Citing dispute, state to run youth lockups

Hutchinson fears service cuts at 7 facilities

“Here we are at the final hour without action by the Legislature,” Gov. Asa Hutchinson said Friday in announcing the state takeover of seven youth lockups. With Hutchinson are Department of Human Services Director Cindy Gillespie and Larry Walther, director of the Department of Finance and Administration.
“Here we are at the final hour without action by the Legislature,” Gov. Asa Hutchinson said Friday in announcing the state takeover of seven youth lockups. With Hutchinson are Department of Human Services Director Cindy Gillespie and Larry Walther, director of the Department of Finance and Administration.

The state will take control of operations at seven youth lockups at the start of the new year, Gov. Asa Hutchinson announced Friday, arguing that such action was necessary because actions by Arkansas legislators made the services "headed for a government shutdown."

Earlier Friday, lawmakers had rejected for the second time a disputed contract to run the lockups, a decision the governor said amounted to a dereliction of the General Assembly's role as a reviewer of state contracts.

Current contracts with two Arkansas nonprofits that have run the centers for nearly two decades are set to expire Dec. 31.

The state Department of Human Services and the Office of State Procurement had awarded a new contract to an Indiana company in August, but the two current operators twice lodged protests.

A legislative subcommittee on Tuesday decided not to review the contract, essentially punting a decision to the Legislative Council, which on Friday also voted not to review the agreement.

To avoid having services cut off to as many as 249 youths in those lockups, the Department of Human Services will begin running the centers with current staff members, who previously had received letters of termination, Hutchinson said.

The state will operate the centers for six months while examining the possibility of returning them to private control, Hutchinson said.

Operation of the lockups will be paid for with department funds, said Human Services Director Cindy Gillespie. The agency will use money budgeted to pay part of the $160 million contract to the Indiana company that won the bid.

Youth Opportunity Investments LLC of Carmel, Ind., had been expected to start operating the centers in Colt, Dermott, Harrisburg, Lewisville and Mansfield on Jan. 1.

But challenges by two providers that lost the bid -- South Arkansas Youth Services in Magnolia and Consolidated Youth Services of Jonesboro -- and disapproval by enough lawmakers forced the Legislative Council to decide Friday to reconvene on the matter Dec. 30.

In addition to presenting an uncertain future to workers and youths at the facilities, that two-day window left legislators with too little time to act without a disruption of services, Hutchinson said.

"Here we are at the the final hour without action by the Legislature," Hutchinson said. "If we're going to run the government, avoid shutdowns and issue contracts in a timely fashion and manage the state, we've got to be able to use the usual procurement process, and that process be honored by the Legislature that reviews it."

The Legislative Council's ability to block executive branch contracts skirts the separation of powers in the state constitution, Hutchinson said, adding that lawmakers had overextended their authority in their interpretation of the procurement statutes.

The governor said he would consider a legal challenge to that authority in the future.

After telling representatives from the Human Services Department and procurement office on Friday that the "the ball is in your court," Legislative Council Co-chairman Sen. Bill Sample, R-Hot Springs, said he supported the governor's decision to take over the facilities.

Sample declined to say whether the governor had pressed the council to approve the contract.

"The Legislative Council did exactly what we are supposed to do, we either review or we don't review," Sample said when reached by phone after the governor's late afternoon news conference.

Sample said he got a call from the Human Services Department informing him of the governor's decision before the news conference.

The heads of the companies currently operating the facilities said they were not given similar notification.

Bonnie Boon, executive director of Consolidated Youth Services, said she first got word of the governor's action when a video of his news conference was uploaded to YouTube. Jerry Walsh, who heads South Arkansas Youth Services, said he saw the announcement on the evening news.

"I didn't think they were going to give current providers a chance to operate their programs," Walsh said. "This looks like a pretty good fight between the governor and the Legislature over who can review contracts."

Both Arkansas providers have been outspoken in their dismay since learning of the decision to go with the for-profit Youth Opportunity Investments. Their formal protests claimed the bid process was rigged because evaluators opted for the more expensive proposal.

They have since filed separate petitions with the Lafayette County Circuit Court seeking emergency stays to stop Youth Opportunity Investments from getting the contract.

Hutchinson said he considered attempts at reviving either contract moot after "the Legislature in essence killed the procurement process"

In Friday's Legislative Council meeting, members questioned whether the contract with Youth Opportunity Investments complied with education requirements and how the bidders' proposals were scored.

They also asked why Youth Opportunity Investments would receive a 58 percent funding increase not previously afforded to providers; the daily per-bed rate was to increase from $147 to almost $232.

"Did we follow process?" Rep. Jeffrey Wardlaw, D̶-̶P̶i̶n̶e̶ ̶B̶l̶u̶f̶f̶ R-Hermitage*, asked. "Did we have a fair bid? Are we looking at sour grapes now?"

Other legislators speculated that it might be "bad for business" if legislators overturned the contract.

"This body needs to really consider what we're doing as a matter of process," said Sen. Jason Rapert, R-Conway. "This could be a problem for the state of Arkansas.

"We have to make sure we're not doing this just because we don't like the way that the rules played out," Rapert said.

Ultimately, review of the contract did not go through, passing 17-6 in the House, but failing 14-5 in the Senate.

A Section on 12/17/2016

*CORRECTION: State Rep. Jeffrey Wardlaw is a Republican from Hermitage. This article gave an incorrect place of residence and party affiliation for the legislator.

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