The shuttered state prison in Standish. (Charles V. Tines / Detroit News)
Lansing— The state has found a privately run prison would cost taxpayers more than a Department of Corrections facility, a calculation that some legislators are challenging.
The Republican-controlled Legislature required the state to request bids for housing 968 Level IV male prisoners from three separate facilities into either a shuttered state prison in Standish or in a privately owned prison.
Neither bidder produced the required 10 percent savings to trigger a privatization of prison management, according to the Michigan Department of Technology, Management and Budget.
“In fact, both bids cost substantially more than the current direct costs for MDOC to provide the services,” state budget office spokesman Kurt Weiss said Thursday in an email.
Utah-based Management & Training Corp.’s lowest bid to run the Standish prison was $20.1 million, 56 percent higher than the estimated $12.9 million cost for the DOC to run the facility in its first year with state employees, according to the state budget office.
GEO Group, a Florida-based private prison operator, submitted a low bid of $18.6 million to operate the shuttered west Michigan prison in Lake County — 44 percent higher than the direct cost for the state to run a facility.
Since the bids failed to generate a required 10 percent savings, Weiss said, “the state will not be pursuing either of the bids.”
“We’re disappointed in the state’s decision to cancel the solicitation and make no awards at this time,” MTC spokesman Issa Arnita said Thursday. “We look forward to having another opportunity to work in the great state of Michigan.”
Weiss said the bid prices were confirmed by the state’s internal auditor. “Great care was taken to ensure that the numbers in the price analysis were accurate,” he said.
GEO Group has been trying reopen its 1,740-bed North Lake Correctional Facility near Baldwin after a contract to house California prisoners fizzled in 2011. In 2005, Michigan ended its contract with the company to house juvenile offenders at the facility.
MTC and GEO Group submitted the only bids, Weiss said.
“I think this is a win for us and a win for the taxpayers,” said Mel Grieshaber, executive director of the Michigan Corrections Organization, the prison guards’ union. “This helps show that the Michigan taxpayers are getting good value with their dollar.”
State Rep. Greg MacMaster, an Antrim County Republican who has pushed for privatization of state services, questioned the state’s decision to include, in the bid prices, long-term legacy costs associated with state workers whose jobs would be cut under a privatization scenario.
The state has to pay retirement overhead “regardless” of who operates a prison, MacMaster said.
“The numbers that were provided to us so far are going to have to be interrogated,” MacMaster told The Detroit News. “We want to trust, yet verify, what the department has done.”
Sen. John Proos, chairman of the Senate’s corrections funding subcommittee, said Thursday he wants state budget officials to remove the legacy costs from the bids.
“If you embed them in each and every payroll individual, then you’ll never understand if the private sector can do it for less,” said Proos, R-St. Joseph. “I want to get to the bottom line number of cost for service.”
Rep. Joe Haveman, chairman of the House Appropriations Committee, said his goal of requiring competitive bids was to force corrections officials to cut internal costs, not necessarily privatize prisons.
I’m not so concerned about privatizing as I am about creating a competitive atmosphere,” said Haveman, R-Holland.
Privatization began with a misfire last spring when officials rejected health and food services bids that wouldn’t have produced a level of savings mandated by state rules.
Food services were reopened to private contract seekers and awarded to Philadelphia-based Aramark after lawmakers learned earlier bid specifications assumed all inmates eat every meal when, often, fewer than two-thirds eat breakfast. Aramark assumed control of food service Tuesday.
Grieshaber said he believes state budget officials used a more “objective” analysis of privatizing a prison than the process involved in the food service pact. “It sounds like this one was looked at with a keener eye,” he said.