Contract puts away prison firm's profit.

• Position: Brief Article

Corrections Corporation of America was supposed to confine North Carolina convicts, but now it's the Nashville-based prison operator that's trying to escape. And like a lot of people behind bars, CCA has no one to blame but itself.

In June, CCA announced that it had begun negotiations to terminate its contracts to manage two medium-security prisons, one in Spruce Pine, in the mountains, the other in Bayboro, near the coast. CCA spokeswoman Susan Hart said the company wasn't making money on the contracts. Its average daily per-inmate cost is "in the low $40s" at the 50 prisons its parent company owns around the country. The Bayboro contract paid $36.69 per prisoner; Spruce Pine, $36.75.

CCA, the management arm of publicly traded Prison Realty Trust Inc., acquired the contracts in 1998 when it bought U.S. Corrections Corp. The Kentucky-based company's low bid had won it the right to build, own and operate North Carolina's first private prisons. CCA had bid, too, but wanted more money. With the merger, it got the contracts -- but had to find a way to cut costs or subsidize them with profits from elsewhere.

The Department of Correction says CCA violated its contract by scrimping on staff and services. From March through May, 7.4% of security jobs at Bayboro and 9% at Spruce Pine were vacant. CCA was supposed to -- but never did -- put 100 inmates to work at each...