The Trump administration’s “zero tolerance” policy at the border generated weeks of outrage, but for some federal contractors it’s also generating profits, analysts say.
The detention of thousands of adults and children is expected to be a boon for private prison operators with federal contracts, such as GEO Group, Inc. GEO, +1.61%[1] and CoreCivic, Inc. CXW, +3.95%[2]
Under Trump’s policy, launched in April, anyone who crosses the border without authorization is subject to criminal prosecution, even if they are seeking asylum. And even after the president signed an executive order on Wednesday [3]stating families seeking asylum should be detained together when “appropriate and consistent with law and available resources,” there are still significant legal and logistical hurdles that need to be addressed.
These circumstances are an opportunity for some contractors, analysts say.
“We believe that rising detainee populations at U.S. Marshals Service (USMS) and Immigration & Customs Enforcement (ICE) is increasing the chances of new business wins that are not the product of long and often delayed public procurement processes,” analysts at SunTrust Robinson Humphrey wrote in a report published Friday.
See also: Advocates say the fastest way to help immigrants separated from their children: Post their bail[4]
Don’t miss: ‘Smile at these kids, please’: reporter’s first-hand look at Trump’s ‘zero tolerance’ youth-detention pens[5]
Contracts with the U.S. Marshals Service and Immigration and Customs Enforcement, or ICE, are usually cumbersome and lengthy public processes that are prone to delays. However, with the potential rise in the number of detainees, there is an opportunity for direct, more efficient negotiations with customers such as the federal government, analysts Tobey Sommer and Kwan Kim wrote.
CoreCivic announced on June 14 that it had entered a new management contract with the Tallahatchie County Correctional Authority, the U.S. Marshals Service and the town of Tutwiler, Mississippi.
Read now: Why immigration is ‘pure gravy’ for federal finances[6]
“The U.S. Marshals Service has experienced an increasing need for detention capacity as its average daily prisoner population has increased throughout the past year,” said Damon Hininger, CoreCivic’s president and chief executive officer, at the time.
There has been a rise in the number of families crossing the border in recent years, according to federal data. Between Oct. 1 and May 31, the number of families apprehended at the southwest border rose 58% compared with the same period a year earlier. The number of unaccompanied children apprehended increased by 14% over...