State procurement officials said Thursday that a company recently awarded a $15.8 million contract to operate Arkansas's youth lockup facilities is ineligible under the terms of the state's RFP.
Edward Armstrong, director of the Office of State Procurement, wrote in a letter that Rite of Passage, a Nevada-based company, "did not meet the RFP's stated minimum requirements" because the state of Colorado last August terminated a contract with Rite of Passage to run a juvenile facility in Durango, Colo.
Arkansas's RFP says a prospective contractor "shall not have received a contract termination due to nonperformance within the last five (5) years."
Armstrong's letter was addressed toYouth Opportunity Investments, an Indiana-based firm that was the only other bidder for the Arkansas lockup contract. After Rite of Passage was awarded the contract at the end of February, Youth Opportunity Investments objected. In a protest filed with the state procurement office on March 12, the company claimed its rival was ineligible for multiple reasons, including the Durango facility contract termination. (Rite of Passage responded to the protest on March 20.)
In his letter, Armstrong only addressed the issue of the Durango contract termination. Youth Opportunity Investment's "protest is sustained, and there is no need for me to consider the other grievances raised in it," he said.
With Rite of Passage now ineligible, the state Department of Human Services will instead "move forward with the remaining vendor, [Youth Opportunity Investments], as the winning bidder," agency spokeswoman Amy Webb said in an email Thursday afternoon. The Office of State Procurement handled the bidding process on behalf of DHS.
An Aug. 23, 2018 story from the Durango Herald details the "abrupt" closure of the Robert E. DeNier Youth Services Center in Durango by the Colorado Department of Human Services. The newspaper reported that the state accused the facility of "consistently failing to maintain standards, making misleading or false statements or reports [and] failing to provide safe conditions for children." A suspension order from the Colorado agency described two cases of employees at the DeNier facility using excessive force to detain youths.
In their response to Youth Opportunity Investment's protest letter over the Arkansas contract, attorneys for Rite of Passage argued the termination of its contract in Durango was not for "nonperformance." Armstrong disagreed.
Mike Cantrell, the executive director of Rite of Passage, disputed Arkansas's conclusion in a statement on Thursday. "We strongly and respectfully disagree with the Office of State Procurement. The scoring process of the bid was fair and we won this contract based on the merits of our proposal, won every category, and provided the state with the lowest bid," he said.
"We are both surprised and disappointed with this decision and are exploring all procedural and legal options related to the appellate process," Cantrell said.
The Arkansas contract is to operate five lockups in Dermott, Harrisburg, Mansfield and Lewisville. (The Mansfield site consists of two facilities, one for boys and one for girls.) Since 2016, Rite of Passage has run a sixth lockup, the Arkansas Juvenile Assessment and Treatment Center located near Alexander. That facility, the state's largest, operates under its own contract separate from the smaller facilities.
The AJATC contract will not be affected by today's decision, Webb confirmed; it runs through the end of July, with an option to renew and extend until June 2023.
When Rite of Passage began running AJATC, it took over from a series of previous contractors that had faced criticism over incidents of misconduct, abuse and neglect. But as the Arkansas Nonprofit News Network and other media have previously reported, problems continued after Rite of Passage assumed control, including instances of physical abuse and frequent use of solitary confinement.
Rite of Passage has said it has addressed concerns raised by critics, and, in his statement Thursday, Cantrell said the company's record at AJATC demonstrates it has been "a strong partner with the state."
"We have invested our own resources, participated in reform discussions, and made a positive turnaround for a facility that had experienced a traumatic past," he wrote.
Scott Hardin, a spokesman for the parent agency of the Office of State Procurement, said the ineligibility determination is final. Rite of Passage could still appeal in circuit court.
When asked whether the Office of State Procurement should have uncovered the Durango contract termination before it awarded the contract to Rite of Passage, Hardin said no. The state's "procurement team performed due diligence on the companies that submitted bids. However, the information that was raised in the protest was uncovered through a Freedom of Information Act request in another state. This information was not immediately available in the research conducted by procurement," he wrote in an email.
The rival companies submitted similarly priced bids. Rite of Passage proposed a daily bed rate of $235 per incarcerated youth; Youth Opportunity Investment proposed a daily rate of $236. Both are far higher than the $145 daily rate paid to contractors when the youth lockups were last privately managed in 2016.
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Since Jan. 1, 2017, all of Arkansas’s lockups except AJATC have been under the direct management of the Department of Human Services’ Division of Youth Services. Before that, they were run for decades by two Arkansas-based nonprofits, South Arkansas Youth Services and Consolidated Youth Services. In 2016, the state gave the contract for the facilities to Youth Opportunity Investments. SAYS and CYS raised objections, and sympathetic legislators blocked the new contract in December of that year, which meant the state was headed into 2017 with no one to run the facilities at all. (AJATC continued to be operated by Rite of Passage.)
Governor Hutchinson then directed the state to take over the facilities, and they have remained in the hands of DHS ever since. At times, the agency has seemingly struggled to run the lockups; families and advocates have complained of unsafe and unsanitary conditions at some locations. The governor said in November the state would re-privatize the lockups by summer 2019.
On Thursday, Hutchinson said through a spokesman that state procurement officials had "conducted a thorough review and heard all arguments."
"DHS will proceed with the next steps for Youth Opportunity Investments to provide the services for our Division of Youth Services. The fact of the appeal and the decision does not present a challenge in terms of our timeline for transfer of state services to the private sector," the governor said.
This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans. Find out more at arknews.org.