In a historic rebuke of the private prison industry, the U.S. Department of Justice today announced plans to eliminate the use of private prisons to incarcerate federal inmates. The announcement follows the release of a critical inspector general’s report and an investigative series published in The Nation, in partnership with the Investigative Fund and Reveal from The Center for Investigative Reporting.

That investigation uncovered more than two dozen questionable deaths and widespread medical negligence in the federal facilities that now will begin a process of closure.

“I am directing that as each contract reaches the end of its term, the Bureau should either decline to renew or substantially reduce its scope,” Deputy Attorney General Sally Yates wrote in a memo today to the Bureau of Prisons’ acting director.

By May 2017, when many of the existing federal contracts already are set to end, the new directive means that the total number of inmates in contract prisons will drop to 14,200, down from 22,000 now and a high of nearly 30,000 in 2013. Within five years, every current federal prison contract will have reached the end of its term.

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The Department of Justice inspector general’s report, released last week, found that private prisons are dramatically less safe, less secure and more costly than the Bureau of Prisons’ own prisons. The private facilities, Yates wrote, “simply do not provide the same level of correctional services, programs, and resources” and “do not save substantially on costs.”

The report bolstered the findings of a June investigation in The Nation, which reviewed 20,000 pages of previously undisclosed agency monitoring reports and discovered that the Bureau of Prisons’ system of oversight has failed to effectively correct serious repeat deficiencies, including medical mismanagement and negligence so severe that some clinics didn’t have a single doctor on staff.

In the immediate wake of the deputy attorney general’s announcement, stock prices of the two largest prison contractors – Corrections Corporation of America and Geo Group – plummeted, with CCA’s stock losing more than half its value by midday.

While state-level private prisons have received notable media scrutiny – including an undercover exposé in July by Mother Jones magazine also featured on Reveal the federal government’s facilities have operated largely out of sight. Inmates and their advocates long have complained about poor medical care, complaints that have erupted into riots at more than one facility in recent years. The Nation’s investigation was the first to substantiate inmates’ complaints.

The first story, published in January, uncovered dozens of deaths that involved substandard medical care in the prisons. Based on thousands of pages of medical records obtained through an open records lawsuit, it found that private contractors consistently failed to provide baseline levels of care to patients with cancer, mental illness, AIDS and other infectious diseases. The prison medical units were gravely understaffed and relied on licensed practical nurses to provide frontline care that far outstripped their training. At some facilities, clinics operated without medical doctors. Prisoners who complained of illness went months at a time without seeing a doctor, their health declining until their premature deaths.

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Part 2 of the investigation revealed that the Bureau of Prisons has known about these medical failures for years. The Nation reviewed the agency’s monitoring reports and additional federal records, all obtained through the open records lawsuit, and interviewed former Bureau of Prisons monitors and officials in the bureau’s contracting office. The investigation found that the bureau’s monitors had recorded a litany of grave concerns, including 34 deaths following substandard medical care.

Yet even as a platoon of federal monitors flagged the repeated failures year after year, contracting officials in Washington renewed contracts with derelict prison operators. Federal monitors assigned to oversee the facilities said they were not permitted by top Bureau of Prisons officials to use their full enforcement muscle to correct deficiencies, and plans to close failing facilities were derailed by the bureau’s top brass.

“It is not breaking news that these facilities … are more costly, less effective and more dangerous than those run by the government,” Arizona Rep. Raul Grijalva said today in a statement. “The lack of transparency in private prison industry has required intrepid reporting, and thankfully journalists at outlets like The Nation have risen to the task.”

Rep. John Conyers of Michigan, ranking member of the House Judiciary Committee, who read the investigation into the congressional record, added: “Private, for profit prisons create perverse and counterproductive incentives that only worsen our crisis of overincarceration. … I have long had the very concerns the Deputy Attorney General cited for this decision, which is consistent with our efforts in Congress to reform our criminal justice system.”

The Bureau of Prisons began to use private contractors to run facilities in the mid-1990s, as re-entry after deportation became a criminal offense and the need for federal prison beds exploded. The agency now uses all but one of its private prisons to hold noncitizen immigrants convicted of federal crimes. The agency has said in statements that because noncitizens later will be deported, the government is not obligated to provide the same level of re-entry services offered to citizens.

About 40 percent of the noncitizens held in these facilities were convicted only of border-crossing crimes, mostly re-entry after deportation. Many of the remainder are held on drug charges.

Prison reform advocates applauded today’s announcement from the Justice Department.

“Today is an historic day, and we hope that this marks a turning point in which federal, state and local agencies follow the DOJ’s lead and end their relationships with prison profiteers,” said Bob Libal, director of Grassroots Leadership, which opposes private prisons. “This is a huge victory for immigrants, criminal justice reformers, and validates the results of investigative reporting done by The Nation.”

Carl Takei, a staff attorney with the ACLU’s National Prison Project, applauded the decision and credited the inspector general’s decision to “tremendous public pressure that’s been brought to bear on the Justice Department and Bureau of Prisons about the terrible conditions in their private prisons.”

As the Bureau of Prisons closes the private facilities, the men held inside will be moved to federal government-run facilities. Although the process of closing prisons already has begun – three weeks ago, the bureau told Corrections Corporation of America that it would close the Cibola County facility in New Mexico – the process is likely to last several years. In her announcement, Yates said an earlier proposal to re-up contacts for more than 10,000 beds next year will be amended to include 3,600 beds.

The announcement today does not directly affect other federal agencies that rely on private prisons. U.S. Immigration and Customs Enforcement, which manages detention for immigrants facing deportation, and the U.S. Marshals Service, responsible for pretrial detention for the federal criminal system, still will be allowed to contract with private companies to hold thousands of detainees.

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Seth Freed Wessler

Seth Freed Wessler is an independent journalist and senior fellow at the Schuster Institute for Investigative Journalism. He is the recipient of a 2014-15 Soros Justice Media Fellowship.