Skip navigation
× You have 2 more free articles available this month. Subscribe today.

CCA Loses Contracts for 9,754 Prison Beds in 18 Months; More Losses Looming

Corrections Corporation of America (CCA), the nation’s largest private prison company, has lost or terminated contracts totaling 9,754 prison beds within an 18-month period, and is expected to lose at least 1,536 more contract beds by the end of this calendar year.

CCA announced on January 21, 2010 that based on the State of Arizona’s proposed budget, the company would lose its contracts to house Arizona prisoners at the company’s 752-bed Huerfano County Correctional Center in Colorado and its 2,160-bed Diamondback Correctional Facility in Oklahoma. Last year, CCA generated about $56.5 million in revenue from those contracts.

It has since been confirmed that the Huerfano contract, which expires in March 2010, will not be renewed; on March 4, CCA announced that the Diamondback facility would close within 60 days. Arizona officials have said they intend to return all of their prisoners from out-of-state facilities.

On January 13, 2010, CCA announced that the federal Bureau of Prisons had not renewed its contract to house prisoners at the company’s 2,304-bed California City Correctional Center. The contract, estimated at $553 million over ten years, instead went to competitor Cornell Corrections.

Previously, Alaska removed approximately 770 of its prisoners from CCA’s Red Rock facility in Arizona in December 2009, and that same month CCA announced the closure of its 1,600-bed Prairie Correctional Facility in Appleton, Minnesota after losing contracts to house Washington and Minnesota offenders at the prison. The Prairie facility shut its doors on February 2, 2010, with CCA laying off 400 employees.

In January 2009, CCA’s contracts to manage the B.M. Moore Correctional Center and the Diboll Correctional Center, both in Texas and totaling 1,018 beds, went to competitor Management and Training Corporation. And on October 9, 2008, after CCA terminated its contract to operate the 1,150-bed Bay County Jail in Panama City, Florida, the county’s Sheriff’s Department took over management of that facility.

Thus, over an 18-month period from October 2008 to March 2010, CCA lost contracts totaling 9,754 prison beds.

During CCA’s fourth quarter 2009 earnings conference call held on February 10, 2010, CCA CEO Damon Hininger acknowledged in response to a question from an Avondale Partners analyst that the company was facing around 12,000 total empty beds. As CCA has approximately 87,000 prison beds available nationwide, this represents a vacancy rate of almost 14%.

Further, two other stock analysts who participated in the conference call inquired about CCA’s contract with the State of Tennessee to house prisoners at the 1,536-bed Whiteville Correctional Facility. Mr. Hininger was equivocal, saying the “legislature will take this up and think about potentially funding these beds through this fiscal year and potentially long-term.” However, he failed to mention that the Governor’s recommended budget states the Whiteville prison “will be closed at the end of calendar year 2010, and all inmates will be transferred to other ... facilities.” Tennessee’s proposed state budget only includes funding for CCA’s Whiteville prison until the end of the year.

Additionally, Texas’ budget reduction plan, unveiled on February 16, 2010, indicates that $10.7 million in funding for 817 private prison beds will be eliminated. CCA, which operates seven facilities that hold Texas state prisoners, likely would be affected by this fiscal reduction. Texas state Senator John Whitmire – Chairman of the Senate Criminal Justice Committee – had previously suggested terminating CCA’s contract to house prisoners at the company’s Mineral Wells Pre-Parole Transfer Facility.

CCA has added some contract beds over the past year to counterbalance its losses, including a Bureau of Prisons contract at the company’s newly-opened 2,232-bed Adams County Correctional Center in Mississippi, which was announced in April 2009. Further, CCA increased the number of California prisoners it can hold in out-of-state facilities by another 2,336 contract beds, and contracted with ICE to house up to 500 immigration detainees at the company’s North Georgia Detention Center.

Although CCA also has several new prisons and facility expansions in the construction phase, they do not make up for the company’s recent loss of 9,754 contract beds and the additional 1,536 beds that CCA is expected to lose at its Whiteville prison in Tennessee by the end of 2010.

Another CCA contract may be in jeopardy this year, too. On March 2, Sheriff Richard Nugent in Hernando County, Florida, where CCA operates the county jail, announced he could run the facility at a lower cost while providing better management. If Sheriff Nugent takes over the jail, CCA would lose another 876 contract beds. “Obviously with the current economic state, it’s really not a surprise that our customers are looking at options,” said CCA warden Russell Washburn, who oversees the Hernando County Jail.

Nor will CCA have an opportunity to bid on a proposed Bureau of Prisons contract to house illegal immigrants convicted of federal crimes. The BOP withdrew the proposal in early March 2010, citing a funding shortfall.

“It’s hard to understand how CCA can continue to maintain its market share and its projected earnings with the loss of so many contracted prison beds,” stated Ken Kopczynski, executive director of the Private Corrections Working Group, which opposes prison privatization.

Apparently, CCA’s numerous contract losses and potential future losses have caused some investors to become bearish on the company. On February 16, 2010, it was reported that billionaire investor George Soros had disinvested all of his holdings in CCA. CCA’s Chairman, John D. Ferguson, sold 20,000 shares on February 22. Further, Zacks, an investment research firm, issued a sell recommendation for CCA stock on March 3, 2010.

According to recent news reports, lost contracts, empty prison beds and declining investor confidence aren’t CCA’s only problems. On February 23, 2010, Courthouse News Service reported that two former prisoners had claimed they were sexually victimized by CCA employees at the company’s Correctional Treatment Facility in the District of Columbia. The former prisoners, who are represented by counsel, have filed separate $20 million lawsuits against CCA. Less than a week earlier on February 18, Hawaii prisoner Bronson Nuhuna was murdered at CCA’s Saguaro Correctional Facility in Eloy, Arizona.

Despite contract losses and other setbacks, CCA continues to reap profits. In its fourth quarter for 2009, the company’s gross revenue increased 4% to $430.7 million while net income rose 12.5% to $.36 per diluted share. Evidently private prisons remain profitable even while states and citizens struggle during the current economic crisis. However, CCA announced that it expected lower earnings per share in the first quarter of 2010 due to higher bed vacancies as a result of lost contracts. The company’s gross revenue was $1.7 billion in 2009.

“State budgets continue to be of concern as states struggle to balance their needs with their revenue, the impact of which is difficult to predict,” said CCA CEO Hininger. “Although the environment continues to be challenging, we remain optimistic about our long-term outlook.” Which is good news for CCA, and not-so-good news for prisoners held in the company’s for-profit lock-ups.

Sources: PCWG press release (,, Hernando Today, Reuters,

As a digital subscriber to Prison Legal News, you can access full text and downloads for this and other premium content.

Subscribe today

Already a subscriber? Login