State auditors say the agency that oversees Maryland's prisons structured a multimillion-dollar 2012 contract for commissary services in a way that stifled competition and limited the bidding to a single company.
The actions described in a recent report by the Office of Legislative Audits occurred under the previous administration.
The Board of Public Works approved the contract for Keefe Commissary Network of Edison, N.J., in 2012. The deal was structured in a complex way that made it difficult to put a value on the overall deal, auditors said. But they said it was estimated that it would bring in almost $16 million in revenue for the state over a five-year period.
When public safety officials put together a request for proposals from potential contract bidders, auditors said, they lumped the job of running the commissaries, at which inmates buy goods, together with the task of setting up an information technology system for a bank for inmates.
Auditors found the Department of Public Safety and Correctional Services also added in a procurement contract for "inmate welfare kits" with toiletries and other necessities.
When prospective bidders asked department officials whether they could bid on the various items individually, they were told no, auditors said. The result was that the state received one bid — from Keefe.
Auditors also faulted the department for failing to consult with the Department of Information Technology, which generally has oversight over such procurements.
Auditors did not find fault with Keefe Commissary Network. The company did not respond to a request for comment.
The department recommended the contract with Keefe to the board, saying its bid was "fair and reasonable."
When the contract came before the board, it faced opposition from Patrick Moran, president of AFSCME Council 3. But most of the discussion by Gov. Martin O'Malley, Comptroller Peter Franchot and Treasurer Nancy K. Kopp centered on whether the contract would displace union-represented state workers — not the question of competition.
After the audit was released, Moran said the deal "reeks of cronyism and doling out favors to the private prison industry."
"It is a bad deal for taxpayers and for employees when multiple functions are rolled into one contract and there are not competitive bids," Moran said in a statement. He said AFSCME anticipates that the Hogan administration will "clean this mess up."
Hogan's public safety secretary promised to do just that.
In a terse response to the audit, Secretary Stephen T. Moyer said he agreed with the auditors' findings. He said future bid requests will be "structured to promote maximum competition."
He also promised that his agency would consult with the information technology department on future computer-related contracts.