The Colorado State Auditor completed a review of the state's private prison contracts in November 2006. The audit found that former Director of Prisons Nolin Renfrow's "private business activities arguably present a conflict of interest and result in a breach of his fiduciary duty and the public trust."

The State Auditor recommended that the Colorado Department of Corrections (CDOC) investigate Renfrow and possibly turn the matter over to the district attorney for prosecution. The audit also suggested that the CDOC strengthen its safeguards for ensuring compliance with codes of ethics and conduct, and develop a strategic plan to address Colorado's prison overcrowding crisis.

While the State Auditor failed to identify Renfrow by name, referring instead to a "former senior-level employee," State Representative Liane "Buffie" McFadyen identified Renfrow as the employee in question. McFadyen, a long-time foe of prison privatization, had requested the audit. She characterized Renfrow's conduct as a "clear conflict of interest."

In August 2005, Renfrow incorporated a prison consulting business with the Colorado Secretary of State. He began operating the business as early as November 2005 while on a combination of annual, sick and holiday leave from his position at the CDOC. Renfrow retired on January 31, 2006 after 28 years of state DOC employment. The Auditor found no evidence that Renfrow had obtained the consent of either his physician or his supervisor to engage in outside employment, as required by State Personnel Board rules and CDOC regulations. Renfrow had used 240 hours of paid sick leave, worth $14,000, during the period when he was pursuing his private consulting work.

While on leave Renfrow assisted the Geo Group, formerly Wackenhut Corrections, in developing a $14 million proposal to build a 1,500-bed private prison in Ault, 10 miles southeast of Fort Collins, Colorado. He also spoke to Ault officials on behalf of Geo. Section 24-l8-l08(2)(b) of the Colorado Revised Statutes prohibits a state employee from assisting any person for a fee or other compensation in obtaining any contract or economic benefit from the employee?s agency. If the facility is built, Renfrow stands to reap a $1 million consultation fee.

The Geo Group was selected to build the prison but then began negotiating with the state. The company tried to hold out for a guarantee of 90 percent occupancy over the next 30 years, or more than $25.6 million annually in current dollars. Colorado has never before made such an agreement. Additionally, Geo wanted Ault to issue tax-exempt revenue bonds to fund construction of the facility, despite having cited private funding in its bid proposal.

In March 2007, Rep. McFadyen called for the CDOC to rescind its agreement with Geo, citing conflicts in the bidding process and Colorado's troubled history with the company. Previously, Geo was selected in 2003 to build a private prison in Pueblo. The project became mired in zoning issues, community resistance and delayed FAA approval (the prison was to be built near an airport). Geo then tried to renegotiate for occupancy guarantees. The contract was cancelled in December 2006 due to non-performance. "I think the state was held hostage for four years waiting for their beds," said Rep. McFadyen.

The Ault prison project also faced zoning issues and community resistance, as well as lawmaker opposition. "It feels tainted," state Rep. Fran Coleman said of the CDOC's Request for Proposal (RFP) bidding process for the facility. Rep. McFadyen had sharp criticism for Geo, too, stating, "They hired an insider knowing he worked for the state. In my mind, Geo has shown itself to be not a company that operates fairly in the state of Colorado."

The Colorado Criminal Justice Reform Coalition, an advocacy group, likewise urged the state to cancel Geo?s contract, remarking in a March 5, 2007 letter that they had "no confidence in the integrity of the bidding and procurement process given the clear conflict of interest and misconduct when Nolin Renfrow provided private consultation services to the Geo Group in the development of their bid in response to the 2005 RFP while still employed by the DOC."

Under pressure, the state rescinded Geo's contract for the Ault prison on April 24, 2007, when CDOC Executive Director Ari Zavaras, in a letter to the company, stated the department would no longer discuss Geo's request for a guaranteed occupancy rate. "It was apparent the Department and Geo could not come to an agreement," said CDOC spokesperson Allison Morgan.

Renfrow, meanwhile, had to deal with problems of his own. While the State Auditor found no evidence that he had disclosed confidential information to assist Geo or his other clients, the Auditor recommended that the CDOC investigate Renfrow's activities "regarding compliance with ethical and legal requirements," seek reimbursement for his misused paid leave, and refer the matter for prosecution. The CDOC initially put its Inspector General on the case, but Zavaras turned the matter over to the Colorado Bureau of Investigation in January 2007. Zavaras said he asked the CBI to take over to "overcome the perception that it won't be a thorough investigation." The CBI completed its review and forwarded the results to the El Paso District Attorney's office in July 2007; however, prosecutors declined to press charges, citing insufficient evidence.

The State Auditor further found that the CDOC did not require employees to take refresher training on codes of conduct and ethics. While the CDOC?s required basic training program includes "Professionalism - Code of Conduct," that course focuses on fraternization with prisoners and barely touches on outside employment and business dealings. More than half of the staff training files reviewed, including Renfrow's, revealed that the employees had not attended the Professionalism class since 1995 or earlier. The Auditor recommended that the CDOC require all employees to annually attest "that they have read, understand, and will abide by the Governor's executive order on the code of ethics." Management should receive refresher training on ethics and conduct at least every two years. The CDOC agreed to implement the recommendations.

The state audit also discussed Colorado?s prison bed shortage. The cause of the shortage lies in the state's sentencing reforms of 1985, which doubled the maximum penalties for all felonies. From June 1988 to October 2006, the prison population grew 340 percent while the state's non prisoner population increased only 42 percent. Colorado's prison population is projected to grow 33 percent, or by another 7,300 prisoners, to 29,300 prisoners by June 2011.

Colorado state and private prisons are now at 99 and 97 percent of operational capacity, respectively. About 400 state prisoners are housed in county jails and the CDOC has sent 479 prisoners to a CCA-run prison in Sayre, Oklahoma. Only one state prison is under construction, a 948-bed administrative segregation unit scheduled to open in August 2009. The CDOC estimates it will need 1,230 ad-seg beds by that time.

The CDOC has asked lawmakers for $100 million annually over the next five years to build more prison beds. Annual operating expenses would increase $196 million to over $800 million. The legislature is not expected to authorize such large expenditures due to limited revenues and pressing transportation, higher education and other funding needs.

The State Auditor recommended that the CDOC develop a strategic plan to address the looming crisis and identify alternatives such as increased community corrections placement, increased double-bunking, increased use of private prisons, and housing prisoners in gymnasiums and other open areas, in addition to building new facilities. Notably, the Auditor did not suggest paroling any of Colorado's 10,000 prisoners who are past their parole eligibility dates or changing Colorado's draconian sentencing laws.

Sources: The Pueblo Chieftain; The Denver Post; Rocky Mountain News; Greeley Tribune; "Private Prison Procurement, Dept. of Corrections Performance Audit," Nov. 2006, Audit No. 1819 (available online at www.state.co.us/auditor)