Mayor Eric Adams’ administration has awarded a no-bid $33 million contract to a Rikers Island food concessionaire that has charged incarcerated people and their families prices twice as high as those at local stores.
In doing so, the administration overrode the contract’s rejection by Comptroller Brad Lander, the city’s top fiscal watchdog, who cited a “litany of procedural failures and contract shortcomings” and pointed to an investigation by THE CITY that exposed high prices and poor service by the vendor, the Keefe Group. The Miami-based private equity firm is known for its extensive investments in prison contracting across the country.
The flaws he pointed to included the Department of Correction’s failure to allow other companies, including minority owned organizations, to bid on the contract.
Correction Commissioner Lynelle Maginley-Liddie defended the decision, saying the commissary prices detailed in the contract were “fair and reasonable.”
The DOC has various “controls” over any possible proposed Keefe cost increases on items, according to a letter Maginley-Liddie wrote to Lander’s team. The comptroller unfairly refused to officially register the contract and should reconsider that decision, she argued.
Under the deal, 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%.
The deal runs from July 1, 2023, to June 30, 2026 and the department can renew it under identical terms for another two years after that.
Rikers detainees currently order an average of 3,300 packages a week via a phone order system. They can spend up to $125 per week with the DOC collecting the money and paying Keefe based on sales. Additionally, family and friends can order items via an online system known as Securepak.
As for Keefe, the firm has also been accused of price gouging and other bad behavior around the country and on Thursday, Lander slammed the mayor from moving forward with the deal.
“The DOC is choosing to stick with the prison industrial complex’s largest private profiteer, rather than find a less mired vendor whose primary motive is not to make a quick buck off the backs of incarcerated people,” he said in a statement. “This is a lose-lose move for the city, and for incarcerated people and their loved ones.”
Under the city charter, the mayor can override the comptroller’s decision to reject a contract. Keefe’s is the third such deal the administration has moved forward with despite Lander’s objections.
The city moved ahead with a no-bid $432 million contract for migrant support services by DocGo, a firm with no experience in that field. Mayor Adams also pushed forward with a contract with Aetna to transfer city retirees to a Medicare Advantage program for their health care coverage. Lander rejected the deal, citing in part the ongoing litigation from retirees upset over the change in coverage they contend illegally limits their medical options.
As for the Keefe deal, THE CITY reported last summer that many of the prices offered at the Rikers commissaries and through an online system that allows family and friends to make purchases for inmates were higher — sometimes by 10 or 20% and in some situations by 200% or more than at local stores. The prices violated the contract Keefe was operating under which stipulated that the local store rates should be benchmarks, not to be exceeded.
Friends and family members of detainees have also repeatedly filed official complaints about delivery mess-ups and failures to make promised refunds, city records show.
The original $13.7 million no-bid contract was signed amid the COVID crisis in April 2022 as the hard-pressed department sought to transfer uniformed personnel from the commissary to cell blocks. For years, the jail commissary was run in-house by detainees supervised by correction officers. Each facility on Rikers had its own independently operated commissary.
Though the initial deal with Keefe was a no-bid contract, jail officials said they were putting together a Request for Proposals (RFP) to let other companies bid for a long-term deal, according to Lander. That RFP could have also given preference to minority and women-owned businesses, an initiative supported by Mayor Adams.
Instead, DOC proposed renewing Keefe’s deal with some new provisions to keep prices down, according to a four-page version THE CITY was able to briefly review last June.
Under that document, Keefe was restricted in how much it can hike prices. The version shared last June also requires the company to collect and digitize records to make sure that orders of food and other basic items are fulfilled. Keefe also was required to create a hotline and help desk to deal with delivery problems and other complaints that incarcerated people and their families say frequently have gone unaddressed, according to the new contract.
Despite those added protections, Lander earlier this month pointed to what he called multiple “defects” in the new contract and questioned how it was overseen and reviewed.
The DOC failed to conduct a required annual performance evaluation of Keefe after the first year of operation, according to Lander.
Maginley-Liddie argued that those reviews had actually been conducted and were uploaded into an internal database.
The Comptroller also criticized the way the deal was designed, noting that Keefe was paid in an “all-inclusive” way that covers costs for things like transportation and computer needs. He said that pricing structures without itemized breakdowns are too opaque to allow for basic cost analyses.