November 22, 1997 in Idaho

Losing Bidders Growl About Prison Project But Review By Idaho Officials Upholds Bidding Process, Selection Of Contractor

By The Spokesman-Review
 

Companies that lost out on the chance to build Idaho’s first private prison are claiming the taxpayers could have been saved millions of dollars.

But a review of documents from the complicated bidding process shows that factors other than price - from how many guards would watch prisoners, to how the building would be designed, to the bidders’ track records - helped determine who got the $100 million contract, the biggest in Idaho’s history.

“We’re not buying plumbing supplies, you know,” said Richard Crane, a nationally known prison privatization consultant who helped Idaho write its bid specifications.

“You’re not just buying a construction job here, you’re buying the design, the expertise the company has in designing a facility that it will be able to run in a cost-effective manner, and you’re buying their operations experience.”

The new prison will not only be built by a private firm; it will be privately operated.

The state Building Authority will issue bonds to finance the construction, and the state will pay a per-inmate, per-day fee. Legislation passed last year required that fee to be less than the state’s average cost to house inmates in similar prisons.

The successful bid sets the fee at $38.14 per inmate, well below the state’s cost of $43.

Sen. Atwell Parry, R-Melba, co-chairman of the Legislature’s powerful budget committee, said, “They followed the guidelines right down the line.”

Any of the seven companies that lost out on the contract could have appealed.

State officials waited nervously through a weeklong appeal period in late September. Four companies sent representatives to meet with the state and discuss the selection process, sort through pages of documents and answer questions.

In the end, no one appealed, and the state launched into contract negotiations with Corrections Corp. of America, a Nashville, Tenn.-based firm that is the largest private prison company in the country.

Now, nearly two months later, the negotiations still are dragging on, and unsuccessful companies have been contacting legislators with their complaints. CCA’s bid is good for 180 days; state prison officials hope to sign the contract shortly.

“We’re greatly stunned by the result of the bidding process,” said Roy Eiguren, a Boise attorney who represents Wackenhut Corp., the nation’s second-largest private prison firm and the second-place finisher in the bidding.

“In every other circumstance where we have competitively bid with CCA, we’ve always been ranked equivalently in terms of quality, capability,” Eiguren said. “So generally when the two companies compete, it simply boils down to an issue of price.”

Wackenhut’s price was lower than CCA’s, both for construction and in the per-inmate daily fee for operation.

In the complicated ranking system the state used, price was one of three categories. The most points were awarded for the proposals themselves - how the prison would be designed and built, how it would be staffed, what programs would be offered. Price was second, followed by qualifications.

The qualifications category awarded some points for the architects and engineers’ experience, some for that of the general contractor, and most for the experience of the company. That’s where CCA might have had an edge, simply because, as the largest company in the business, it has the most experience.

But because of the questions, the state purchasing administrator, Jan Cox, went back and recalculated the scores last month without the numbers for the company’s experience. They still came out with CCA on top and Wackenhut in second place.

Reed Miller, vice president of Ormond Construction in Idaho Falls, was part of a team that came in fourth, despite ranking second for price.

“The way they put this together, there’s only one company who could have got this job, and that’s the largest in the country,” Miller charged.

Miller sent letters to Gov. Phil Batt, every member of the Legislature’s budget committee and others to protest the bid award. He noted that his group’s bid was millions of dollars lower.

“You’re talking about a huge difference in cost,” Miller said. “That is a tremendous amount of difference when everyone’s whining about the cost of prisons.”

The U.S. Corrections Corp., however, bid that Miller’s company joined in on lost points for things like staffing, programming and USCC’s overall service quality. It proposed only 124 security staff at the 1,250-bed prison - compared to CCA’s figure of 210 and Wackenhut’s 191.

Crane, an attorney and former Louisiana prison official who worked for CCA for three years in the 1980s when the private prison business was new, has been a consultant to states and other agencies seeking prison privatization for the past 10 years.

When the Idaho specifications were distributed in a detailed “Request for Proposals,” there were meetings with bidders, comment periods, question-and-answer sessions.

“Nobody raised any questions about anything in the RFP that would tend to have indicated that it favored any one company,” Crane said. “It provided for a level playing field.”

Crane said a performance bond requirement was the only aspect of the plan that might have been troublesome for smaller companies, and it was required by the state building authority. None of the unsuccessful bidders has complained about that requirement.

“Everyone knew what percentage of the points went for cost, it was all set forth in the RFP,” Crane said.

Gov. Phil Batt’s spokesman Lindsay Nothern said the governor isn’t meddling in the contract process and expects it to go forward.

Said Sen. Parry: “As far as I’m concerned, I thought the process was very fair. … I think those selecting the bids were very concerned about getting the best bang for the buck for the state.”

He added with some frustration, “If they (companies) felt there was any discrepancy at all, if they’d just appealed, everything would have been put on hold.”

Eiguren, who is also a lobbyist, has contacted state legislators about his concerns. The company is still reviewing documents, Eiguren said, and likely will decide next week whether it believes there were “irregularities” in the bidding process.

, DataTimes MEMO: This sidebar appeared with the story:

SELECTION PROCESS

The state used a three-tiered ranking system to select a prison contractor.

The most points were awarded for the proposals themselves - how the prison would be designed, built, staffed, etc.

Price was second.

Qualifications, including the experience of the company, was third.

This sidebar appeared with the story: SELECTION PROCESS The state used a three-tiered ranking system to select a prison contractor. The most points were awarded for the proposals themselves - how the prison would be designed, built, staffed, etc. Price was second. Qualifications, including the experience of the company, was third.

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