California's Governor Boosts Outlook For Private Prison Industry (IBD)

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California's Governor Boosts Outlook For Private Prison Industry
Friday October 6, 7:00 pm ET
Daniel Del'Re

California Gov. Arnold Schwarzenegger sent shock waves through the private prisons industry last week when he declared a state of emergency in the state's overcrowded prisons.

The governor plans to ship several thousand inmates to facilities in other states, including private facilities. Jim Tilton, head of the state's correctional system, said the state plans to sign contracts with private prison operators without conducting a formal bidding process.

Tilton specifically mentioned the Geo Group (NYSE:GEO - News), Corrections Corp. (NYSE:CXW - News) and Cornell Companies (NYSE:CRN - News) as likely candidates for no-bid contracts, sparking a run-up in their shares.

Geo Group spokesman Pablo Paez says his company has been in discussions with the state for more than a week. The state recently requested information on how many beds are available in its facilities.

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