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Missouri Court Finds Prisoner Phone Contract Bidding Process Unfair

On November 30, 2011, a Missouri circuit court held that adding optional services to the state’s prisoner telephone contract without putting those services out for competitive bidding would render the contract void. The court found the current contract was valid, but to amend it to include the optional services would require the entire contract to be rebid.

From 2006 to 2011, Public Communications Services (PCS) provided phone services to more than 30,000 prisoners in the Missouri Department of Corrections (MDOC). The PCS phone system handled 12.1 million calls that totaled more than 117 million minutes in 2010. There are three methods by which prisoners can make calls: 1) debit calls, which are debited directly from the prisoner’s account; 2) pre-paid calls with accounts set up by friends and family members; and 3) collect calls that result in the accepting party being billed.

In December 2010, Missouri’s Office of Administration (OA), through its Director of Purchasing and Materials Management (DPMM), issued a Request for Proposal (RFP) for a new prison phone service provider following the expiration of the PCS contract in May 2011. Seven companies submitted acceptable responses: CenturyLink, Consolidated Communications Public Services, PCS, Securus Techonologies, Synergy Telecom Service Company/Telcomate, Talk Telio LLC and Unisys Corporation.

Securus ultimately won the bid; its “proposal included a $.05 per minute call charge for debit, pre-paid and collect calls; a $1.00 collect call set up fee; and $6.95 per transaction fee for pre-paid accounts, which was the highest pre-paid account transaction fee in any of the proposals,” the circuit court found.

Securus’ proposal also included “four optional services that would be provided at an additional cost of $.01 per minute each for a total of an additional $.04 per minute that would raise the Securus bid from $.05 per minute to $.09 per minute, one of the highest per-minute costs of all providers.” The optional services, which included a cell phone detection fund and a prisoner voice mail system, would add $32.8 million to the overall cost of the contract over its seven-year term (five years plus two optional one-year extensions).

The court found that had DPMM “considered the cost of Securus’ optional services in the calculation and compared Securus on a fair and equal basis with other offerors who included comparable proposals,” Securus would have come in sixth in the bidding process. Even if the optional services were not at issue, the company’s $6.95 per pre-paid account transaction fee, if properly considered, would have placed it second.

After DPMM accepted Securus’ bid, PCS and a Missouri taxpayer who received phone calls from prisuoners filed a lawsuit contesting the contract award. The circuit court held a trial and initially found the plaintiffs had standing to bring the suit. The court said it was troubled by OA’s position about the optional services; MDOC wanted the services, and DPMM believed it could add them through a contract amendment without further bidding.

“During the procurement process, DPMM failed to weigh the quality or cost of the optional services and gave no analysis whatsoever to $32 million’s worth of optional services,” the court concluded, finding the OA could not simply amend a contract for such costly services without competitive bidding.

“If DPMM were allowed in a bid document to do what it did in this RFP, which was effectively to ask offerors to propose any optional services each offeror individually might propose and then to select the optional services offered by one bidder, without giving other bidders the chance to make an offer on the same terms, it would create an exception to ... competitive bidding requirements that would threaten to swallow the rule and undermine the entire competitive bidding scheme,” the circuit court wrote.

Having reached those conclusions, the court found that the MDOC’s existing phone contract with Securus was valid, but the optional services were not contained in that contract. The defendants were enjoined from adding the optional services without rebidding the entire prison phone service contract. See: Public Communications Services, Inc. v. Simmons, Circuit Court of Cole County (MO), Case No. 11AC-CC00543.

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Related legal case

Public Communications Services, Inc. v. Simmons