The watchdog agency of privately run prisons likely will be disbanded as Gov. Bush admits to bumps in privatization efforts.
By JONI JAMES
Published April 25, 2004
TALLAHASSEE - It was a straightforward business proposition.
Two companies had been paid hundreds of millions of dollars to run state prisons for six years, and it was time to find out whether taxpayers could get a better deal, a state board decided in 2002.
But the decision would prove to be the undoing of the Correctional Privatization Commission, an obscure body created by the Legislature to safeguard tax dollars spent on privately run prisons.
Two years later, the commission's executive director stands accused of bad management, poor judgment and impropriety.
The two private companies that run five state prisons still have their contracts, worth a total of $90-million annually, even though audits have found the contracts aren't as efficient as state law requires.
And the Legislature is poised to eliminate the commission.
What went wrong?
Commission members, all appointed by the governor, say they are victims of a politically influential company that feared losing its lucrative contract and a union that hates privatization.
But others, including Gov. Jeb Bush, place the blame squarely on the inexperience of the commission and its staff.
The fall of the five-member commission illustrates the potential pitfalls of Bush's relentless drive to turn over public services to private companies.
Even Bush acknowledges that state government often lacks the savvy to smoothly implement multimillion dollar contracts. He has pledged to increase scrutiny and improve accountability of private companies getting public dollars.
But some commission members are skeptical.
"We're not putting the people of the state of Florida first," said Vero Beach attorney Sam Block, a longtime member of the commission who was first appointed by Bush's predecessor, Lawton Chiles. "Greed and self-interest are first."
Lucrative contracts
The commission's unraveling can be traced to April 2002, when the group inducted four new members and accepted the resignation of its founding executive director, C. Mark Hodges, who had been accused of using state property to run an independent consulting business.
The all-Republican commission set about to fix things.
It named employee Alan Duffee acting executive director. Duffee, a former legislative aide, had monitored a private prison contract at the Gadsden Correctional Facility in Quincy, just north of Tallahassee. He also had worked with juvenile offenders in Washington County and been a regional executive for Sprint Cellular.
But Duffee had never run a state agency. He eventually became the permanent director.
"We didn't do an awful lot of searching because he was qualified, and he is a peacemaker, and we had an awful lot of peace that needed to be made," said Chairwoman Carol Atkinson, a former Bay County commissioner, and longtime vice president of a Panama City commercial construction firm.'
Conflict came anyway.
Contracts with Corrections Corporation of America (CCA) of Nashville and the GEO Group of Boca Raton were expiring. State law required the companies to save taxpayers 7 percent annually, but both companies failed to do so at two prisons.
It was time to put the contracts out to bid, the commission decided.
But decisions Duffee and the commission made early on would doom what commissioners still contend was a well-intended effort to save tax dollars.
Missteps from the start
In April 2003, Duffee hired Michael Moore, who had recently resigned as Bush's corrections secretary, to write and oversee the commission's first bids.
But the private and public corrections sectors in Florida had never been friendly, and Moore's hiring concerned some vendors. State corrections officials had fought privatizing prisons in the early 1990s, causing a frustrated Legislature to create the commission to get the job done. Plus, Duffee never advertised the $64,000 job.
Moore, who had never written a procurement plan, subcontracted the work to two former employees who still worked for the state - a legal but highly irregular practice.
The Legislature soon added a new wrinkle: It wanted 1,086 new beds at the Lake City and South Bay prisons. And it wanted the two companies that already had the contracts to do it.
Those were the same prisons auditors said weren't being run as efficiently as state law required.
Commission members were annoyed.
Lobbyists for both companies had persuaded lawmakers that the companies could quickly provide new prison beds.
But Duffee concluded the commission could seek bids from other companies anyway.
"We decided to go that route, and we did the fatal thing of saying we're going to do what is best for the state of Florida and citizens," Commissioner Block said. "From that point forward all hell broke loose."
CCA, which operated the Lake City prison, filed a legal challenge saying the commission was ignoring the Legislature's intent. Subsequent depositions further undermined the commission.
Duffee said he often had drinks with the longtime lobbyist for The GEO Group. He acknowledged being treated to dinner by other companies anxious to break into Florida: CiviGenics, Cornell Corrections and Management & Training Corp.
Duffee insisted his intentions were honorable. He never discussed the bidding process, he said. And he always was careful to keep his dinner tab under the $25 limit for state employees.
Bush's deputy chief of staff, Alan Levine, was alarmed when he learned of Duffee's admissions. And he was concerned the commission was ignoring the Legislature. He stepped in.
"There appeared to be a confluence of events that whether real or not, at the very least presented the perception of impropriety," said Bush spokeswoman Jill Bratina.
Bush cites improprieties
In January, CCA dropped its challenge after the commission extended the company's Lake City contract through June 2006, including construction of half of the 1,086 new beds.
Days later, Bush proposed dissolving the commission.
Attitudes had changed at the corrections department, Bush said, making him confident it can oversee private prisons and save $859,405.
But Bush acknowledged last week that wasn't his only motivation. "There have been some improprieties," he said.
Commission members continue to blame Corrections Corporation of America, noting that it donated $21,000 to the Republican Party of Florida between October and December and gave $3,500 to legislators, including $2,500 to a special fundraising committee created by Senate Appropriations Chairman Ken Pruitt, R-Port St. Lucie.
All told, the company made about $70,000 in political contributions since 1996. GEO Group has given $492,600.
"I tell you in no uncertain terms, CCA is ruining all this," said Commissioner Bob Ryals, a Tallahassee Realtor. "They've got their high-powered lobbyists, and I'm just so angry that I can hardly talk about it."
Commissioners also blame a longtime nemesis of private prisons: the Police Benevolent Association. The union is a staunch supporter of Bush.
But Pruitt and the governor deny political influence. And the company contends it was only seeking to insure a level playing field.
"We wanted procurement rules that were fair for everybody," said CCA attorney Thomas Panza.
Next week, state lawmakers are expected to approve a state budget that will disband the commission in a year. The Legislature will shift its duties to the Department of Management Services instead of the Department of Corrections, as Bush proposed.
Management Services will oversee new bids, but officials say they don't when they'll rebid the contracts, which the companies have now had for eight years.
