Paul Egan
Detroit Free Press
LANSING — The State of Michigan won’t transfer prisoners to a privately run prison because two firms that bid on the work submitted prices higher than what the Department of Corrections spends now, a state government spokesman said today.
Kurt Weiss, spokesman for the Michigan Department of Technology, Management and Budget, said it costs the state about $12.9 million to house the 968 prisoners involved and the lowest private bid was $18.6 million.
“In fact, both bids cost substantially more than the current direct costs for MDOC to provide the services,” Weiss said.
“Great care was taken to ensure that the numbers in the price analysis were accurate,” he said.
“Our internal auditor reviewed the numbers and confirmed them. Because the required cost savings were not achieved, the state will not be pursuing either of the bids.”
The accuracy of bid analysis by the management department and corrections department has been a source of recent controversy. State officials initially rejected bids to privatize prison food service, saying none of the bids received would achieve the 5% cost savings the Michigan Civil Service Commission required.
But after pressure from Republican lawmakers, state officials revisited the issue and found an error in their analysis. A three-year, $145-million prison food service contract was awarded Monday to Aramark Correctional Services of Philadelphia. State officials say they expect the company to take over full food service by Dec. 1, resulting in the layoff of 370 state employees.
On opening a private prison, companies were given two options, Weiss said. One was to use the state’s Standish prison, which closed in 2009. The other option was to use a private prison anywhere in Michigan.
Bids were received from the GEO Group Inc., based in Florida, and from Management and Training Corp., based in Utah, Weiss said. The lowest bid using Standish was $20.1 million in the first year and the lowest bid using a private prison was $18.6 million in the first year, he said.
“We respect the state’s decision to cancel the solicitation and make no awards at this time,” said Management and Training Corp. spokesman Issa Arnita. “We look forward to having another opportunity to work in the great state of Michigan.”
An e-mail seeking comment from GEO Group was not returned.
The prisoners would be moved to the private facility after closing three housing units in existing Michigan prisons, Weiss said.
Mel Grieshaber, executive director of the Michigan Corrections Organization, the union representing corrections officers, said the bid results are “a win for the taxpayers,” and “a win for correctional officers.”
“We’ve been tightening the belt for years, and the belt is about as tight as you can get it,” Grieshaber said.
Sen. Darwin Booher, R-Evart, expressed skepticism at the decision. “I look forward to reviewing the proposals and the state’s estimated cost numbers so that we can all see how they arrived at this decision,” he said.
“As we look for ways to reduce prison costs, we must ensure that the bidding process is transparent, fair and that there is an apples-to-apples comparison between the state and private companies.”
But Rep. Joe Haveman, R-Holland, chairman of the House Appropriations Committee, said the bid process was “solid all the way through.”
“They have trimmed their budget as we asked,” Haveman said. “The goal here was never to privatize, the goal was to save money.”