ICE Awards Warehouse Contracts to New Industry Entrants

The Trump administration is shaking up the immigration detention business — and the real estate behind it — by turning to relatively untested firms to build and run a new generation of warehouse-scale holding centers.

Immigration and Customs Enforcement awarded at least $426 million in contracts to two companies to convert industrial properties into detention facilities in Maryland and Arizona, the Washington Post reported. The awards are part of a broader $38 billion federal plan to rapidly expand detention capacity by repurposing large warehouses across the country.

Defense contractor KVG won a contract worth at least $113 million to retrofit and operate a 1,500-bed facility in a warehouse in Williamsport, Maryland. Security contractor GardaWorld Federal Services landed a deal worth at least $313 million to run a detention center planned in Surprise, Arizona.

Neither company has previously overseen immigrant detention centers for ICE, marking a departure from the government’s long-standing reliance on industry heavyweights Geo Group and CoreCivic.

The projects underscore a sweeping real estate pivot inside the federal detention system. Instead of relying primarily on privately owned prisons or county jails, the government is planning to acquire or control many of the properties itself, large industrial buildings that can be quickly retrofitted into sprawling detention campuses.

Contractors are racing to transform the empty structures into secure facilities with dormitories, courtrooms, medical units, cafeterias and visitation areas. Officials have said the first site could begin taking detainees as soon as April, giving vendors just weeks to make buildings habitable.

At full buildout, some facilities could house between 7,500 and 10,000 detainees, rivaling the capacity of major Las Vegas resorts and far exceeding the roughly 1,800-person capacity typical at existing detention centers.

The strategy threatens the dominance of Geo Group and CoreCivic, which for decades controlled most of the nation’s immigrant detention beds through long-term contracts with ICE.

Federal officials have also pressured those firms to reduce prices on existing contracts by roughly 15 percent, according to people familiar with the discussions. At the same time, ICE is exploring buying up to 10 existing detention facilities from private operators while shifting development to nontraditional properties like warehouses.

Industry executives warn that converting industrial buildings into detention facilities at such scale and speed could prove more complicated than expected.

— Holden Walter-Warner