UPDATE: State to take over operation of seven youth lockups | Arkansas Blog

Friday, December 16, 2016

UPDATE: State to take over operation of seven youth lockups

Posted By on Fri, Dec 16, 2016 at 4:10 PM

click to enlarge GOVERNOR RESPONDS: At news conference with Cindy Gillespie and Larry Walther.
  • GOVERNOR RESPONDS: At news conference with Cindy Gillespie and Larry Walther.
 UPDATE: Gov. Asa Hutchinson will announce this afternoon that the state Monday will takeover operation of all seven juvenile lockups operated by two Arkansas-based operators.

A spokesman for the Department of Human Services said state officials will be at the state-owned centers Monday to assess continuing operations as manager. Current contracts with local agencies end Dec. 31.

Here's what I'd written earlier, with additions to reflect later developments:

As many had expected, the Legislative Council did not give favorable review today to a $160 million, seven-year contract for an Indiana firm to take over operation of seven juvenile offender lockup facilities now run by local agencies or the state in Harrisburg, Colt, Mansfield (two), Lewisville and Dermott (two). CORRECTION: I originally wrote Alexander was included. A private organization won a bidding process to operate that facility.

A legislative review committee had earlier refused to sign off on the proposal being pushed by the Department of Human Services to give the work to Youth Opportunity Investments. Current operators questioned the significant cost increase — from $13 to $22 million a year next year — and whether the new operator would be held to the same standards they had to meet.

Today, the House members of the Legislative Council voted to favorably review the proposal, but Senate members did not. That meant it failed to win approval.

Without Legislative Council approval today, steps had to be taken to continue services in 2017.  A tentative meeting  was scheduled Dec. 30 to take up a possible emergency procurement contract for the Indiana firm to take over services in 2017. The emergency process apparently is thought to provide a means around legislative review, otherwise required for most executive agency contracts under terms of a relatively new constitutional amendment.

I'm seeking to see what actions, if any, might be planned in response by agencies that would lose the work. South Arkansas Youth Services of Magnolia and Jonesboro's Consolidated Youth Services have operated the centers for years and contested the award to the Indiana firm.

Gov. Asa Hutchinson called a late-afternoon news conference on the issue. Clearly, a Dec. 30 meeting was too late to either change to a new operator or otherwise go forward with operation of the centers in a different way.

The issue is abuzz with behind-the-curtain politics — the connections of various legislators in the vote to the existing operators and the lobbying forces lined up on both sides. There's ire, particularly, over the move by Senate Legislative Council members, including Joyce Elliott, Linda Chesterfield and Bruce Maloch, all Democrats, to split the Council vote into House and Senate tallies. That required individual approval from both sides and the Senate side voted 8-4 against approval, I was told by an observer. Maloch said other senators joined in the vote to divide the votes on the issue.

The administration believed an emergency purchase contract could be an exception to control given the legislature over executive branch contracts by a 2014 constitutional amendment. But rather than test that, the governor and his agencies chose a different path.

DHS and the Department of Finance and Administration joined the governor at the news conference. The buildings are state-owned but privately operated under contract with the state.

A hearing had been set Tuesday in Circuit Court in Jonesboro over an earlier challenge to the contract award. The hearing was to consider a temporary order to stop the changeover. It's unclear the status of that proceeding at this point.

Hutchinson announced that the state would step in and manage the  centers for the next six months. He said the alternative was a shutdown of the Division of Youth Services.

He said he was disappointed in the legislature and disapproval of a contract that had been through full review.

"We're going to run the government and avoid shutdowns," he said. He said the legislature needed to "honor" the procurement process.

DHS Director Cindy Gillespie said the swift executive action was necessary to reassure employees, vendors and families of youths in the residential facilities. DFA Director Larry Walther said his agency would do everything necessary to make the plan work.

Hutchinson said the contract process had ended. He said a re-evaluation of private operators would occur at the end of the six-month state operating period.

Gillespie said existing staffing would remain in place, with state agency oversight. She said money was in the budget for the contract that failed to win approval today.

Hutchinson complained about the new legislative review process as cumbersome and lengthy. It "fundamentally violates the rules process," he said, and is complicated by the involvement of lobbyists. He said the review process authorized by law to implement the new constitutional amendment might someday be challenged in court. (Allow me an I-told-you-so about this usurpation of executive power by the legislatively referred amendment. It gave still more power to meddle to an already too-powerful legislature, but is the work of Republican legislative leaders during a time when the governor was a Democrat.)

I asked Maloch, of Magnolia, about his role in opposing the new contract. He said by e-mail:

I did support dividing the votes between House and Senate. There was a lot of opposition in the Senate because of issues about the procurement process and negotiations and changes made to the contract that lessened the responsibilities of the provider from what was called for in the RFP and bid proposal. Senate opposition was from different parts of the state and without regard to party lines etc.
Hutchinson chose to emphasize the positive, saying the state could learn more about operation of the centers through direct oversight.

This bid process is over, the governor emphasized. "It was bid, it was selected, it was challenged, it was rebid, there was another protest and it was affirmed by the Office of Procurement." If there is another opening for private operators after six months, it will be a new process, he said.

The tangled political webs in this are something to behold. A nephew of the governor, Sen. Jeremy Hutchinson, is on the Legislative Council. He recused. A relative of a lobbyist for the local operating agencies works for the governor. A relative of a legislator has reportedly worked as a consultant to the local agencies, though the legislator disputes that. Another legislator may have a business relationship with one agency. Powerful lobbyists/consultants/attorneys include a son of a former legislator, a former top Human Services lawyer and others. You need a scorecard.

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