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Arizona Attempts Prison System Sell-Off

The next lot in our auction is the Arizona prison system. Do I hear $100,000,000? What, no bidders? None? You, sir, Corrections Corporation of America, you must be interested. No? Okay. How about you, GEO Group? No, not interested either?

Prison privatization is not a new concept but efforts to privatize an entire prison system are rare – having been previously considered in only one state, Tennessee, more than a decade ago. [See: PLN, Sept. 1998, p.16]. However, last year Arizona lawmakers attempted to privatize most of that state’s prison system as they tried to close a whopping $4 billion budget deficit.

HB 2010, signed into law by Governor Jan Brewer on September 3, 2009, permitted the unprecedented sale of almost all of Arizona’s prisons. Under HB 2010, state prison officials were required to solicit bids for the operation of “one or more prison complexes” by private companies in return for an upfront payment of $100 million. The state would then lease the prisons back from the companies over a 20-year period, paying them to manage the facilities. The prison complex at Yuma was not subject to the law; it had been exempted at the insistence of a Yuma legislator.

The concept was “such a new idea. The model hasn’t been done,” said Leonard Gilroy, an official with the Reason Foundation, which champions the privatization of government services and has received funding from the private prison industry. “It’s sort of like ‘we want you to do an operational contract and loan us $100 million,’” Gilroy said. “I don’t know if there’s enough there to sweeten the pot for the private sector.”

When asked about taking over Arizona’s prison system, Louise Grant, spokesperson for Corrections Corporation of America (CCA), said they were “not focused on that.” She noted that CCA was interested in pursuing traditional private prison contracts. GEO Group, the second-largest private prison operator in the U.S., declined to comment on its intentions, as did a third potential bidder, Utah-based Management & Training Corporation (MTC).

Aside from the $100 million upfront payment being a nonstarter, some lawmakers and state prison officials questioned the wisdom of trying to put Arizona’s entire prison system into private hands.

Corrections Director Charles L. Ryan told legislators in a May 2009 hearing that the idea was “very concerning,” especially considering that some prison complexes house death row prisoners and other violent offenders. “[The bill] seeks to attempt something never experienced in the nation: Privatizing a state’s entire prison system. This is bad public policy,” Ryan remarked.

J. “J-Rod” Rodriguez, vice-president of the Arizona Correctional Peace Officers Association, raised concerns about the loss of jobs for state prison guards. “They’re trying to replace us with lower-paid [private] guards to handle sex offenders, murderers, rapists, inmates with volatile connections,” he said.

Ultimately, Ryan, Rodriguez and other concerned officials had nothing to fear. Although Arizona tried to sell off its prison system to the private sector, there were no buyers. CCA, GEO Group, MTC and other companies just weren’t interested – possibly because HB 2010 required “an annual cost efficiency savings to the state.”

The system-wide privatization provision of HB 2010 was quietly repealed when HB 2006 was signed into law in March 2010. Prior to its repeal, the Arizona Department of Corrections had reduced the number of prison complexes that could be privatized from nine to two, excluding facilities that house maximum or close-security prisoners.

However, other aspects of HB 2010 remain in force – including a requirement that the Arizona Department of Corrections (ADOC) “issue a request for proposal to privatize correctional health services, including medical and dental services,” and “issue a request for proposals and contract for 5,000 private prison beds for either an expansion of current private prisons ... or new locations in this state.” Arizona already houses about 20% of its prison population in privately-operated facilities.

Private prison companies were amenable to traditional contracts for 5,000 more beds, and four firms submitted bids in May 2010. The interested companies are CCA, GEO, MTC and Emerald Correctional Management, which is seeking to build several facilities in Arizona including a 1,000-bed prison in Globe. CCA and MTC considered putting prisons in Prescott Valley, but withdrew their proposals due to community opposition and lack of support from the town council.

Arizona’s plan to contract for 5,000 more private prison beds hit a snag with the high-profile escape of three prisoners from an MTC-operated facility in Kingman on July 30, 2010. “I believe a big part of our problem is that the very violent inmates, like the three that escaped, ended up getting reclassified [as lower security] quickly and sent to private prisons that were just not up to the job,” said Arizona Attorney General Terry Goddard.

The escape, which sparked a nationwide manhunt and exposed serious security flaws at the MTC prison, will be covered in an upcoming issue of PLN. Following the Kingman escape it was revealed that two advisors to Governor Jan Brewer had close lobbying ties to CCA, and that eight CCA executives had donated to Brewer’s election campaign. Also, a February 2010 report by the ADOC found it may actually be more expensive to house the state’s prisoners in privately-operated facilities.

Sources:, Associated Press,, Arizona Republic,,,, Prescott Daily Courier,

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