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Mississippi Oversight Committee Finds Fault in Operation of Prison Canteens
by David M. Reutter
In June 2011, the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER) issued a report to the Mississippi legislature concerning the state’s prison canteen contract, the operation and oversight of that contract, and the disposition of its profits. The report provided 15 recommendations to address eight problem areas.
The Mississippi Department of Corrections (MDOC) contracted its canteen services out for the first time in November 2007 to G.T. Enterprises. G.T. assigned the contract to Centric Group, doing business as Keefe Commissary, the following year.
PEER took issue with how the MDOC procured the contract, because rather than using a competitive process to locate a commissary provider, the department negotiated with the company from which it had previously purchased goods. When renewing the contract it should be put out to competitive bid “to select a commissary services provider to make goods of acceptable quality available for purchase while maximizing commissary revenues at least cost,” PEER stated.
The MDOC replied it was “not opposed” to this recommendation and would “consider requesting proposals for these services ... with several specifications.”
The department also agreed the contract should have quality assurances as a contract performance requirement, and that it needed to improve survey methods to determine fair product pricing. The contract requires Keefe to set the prices of prison canteen items based on “the average of convenience store prices.” To determine those prices, Keefe is to survey convenience stores twice a year and request approval for price increases from the MDOC’s commissioner.
For the period from November 2007 to November 2010, the MDOC’s canteens generated $24,087,428 in gross revenue. Of that amount, the MDOC retained 29.4% in commissions from public prisons and 24% from private prisons. For items purchased by families during visitation, the MDOC received 10%. In total the MDOC received $7.6 million in canteen commissions during the time period reviewed.
The department used $4.7 million for canteen operating expenses, which included approximately $956,630 for reimbursement of salaries for canteen employees. PEER questioned the methods and uses of those profits, as the profits are supposed to go to the Inmate Welfare Fund (IWF). State law requires that the IWF be used “for the benefit and welfare of inmates in custody of the department.”
While PEER did not describe the MDOC’s actions as violating the law, it did find five problematic issues with respect to the department’s use of canteen profits. The first concerned the MDOC improperly reducing funds available to the IWF.
PEER also found that the use of $855,661 from the canteen fund for OffenderTrak software maintenance was an administrative expense rather than a cost related to the MDOC’s commissary services. Although the legislature had authorized the purchase of OffenderTrak software from the IWF, it did not approve annual maintenance costs. The MDOC disagreed with PEER on this point.
The MDOC also failed to follow state law by having seven members on the IWF committee. The department agreed to remedy that shortcoming, but did not agree that a “person to represent the interests of inmates’ families” should be included as a committee member.
The MDOC further said it would follow PEER’s recommendation to implement expenditure guidelines. Those are required, PEER stated, due to several questionable expenditures by the department. While the MDOC includes administrative overhead costs for canteen employees in its “salaries, wages and contracts” category, it also “appears to be relying on the Inmate Welfare Fund to cover general operating costs of the department that PEER believes should be paid from appropriated funds.”
Additionally, in January 2011 the MDOC requested $28,062 in IWF funds to purchase two state vehicles, one for the Director of Religious Programs and one for the Director of Treatment Programs. It made another request that same month to buy a $14,031 vehicle for “the Director of Fiscal Affairs to provide assistance to the Deputy Commissioner of Administration and Finance.” PEER questioned whether the requested vehicle purchases were an appropriate use of IWF funds.
Lastly, PEER found the MDOC was not sending required financial reports concerning the IWF to lawmakers. The MDOC agreed to make improvements in that regard, including expanding the list of persons to whom the reports are sent.
The PEER report is available on PLN’s website.
Source: “The Department of Corrections’ Management of Commissary Services and the Inmate Welfare Fund,” PEER Report to the Mississippi Legislature (June 14, 2011)
In June 2011, the Joint Legislative Committee on Performance Evaluation and Expenditure Review (PEER) issued a report to the Mississippi legislature concerning the state’s prison canteen contract, the operation and oversight of that contract, and the disposition of its profits. The report provided 15 recommendations to address eight problem areas.
The Mississippi Department of Corrections (MDOC) contracted its canteen services out for the first time in November 2007 to G.T. Enterprises. G.T. assigned the contract to Centric Group, doing business as Keefe Commissary, the following year.
PEER took issue with how the MDOC procured the contract, because rather than using a competitive process to locate a commissary provider, the department negotiated with the company from which it had previously purchased goods. When renewing the contract it should be put out to competitive bid “to select a commissary services provider to make goods of acceptable quality available for purchase while maximizing commissary revenues at least cost,” PEER stated.
The MDOC replied it was “not opposed” to this recommendation and would “consider requesting proposals for these services ... with several specifications.”
The department also agreed the contract should have quality assurances as a contract performance requirement, and that it needed to improve survey methods to determine fair product pricing. The contract requires Keefe to set the prices of prison canteen items based on “the average of convenience store prices.” To determine those prices, Keefe is to survey convenience stores twice a year and request approval for price increases from the MDOC’s commissioner.
For the period from November 2007 to November 2010, the MDOC’s canteens generated $24,087,428 in gross revenue. Of that amount, the MDOC retained 29.4% in commissions from public prisons and 24% from private prisons. For items purchased by families during visitation, the MDOC received 10%. In total the MDOC received $7.6 million in canteen commissions during the time period reviewed.
The department used $4.7 million for canteen operating expenses, which included approximately $956,630 for reimbursement of salaries for canteen employees. PEER questioned the methods and uses of those profits, as the profits are supposed to go to the Inmate Welfare Fund (IWF). State law requires that the IWF be used “for the benefit and welfare of inmates in custody of the department.”
While PEER did not describe the MDOC’s actions as violating the law, it did find five problematic issues with respect to the department’s use of canteen profits. The first concerned the MDOC improperly reducing funds available to the IWF.
PEER also found that the use of $855,661 from the canteen fund for OffenderTrak software maintenance was an administrative expense rather than a cost related to the MDOC’s commissary services. Although the legislature had authorized the purchase of OffenderTrak software from the IWF, it did not approve annual maintenance costs. The MDOC disagreed with PEER on this point.
The MDOC also failed to follow state law by having seven members on the IWF committee. The department agreed to remedy that shortcoming, but did not agree that a “person to represent the interests of inmates’ families” should be included as a committee member.
The MDOC further said it would follow PEER’s recommendation to implement expenditure guidelines. Those are required, PEER stated, due to several questionable expenditures by the department. While the MDOC includes administrative overhead costs for canteen employees in its “salaries, wages and contracts” category, it also “appears to be relying on the Inmate Welfare Fund to cover general operating costs of the department that PEER believes should be paid from appropriated funds.”
Additionally, in January 2011 the MDOC requested $28,062 in IWF funds to purchase two state vehicles, one for the Director of Religious Programs and one for the Director of Treatment Programs. It made another request that same month to buy a $14,031 vehicle for “the Director of Fiscal Affairs to provide assistance to the Deputy Commissioner of Administration and Finance.” PEER questioned whether the requested vehicle purchases were an appropriate use of IWF funds.
Lastly, PEER found the MDOC was not sending required financial reports concerning the IWF to lawmakers. The MDOC agreed to make improvements in that regard, including expanding the list of persons to whom the reports are sent.
The PEER report is available on PLN’s website.
Source: “The Department of Corrections’ Management of Commissary Services and the Inmate Welfare Fund,” PEER Report to the Mississippi Legislature (June 14, 2011)
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