DOJ's $123.5M contract for correctional facility operations shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $123,500,134 ($123.5M)

Contractor: Management & Training Corporation

Awarding Agency: Department of Justice

Start Date: 2019-07-01

End Date: 2022-09-30

Contract Duration: 1,187 days

Daily Burn Rate: $104.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: OPERATION OF A CONTRACTOR OWNED/CONTRACTOR LEASED, CONTRACTOR OPERATED SECURE CORRECTIONAL FACILITY.

Place of Performance

Location: CENTERVILLE, DAVIS County, UTAH, 84014

State: Utah Government Spending

Plain-Language Summary

Department of Justice obligated $123.5 million to MANAGEMENT & TRAINING CORPORATION for work described as: OPERATION OF A CONTRACTOR OWNED/CONTRACTOR LEASED, CONTRACTOR OPERATED SECURE CORRECTIONAL FACILITY. Key points: 1. The contract's firm fixed-price structure provides cost certainty for the government. 2. Competition was limited to 10 bidders, potentially impacting price discovery. 3. The contractor has a track record in facility management, suggesting operational capability. 4. Performance context is crucial, as facility operations are complex and sensitive. 5. This contract falls within the Facilities Support Services sector, a niche area. 6. The duration of the contract (1187 days) indicates a long-term operational commitment.

Value Assessment

Rating: fair

The contract's total value of $123.5 million over approximately 3.25 years suggests an average annual cost of roughly $38 million. Benchmarking this against similar correctional facility management contracts is challenging without more specific service level agreements and facility size data. However, the firm fixed-price nature generally indicates that the contractor assumes the risk for cost overruns, which can be favorable for the government if managed effectively. The absence of detailed performance metrics makes a definitive value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under full and open competition, but attracted only 10 bids. While 10 bidders represent some level of competition, it is on the lower side for a contract of this magnitude and duration. A more robust competitive landscape, with a larger number of qualified bidders, could have potentially driven down prices further and ensured the government secured the best possible value. The limited number of bids may indicate barriers to entry or a specialized market.

Taxpayer Impact: A limited number of bidders means taxpayers may not have benefited from the most competitive pricing achievable. This could translate to higher overall costs for the government and, consequently, for taxpayers.

Public Impact

The primary beneficiaries are the Federal Prison System and the Bureau of Prisons, ensuring the operation of secure correctional facilities. The contract delivers essential services for the management and operation of a correctional facility, including security, inmate services, and facility maintenance. The geographic impact is specific to the location of the facility in Utah (UT). Workforce implications include employment opportunities for facility staff, administrators, and support personnel managed by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher costs for taxpayers.
Operational risks associated with correctional facilities are significant and require robust oversight.
Ensuring consistent service quality and inmate safety over the contract term is critical.

Positive Signals

Firm fixed-price contract provides cost predictability.
Contractor's experience in facility management is a positive indicator.
The contract supports a critical government function.

Sector Analysis

This contract falls under Facilities Support Services (NAICS 561210), a broad category encompassing the operation and maintenance of buildings and other facilities. The market for correctional facility management is specialized, often involving significant security requirements and regulatory compliance. Comparable spending benchmarks would typically be found within government reports on correctional services or private prison management, though direct comparisons are difficult due to variations in facility size, security levels, and service scope.

Small Business Impact

The data indicates that small business participation was not a specific set-aside (ss: false, sb: false). This suggests that the contract was not specifically targeted towards small businesses, and large, established firms likely dominated the bidding process. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in this summary. The impact on the small business ecosystem is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Justice, specifically the Bureau of Prisons. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract award databases, but detailed operational oversight and inspector general jurisdiction would focus on the contractor's adherence to the contract's stipulations and any relevant regulations.

Related Government Programs

Federal Prison System Operations
Bureau of Prisons Contracts
Correctional Facility Management Services
Government Facilities Operations

Risk Flags

Limited competition
Potential for cost overruns if not managed efficiently by contractor
Ensuring consistent quality of services and inmate safety

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $123.5 million to MANAGEMENT & TRAINING CORPORATION. OPERATION OF A CONTRACTOR OWNED/CONTRACTOR LEASED, CONTRACTOR OPERATED SECURE CORRECTIONAL FACILITY.

Who is the contractor on this award?

The obligated recipient is MANAGEMENT & TRAINING CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $123.5 million.

What is the period of performance?

Start: 2019-07-01. End: 2022-09-30.

What is the contractor's track record in managing secure correctional facilities?

Management & Training Corporation (MTC) has a significant history of operating correctional and detention facilities for federal, state, and local governments. They are one of the largest private operators of correctional facilities in the United States. Their experience spans decades and includes managing facilities with diverse inmate populations and security levels. While their experience is extensive, it's important to note that private prison operations are often subject to scrutiny regarding cost-effectiveness, inmate welfare, and security incidents. A thorough review would involve examining specific performance data, audit reports, and any litigation or significant incidents associated with facilities they manage.

How does the per-day cost of this contract compare to similar federal correctional facilities?

To compare the per-day cost, we first calculate the average daily cost. The contract value is $123,500,134.18 over 1187 days. This yields an average daily cost of approximately $104,044. The Federal Bureau of Prisons (BOP) operates numerous facilities, and per-day costs can vary significantly based on inmate population, security levels, location, and services provided. For instance, publicly available data from the BOP's budget justifications or Inspector General reports sometimes provide average per diem costs for different facility types. Without direct access to these specific benchmarks for comparable facilities under BOP management during the contract period (2019-2022), a precise comparison is difficult. However, the calculated daily cost of approximately $104,044 per facility is a substantial figure that warrants scrutiny against similar government-run or privately managed facilities.

What are the primary risks associated with the operation of a contractor-owned/leased correctional facility?

The primary risks associated with operating a contractor-owned/leased correctional facility are multifaceted. These include: 1. **Security Risks:** Maintaining a secure environment to prevent escapes, contraband, and violence is paramount and requires constant vigilance and effective management. 2. **Inmate Welfare:** Ensuring humane treatment, adequate healthcare, and appropriate rehabilitation programs for inmates is a significant ethical and operational challenge. Failures in these areas can lead to lawsuits and reputational damage. 3. **Staffing and Training:** High turnover rates and the need for specialized training for correctional officers can impact operational stability and security. 4. **Cost Overruns:** Despite a fixed-price contract, unforeseen circumstances (e.g., major repairs, security incidents, changes in regulations) can lead to cost pressures or necessitate contract modifications. 5. **Reputational Risk:** Incidents within the facility, whether security breaches or issues with inmate welfare, can lead to negative public perception and political scrutiny for both the contractor and the contracting agency.

How does the firm fixed-price contract type influence cost control and risk allocation?

A Firm Fixed-Price (FFP) contract type is designed to provide the government with cost certainty and transfer most of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently and effectively to maximize profit. For the government, this means the total cost of the contract is known upfront, simplifying budgeting and financial planning. However, if the contractor significantly underestimates costs or encounters unforeseen difficulties, they bear the brunt of the financial loss. Conversely, if the contractor is highly efficient, they may realize a larger profit margin. The FFP structure is generally preferred for services with well-defined requirements where cost estimation is relatively reliable, such as the operation of a correctional facility.

What is the historical spending trend for correctional facility operations by the Department of Justice?

Historical spending by the Department of Justice (DOJ) on correctional facility operations, particularly through the Bureau of Prisons (BOP), has been substantial and generally increasing over the past two decades. This trend is driven by factors such as evolving sentencing guidelines, an increase in the federal inmate population, and the use of both government-operated and contracted facilities. The BOP's budget justifications and annual reports provide detailed insights into their spending. While specific figures fluctuate year-to-year based on appropriations and operational needs, the overall reliance on contracted services for facility management has been a consistent feature. Analyzing historical data would reveal patterns in contract awards, the number of facilities operated by private contractors, and the total expenditure allocated to these services, often showing a significant portion of the BOP's budget dedicated to inmate housing and care.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: SOCIAL SERVICES › SOCIAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: RFP-PCC-0026

Offers Received: 11

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 500 N MARKET PL DR STE 100, CENTERVILLE, UT, 84014

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $400,967,372

Exercised Options: $132,502,925

Current Obligation: $123,500,134

Actual Outlays: $23,882,608

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline