Sparks fly at a meeting of the Board of Public Works over a prison food contract that had the Governor and Comptroller calling foul. CNS-TV video by Evan Sery
ANNAPOLIS — The Maryland Board of Public Works Wednesday excoriated state and company officials after a prison food contract granted earlier this year vastly underestimated the necessary costs.
Department of Public Safety and Correctional Services representatives along with Crystal Enterprises Inc., a Maryland-based food service company, requested a $6 million emergency contract after the company cited an undercount by prison officials in the number of daily meals and said they needed additional funds within four days or they could not provide any more service.
This especially drew the ire of the comptroller.
“This might just be the most troubling item that I have ever seen brought before this board in the eight years I’ve been sitting on it,” said Comptroller Peter Franchot. “Taxpayers are getting socked with an unexpected $6.6 million as a result of either staggering incompetence or something else.”
Franchot, a Democrat, called for Maryland Attorney General Brian Frosh and his office to investigate the situation, and Gov. Larry Hogan, a Republican, acknowledged prison riots could break out if the controversial contract was immediately halted, which he said was the only reason the emergency deal received approval.
“This is one of the most disgraceful displays of mismanagement I’ve ever seen in my entire life,” said Hogan.
Department of Public Safety and Correctional Services Secretary Stephen Moyer explained that the original contract cited a need for 22,000 meals served a day, but the department was incorrect with those numbers. The actual number is between 16,000 and 17,000 meals, Moyer said.
Trinity Services Group Inc., the incumbent company for the previous contract, offered over $3 per meal in their January bid. Crystal offered $1.43 when the contract was awarded, but asked for $2.20 in its emergency contract.
Franchot also could not get a definitive answer as to why Crystal did not obtain a $2 million performance bond the contract included.
Joselyn Hopkins, procurement director for the corrections department, said that a bond was not obtained at the time of the contract approval, but continued with the deal with the belief that the bond would be delivered.
Stuart Nathan, principal counsel for the department, said that while he believed it legal to operate a service contract with a private vendor without a performance bond in place, his office did not advise it.
Crystal CEO Saundra Custis and Chief Financial Officer Thurman Custis told the board at the meeting Wednesday that in addition to miscalculating the costs for providing these services, the condition of the prisons also factored into the need for more funding. The CEO said the facilities are crawling with rats and much of the kitchen equipment is broken or unusable for sanitation reasons. This has forced the company to spend more than expected on maintenance.
The comptroller was not swayed.
“I’m not particularly impressed by the fact that you list a number of problems, those are your problems in the private sector,” Franchot said. “You should have informed yourselves about the condition of the place you were taking over.”
Trinity stated in a statement Wednesday that they held Baltimore City Health Department permits in their name through the end of their contract. They also said that pest control was continued on a “daily and weekly basis” through the end of the contract.
Saundra Custis said the company had toured the facilities, but did so a few years ago.
Crystal representatives stood firm that they were still the best option for the state, but allowed that they may not have known what they were getting into and needed the emergency contract.
“It was not at all our intention to deliver some kind of ultimatum or threat,” Thurman Custis said. “It was basically informing (the department) that after being on the account for several weeks, and getting full inventory of what was really there, that financially it was not viable for us to continue under those conditions.”
On Jan. 7, former Gov. Martin O’Malley’s last meeting, the board awarded to Crystal a three-year contract to feed inmates of Baltimore City correctional facilities at a substantially lower cost, $37 million, than the $89 million bid from Trinity, a Florida-based company.
The organization assured the board at the Jan. 7 meeting it could provide the 22,000 meals a day the contract required at such a low cost after heavy questioning from O’Malley and fellow members Franchot and Treasurer Nancy Kopp. Crystal representatives also assured the board that the cost per meal would remain the same even if the number of meals served daily dropped considerably.
Crystal alerted the Department of Public Safety and Correctional Services on Feb. 24 that it needed to raise its price per meal from $1.43 to $2.20 by Feb. 28 or it would have to stop conducting its services. To avoid interrupting prison food service, the department cancelled the existing contract and awarded Crystal the emergency contract.
The contract is for six months, having already started in February, while the department goes through the bidding process again.
Mike Johansen, an attorney representing Trinity, said Wednesday the bidding process was not fair to his client and that Crystal should be held to their promises. He also said he believes the new contract will not be finalized by the time the emergency contract ends in August. Moyer was appointed by Hogan in January to replace Gregg Hershberger, the secretary when the original contract was approved.
While Kopp, a Democrat, did say Wednesday that she believes the situation is more a case of incompetence rather than corruption, she insisted, as she has numerous times in recent meetings, that state agencies coming before the board need to be more transparent when presenting contracts.
“I would just urge all the departments who are here, you’ve seen now for several months, it’s so much easier and better if you could just state facts as they really are,” Kopp said.
Since Hogan started on the board in January, he has consistently condemned the procurement process used by state agencies and said he is looking to sit down soon with board members and Lt. Gov. Boyd Rutherford to discuss new methods.