Youth-lockup firm to get Arkansas job in spite of vote; Hutchinson rejects panel’s concern on Indiana provider

Gov. Asa Hutchinson is shown in this file photo.

Gov. Asa Hutchinson says he plans to hire an Indiana company to manage five state youth prisons, even though lawmakers voted against the $15.8 million contract on Friday.

Arkansas Legislative Council members voiced concerns about for-profit Youth Opportunity Investments LLC of Carmel, Ind., because of recent troubles the company had managing Michigan juvenile lockups, as well as issues some of its executives had overseeing facilities in Indiana and Arkansas years ago when they were with different firms.

Lawmakers said that state officials failed to carefully review Youth Opportunity's past when deciding if it met the requirements of a request for proposals to run the Arkansas juvenile lockups.

At Friday's meeting, legislators voted 9-5 to not review the contract, meaning they didn't approve. Thirteen members were absent. The council meets when the General Assembly is not in session.

While the Legislature has the statutory authority to "review" state contracts, the governor can override this vote.

"It is the responsibility of the executive branch to do as it will," said Sen. Linda Chesterfield, D-Little Rock. "It is the responsibility of this body to express its concern one way or the other about what the contract is before us.

"It is my hope that whatever they decide -- and I suspect this is a done deal -- that there is oversight," Chesterfield said. "The lives of our children are at stake, and who we put in place is of critical importance to those children's lives."

Hutchinson found himself in a similar situation in December 2016 when lawmakers failed to approve a multi-year, $160 million contract to run Arkansas' juvenile lockups, which was also to go to Youth Opportunity.

Hutchinson then ordered the Department of Human Services to take over the facilities that January, citing a need to avoid "government shutdown."

On Thursday, the governor said he was "disappointed" with lawmakers for failing to favorably review the new contract and said he plans to move forward with Youth Opportunity, which will begin operating the sites in Dermott, Harrisburg, Lewisville and Mansfield on July 1, according to his spokesman J.R. Davis.

"Our youth in these facilities are in need of improved services," the governor said in a statement. "All youth facilities are subject to enhanced monitoring to ensure that the children in those facilities are cared for properly and safely."

Hutchinson, who sees himself as a "juvenile justice reformer," has said before that having all facilities under a single provider will ensure that children receive consistent and quality services, no matter where they're jailed, and will help them reintegrate in their communities after their release.


Lawmakers on Friday described the state's procurement system as broken, with lobbyists routinely inserting themselves in the bidding process when a bidder doesn't like the results.

"I am tired of the loser hiring another lobbyist, and them coming to tell us to redo the procurement process, month after month after month after month," said Sen. Bart Hester, R-Cave Springs.

"This isn't a lobbyist game. We don't want lobbyists determining who wins contracts... And I certainly don't think the people of Arkansas want that to be the case.

"They want a fair procurement process, let the executive branch run it," he said. "We air our concerns and grievances, and if we're not happy with it, we will re-address it the next time we have an opportunity."

The governor's office said that state officials followed all procurement policies and laws.

In the request for proposals to run the youth jails, the Human Services Department required that a bidder have a clean five-year history of running similar facilities, including no contract terminations elsewhere attributable to "non-performance" and no more than a dozen written citations for poor performance.

Youth Opportunity Investments won the contract after it challenged the state's original decision.

The contract was supposed to go to Nevada-based Rite of Passage, which already runs a youth lockup near Alexander in a separate three-year, $34.1 million deal.

The state procurement director found that Rite of Passage did not meet the no-termination requirement because it lost one of its contracts to run a youth lockup in Colorado last year. Colorado officials had found that children were exposed to unsafe conditions, including abusive guards.

The procurement office then awarded the contract to Youth Opportunity.

Lawmakers noted Friday that Youth Opportunity had incurred more than a dozen written citations for poor performance, but Hutchinson said the allegations weren't presented within the two-week window firms have to protest a contract decision. The protest period for this contract ended mid-March.

Thursday's Arkansas Democrat-Gazette reported that Michigan officials, between 2012 and 2018, found that guards at Youth Opportunity-run facilities injured children, escalated situations leading to the use of physical restraints, and failed to conduct routine checks on a suicidal teen, leading to his death.

Those instances -- at least 84 written violations -- occurred at Youth Opportunity's Muskegon River Youth Home or Muskegon River Pathway of Hope sites, according to "special investigation reports," routine inspection reports and federal court records.

At Friday's meeting, state procurement director Edward Armstrong told lawmakers that Youth Opportunity executives informed him the company was no longer associated with those two facilities as of June 2018.

But according to the Michigan Department of Licensing and Regulatory Affairs website, the Muskegon River Youth Home Inc., the owner of those two sites, still shares the same chief executive and the same address as Youth Opportunity.

Sen. Jonathan Dismang, R-Beebe, criticized state officials' brief review of Youth Opportunity's corporate structure.

"We've looked at [company] websites, and we've looked at secretary of state websites from other states," Dismang said. "We have done nothing beyond that, except for asking the company some basic questions?"

Armstrong argued that he wanted to dispense justice when reviewing Youth Opportunity's case during the procurement process and that he didn't think it was fair to punish the company for the actions of another "corporate person."

In response, Rep. John Payton, R-Wilburn, said that "some of the biggest problems we face is because we ignore red flags."

"A corporation can be formed overnight, but where do you look when you're hiring that corporation?" he said. "It's the executives."

Spokesmen for Youth Opportunity and Rite of Passage did not respond to requests for comment on Friday's decisions.

A Section on 05/18/2019