800-bed Big Spring Facility and $318,126,120 for the 1,732-bed Flight Line Facility, both in Texas.
At a combined rate of $187,988.69 per bed, the sum supports the detention of “low security adult male inmates that are primarily criminal aliens with ordinarily 90 months or less remaining to serve on their sentences,” according to the contract description.
The government first posted the opportunity and welcomed bidders in September 2014. The terms were amended multiple times through Aug. 18, 2016, the same day Former Deputy Attorney General Sally Yates advised the Federal Bureau of Prisons to decline renewals or reduce the scope of contracts with private prisons.
No updates followed until Thursday.
The final terms negotiated by the Trump Administration reverted August amendments, extending a two-year base period with eight one-year option periods to a five-year base period with five one-year option periods. The longer contract aligns with Attorney General Jeff Sessions’ vision for the correctional system outlined in February, as well as President Donald Trump’s policies regarding immigration.
The Bureau of Prisons did not respond to requests for comment.
GEO factored financial contributions of winning the award into the assumptions behind the 2017 guidance it released in May, when it said it expected sales of $2.28 billion, 7.5 percent above consensus estimates.
The company’s stock traded up 3 percent to close at $31.13. Peer Corecivic Inc (NYSE: CXW) was up 3.4 percent Thursday but down more than 1 percent in the pre-market session
GEO Group: Sally Yates’ Decision To Stop Private Prison Use Was Based On A ‘Misrepresentation’
Homeland Security Reportedly Needs More Beds For Immigrant Detainees In Big Windfall For Private Prisons
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