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State calls off contract with prison firm
Deal would have been with company that hired 2 retired corrections officials

By Mark Martin
Chronicle Sacramento Bureau
Friday, February 4, 2005

Sacramento -- Gov. Arnold Schwarzenegger's administration this week abruptly canceled a no-bid contract it was set to award to a private prison company that employs two former high-ranking state corrections officials.

After pursuing a deal with the company for several months, a spokesman for the state Department of Corrections said the department decided Wednesday that it was no longer interested in finalizing a $5.7 million contract that would have reopened the Mesa Verde Community Corrections Facility in Bakersfield. The contract would have been with a Massachusetts-based company called CiviGenics, which recently hired two retired Department of Corrections officials. The company and administration insist the two hires had nothing to do with the company nearly getting the contract.

On Wednesday, The Chronicle requested information about the contract, including communications between corrections officials and the company. Todd Slosek, a corrections spokesman, said the decision to shelve the deal was made late Wednesday after the department decided it didn't need extra beds after all.

The aborted deal is one of two the administration had been advancing to pay private prison companies to run previously shuttered facilities and help alleviate overcrowding at state prisons. The state has finalized a contract with GEO Group Inc. to reopen a prison in McFarland (Kern County).

In both cases, the administration chose not to allow other interested companies to bid for the jobs, a typical procedure used to ensure that taxpayers get the best deal. Instead, prison officials said they were facing emergency overcrowding and needed to strike quick deals with the two firms without going through the lengthy bidding process.

Both contracts have come under fire, however, because both companies have hired people with ties to the corrections department or Schwarzenegger's administration.

State Sen. Gloria Romero, D-Los Angeles, called for a state audit of the deals last week after the Los Angeles Times reported that Schwarzenegger's former finance director, Donna Arduin, was appointed to the board of directors of a trust that owns the facility that GEO Group plans to use.

CiviGenics employs Michael Pickett, a former warden and deputy director for health services at the Department of Corrections, and David Tristan, a former deputy director of operations for the department.

"The revolving door is spinning so fast it's now hit the department in the rear end,'' Romero said in an interview Thursday.

Peter Ageropulos, chief operating officer for CiviGenics, said he hired Pickett in December and Tristan in January, both after the company had already begun plans to run a 340-bed minimum-security facility in Bakersfield. Pickett was hired to help open the facility while Tristan will help the company's long- term planning in California, Ageropulos said.

"Neither one had anything to do with that contract,'' he said.

Tristan, who lives in Nevada, and Pickett both have unlisted telephone numbers, and efforts by The Chronicle to contact them were unsuccessful.

CiviGenics CEO Roy Ross was formerly director of administration for the Shriver Center, a biomedical research center founded by California first lady Maria Shriver's mother, Eunice Kennedy Shriver. A spokeswoman for the first lady said Maria Shriver had no knowledge of the contract.

The contracts with GEO Group and CiviGenics were born out of a population crisis at state prisons that has inmates sleeping in gyms, cafeterias and even chapels.

Faced with a record-high population, state prison officials began exploring last year the possibility of reopening privately run corrections facilities that had been closed in 2003. Administrators contacted several firms.

But instead of conducting a bidding process to determine who could run the prisons for the best price, corrections officials decided to contract with the two companies.

The two firms were selected because they could open facilities quickly and were well-known companies, according to corrections documents filed with the state Department of General Services, whose approval is needed to approve many state contracts.

Other companies have objected to not being allowed to bid.

Gary White, who ran the Bakersfield facility before it was closed in 2003, said he spoke with corrections officials in October, and submitted paperwork to them concerning reopening. White said department officials discussed paying roughly the same amount they had paid him in the past for the 340-bed facility, about $39 per day per inmate.

White, who runs a company called Alternative Programs Inc., said he was stunned to learn in January that the department was proposing a contract with CiviGenics that would pay more than $46.

According to department documents, the two contracts the department had pursued were one-year deals, and corrections officials were considering accepting bids for five-year deals later in the year.

But Thursday, Slosek, the corrections spokesman, said the department had decided it didn't need the beds that were to be provided by CiviGenics. The department has recently converted two minimum-security Youth Authority camps into adult facilities, Slosek said.

Ageropulos was informed of the department's decision by The Chronicle on Thursday. He said he had been in Sacramento on Wednesday morning hashing out details of the deal with corrections officials. He said he had already hired a warden under the assumption the deal would be finalized.

"I have spent a lot of money,'' he said. "I guess we've had the rug pulled out from under us.''

E-mail Mark Martin at markmartin@sfchronicle.com.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/02/04/BAGV2B5IAR1.DTL

State calls off contract with prison firm Deal would have been with company that hired 2 retired corrections officials

State calls off contract with prison firm
Deal would have been with company that hired 2 retired corrections officials