The Justice Department announced it plans to end its use of private, for-profit prisons.
The decision was announced in a Justice Department memo that instructed officials to decline to renew contracts with private prison companies after they expire.
The announcement sent stock prices for private prison companies tumbling.
Corrections Corporation of America (CCA) has its headquarters in Nashville. By mid-afternoon its stock had lost half its value.
The Department of Justice cited a report by the Department's Office of Inspector General that blasted for-profit prisons. The department concluded they are less safe, less effective and do not substantially save taxpayer money.
A spokesman for CCA said the report was "flawed" and said that federal inmates account for only seven percent of their business.
There are seven CCA prisons in Tennessee and none are operated by the federal government.
Private for-profit prisons have been a target for people pushing for prison reform. In May, protestors gathered outside CCA's headquarters in Green Hills.
Civil Rights Attorney David Raybin has pushed for prison reform and argued for profit prison lead to mass incarceration.
"The federal government has said we've had enough. You have increased violence in the private prisons. There are nothing but problems in these institutions," Raybin said.
The big question for CCA becomes - will states now follow the federal government?
"You are going to have tremendous resistance to unprivatizing something that entrenched in our state because it's a money making proposition. A lot of people make a lot of money out of this," Raybin said.
Public affairs director, Jonathan Burns, with CCA responded with the following statement:
We value our partners, and we will continue to work with them, both through the types of management solutions we’ve provided for more than three decades, as well as new, innovative opportunities we’ve been exploring in recent years in a proactive effort to meet their evolving needs. For example, our real estate-only solution helps government deliver needed facility space in a cost-effective manner while providing its own staffing and management services. We’ve also greatly expanded our residential re-entry offerings, which help inmates prepare to successfully return to their communities. In fact, this spring we won a re-bid of a Federal Bureau of Prisons (BOP) contract for these critical services. It’s important to note that today’s announcement relates only to BOP correctional facilities, which make up seven percent of our business.
The Inspector General’s report used to buttress this decision has significant flaws. The report’s authors freely admit that they “were unable to evaluate all of the factors that contributed to the underlying data,” and they failed to account for the impact of elements such as population demographics or the scope and efficacy of efforts to mitigate contraband. The findings simply don’t match up to the numerous independent studies that show our facilities to be equal or better with regard to safety and quality, or the excellent feedback we get from our partners at all levels of government.