After THE CITY exposed high prices and spotty delivery at the Rikers Island commissary, the city Department of Correction is close to approving a $33 million no-bid contract with the operation’s management firm that restricts how much it can raise prices and takes measures to ensure that orders of food and other basic items are fulfilled. 

A four-page version of the proposed three-year contract with Keefe Group stipulates that prices for items such as toothpaste and soda cannot change over the first year. Afterwards, Keefe can seek a price hike for no more than 20% of the items, and the increases can’t exceed 5%, according to the proposed deal.

But it remains to be seen how much that will curb prices that are now often far higher than those at neighborhood stores, because the department and Keefe are still negotiating the base price list.   

In addition to facing new limits on how much it bills detainees and their friends and family, Keefe also will be required to save every receipt, physical signature, and digital record showing that an order was made and delivered. Keefe also will have to create a hotline and help desk to tackle delivery issues and other complaints that incarcerated people and their families say frequently have gone unaddressed. 

The contract provisions were added following an investigation by THE CITY that found that every product listed through the online part of the service used by friends and family to send packages to those behind bars is being sold at a price higher than the one stipulated in the contract.

Many of the prices there and at the Rikers commissary are more than double those at local grocery stores and online retailers. Yet the contract requires them not to exceed the prices at the neighborhood shops.

The investigation detailed multiple complaints from friends and family members, as well as from incarcerated people, about the company’s prices and service. 

It also raised questions about why the contract — originally awarded on a no-bid emergency basis as the Correction Department staggered through a pandemic-induced staffing crisis — was being renegotiated without competition after that crisis had passed, and to a company that had been heavily criticized for its practices in correctional systems in Los Angeles, Washington state, and numerous other locations.

The department has scheduled a hearing on the contract for 10 a.m. Thursday. Following that, it will go through a lengthy approval process involving reviews by the Mayor’s Office of Contract Services, the Office of Management and Budget, the Law Department, and the Comptroller’s Office. 

This latest hearing was announced last Monday in a posting in The City Record, the official publication that notes the schedule of municipal meetings and hearings, contract proposals and awards and personnel moves at city agencies.    

The posting invited the public to view a draft of the proposed contract in person at its headquarters in Queens from June 12 to 22.  

But, unusually, when they were asked for a copy of the contract yesterday morning, Correction officials said there was no contract to show — that it was still being negotiated with Keefe and would be available at the end of the day. At 4 p.m., Latima Johnson, the department spokesperson, turned over the four-page draft that lacks the vital inclusion of the price list. 

“I’ve never heard of something like that happening,” said Michelle Jackson, executive director of the Human Services Council, a nonprofit umbrella group with 170 member organizations. Those organizations frequently go through a similar so-called “negotiated acquisition” process when the city issues no-bid contracts.