Private prison company facing sex harassment suit wins state contract

• State awards $70-plus million private prison contract to GEO Group
• GEO Group is a major donor to campaigns that helped elect Gov. Doug Ducey

The state of Arizona has awarded a multi-million-dollar contract to run a private prison outside Kingman to the GEO Group, which is being sued by the federal government over sexual-harassment claims at another Arizona correctional facility.

The GEO Group will assume an existing contract for the riot-damaged prison in Golden Valley, after Gov. Doug Ducey terminated a deal in August with the previous operator, Management & Training Corp.

GEO, which already runs private prisons for the state in Florence and Phoenix, beat out four bidders, by offering its services at the lowest price. The Florida-based company has been a major donor to campaigns that helped elect Ducey.

Ducey ended MTC's deal following a series of inmate uprisings around Fourth of July weekend that severely damaged the facility and forced the evacuation of roughly 1,200 inmates. A state investigation found MTC failed to control the riots and had a "culture of disorganization, disengagement, and disregard" of state Department of Corrections policies. MTC has said state monitoring reports and audits stated the company was largely in compliance.

The contract with GEO will run through 2023, according to Corrections. It calls for the state to pay the company $60.10 a day per inmate, the same amount paid to MTC, for up to 3,298 inmates. That translates to about $72.3 million a year. The state then would pay much lower per diem rates to house additional inmates, up to 3,508 prisoners.

GEO, which will begin training staff in early November, will take full operational control Dec. 1.

"The governor is confident the process was thorough and competitive," said Daniel Scarpinato, the governor's spokesman. "The governor is pleased that MTC will no longer operate the facility. The problems were unacceptable and that was the decision he canceled the contract."

Corrections wants to add 2,500 more prison beds

The contract comes as GEO faces a second federal Equal Employment Opportunity Commission lawsuit, filed in September.

The EEOC alleges that at least eight male GEO employees sexually harassed a female colleague at one of the company's two private prisons in Florence that house Arizona inmates. The woman was fired after she complained of mistreatment, according to the EEOC.

Pablo Paez, a GEO spokesman, said the EEOC's claim has no merit, and the company did not terminate the woman in retaliation.

"The GEO Group takes allegations of discrimination, harassment and retaliation very seriously," Paez said.

In an earlier suit by the EEOC and the state, GEO paid a total of $140,000 in 2013 to two other women who claimed they were sexually harassed while working at a private prison the company operates in Florence.

Asked about the sexual-harassment allegations, Scarpinato said bad behavior would not be tolerated.

State Corrections Director Charles Ryan said his agency is aware of the EEOC suit and called it a situation between GEO and its employees.

The DOC has had similar allegations of workplace harassment at the prisons it operates.

The Arizona Republic found that from 2009 to 2014 Corrections paid the largest amount among state agencies —  $2.55 million —  to settle workplace-discrimination allegations, including claims filed by female prison guards who alleged they were sexually harassed by male colleagues. Ryan has declined to comment on these cases.

GEO was among five companies seeking to take over the Kingman-area prison. The others were LaSalle, Emerald, Corrections Corporation of America and Community Education Centers. Ryan said GEO and CCA were the two finalists. But GEO ultimately won because it offered its services at a lower price than CCA, which runs a private prison for Arizona in Eloy.

The state has six private prisons. Prior to the riots, they held about one-sixth of the inmates. On Monday, there were 42,806 inmates statewide.

Public Disservice: Corrections has largest workplace payouts

Campaign-finance records with the Arizona Secretary of State's Office show GEO gave $2,000 directly to Ducey's campaign in 2014 and another $50,000 to Conservative Leadership for Arizona, an independent expenditure committee that supported Ducey's bid for governor.

Scarpinato, the governor's spokesman, said campaign contributions had nothing to do with GEO's getting the contract. He noted that MTC had also given $2,000 directly to Ducey's campaign, and the governor fired MTC.

"The governor makes these decisions on what is best for the state and in this particular case, what is the best interest of public safety," Scarpinato said.

Paez said GEO participates in the political process through campaign contributions and lobbying efforts as do other companies and organized labor. He added that GEO's political activities are aimed at promoting the benefits of public-private partnerships.

But Caroline Isaacs, a private-prison critic and state director for the American Friends Service Committee, said companies like GEO buy access to influential politicians like Ducey. She added it was a "travesty" for the state to award a contract to a company that has been involved in sexual-harassment suits.

She said Ducey and lawmakers shouldn't turn a blind eye to companies accused by the EEOC of engaging in bad behavior. She added state political leaders who support private prisons have failed to show such a partnership provides the best service at the lowest cost to Arizonans.