As Central Americans surged across the U.S. border two years ago, the Obama administration skipped the standard public bidding process and agreed to a deal that offered generous terms to Corrections Corporation of America, the nation’s largest prison company, to build a massive detention facility for women and children seeking asylum.
The four-year, $1 billion contract – details of which have not been previously disclosed – has been a boon for CCA, which, in an unusual arrangement, gets the money regardless of how many people are detained at the facility. Critics say the government’s policy has been expensive but ineffective. Arrivals of Central American families at the border have continued unabated while court rulings have forced the administration to step back from its original approach to the border surge.
In hundreds of other detention contracts given out by the U.S. Immigration and Customs Enforcement agency, federal payouts rise and fall in step with the percentage of beds being occupied. But in this case, CCA is paid for 100 percent capacity even if the facility is, say, half full, as it has been in recent months. An ICE spokeswoman, Jennifer Elzea, said that the contracts for the 2,400-bed facility in Dilley, Texas, and one for a 532-bed family detention center in Karnes City, Texas, given to another company, are “unique” in their payment structures because they provide “a fixed monthly fee for use of the entire facility regardless of the number of residents.”
The rewards for CCA have been enormous: In 2015, the first full year in which the South Texas Family Residential Center was operating, CCA – which operates 74 facilities – made 14 percent of its revenue from that one center while recording record profit. CCA declined to specify the costs of operating the center.
“For the most part, what I see is a very expensive incarceration scheme,” said Rep. Zoe Lofgren of California, the top Democrat on the House’s Immigration and Border Security subcommittee. “It’s costly to the taxpayers and achieves almost nothing, other than trauma to already traumatized individuals.”
The Washington Post based this account on financial documents – including copies of the agreements spelling out the Dilley deal obtained from the National Immigrant Justice Center – interviews with government lawyers and former immigration and homeland security officials.
CCA’s chief executive, Damon Hininger, told investors in an earnings call this month that ICE recently has begun pushing for a more “cost-effective solution.” Those discussions, he said, are in the “preliminary stage.”
The facility in Dilley – built in the middle of sunbaked scrubland, in what used to be a camp for oil workers – now holds the majority of the country’s mother-and-child detainees. Such asylum seekers, until two years ago, had rarely been held in detention. They instead settled in whatever town they chose, told to eventually appear in court. The Obama administration’s decision to transform that policy – pushed by lawmakers assailing the porous state of the nation’s border – shows how the frenzy of America’s immigration politics can also bolster a private sector that benefits from a get-tough stance.
Before Dilley, CCA’s revenue and profit had been flat for five years. The United States’s population of undocumented immigrants had begun to fall, reversing a decades-long trend, and the White House was looking to show greater leniency toward illegal immigrants already in the country. But under pressure to demonstrate that it still took border issues seriously, the administration took a tougher stance toward newly arriving Central Americans.
“This was about the best thing that could happen to private detention since sliced bread,” said Laura Lichter, a Denver immigration and asylum attorney who spent months living out of an old hunting lodge in Dilley.
For the first years of the Obama administration, the United States maintained fewer than 100 beds for family detention. But by the end of 2014, the administration had plans for more than 3,000 beds, and immigration advocates said the ramp-up had broken with America’s tradition of welcoming those seeking a haven from violence. At the Dilley facility, detainees described in interviews an understaffed medical clinic and rampant sickness among children, among other problems.
CCA, a Nashville-based public company valued at $3.18 billion, declined interview requests for this story. The company declined to respond to 28 of 31 written questions. It said that ICE oversees medical care at the facility, and the agency said it was comfortable with the quality of care.
The Central American asylum seekers were coming mostly from three countries in meltdown – El Salvador, Guatemala and Honduras – where gang and drug-related violence have grown so rampant that their murder rates are now three of the world’s five highest, according to U.N. data. By claiming that they feared for their safety, the Central Americans were not subject, as are other unauthorized migrants, to ordinary deportation; they were entitled to press their asylum claims. But Homeland Security Secretary Jeh Johnson, who oversees ICE, heard from border patrollers that the emergency was brewing momentum: People kept coming because word was out that the United States was permitting new arrivals, allowing them to walk right into the country.
According to lawmakers and administration officials, Johnson determined the U.S. could cut down the surge only by ramping up family detention for asylum seekers on a scale never before seen in America, part of what he called an “aggressive deterrence strategy.” He ordered ICE to figure out a way to make it work.
“This whole thing (was) building and reaching an unsustainable level,” said Christian Marrone, then Johnson’s chief of staff. “We had to take measures to stem the tide.”
In a matter of days, ICE patched together a temporary solution. In June 2014, it placed the first batch of Central American mothers and children at a law-enforcement training site in Artesia, N.M. The agency pulled border agents off their usual jobs to help run the facility, and it was wary of hiring new employees and building a permanent facility for a problem it didn’t know how long would last.
“It makes sense that you put some of the risk on a private company,” said Mark Krikorian, executive director at the Center for Immigration Studies, which favors stricter border control.
In forging their deal, CCA and ICE faced one major hurdle: the requirement for a public bidding process – one that threatened to significantly delay construction. So CCA found a workaround. In September 2014, the company approached Eloy, Ariz., an interstate town of 17,000, and asked its officials if they would be willing to amend its existing contract with the town. The company had been operating a detention center for undocumented men in Eloy since 2006. If Eloy modified that contract – essentially, directing CCA to build a new facility in another state, 1,000 miles away – the federal government would be freed from the bidding process. And by reaching out to a town already involved with the industry, CCA could also avoid the political risks that often come when trying to convince a new locality to build a detention center.
The deal is formed by two separate agreements: One between ICE and Eloy, the other between Eloy and CCA. Both were signed on the same day and refer to the family detention center in Dilley. As spelled out in the contracts, ICE provides the money to Eloy; Eloy, in turn, receives a small “administrative fee” for being party to the deal.
The contract shows how CCA is assured of a predictable payment, collecting a fixed amount of about $20 million per month – even when the facility’s population drops.
A CCA spokesman, Jonathan Burns, said the company is required by the contract to provide full staffing and other services no matter the population. But, from the government’s perspective, the contract becomes less cost-effective when fewer people stay in Dilley. When 2,400 people are detained, the government spends what amounts to $285 per day, per person, according to a Post calculation. When the facility is half-full, as it has been recently, the government would spend $570. On some days when the facility is nearly empty, as it was for a period in January, the government would be paying multiples more.
At more than 200 nonfamily immigration detention sites, most per diems are between $60 and $85, according to an ICE document. The daily cost to detain children is higher, ICE officials said, because the government requires a litany of extra standards such as education courses and medicine for nursing mothers.
Critics say ICE could have chosen much more cost-effective alternatives. Ankle monitors, which could track asylum seekers as they await court dates, for example, cost several dollars per day.
Miller, the ICE official, said his agency didn’t push as hard as usual for lower costs because of the “immediacy” of the need.
“If you need an air conditioner today, you’re going to pay what the AC guy tells you,” Miller said. “If it’s December and you want a new AC unit in place by June, you have more time to research.”