IN THIS ISSUE

United Kingdom

 

 

UK : competition shrouded in secrecy

   

 

On 22 October 1999, the Government announced that the British firm Group 4 is to lose a prison management contract. But this does not represent a weakness in Labour’s resolve to out-privatise the former Tory government.

      On the same day, the Government also announced the resurrection of market testing for existing prisons which are considered to be failing (see PPRI # 2).

     Following a competitive tendering process for the contracts for two currently privately run prisons, the Prison Service has been chosen as preferred bidder for HMP Buckley Hall at Rochdale, north west England. If contract negotiations are successful the prison, which has been  run by Group 4 since June 1994, will be brought back under Prison Service control as of 26 June 2000.

    Meanwhile, Premier Prison Services has been named preferred bidder to run HMP Doncaster. The company’s current contract expires in August 2000.

    New contracts are expected to be signed by the end of the year. Both contracts will run for ten years. Until now, management contracts have been for five years only. The new strategy is partly designed to save on retendering costs.

    In a message to Prison Service staff Martin Narey,  Director General of the Prison Service, said that “the results of these competitions show that the Prison Service is very capable of delivering the same high standards and efficiency as the private sector - provided that we are willing to look at radical change in the way the work is done.”

Commercial confidentiality

    The Prisons Minister Paul Boateng has said that the decisions were made in the public interest (see pages 3/4).  But the tendering process has been shrouded in commercial confidentiality, so the public is prevented from knowing the criteria for evaluating the bids and the true basis for the decision in each case.

    Even the Tory-led Home Affairs Committee, which reported in March 1997 stated that  “while we accept the non-release of commercially confidential information in principle, we take the view that commercial confidentiality should be interpreted very narrowly and must not be used as an excuse not to publish information about performance which is necessary for proper and full comparisons to be made between the public and private sectors” (see PPRI # 9).

     Labour’s response in December 1997 was that while details of  bids for contracts had to be confidential  “the Prison Service will keep to a minimum information that has to be treated as commercial in confidence.”

The need for openness

     Openness is paramount in this latest competition particularly because, off the record,  senior ranking Prison Service staff had predicted the outcome since the day in May 1998 when the Home Secretary  announced that in house bids for upcoming contract renewals were going to be allowed (see PPRI #21).

     Also in May 1998, Jack Straw endorsed an internal Government review which concluded that the immediate transfer of existing private prisons to the public sector is not affordable and “cannot be justified on  value for money grounds” (see PPRI # 21).

    Commercial confidentiality throws the decision making process into question and keeps the public in the dark about some fundamental issues.

n It cannot be established how far the decisions rested on both contractors’ performance to date and/or the companies’ and the Prison Service in house teams’ ability to respond effectively to the tenders.

n What are the figures for Premier’s success in combatting reoffending and what programmes are now - and will be - in place and how have these been assessed?

n The Prisons Minister Paul Boateng said on Radio 4 (see page 4) that “the public interest is best safeguarded by proper attention to security and the delivery of programmes within a prison context to combat reoffending. We are quite satisfied that Premier Prisons have shown themselves capable of delivering that in Doncaster.”

    But what criteria have been used in the equation to assess ‘value for money’?

n Given what is known about the private sector’s repeated failure to meet its contractual obligations in the first year to 18 months of opening any new prison - the so called teething or bedding in problems - it is important to know how different the invitations to tender were from the existing contract specifications. This is particularly true in the light of the Doncaster decision.

n There are also questions about how any costs associated with the handover of Buckley Hall from Group 4 to the Prison Service - and any potential problems associated with this process - will be dealt with by the Prison Service and how these and the cost of the tendering process itself might have affected the bids.

n Achieving a so-called ‘level playing field’ which would prevent one or more parties crying foul over perceived advantages or disadvantages, is extremely difficult. So how was this managed?

n There is the thorny question of the financial details, including: what are these prisons going to cost taxpayers? What profit margin is Premier Prisons expecting from its ten year contract? If the financial penalties are capped at five per cent of the total contract price (as with other existing contracts) why has that not been revised? How will the Prison Service be penalised if it fails to meet its contractual obligations at Buckley Hall? Exactly why was one bid more or less competitive than the other?

n What consideration has been given to the contractors’ performance in the UK and elsewhere?

    In order to allay any doubts about the probity of the tendering and evaluation process, the Government should, as a minimum, immediately publish the bid evaluation documents relating to both Buckley Hall and Doncaster.

Group 4's record

      Following the Prisons Minister’s announcement on 22 October 1999, Jim Harrower, Group 4's executive vice president, said that he was “astonished” that the company had lost the Buckley Hall contract.

      When the contract for Buckley Hall was first tendered in 1993, Group 4's bid was £33m over five years. The in house bid was £31.7m. But Group 4 still won the contract.

      On 29 July 1994, Jim Harrower, then Group 4's chief executive said that his company’s proposal “combines a secure and constructive regime with innovative ideas, formulated with the help of independent experts, to tackle the key issues facing prisons in the 1990s.”

      But, for more than a year, the prison suffered numerous problems causing a local MP to call for a public inquiry into the prison’s management (see PPRI #2 and 3).

      Since the announcement on 22 October, media attention has focused on HM Chief Inspector of Prisons, Sir David Ramsbotham’s February 1997 assessment of Buckley Hall as “thoroughly good”. But that inspection report also cited numerous deficiencies (see PPRI #16).

        In a move too late to save Group 4,  the prison’s  Board of Visitors’ Annual Report was published on 21 October 1999. It noted that Buckley Hall was “a good prison still improving”.  Sir David Ramsbotham, even added his comments to the report saying that Buckley Hall was “ahead of many others in the quality of what it delivers.”

        Group 4 has been penalised £28,089 for contract failures at HMP Altcourse (see PPRI #29). Its subsidiary,  Rebound ECD Ltd, has also been penalised for failures at the Medway Secure Training Centre (see PPRI #16-23, 25, 28 and 29).

        In Australia, the company has had major problems at Port Phillip Prison (see PPRI #15-26 and 28-30).

Doncaster, Premier and Wackenhut

    Premier Prison Services retained its contract to run HMP Doncaster. Although  not comparable with Buckley Hall on a ‘like for like basis’ the prison has had a worse operational history. On that basis alone, Premier might  have been more likely than Group 4 to lose its contract.

    In  a  Prison Service press release on 22 October 1999, Martin Narey, Director General of the Prison Service, said that Premier Prison Services has “provided such an impressive regime since the prison opened in 1994.” That is a revision of history, since much has been documented about the prison’s difficulties during the first eighteen months. But again, due to commercial confidentiality, the public still does not know just how far the Prison Service went - and how much it cost taxpayers - to help the company try and meet its contractual obligations.

    Not only did the prison start off extremely badly but it has since recorded high numbers of assaults, incidents of self harm and suicides.Yet the prison has earned plaudits from the Chief Inspector of Prisons.

    On the BBC Radio 4 programme PM on 22 October, it was pointed out to Prisons Minister Paul Boateng that Doncaster had persistently failed to meet two of the Prison Service’s key performance indicators. His response was that these were “just indicators” (see page 4).

Problems elsewhere

       Between July 1998 and February 1999 Premier was  fined £83,347 for contract failures at HMP Lowdham Grange, Nottingham (see PPRI # 17 and 29). And even as the tender evaluation panel was considering Premier Prison Services’ bid for Doncaster, the Scottish Prison Service was dealing with problems at the company’s most recently opened prison at Kilmarnock.

    The Scotsman reported on 9 October 1999 that the company allegedly faces penalties of “six figures” for failing to meet contract requirements. The newspaper claimed that the penalties are for violence amongst prisoners; the lack of available work and educational facilities; high levels of drug use; and the short time that prisoners spend out of their cells. There is also thought to be a high turnover of staff and those who remain are being “ordered to work between 15 and 16 hour shifts” to cover.

Recent events in the US

                But regardless of Premier Prison Services’ record at Doncaster or in the UK generally, it could also be argued that neither Premier Prison Services nor its sister company Wackenhut (UK) Ltd - which recently lost the contract to run HMP Coldingley’s  prison industries (see PPRI #23-27) -  should have been awarded any new contracts before the Home Office carried out a thorough investigation into some of the parent company’s operations in the US.

    Premier Prison Services is 50 per cent owned by Wackenhut Corrections Corporation, the second largest private prison operator in the US and the largest outside of the US.

     Some of Wackenhut Corrections Corporation’s  recent problems at US prisons include:

n deaths of prisoners and a guard at two prisons in New Mexico. This has led to the State commissioning an independent investigation into the entire prison system (see PPRI # 29 and 30);

n a recent State audit of Wackenhut’s Hobbs, New Mexico facility found that the prison was not meeting numerous State standards or contractual obligations (see PPRI # 30);

n the company has lost a  contract in Travis County,Texas after being penalised a record $625,000 for non provision of programmes;

n  a court appointed prisons expert found that the company  had serious problems operating the Jena Juvenile Justice Center in Louisiana (see PPRI # 23 and 30);

n a lawsuit filed by prisoners alleging abuse at the Coke County Juvenile Facility, Texas led to the company making  an out of court settlement (see PPRI # 21);

n the American Civil Liberties Union has filed a lawsuit compelling the company to release documents relating to alleged incidents of sexual harassment and other abuses of prisoners at a Florida prison.

 

Market testing resurrected

    On 22 October 1999, Prisons Minister Paul Boateng  announced that “in future those prisons  which continually fail to meet [high standards] will be market tested and opened up to competition. I have asked the Director General to put forward proposals for developing this further and look forward to receiving these in the new year.”

    Market testing was  a strategy devised by the former Tory government. But it had to be abandoned in September 1996 by the then Home Secretary Michael Howard following a challenge by the Prison Officers Association (POA) and advice from the Government’s lawyers (see PPRI #5).

    In the long period of uncertainty over the future of some 20 targeted prisons, staff morale plummeted.

    Now under Labour’s plan, both Prison Service and privately run prisons will be open to competition. It was not made clear whether prisons which are privately financed, designed, built and managed would have their separate management contracts market tested when due for renewal.

    In response to the announcement, a spokesperson for the POA said his union believes that “no prison will continually  fail in the public sector”. The POA and other trade unions will be consulted  about the criteria used by the Prison Service to determine which prisons will be market tested.

 

Even more competition

    On 22 October 1999, Paul Boateng also said that “there will be more competition coming up as contracts fall for renewal.” HMP Wolds, currently run by Group 4 and HMP Blakenhurst, run by UK Detention Services will be the next  private management contracts open to bidding, along with HMP Manchester, which is currently run by the Prison Service.

    As Group 4 staff at Buckley Hall contemplate a future in the public sector with enhanced wages and conditions to be phased in after six months, the company’s directors - and their competitors - will not be short of new business from the Government.

    On 21 October 1999, the day before the new market testing policy was announced, the Home Office  revealed that a contract for a new 400 bed immigration reception centre in Cambridgeshire would soon be open to tender.

    There are also at least  three or four further adult prisons and two Secure Training Centres for 12-14 year olds planned.

 

What the Prisons Minister said

BBC Radio 4, World At One, 22 October 1999, interview with Prisons Minister Paul Boateng.

 

                Q. What are the advantages of transferring the management of Buckley Hall to the Prison Service?

A. The advantages lie in cost effective delivery of high standards of safety and security, all those are in the public interest.

                Q. That must imply, Minister,  that all those were not being supplied by Group 4.

A.  I’m not going to make a judgement, that’s not my role to make judgements about Group 4. That is the role of the Director General. His independent assessors, they take into account their assessment, which is fair, which is open, which is transparent, of that which is on offer and they make a recommendation based on the public interest and I go along with that,  because what I have got to do is to make sure that there are, in place, processes that are designed to maximise the value that the public get out of the Prison Service.

                Which is why I have also made it clear today that failing prisons can expect to be subject to this rigorous competitive process, because I believe market testing has a role in upping the game of failing prisons in order, again, that the public get safety and security and regimes in those prisons are designed to correct and to address offending behaviour.

                Q. Why, though, Minister, has Doncaster remained with its present management, because Doncaster is notorious: it has a very high level of assaults; it has failed to meet some of the criteria you set for it; there have been a number of deaths there; it is known as Doncatraz by its inhabitants. Why is  Doncaster allowed to carry on?

A. What the independent assessors have taken into account in relation to Doncaster is the view of the Chief Inspector, the view of the Director General  of Prisons, who found that there were programmes in place to manage vulnerable and suicidal prisoners and bullying which were, quite frankly, impressive. Doncaster has had problems - all prisons do - but it has gone to great lengths to tackle these issues. They have won out in the course of a competitive process.

                Q. But in terms of value for money, it is my understanding, correct me if I am wrong,  that in Doncaster the in house bid said they could do it for £17m. The current contract is £19.5m. So it is actually going to be more expensive to keep it in current hands.

A. It’s not just simply a question of pounds, shillings and pence. It is also a question of value and effectiveness in the wider context that I have outlined, of safety and security and correctional programmes designed to reduce reoffending.

                I have to take into account the public interest. It’s a question of value, value for money, and this private/public mix obviously has produced that value for money and has made it absolutely clear that the future of the Prison Service is one in which there will continue to be the involvement of the private sector. But the public sector too has a role to play and where it can show it can do better than the private sector it will be allowed to do so.

 

BBC Radio 4 PM, 22 October 1999, interview with Prisons Minister Paul Boateng.

 

                Q. ... asked why Group 4 had lost its contract when Premier had not despite failing to meet some of his own department’s targets, the so-called key performance indicators.

A. Key performance indicators are just that - indicators. When you look at the totality of what Doncaster had to offer through Premier Prison Services, the judgement was made that the public got better value from Premier Prison Services. Similarly, in relation to Buckley Hall, currently managed by Group 4, the decision was made that we  would get better value for money from the Prison Service who were bidding.

                Q. ... on serious concerns about Wackenhut’s record at some of its prisons in the US.

A. Contracts are awarded on the basis of what has been delivered and what is contractually bound to be delivered and on that basis Premier Prison Services have shown themselves in relation to Doncaster - which is what we are discussing today - Doncaster, not Texas, what they have shown in relation to  Doncaster and their services there, is that they provide a standard of service that is competitive, that provides value for money and, as such, they were awarded the contract.

                Q. ... on whether he is interested in who is running Wackenhut which has a 50 per cent share in Premier Prison Services and what their record is and whether the Minister has to be more responsible.

A. My interest is the public interest. The public interest is best safeguarded by proper attention to security and the delivery of programmes within a prison context to combat reoffending. We are quite satisfied that Premier Prisons have shown themselves capable of delivering that in Doncaster.

 

What Group 4 said

 

Extract from BBC Radio 4, World At One, 22 October 1999, interview with Jim Harrower, Executive Vice President, Group 4.

                Q. ... asked why he thought the contract had been lost.

A. We put together a bid that we thought was correct. We are astonished that we have lost it. When you consider that ... Sir David Ramsbotham from the  inspector’s office just said it was one of the best prisons he visits ... so I am very disappointed that we’ve lost. I presume it has got to have been lost on some cost issues but until I know the details of the bids I don’t know why we have lost it.

                Q. Do you think ... it was a political decision?

A. I have had meetings with the Home Secretary before. He’s never indicated to me in the past that there were political pressures that were going to come from him on the private sector. I have never had that from him. In fact, he has been encouraging us all along to continue to raise our  standards. So I don’t have a difficulty with that ... if the debriefing is thorough enough, we will find out why we lost it ... I have never had any impression from the Home Secretary ... that he had any political pressure on him to move prisons back into the public sector.