Specialist
Former assistant director at Federal Bureau of Prisons
Agenda
- Operating environment for The Geo Group (NYSE: GEO) and CoreCivic (NYSE: CXW) – impact of recent presidential and congressional elections
- US federal government perceptions of the use of private prisons across ICE (Immigration and Customs Enforcement), BOP (Bureau of Prisons) and US Marshals Service
- Regulatory risks at the federal and state level, including potential impact of governmental budget constraints or prison reform on per diem rates and demand
- Outlook for 2021 and beyond – potential best-, worst- and base-case scenarios for the industry
Questions
1.
Can you start by breaking down the operating and regulatory environment for Geo Group and CoreCivic, in light of the recent news flow? What key trends or drivers should we be tracking particularly closely?
2.
How should we differentiate campaign rhetoric from the potential for policy changes? President Biden’s campaign promise was to end the federal use of private prisons and to quote, make clear that the federal government should not use private facilities for any detention, including detention of undocumented immigrants. What were your takeaways from the choice of words used, in end vs make clear?
3.
How would you characterise President Biden’s ability to enact wider reforms in the prison industry? This could include at the state or local level, with aspects such as no elimination of cash bail, or decriminalisation of non-violent crimes. Is that something he can do unilaterally? Does he need Congress? Ultimately, what’s the impact on the prison population?
4.
Do you expect a substantial decline in prison populations, assessing state and federal data on prison populations and the use of private beds today? Could you quantify your expectations for a reduction in the next 3-5 years? How many private prisons do you think will be in demand over that same time period?
5.
Can you outline the BOP’s [Bureau of Prisons’] current prison infrastructure? How should we assess its real estate or private bed needs, and then frame an outlook on the decline for the BOP populations?
6.
The BOP seemingly has the capacity to absorb an intake of some of the people hosted in private prisons into its own facilities. How should we evaluate what’s feasible, if the federal government does move away from private prisons for the BOP or even ICE or Marshals? Is it a scale-back of use vs entirely eliminated? Do they consider buying the real estate vs leasing?
7.
You referenced the BOP having nine active contracts with Geo, one with CoreCivic and one with MTC. What percentage of those contracts do you think are at risk of not renewing?
8.
Do you think these active contracts will run to the end of their terms? You mentioned there’s some standardisation in typical contracts across agencies, and that it’s largely driven by the prison operators. Can you outline the average contract terms, and whether the government would or could break any mid-term?
9.
Let’s assume the BOP is moving away from private prison use. Some people would comment its existing infrastructure might need some investment. Do you think the BOP would consider purchasing some of those Geo facilities or other facilities to replace the federal prisons that are perhaps too old and in disrepair?
10.
Some analysts have commented that people detained by the Bureau of Prisons can be held anywhere, while people detained by US Marshals or ICE need to be held near the court where their case is being heard. Is that true, and if so, how does that impact the need for private prison use?
11.
Do you think the executive order for the DoJ not to renew contracts with private prison operators could potentially extend to contracts with the US Marshals Service? Some people would comment that this order doesn’t necessarily apply to IGSAs [intergovernmental service agreements], which accounts for a large portion of Geo’s contracts with the Marshals Service. Do you agree with that statement?
12.
How should we frame the impact of President Biden’s immigration policies – be it amnesty programmes or a more porous border – on demand for ICE detention facilities near the border?
13.
Can you outline the terms of renewal for ICE contracts? What might these mean for Geo Group specifically, whether through the elimination of minimum payments or other factors?
14.
There’s been a lot of discussion around ICE detaining fewer people and using alternatives to detention, such as bail bonds, ankle monitoring or even just the honour system. How would you describe the political or societal appetite for this, and read-throughs to players such as Geo that also have the monitoring business?
15.
How would you compare the state and the federal contracts? How should we form an outlook for state-level populations, appreciating it’s very disparate depending on the state? Are there any states where you expect a change in the near term?
16.
Is there a likelihood the federal government tries to impose sentencing guidelines on the states? How should we consider the impact of tight state budgets, given fallbacks in tax revenues amid the pandemic?
17.
It sounds as if the BOP is likely to walk away from those 11 or so contracts. ICE doesn’t necessarily have the facilities, and US Marshals has its own dynamics. How might Geo or CoreCivic evaluate next steps for existing facilities, in monetising the real estate, or idling or re-marketing facilities, repurposing if possible?
18.
Could you elaborate on the potential alternative uses for any unused facilities, and your thoughts on any likely buyers?
19.
Some reports have indicated that facility management contracts allow for termination with 30- to 180- days’ written notice. Can you confirm or clarify that dynamic?
20.
Have you noted any differences in prisoner outcomes or treatments under state and federal jurisdiction, in reference to the 2016 OIG [Office of the Inspector General] report?
21.
Could you quantify your outlook on the portion of the total business that survives for Geo and CoreCivic across BOP, ICE, US Marshals, state and local?
22.
Can you conclude by summarising your outlook for private prison populations, any regulatory dynamics that we should be tracking particularly closely?
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