An Arizona mayor who signed off on part of a multi-million dollar government contract to house Hawai'i inmates in prisons on the Mainland also is an employee of Corrections Corp. of America, the company that holds Hawai'i inmates at the privately owned Arizona prisons.

The contract was not let out for bid because it was a government-to-government transaction between the state of Hawai'i and Eloy, Ariz., that is exempt from competitive bidding.

Hawai'i officials say the "highly unusual" situation involving Eloy Mayor Byron K. Jackson isn't covered by the Hawai'i state procurement law, but does raise questions about the contract.

"I think on the surface, the appearance is poor," said Hawai'i Chief Procurement Officer Aaron Fujioka.

Jackson works as a corrections officer at the Red Rock Correctional Center, where the Hawai'i inmates are housed. He said he discussed his employment with the Eloy city attorney, who concluded Jackson has no conflict of interest because Jackson does not gain anything personally through the government-to-government contract.

Fujioka said government-to-government contracts are usually exempt from competitive bidding requirements because of the presumption that when one government agency purchases a service from another government agency, no private individual stands to benefit.

That presumption would be called into question if a government official signing the contract has a personal financial interest in the contract.

Fujioka was not involved in the contract because government-to-government contracts are exempt from the state procurement code, which Fujioka oversees as administrator of the state procurement office. The contract was handled by the Hawai'i Department of Public Safety with legal advice from the state Attorney General's office.

Deputy Attorney General Diane Taira said the Hawai'i officials involved in the contract were not aware Jackson works as a corrections officer for CCA. Taira said she and others in the state are looking into the matter, and have made inquiries with Eloy city officials.

"It doesn't, certainly, present well," Taira said of Jackson's signature on the document. "At worst — and I'm not saying it is at the worst because our inquiry is ongoing — at the worst, perhaps it is a voidable contract, but it does not necessarily make the contract automatically void."

Technically, the state contracts with the city of Eloy to house Hawai'i inmates, but the prison where the inmates are housed is owned and operated by CCA, which provides all of the services required under the contract.

Eloy Vice Mayor Frank C. Acuna III signed off on the contract last June on behalf of Eloy as the "provider," while a CCA vice president signed the contract as the "provider's administrator." Then in September, Jackson signed off on behalf of Eloy on the contract's compensation schedule, which sets the amounts the state pays per inmate per day.

Jackson said he arranged to have Vice Mayor Acuna sign the main portion of the Hawai'i contract in June to avoid any appearance of a potential conflict.

Jackson said he could not recall why he personally signed off on the Hawai'i contract's rate and payment schedule on Sept. 25.

Louise Kim McCoy, spokeswoman for the Hawai'i Department of Public Safety, said Public Safety Interim Director Iwalani White was not aware Jackson worked for CCA when White signed off on the same payment schedule document on Oct. 12.

Since Hawai'i procurement law doesn't address this particular set of circumstances, Taira said the issue is really whether Jackson complied with Arizona ethics law in signing off on the document.

Arizona's conflict of interest law requires that "any public officer or employee of a public agency who has, or whose relative has, a substantial interest in any contract, sale, purchase or service to such public agency shall make known that interest in the official records of such public agency and shall refrain from voting upon or otherwise participating in any manner as an officer or employee in such contract, sale or purchase."

Jackson, who said he has worked for CCA since June 1, said that issue was considered and put to rest.

"At the time, all this was run by our city attorney, and he felt there was no conflict of interest because there is no personal gain to me whatsoever," Jackson said. "There's a gain to the city, and it benefits CCA, but as I'm concerned personally, there's no monetary gain."

The state holds nearly 1,700 men and 175 women in private prisons operated by CCA in Arizona, Oklahoma, Mississippi and Kentucky because there is no room for them in Hawai'i prisons.

The state will spend about $45 million this year to house the out-of-state inmates, and is asking state lawmakers for more money to export another 200 inmates.

CCA is building a new 1,896-bed facility called Saguaro Correctional Center in Eloy to house Hawai'i inmates, and the state plans to consolidate all of the prisoners now housed in other states at the Saguaro and Red Rock facilities later this year.