How Common Sense Is Trumping High-Flying Lobbyists in the Dispute Over a D.C. Prison
At its glum outpost in Southeast D.C., the Correctional Treatment Facility (CTF) looks just like the sort of municipal institution nobody cares about. The facility was built in the early 1990s to house inmates suffering from substance abuse, mental illness, and physical handicaps. Inside, the 898 individual cells could not be more generic: 7-by-10-foot blocks with a single bunk, a face bowl, and a coverless toilet. The gray walls and black-and-white tile floors round out the institutional look. For many of those caught inside, the long, narrow slits that pass for windows afford a lugubrious view of Congressional Cemetery.
But in recent weeks, the prosaic confines of CTF have become the focal point of a major dustup before the D.C. Council. Two deep-pocketed companies with extensive experience in managing prisons, Wackenhut Corrections Corp. and Corrections Corp. of America (CCA), are vying for a contract from the District government to operate CTF.
The competition between the firms is a high-stakes affair. Privately run prisons are multimillion-dollar operations, with developers, investment bankers, stockholders, and lawyers all getting a slice of the incarceration pie. And while CTF and its $25-million budget seem like a small repast, every last contract is a strategic battleground, in part because both companies trade on Wall Street, where new prison contracts capture investor interest. The District is prime turf for marketing and promotionespecially since congressional representatives from every state work in the city. And the outcome of the CTF contract could sway the course of a similar competition in Jamaica, where both companies have bidden on a contract for the country's prison system.
Small wonder, then, that the companies have turned the CTF contract battle into an object lesson on District power politics.
The CTF privatization was supposed to be a yawner. A private company would buy the facility and lease it back to the city, and the city would pay the same company to operate the prison on a daily basis. Although Joseph Johnson, a local entrepreneur, had for years proposed the concept to District officials, including late D.C. Council Chairman John Wilson and Councilmember Bill Lightfoot, this year's budget crunch forced the mayor and the council to focus on the idea's cost-saving potential.
Early this year, Lightfoot introduced a bill that would allow the mayor to step around standard contracting rules to privatize CTF. The bill merely urged the mayor to "use the most competitive process practicable under the circumstances to facilitate the expeditious completion..." The message was clear: The council wanted the mayor to save money on CTF, but not necessarily open the contract to competitive bidding.
Acting on the council's directions, the Barry administration quickly came to terms with CCA, which owns or operates 56 facilities in the United States, Australia, and the United Kingdom.
D.C. City Administrator Michael Rogers says the council action was necessary because "it would have been unlikely we could have developed a [request for proposal], received responses, reviewed them, and awarded a contract within the time frame necessary to comply with the fiscal 1997 budget.
"The drive was complying with the '97 budget, reducing the head count, reducing overall cost of providing services, and generating cash for a cash-starved city," Rogers continues. "This deal is a grand slam for the city. The Barry administration did just what it promised."
The administration's "grand slam" will shave $3 million from CTF's operating costs in the first year of the CCA contract. And the deal, city officials say, promises comparable savings over the 20-year term of the contract, which obligates CCA to pay $52 million in cash to purchase the facility and $3.8 for repairs. The District will repay, interest-free, the $55.8 million over the 20-year term. In addition, CCA has agreed to retain existing workers who pass drug tests and background checks. Employees who remain on the job for one year will be offered stock options with the company. All of which sounds like win-win, unless you work for another company that wanted the contract.
If you're compiling a team of high-powered lobbyists in the District, some would say you can't pick a better ringer than Michelle Bernard, the young lawyer and former head of the Redevelopment Land Agency who saved the city millions of dollars on the financing of the MCI Arena.
Wackenhut retained Bernard because it no doubt wanted to trade on her currency with D.C. leaders to slow down the CCA juggernaut. Bernard got to work immediately, circulating a scathing, unsigned handbill to councilmembers and the media blowing holes in the city's agreement with CCA. The circular calls attention to the number of escapes at other CCA facilities, spotlights employee unrest at other prisons they manage, and questions the merit of an uncompetitive contract negotiated by the mayor's office. Bernard won the ear of Washington Post business columnist Rudolph Pyatt, who wrote that the process for awarding the contract to CCA was "flawed."
"I wouldn't say I'm trying to topple the deal," says Bernard. "I'm trying to get the council to realize the process was flawed. Ultimately, what we would like the council to do is disapprove [the contract]. My argument is that it is not the best deal for the city."
Specifically, Bernard is angling to get the council to repeal CTF's exemption from contracting rules.
In their endless search for pressure points on the CTF contract, Bernard and Wackenhut also accused CCA of playing funny numbers. The "huge discrepancy between CCA's bid and D.C.'s own estimate," according to Wackenhut, "signals a need for a formal [request for proposal]." They also question how CCA can pay over $50 million interest-free to the District.
Doctor R. Crants ("Doctor" is in fact his given name), one of CCA's founders, responds, "The money is already in the bank earning interest." And based on a report in Business Nashville, CCA has plenty more where that came from: On May 31, the company issued a stock offering that raised $132 million.
Impugning CCA's numbers is an obvious tack for Wackenhut, whose own CTF proposal would cost more than the facility's current budget. Under Wackenhut's plan, the city would pay $87 per day for each of the 800 inmates in the facilitya rate roughly $17 higher than the CCA terms. The District would pay $25.6 million for the first year of the Wackenhut contracta full $600,000 over CTF's 1997 budget and $5 million more than CCA's proposal.
Wackenhut officials complained that the company didn't even learn of the contract until Johnson, CCA's local spokesman, announced on the news that CCA was close to beginning negotiations with the city. The company vaulted into action, rounding up its impressive lobbying crew of Bernard, former D.C. councilmembers Jim Nathanson and Betty Ann Kane, and former corrections department Director Hallem Williams.
Wackenhut Chief Operating Officer Wayne Calabrese says city officials didn't give his company the same information CCA received before bidding on the project or enough time to hammer out a competitive bid. But according to city documents, CCA submitted and had its proposal evaluated before it received any of the "insider" information Wackenhut claims it was denied. And once Wackenhut submitted its bid, city officials accorded the company the same treatment as CCA.
Along the way, Wackenhut has been careful to stifle discussion of the pockmarks on its own record. For instance, last March Wackenhut reached an out-of-court settlement with Essex Corp., one of Wackenhut's competitors for contracts with the Department of Energy. The settlement enabled Wackenhut to dispose of charges that it resorted to "bribery, corruption, and fraud" in edging out Essex for a contract to provide training at the Kirtland Air Force base in Albuquerque, N.M. The terms of the settlement are sealed.
Despite her multifront lobbying blitz, Bernard's misgivings about the CTF contract aren't widely shared at the District Building or 1 Judiciary Square.
"Michelle has done more to piss people off than to be of assistance to her client," says a D.C. attorney who is following the contract dispute. "She is doing her client a real disservice."
CCA spokesman Johnson says, "Wackenhut just got beat on the numbers." He calls Bernard's fact sheet "dirty tricks," even though he acknowledges that some of the allegations are true. "Bernard, who fancies herself as the new sheriff in town, says she whipped the city on the MCI Arena deal and she's going to whip [us] on this," he adds.
Furthermore, overtures made by Bernard to CCA earlier this year are undercutting her credibility as a lobbyist for Wackenhut. A month after the council passed its CTF bill, Bernard began courting key players in prison privatization: the Jamaican government, Wackenhut, and CCA.
With her father, Milton, in tow, Bernard visited Johnson at his Connecticut Avenue office, offering to represent CCA in a deal with Jamaica to privatize two prisons. "He sat right there on my sofa," remembers Johnson. "He asked me to work with his daughter." Milton Bernard has well-placed contacts in the Jamaican government. In a June letter, Michelle proposed that CCA pay her firm, Patton Boggs, $90,000 for the first three months of work on the Jamaican contract.
CCA entertained the offer, inviting Bernard and Jamaican officials to its corporate headquarters in Nashville, Tenn., on the July 4th weekend. But Johnson was bothered by Bernard's style. He asked if a "more senior and seasoned" lead attorney could work with Bernard. "That pissed her off," says Johnson.
"I like the firm," he continues. "I thought they would be good, but I wanted somebody I had a little more confidence in. I didn't mean it in a negative way. And I was surprised she got all angry about it."
"I think she went out and found Wackenhut at the same time she was talking with us," Johnson adds. He says Bernard knew CCA was trying to get the CTF deal and even had a copy of the organization's proposal. He says the plan, the visit to Nashville, and talks with the CCA brass gave Bernard an insider's edgean edge she and Wackenhut have used in the ongoing contract dispute.
But Bernard denies having read CCA's proposal and then courting Wackenhut.
Johnson claims he had a similar experience with Nathanson, to whom he pitched the CTF proposal repeatedly when Nathanson was serving as Ward 3 councilmember. "Then I find out the guy I lobbied every chance I got is working with somebody else on my idea. I think we're the ones who got screwed," says Johnson.
Even though respected officials like City Administrator Rogers and District CFO Anthony Williams believe that the CCA proposal is the easy choice in the CTF contract affair, Bernard and Wackenhut still have plenty of opportunities to ambush CCA. First up is a vote by the council, where Bernard has a posse of close friends. Councilmembers Harold Brazil, Kevin Chavous, and Charlene Drew Jarvis have all benefited from fundraisers either organized or hosted by Bernard. And last year Bernard served pro bono as Ward 8 Councilmember Eydie Whittington's attorney when her seat on the council was challenged. At the recent council hearing, Whittington led the attack on the CCA proposal, frequently leaving the council chamber to consult with Bernard in the hallway, only to return with another bevy of questions.
Even if the package passes the council vote, it must still meet the scrutiny of the financial control board. In the interim, the General Services Administration and the National Capital Planning Commission must agree to transfer the land and title to the city before the deal is finalized.
"It's going to be OK," says a council source, who predicts that Whittington and others who owe Bernard will vote to approve the deal or simply skip out of the chamber when the vote is taken. And the control board is likely to follow suit, especially in light of Williams' support for the contract. If CCA gets by Bernard, she might wonder where she should have saved her chits for a better bet. She may find them useful for the three other privatization deals slated for the corrections department.
Jonetta Rose Barras