Monday, March 31, 2003
Crain's Chicago Business

With little notice and no public bidding, Cook County is moving to renew a lucrative contract under which it, SBC Communications Inc. and a tiny partner firm will split tens of millions of dollars in fees paid by the families of County Jail prisoners who phone home.

In line for the no-bid deal that's expected to net the county $18 million in commissions over the next three years are Texas-based telecom giant SBC and Crucial Communications LLP, a four-employee company operated by Jabir Herbert Muhammad, the onetime spiritual adviser and manager of boxer Muhammad Ali.

Although the county is not welcoming competitive bidding, the Illinois Department of Corrections late last year did seek bids for a similar phone service contract, covering inmate phones at 41 facilities around the state, and drew five competitors. The winner was new to most of the prison system - and is paying the state a commission of 56% of gross receipts, compared with the 45% Cook County will get.

Picking up the tab under the county pact will be those who receive calls from individuals awaiting trial and others held in the County Jail. In most instances, prisoners are allowed to make only collect calls, and those they phone - generally family members, attorneys and ministers - will be billed under the new contract at up to $5.77 for a 20-minute local call.

The contract pending before the Cook County Board would replace an existing pact with SBC and Crucial Communications that still has another year to run, and extend it by two years. The proposal is drawing sharp fire from some members of the board, which was substantially recast in last year's elections.

"We don't need to rip off people who are already down and out," says Commissioner Bobbie Steele, a Democrat representing Chicago's West Side. "These rates place such a burden."

"I have no gripe with SBC," says north suburban Commissioner Larry Suffredin, who ousted a long-term incumbent in November. "I do have a problem with a public policy that allows the families of those in jail to get stuck with these charges."

SBC defends the contract on the grounds that prisoners incur the same collect-call rates from any pay phone. It says it sought the state contract, but failed to win it because the rates it would charge are too low to be competitive.

Phone calls or medicine

County officials say they're sticking with SBC because jail operations could be disrupted if another firm had to replace the jail's 1,000 phones.

Convict calling programs have long been controversial, with prisoner welfare groups charging that they make it difficult for prisoners to stay in touch with loved ones and, eventually, to reintegrate into society.

Chicago attorney Michael Deutsch, who unsuccessfully challenged the practice on constitutional grounds in a 1999 federal court suit here, says the practice results in hardship for prisoners' families.

"A lot of people have had their phone service cut off because they couldn't pay their bills" of up to $350 a month, he says. "One woman had to choose between keeping up with her medicine and stopping talking to her son in jail."

Under the proposed new pact, prisoners without calling cards must make an operator-assisted collect call costing $2.71 to connect plus eight cents to 16 cents a minute. The county expects to earn $6 million a year from its share of the calling fees, up from the current $4.5 million.

Caryn Stancik, press secretary to Cook County Board President John H. Stroger Jr., said officials are discussing a plan, separate from the current pact, to make prepaid phone cards available for sale at the jail. That would eliminate the $2.71 connection fee, but not the per-minute charge.

Mr. Suffredin, who works as a lobbyist in Springfield and has represented some of SBC's competitors, says that would help, but expresses doubts that the county would want to cut its income.

SBC and Chicago-based predecessor Ameritech Corp. have held the county contract since 1994. It was renewed - also without bidding - in 1999, when Crucial Communications was brought in as a subcontractor.

State records indicate that Crucial Communications was formed in 1999 and that its president is Mr. Muhammad, son of Nation of Islam founder Elijah Muhammad.

Mr. Muhammad was not available for comment. Crucial CEO Dolores Wade confirmed his identify in a brief phone interview and said the company has one client: the county. The firm manages a computer through which prisoners' calls are routed, and has two staffers at the jail to help keep phones in operation, she said.

Ms. Wade would not disclose how much the firm is paid, but said it is entitled to 30% of Ameritech's share of gross revenues. "We don't set the (calling) fees - SBC does," she added.

Asked what expertise the firm has in telecommunications, Ms. Wade replied, "Just like anyone else, you learn what you need to do as you go along."

Says Ms. Stancik, Mr. Stroger's press secretary: "That sounds like a mentoring program." She says SBC was "encouraged," but not required, to hire a minority subcontractor. She referred other questions about Crucial to SBC.

$400,000 signing bonus

A spokeswoman for SBC asks whether there have been any complaints about Crucial's performance, and says the company was told it had to have a minority partner. Also, Crucial is getting 30% of net, not gross, revenues, she says.

Catherine Maras O'Leary, the county's chief information officer, says Sheriff Michael Sheahan was "adamant" about not bringing in another firm because of potential disruptions, and stresses that SBC is offering a $400,000 signing bonus and valuable public service software that may not be included in the state prison contract.

Mr. Sheahan says he did express some concerns about security in 1999, but has not spoken with anyone in Mr. Stroger's office about it since.

The SBC spokeswoman says the company wanted a new contract early because it intends to install upgraded equipment and couldn't afford to do so without a long-term deal in place.

SBC and Ameritech have donated several thousand dollars to Mr. Stroger's campaigns since mid-1999.