Captive Company

STORY PROPOSAL

It's unusual to find a company that negotiates with clients about the use of deadly force. But that's just what I found at Corrections Corporation of America, which runs jails. CCA is in the vanguard of the movement to turn more public operations over to private industry -- especially difficult here, jails being notoriously costly and poorly run.

E.L.

ROBERT G. ("BUTCH") BRITTON LOOKS a little out of place. He is standing now before the five commissioners who run Jackson County, situated just beyond the Alabama and Georgia borders, had only 42,000 people. In the county courthouse in Marianna, a vending machine still dispenses Coke in bottles and people still put the empties in the adjacent metal rack. A sign on the courthouse door asks visitors to "please" leave their guns and knives in their cars.

Britton, a tall man with silver-gray hair, is wearing what may be the only pin-striped suit within a 30-mile radius. He looks like an insurance salesman, but there's only prison in his background -- jobs running entire corrections systems in Texas, Arkansas, and Alabama -- and what he's pitching today is a solution to the county's jail troubles. Like most of Florida's counties, Jackson County was sued a few years ago by the state, charged with having an unsafe, overcrowded jail. The commissioners now realize the jail must be replaced. Britton is here representing Nashville's Corrections Corporation of America (CCA), the country's largest and most successful operator of private jails.

His pitch is slick, direct. First he shows TV news clips about CCA. He knows which buttons to push. He starts his talk by telling the story of Bay County, due south -- how its jail too had been overcrowded, how its commissioners "had several very serious lawsuits filed personally against them for conditions in the jail." CCA cleaned up Bay County's old jail and added a new annex; soon afterward, the state dropped its suits.

Jackson County would not have to worry about overcrowding ever again, Britton promises. CCA would build a new state-of-the-art jail, and would do so with future expansion in mind. As the jail population grew, CCA would add cell blocks, financing them itself. The county would pay for this over time, in the per diem charges levied for each inmate. Britton promises, too, that the commissioners would no longer have to fear personal loss from jail-related lawsuits. "If you do get sued, we'll represent you," he says. "And if there are any awards made, we pay 'em."

Commissioner S. Durelle Johnson, his voice gruff, asks Britton what Bay County pays for all this, per day, for each inmate. Johnson seems not to believe the answer.

"No other costs?" he asks.

"No. That's it."

"What about liability, and the facilities?"

"Every cost," Britton says.

"What about the annex?"

"They're both the same: $29.81."

Johnson persists. "Total cost?"

"Total," Britton says. Britton does not, however, mention some of the other things that went on in Bay County before CCA took over its jail -- the threats, for example, that were aimed at two pro-CCA commissioners. Or the way supporters of the local sheriff later voted one of them out of office. Or how the sheriff, when it became clear he had lost his jail for good, hauled away all his inventory, including telephone books, food, leftover clothing, even some desks. As one Bay County commissioner recalls, "The sheriff pitched an absolute fit."

The challenges faced each day by CCA would likely chill the souls of garden-variety entrepreneurs. Clearly, every new venture risks failure. But CCA risks riot, murder, mayhem. At any one moment, its inmate population includes kids who stole cars, adults who took lives. If its products fail, dangerous people escape. CCA contracts cover the use of deadly force. The company's shopping list includes razor wire and billy clubs.

All this is bad enough. But CCA also faces assault from outside its fences. When McDonald's Corp. decides to sell a new kind of hamburger, no one questions its moral, philosophical, or constitutional right to do so. CCA, however, meets such opposition every time it tries to win a contract. It has battled unions, civil-rights watchdogs, and corrections bureaucracies -- perhaps the most entrenched bureaucracies of all. "The idea is so foreign to most people's experience," says Thomas W. Beasley, who conceived CCA and is now its chairman. "Their first impulse is to say only the government can do it, because only the government's ever done it. But their second reaction is that the government can't do anything very well." At that point, he says, "you just sell it like you were selling cars or real estate or hamburgers."

CCA contends it can run jails not only cheaper than government can, but better. It tries to mine its profits from that nether zone of government waste and inefficiency, in which red tape ensnares even simple decisions. Freed from bureaucratic restraints, the company can act faster than public agencies in everything from construction to buying shampoo. It devises employee incentives and designs more efficient, less labor-intensive jails. It won't pursue contracts in any area heavily dominated by organized labor. Employees share in the profits of the company through an employee stock ownership plan. The formula for success doesn't take a rocket scientist to figure out, says Doctor R. ("Doc") Crants, president and a cofounder. Every employee comes to work on time and every employee works his eight hours, or he's history. "It's so simple, it's shocking," says Crants.

This year, that formula may produce CCA's first profit. After five years of losses, albeit declining ones, CCA expects to begin booking quarterly net income in the fourth quarter. (CCA, public since 1986, lost $1.9 million last year on $17 million in revenues.) The company runs nine jails, work camps, and juvenile centers in four states, and is a partner in several European joint ventures. How CCA reached this point is a story for these times. The capitalist world seems giddy with the idea that private industry can surpass government in almost any pursuit. In Great Britain, Prime Minister Margaret Thatcher's government has sold off many state-owned industries, including Jaguar and British Airways. Last March, the President's Commission on Privatization urged the U.S. government to shed a broad array of public operations, including administration of prisons.