BILLINGS - An empty jail where promoters tried unsuccessfully to bring Guantanamo Bay terrorism detainees has landed a 10-year operating contract with a private security firm that says it wants to sharply expand the lockup.

The deal to house hundreds of low- and medium-security inmates in the Hardin jail involves American Police Force, a California-based security company.

City leaders trumpeted the agreement as a potential savior for a $27 million economic development project that has become a civic embarrassment after sitting idle for more than two years.

But outside Hardin, skepticism lingered.

A California corrections system spokesman, Gordon Hinckle, said there was "no truth" to assertions by city officials that prisoners from California would likely be housed in the jail. And U.S. Marshal Dwight MacKay in Billings rebutted claims that federal prisoners could be involved.

"I don't know where in the heck they're getting them from," MacKay said.

Full terms of the contract were not provided. But Albert Peterson, vice president of Hardin's Two Rivers Authority, the city's quasi-public economic development agency, said the agency would receive $5 per prisoner a day and enough additional money to pay off $27 million in bonds still owed on the jail.

Those bonds went into default last year. Peterson is also superintendent of Hardin's public schools.

An American Police Force representative who asked to remain anonymous because of security concerns said the existing 464-bed jail would be expanded to include a 102,000-square-foot military and law enforcement training center, homeless shelter, animal shelter and possibly enough beds for as many as 2,000 prisoners.

He said the firm did not yet have contracts for inmates, but expected to get at least 1,000 now that it has a place to house them.

He said the firm plans to invest $30 million in new construction at the jail site at the edge of Hardin, a town of 3,500 located about 45 miles southeast of Billings.

That includes at least $17 million for the training center, which is envisioned to offer everything from sniper training to DNA analysis for domestic and international law enforcement and military personnel.

But the operating contract, signed Sept. 4, is limited to the existing jail, said Two Rivers' executive director Greg Smith.

"All this stuff kind of takes time," he said. "The focus here to me is on the detention center - get the thing open and run it."

Smith said he had been told by American Police Force representatives that the company had been in the detention business years ago, but said he had not inquired further and did not have any details.

An executive with the jail's former contractor, CiviGenics, said he had never heard of American Police Force.

The security firm, based in Santa Ana, claims to have 28 employees in the United States and 1,600 contractors worldwide. Those claims could not be verified.

Smith declined to answer questions about the contract, but said he would make the document public after presenting it to the Hardin City Council next Tuesday.

Members of the authority and Hardin officials have spent much of the last two years searching for inmate contracts to no avail. Asked about the likelihood of American Police Force succeeding, Smith said he was confident the first batch of 150 to 200 prisoners would be in place by mid-January.

He said the first payment under the contract is due Sept. 1.

On its Web site, American Police Force lists services ranging from convoy security in war zones such as Iraq to assault weapons sales and investigations into cheating spouses. It was registered in March as a California corporation, under the name American Private Police Force Org Inc.

The Hardin jail was built by the Two Rivers Authority as an economic development project in cooperation with a consortium of Texas developers. Its backers had hoped to land contracts to house state and federal inmates.

But it has remained empty after the administration of Gov. Brian Schweitzer said it had no need for the facility and other contracts never materialized.

"Thank you, governor, for turning Hardin down, because now we've got something that's 10 times better," Peterson said.

The facility's prior contract operator, CiviGenics, left about six months ago.

Montana Department of Corrections spokesman Bob Anez said his agency was not involved in the deal between Two Rivers and American Police Force.