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Evaluation Report on Contract Management of Private Correctional Facilities - June 30, 2005

This evaluation report by the Department of Management Services Office of Inspector General outlines significant oversight failures in contract management related to private correctional facilities. Key findings indicate that the Correctional Program Contract (CPC) inadequately safeguarded the state's interests, leading to questionable vendor concessions and improper payments totaling approximately $4.5 million. Additionally, contract compliance issues resulted in overpayments and mismanaged resources, exacerbating financial burdens on the state. The report highlights crucial areas needing reform to enhance accountability and efficiency within the correctional system.

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Evaluation Report on Contract Management of Private Correctional Facilities - June 30, 2005

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  1. Department of Management Services Office of Inspector General Evaluation Report Contract Management of Private Correctional Facilities June 30, 2005

  2. OUR REVIEW SHOWED • THE CPC FAILED TO ADEQUATELY SAFEGUARD THE STATE’S INTEREST. • THE CPC CONSISTENTLY MADE QUESTIONABLE CONTRACT CONCESSIONS TO THE VENDORS.

  3. CPC Oversight • The CPC failed to enforce contract provisions relating to the reporting of vacancies in staff positions. This resulted in vendors receiving payments of about $4.5 million to which they were not entitled.

  4. CPC Oversight (Cont.) • The CPC allowed vendors to waive required staffing patterns for non-correctional positions and did not reduce vendors’ monthly per diem payments. As a result, the State overpaid vendors about $290,000.

  5. CPC Oversight (Cont.) • The vendor at the South Bay Correctional Facility received questionable payments of about $3.4 million during the period of January 1, 1999 through December 31, 2004, for salary additives referred to as Competitive Area Differential (CAD) payments.

  6. CPC Oversight (Cont.) • The State was charged a “burden” or overhead on the Competitive Area Differential payments the South Bay vendor received during the contract period. These ‘burden’ payments amounted to about $1.57 million.

  7. CPC Oversight (Cont.) • In November 2001 special session, the Legislature zero-budgeted CPC salaries and expense funds. The CPC authorized a per diem increase to the vendors who in turn remitted the per diem back to a trust fund from which the CPC paid salaries and expenses of about $500,000 annually.

  8. CPC Oversight (Cont.) • Gadsden Correctional Facility receives an additional per diem rate of $2.30 per inmate (up to 768 inmates) or about $645,000 per year for routine and major maintenance and repair of the facility under the terms of its contract. However, the Facility only spent an average of $170,000 annually on maintenance and repair.

  9. CPC Oversight (Cont.) • The Inmate Welfare Trust Fund was used to supplement the cost of contractually required programs and services. During FY 2003-04, vendors expended about $988,000 for contractually required programs and services.

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