In this country, in fact, prisons are already an industry, with a dozen companies and partnerships competing for contracts. Some offer real competition, such as Pricor Inc., also in Nashville, and a joint venture between Bechtel Corp. and Wackenhut Services Inc. When Bay County put out its request for proposals, 11 companies responded; the county, however, took only 4 of them seriously, settling on CCA because its officers had the most prison experience.
No field better illustrates the method, risk, and potential reward of privatization than corrections. "I love it," says Tom Beasley, after attending a conference on prison overcrowding. "I just love it. We're the best thing that ever happened to corrections since they stopped beating 'em."
CCA became a company on Valentine's Day, 1983, the day Tom Beasley and Doc Crants took their plan for the company to the offices of Massey Burch Investment Group, a prestigious venture capital firm in Nashville.
Beasley and Crants, best friends since rooming together at West Point, had spent a year building a plan around Beasley's notion that private industry could help solve the nation's prison troubles. By then, Terrell Don Hutto, the third founder, had agreed to join. Each brought a talent necessary for the success of the idea: Beasley, a lawyer and chairman of the Tennessee Republican Party until 1981, brought the political skills and Crants, a Harvard-trained lawyer and M.B.A., the financial. Hutto, a former director of two state prison systems, delivered the corrections know-how. He also brought instant credibility: he'd just been named president-elect of the American Correctional Association, a post that could give CCA a foot in the door of any slammer in the country.
At Massey Burch, venture capitalist Lucius Burch was scouting for new businesses to carve from the public sector. The firm's appetite had been whetted by its success with Hospital Corporation of America, which runs private hospitals. Burch, in fact, had begun researching prisons long before Beasley and Crants walked through the door. He had simply lacked the team to turn the idea into a company. Fifteen minutes into the meeting, on only a handshake, Burch committed $500,000 to the venture.
Things continued going smoothly for CCA. Its business plan forecast that the company would get its first contract in about two years. Yet within six months, CCA signed two agreements, modest proposals that drew little opposition. Reactions were more intense a year later, however, when CCA offered to take over the entire Tennessee prison system. The plan was bold, innovative, and fresh; too bold, in fact. It threatened too many different constituencies -- labor, the corrections bureaucracy, legislators. In a 119-page proposal, the three founders said they would upgrade and run the Tennessee system for $210 million a year in management fees, $15 million less than the state had budgeted. The plan incensed organized labor. The American Federation of State, County, and Municipal Employees (AFSCME), CCA's nemesis, rallied to the cause.
The plan failed, but Beasley stands behind it even now. "This thing, the simplicity of it, is what drives you crazy," he says, clearly still frustrated by the memory. "There's nothing horribly complicated about all this. You write a business plan looking at the marketplace and the demographic data. . . . That's exactly the way we proceeded. Everybody thought that was so horribly unorthodox -- when it was so logical and sensible."
Not for CCA's enemies. Last year, the National Sheriffs' Association flatly opposed privatization. The Florida Sheriffs Association, in the wake of CCA's winning its Bay County contract, muscled a bill through the state legislature that made it much harder for county commissions to approve going private. In an AFSCME brochure, an attorney writes, "Are we really so deeply in the thrall of private enterprise that we are prepared to parcel out opportunities to some of our citizens to reap a profit from the punishment of others?"
Tom Beasley bristles at this kind of argument. The fundamental question, he says, is who can do it better? He describes the last legal case he handled in private practice: "I was assigned by the court to defend a guy in the Dickson County [Tennessee] jail who had led the assault by five guys on an 18-year-old inmate. They raped him 35 times from four o'clock on Friday afternoon until Monday morning. . . . There wasn't any doubt in my mind that we could beat the hell out of [the prison's] performance."
The troubles of the nation's prison system may well be CCA's biggest asset. Half the country's state systems are operating wholly or in part under court orders to reduce their prison populations or otherwise improve conditions. In 1985, overcrowding forced 19 states to release nearly 19,000 prisoners. All CCA's senior corrections executives tell stories of delay and waste from their days in the public sector -- in particular, how bidding procedures tied their hands. In Virginia, for example, the state corrections department bought pencils for twice what they cost in the local dime store. "You buy things on low bid, but low bid doesn't mean low price," says Don Hutto, who once ran the Virginia prison system.
In hiring its key managers, CCA insists on heavy-duty prison experience. Such experience is sure to be accompanied by frustration with the ways of public-sector prisons. CCA can offer these red-tape refugees freedom they never had in government -- the simple freedom, say, of buying a floor buffer in a single day. David L. Myers, a CCA vice-president, quit his job as warden of Texas's Eastham Unit in September 1985 to join CCA. He was intrigued by the concept of private jails, and was drawn as well by the good reputations of Don Hutto and Butch Britton. After joining CCA, Myers found he in fact did need to buy a floor buffer. He bought it on the spot, shaving about two months off what the process would have taken in Texas.
CCA can also dangle the prospect of mobility. In state systems, congealed by bureaucracy, promotions come slowly. Seniority may get more consideration than performance. The situation is far worse at the county level. "If you work in the local prison, your chances of being a warden are infinitesimal," says Beasley. "The probability is that 10 years from now you're going to be what you are today, only with more seniority." CCA also offers promotion to jobs in different states. Moreover, it offers promotions to jobs that don't exist in public corrections, such as marketing.
