After lawmakers grilled state officials for more than an hour Tuesday, a legislative panel rejected a disputed $160 million contract with an Indiana company to take over operation of seven youth lockups in Arkansas.
The Administrative Rules and Regulations Subcommittee of the Legislative Council voted not to review the Department of Human Services' contract with Youth Opportunity Investments LLC of Carmel, Ind., which is to take over the facilities Jan. 1.
The Legislative Council could take up the contract for final review during its Friday meeting.
If the contract doesn't make it on Friday's agenda or is rejected again, the services could be provided through "special procurement," such as a short-term sole source contract, to ensure the youth centers remain open.
Nearly 250 youths adjudicated as guilty and in state custody can be placed at those sites.
The Human Services Department has been trying to finalize the contract with Youth Opportunity Investments since August.
Top executives from South Arkansas Youth Services of Magnolia and Jonesboro's Consolidated Youth Services, which have run the centers for years and lost the bid, twice challenged the state's intention to go with Youth Opportunity Investments.
The nonprofits' executives claimed the selection process was rigged and that their less-expensive proposals were better. Both have said they would pursue the issue in court.
One of their biggest questions -- which was shared repeatedly by legislators Tuesday -- was how the Human Services Department could approve a contract raising the per-bed rate 58 percent from $147 to $232.
Department representatives said that inflation -- and more notably, the increase in services and treatment outlined in the new contract -- account for the higher cost.
The per-bed rates proposed by the current contractors also are higher than those under their 2007 contract, department officials said.
"We just made a determination, internally within DHS, that we are going to have to find the money to provide these services to our children," Keesa Smith, the agency's deputy director, said at the meeting.
"We have not provided the services and not paid the type of money that we needed to in the juvenile justice arena for years."
The new contract allows the department to focus on recidivism, Smith added.
Lawmakers still expressed concern with the department's funding decision. There was no full-disclosure budget in the company's proposal, which would distinguish between administrative and program costs.
Legislators also questioned whether the dollars steered toward residential facilities could have been more effective going to community-based services -- an explicitly stated goal of the Youth Justice Reform Board, a group of judges and juvenile-justice officials, including Youth Services Division Director Betty Guhman, appointed by Gov. Asa Hutchinson.
Bonnie Boon, who leads Consolidated Youth Services, said she only can take the department's rejection of her company personally, considering her "years of commitment."
"We were misrepresented," she said after the subcommittee meeting. "I think they're grasping at straws."
Boon argued that the centers run by Consolidated Youth Services in Colt and Harrisburg already provided substance-abuse services and therapy on-site.
Department representatives asserted to lawmakers that these services were contracted through other groups and that with Youth Opportunity Investments, these "enhanced services will be centralized," thereby justifying the company's more expensive bid.
Boon's lawyer told legislators that Youth Opportunity Investments' new contract was a "shell" that did not include enough detail.
The vote not to review the contract came minutes after an attorney representing Youth Opportunity Investments brought in a disgruntled South Arkansas Youth Services employee to testify against how its youth lockups are being managed.
"We are nothing more than a day care and a warehouse," said Jimmy Kirsch, a teacher at the Mansfield center. "We shuffle students like commodities instead of individual human beings from one juvenile center to another, instead of rehabilitating them."
Kirsch said his remarks were supposed to reflect the negative work of South Arkansas Youth Services, which runs the Dermott Juvenile Correctional Facility and juvenile treatment centers in Dermott, Lewisville and Mansfield.
After the meeting, Smith said the agency valued its current operators, but that the new contract did not "pertain to whether a certain vendor would win or lose."
The state is required to create new proposals open to all bidders, including those outside Arkansas, entitling them to an even playing field in the process, she explained.
"This is about additional opportunity for children to be successful," she said.
Metro on 12/14/2016