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Private prison company finds gold in California

In the intensifying debate over budget-driven releases of state prison inmates, the state’s cash problems are well known. But at least one private correctional company is reaping major rewards.

In three years, a private-prison construction and management company, the Corrections Corporation of America, has seen the value of its contracts with the state soar from nearly $23 million in 2006 to about $700 million three months ago – all without competitive bidding. Even in a state accustomed to high-dollar contracts, the 31-fold increase over three years is dramatic.

During the same period, the company’s campaign donations rose exponentially, from $36,750 in 2006, of which $25,000 went to the state Republican Party, to $233,500 in 2007-08 and nearly $139,000 in 2009.  The donations have gone to Democrats, Republicans and ballot measures. The company’s largest single contribution, $100,000, went to an unsuccessful budget-reform package pushed last year by Gov. Schwarzenegger.

The lack of competitive bidding has raised concerns about in the Democrat-controlled Legislature about prison-system procurement.   

But the state and the company note CCA’s ability to respond quickly and efficiently to California’s prison overcrowding emergency. “We couldn’t be happier with their (CCA’s) responsiveness and performance,” said Scott Kernan, the undersecretary for operations at the California Department of Corrections and Rehabilitation. Overcrowding is just one critical problem facing the state’s prisons. The prisons’ health-care system is under federal supervision, and the correctional system’s financial problems — always severe — are especially difficult in a state budget facing a $20 billion shortage through next year.

CCA, a national leader in private correctional work handling more than 80,000 state, federal and local inmates across the country, also has spent heavily on lobbying in California, more than $840,000 over the past decade, according to state financial disclosure records.

Typically, it spends between $30,000 and $45,000 per quarter on lobbying. The level of spending is not unique: Major companies doing business with the state often contribute to candidates and hire lobbyists.

Nashville-based CCA won its first, $22.9 million contract in October 2006 immediately following Gov. Schwarzenegger’s emergency proclamation to send prisoners outside the state to relieve overcrowding.  Its most recently updated contract is worth a total of about $700 million over several years, or about $197 million annually, according to an Assembly analysis. Another corrections company also won an early out-of-state transfer contract, but later pulled out.

The emergency proclamation triggered the out-of-state transfers and, in effect, allowed an end-run around formal bidding procedures which, Kernan said, “would have pushed us back months, seven to nine months.” Later, legislation solidified the process.

“We have been able to deliver immediate relief to overcrowding,” said CCA spokeswoman Louise Grant. “We have done it very cost effectively and we have done it by focusing on delivering the best quality corrections operations.”

Kernan and CCA agree that the company’s ability to speedily accommodate California’s inmates in high-security settings is a key to CCA-state relationship. One example: CCA built the 3,060-bed La Palma Correctional Center in Eloy, Ariz., in nine months and had it fully operational in 12, far less than the three-year window for a government-built prison.

The rise in the dollar value of the contract is mirrored by the increase in the numbers of California’s out-of-state prison inmates – most of whom are handled by CCA.

In the first departure of inmates in January 2007, about 80 prisoners were transferred. Now, more than 8,000 are housed out of state, and CCA has just been contracted to handle some 2,500 more – for a total of 10,468. New plans call for an additional 5,000 inmates to be sent out of state. It has not yet been decided where those prisoners will be located, and within the private correctional industry there is a scramble for the new state business.

Costs vary, but CCA receives about $63 per day per inmate, or about $23,000 annually. Under the contract, the state will pay the CCA about $200 million annually.

State officials speak highly of CCA, and note that CCA likely would have received its contracts, competitively bid or not. In a difficult industry, the company has performed, they said.

But not everyone is so complimentary.

The California Correctional Peace Officers Association, which represents some 28,000 prison officers, has been critical of the  inmate transfers. CCPOA’s web site is peppered with stories about lack of security at CCA and comments about CCA-run institutions. The chairman of the Assembly Oversight Committee, Assembly Hector De La Torre, is critical of the magnitude of the contract and the succession of high-dollar amendments. He opposes expansion of the private-prison contracting without competitive bidding.

CCA is one of three companies that currently contract or have contracted in the past to  provide private prisons.

The others are GEO Group and Cornell Corrections. Cornell operates about six dozen facilities in 15 states and Washington, D.C., with a national total service capacity of more than 18,000 beds. Both groups have operated several facilities in California.

The in-state, dormitory-style community facilities handle a lower security level inmate than CCA’s out-of-state prisons.

Last fall, the state ordered the closure of three of the private community correctional facilities – including two of Cornell’s institutions in Baker and Bakersfield, and a GEO facility in McFarland. The state said the closures would save some $15.2 million, and were prompted by a declining number of low-security inmates.
CCA operates five out-of-state facilities for the state of California.

Three are in Arizona – the Florence Correctional Center, La Palma Correctional Center and Red Rock Correctional Center. The other two are the Tallahatchie County Correctional Facility in Mississippi and the North Fork Correctional Facility.

The prisons hold a total of about 8,060 inmates, with an expected increase to 10,468 inmates under CCA’s latest contract, according to the Out-of-State Correctional Facility, a section of the state prisons’ administrative system, which supervises California inmates who have been shipped to out-of-state institutions.

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