STATE'S PRISON DEAL 'UNUSUAL'

An Arizona mayor who signed off on part of a multi-million dollar
government contract to house Hawai'i inmates in prisons on the
Mainland also is an employee of Corrections Corp. of America, the
company that holds Hawai'i inmates at the privately owned Arizona prisons.

The contract was not let out for bid because it was a
government-to-government transaction between the state of Hawai'i and
Eloy, Ariz., that is exempt from competitive bidding.

Hawai'i officials say the "highly unusual" situation involving Eloy
Mayor Byron K. Jackson isn't covered by the Hawai'i state procurement
law, but does raise questions about the contract.

"I think on the surface, the appearance is poor," said Hawai'i Chief
Procurement Officer Aaron Fujioka.

Jackson works as a corrections officer at the Red Rock Correctional
Center, where the Hawai'i inmates are housed. He said he discussed
his employment with the Eloy city attorney, who concluded Jackson has
no conflict of interest because Jackson does not gain anything
personally through the government-to-government contract.

Fujioka said government-to-government contracts are usually exempt
from competitive bidding requirements because of the presumption that
when one government agency purchases a service from another
government agency, no private individual stands to benefit.

That presumption would be called into question if a government
official signing the contract has a personal financial interest in
the contract.

Fujioka was not involved in the contract because
government-to-government contracts are exempt from the state
procurement code, which Fujioka oversees as administrator of the
state procurement office. The contract was handled by the Hawai'i
Department of Public Safety with legal advice from the state Attorney
General's office.

Deputy Attorney General Diane Taira said the Hawai'i officials
involved in the contract were not aware Jackson works as a
corrections officer for CCA. Taira said she and others in the state
are looking into the matter, and have made inquiries with Eloy city officials.

"It doesn't, certainly, present well," Taira said of Jackson's
signature on the document. "At worst -- and I'm not saying it is at
the worst because our inquiry is ongoing -- at the worst, perhaps it
is a voidable contract, but it does not necessarily make the contract
automatically void."

Technically, the state contracts with the city of Eloy to house
Hawai'i inmates, but the prison where the inmates are housed is owned
and operated by CCA, which provides all of the services required
under the contract.

Eloy Vice Mayor Frank C. Acuna III signed off on the contract last
June on behalf of Eloy as the "provider," while a CCA vice president
signed the contract as the "provider's administrator." Then in
September, Jackson signed off on behalf of Eloy on the contract's
compensation schedule, which sets the amounts the state pays per
inmate per day.

Jackson said he arranged to have Vice Mayor Acuna sign the main
portion of the Hawai'i contract in June to avoid any appearance of a
potential conflict.

Jackson said he could not recall why he personally signed off on the
Hawai'i contract's rate and payment schedule on Sept. 25.

Louise Kim McCoy, spokeswoman for the Hawai'i Department of Public
Safety, said Public Safety Interim Director Iwalani White was not
aware Jackson worked for CCA when White signed off on the same
payment schedule document on Oct. 12.

Since Hawai'i procurement law doesn't address this particular set of
circumstances, Taira said the issue is really whether Jackson
complied with Arizona ethics law in signing off on the document.

Arizona's conflict of interest law requires that "any public officer
or employee of a public agency who has, or whose relative has, a
substantial interest in any contract, sale, purchase or service to
such public agency shall make known that interest in the official
records of such public agency and shall refrain from voting upon or
otherwise participating in any manner as an officer or employee in
such contract, sale or purchase."

Jackson, who said he has worked for CCA since June 1, said that issue
was considered and put to rest.

"At the time, all this was run by our city attorney, and he felt
there was no conflict of interest because there is no personal gain
to me whatsoever," Jackson said. "There's a gain to the city, and it
benefits CCA, but as I'm concerned personally, there's no monetary gain."

The state holds nearly 1,700 men and 175 women in private prisons
operated by CCA in Arizona, Oklahoma, Mississippi and Kentucky
because there is no room for them in Hawai'i prisons.

The state will spend about $45 million this year to house the
out-of-state inmates, and is asking state lawmakers for more money to
export another 200 inmates.

CCA is building a new 1,896-bed facility called Saguaro Correctional
Center in Eloy to house Hawai'i inmates, and the state plans to
consolidate all of the prisoners now housed in other states at the
Saguaro and Red Rock facilities later this year.