CXW CoreCivic Inc

The Department of Homeland Security will review whether private prison operators will continue to run immigration and customs enforcement's immigration detention centers, the latest sign that the federal government is turning away from using these private contractors.

The move comes 11 days after the Justice Department said it planned to eventually stop using private facilities and operators to house federal prisoners.

Homeland Security Secretary Jeh Johnson said Monday that he directed an internal council to determine whether the use of private immigration detention centers should be eliminated.

Shares of private prison operators dropped on the news. Corrections Corp. of America shares fell 7% to $16.28 as GEO Group Inc. shares dropped 4.2% to $21.00.

GEO said it welcomed the announcement.

"We are confident that this independent review will show that GEO has provided needed, cost-effective services that have resulted in significantly improved safety outcomes for the men and women in ICE's care and custody," GEO Chief Executive George Zoley said.

Since 2001, GEO and Corrections Corp. have become increasingly reliant on federal government revenue to drive results. In 2015, just over half of Corrections' revenue came from various federal government agencies. For GEO, that figure was 45%.

In the federal system, private prisons are used by the Justice Department's Bureau of Prisons to house some federal convicts, the U.S. Marshals Service to temporarily jail suspects and convicts awaiting trial or sentencing and by ICE to house some immigrants.

Prisoners in the federal system are only a fraction of the overall U.S. prisoner population, where most are held in state prison systems.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

August 29, 2016 16:15 ET (20:15 GMT)

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