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The Honolulu Advertiser
Posted on: Monday, October 3, 2005

Prisons for profit: inside the big business of CCA

 •  Years of problems yield few answers

By Kevin Dayton
Advertiser Staff Writer

Starting pay for a corrections officer at CCA's Tallahatchie County Correctional Facility in Mississippi is about $8.40 an hour, compared with $13.20 in Hawai'i. The company operates prisons in high- unemployment areas that need jobs, which helps reduce labor costs.

MIKE BROWN | Special to The Advertiser

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A Mississippi flag waves outside the Tallahatchie facility in Tutwiler, Miss., which houses nearly 860 Hawai'i inmates along with convicts from the Mainland. CCA dominates the prison business, with 66 facilities.

MIKE BROWN | Special to The Advertiser

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Corrections Corp. of America, a pioneer in the private prison industry, has control over nearly half of Hawai'i's prison population in what may be the state's biggest venture into privatization.

Publicly traded CCA is the nation's largest private provider of jail and prison services to government agencies, and has the country's sixth-largest corrections system, behind only the federal government and four states.

It owns and operates 39 facilities and manages 38 others. The company also owns three facilities that are leased to other operators. In all, CCA is present in 19 states and the District of Columbia.

Founded in 1983, the Nashville, Tenn.-based company has grown into a behemoth that employs 15,000 workers to oversee 62,000 inmates, including about 1,830 inmates from Hawai'i. CCA reported revenues of $1.15 billion last year, and last week became Hawai'i's sole provider of Mainland prison space.

The company is expected to collect $36 million from Island taxpayers in mostly nonbid contracts this year.

All but one of the prison contracts were awarded without formal competitive bidding because, technically, they are government-to-government agreements, which are exempt from state procurement rules. The contracts are with governmental entities such as Pinal County in Arizona, the Watonga Economic Development Authority in Oklahoma and the Tallahatchie County Correctional Authority in Mississippi, which subcontract the work to CCA.

Hawai'i Department of Public Safety officials said they invite other companies to compete for the contracts in an informal process, but the nonbid arrangement gives the state greater flexibility to negotiate for services.

In order to broaden the field of potential providers, the state issued a request for proposals when seeking a new facility to house women inmates, said Marc Yamamoto, purchasing specialist for the Department of Public Safety. CCA's Otter Creek Correctional Center in Kentucky was selected, and last week about 80 women inmates were transferred there.

As for male inmates, an official familiar with the history of the prison contracts said that since the late 1990s, CCA has been the only private operator with enough suitable beds available to house all of the men Hawai'i must send to Mainland prisons. The official asked not to be identified because the official is not authorized to discuss the issue with the media.

Contracts to house male inmates in CCA prisons expire June 30, 2006.

Yamamoto said CCA towers over the private prison industry in much the same way IBM dominates the market for mainframe computers.

"Because of their size, it's unavoidable that we're going to be working with them," he said.

The company has been dogged by controversy over its financial stability and management, labor practices, and safety problems that led to escapes and deadly violence. Some critics argue it is wrong for a business to profit from the imprisonment of human beings.

CCA spokesman Steve Owen said the company is simply filling a dire need for more prison beds while saving state and federal governments millions of dollars.

"We're very proud of that partnership. We're very proud of the services we provide," he said. "Thank goodness this option is available to the state because the alternatives actually are overcrowding, which is unsafe."

The company's most notorious incidents occurred at Northeast Ohio Correctional Center in Youngstown, which opened in 1997. During the first year of operation, when the prison held 1,500 inmates from the District of Columbia, there were 13 stabbings, including two fatalities. The prison was supposed to hold only medium-security inmates, but more than 100 had to be moved after it was discovered they actually had higher security classifications.

The deaths of several inmates while under prison medical care brought additional scrutiny, and when a group of five murderers and another inmate escaped, Ohio Gov. George Voinovich wrote a letter to U.S. Attorney General Janet Reno in July 1998 saying he wanted the prison closed.

A lawsuit filed by inmates alleging unsafe conditions at the Ohio prison resulted in a $1.65 million settlement with CCA. The prison closed in 2001 when the District of Columbia withdrew its inmates, but CCA reopened the facility last year to accommodate federal detainees.

More recent CCA troubles include a five-hour riot involving inmates from Washington, Colorado and Wyoming at Crowley County Correctional Facility in Colorado in July 2004. Nineteen inmates were injured in that melee. A Colorado Department of Corrections report found prison staff were inexperienced, undertrained and spread too thin to control the inmates. The night of the riot, fewer than 35 corrections officers were on duty for more than 1,100 prisoners.

The company referred to the trouble in its 2004 annual report. "While disappointing, inmate disturbances are an unfortunate part of our business," the report said, noting that the incidents led to significant changes in the company's management structure and operations.

There also have been problems at CCA prisons holding Hawai'i inmates, including violence, drug smuggling and contract violations. Still, state prison officials say CCA has generally done a good job and has been quick to make changes when deficiencies are pointed out.

CCA's formula for success includes buying or building prisons in rural or depressed communities such as Tutwiler, Miss., and Wheelwright, Ky., providing needed jobs in areas with high unemployment.

That strategy helps CCA keep its wages relatively low, which is critical because labor is the primary cost in operating a prison. The starting pay for a CCA corrections officer at the Tallahatchie County Correctional Facility in Tutwiler is about $8.40 an hour, compared with $13.20 for a new guard in Hawai'i.

In the late 1990s, CCA teetered near bankruptcy as thousands of beds remained empty and states began withdrawing inmates from private prisons. A surge of new contracts from federal agencies seeking space for increasing numbers of criminals and immigration detainees helped the company rebound in recent years.

Since CCA relies on government contracts, it has not shied away from playing politics.

The company last year contributed $100,000 to the DeLay Foundation for Kids, a charity established by U.S. Rep. Tom DeLay. DeLay resigned as Republican majority leader last week after he was indicted in connection with a Texas political fundraising scandal.

In Montana, which is a CCA client, the company donated $10,000 to help finance an inauguration ball for Democratic Gov. Brian Schweitzer. In the state of Washington, another client, CCA has made political contributions to Republican and Democratic organizations and candidates.

Hawai'i Gov. Linda Lingle accepted a $6,000 corporate contribution from CCA in 2002, the maximum allowed in a four-year campaign cycle, and an identical sum in February of this year for her 2006 re-election race.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.