Audit: Private Prison Operators Overcharged State $13 Million

TALLAHASSEE, Fla. – A report from the Florida agency that oversees private prisons has revealed that the state paid nearly $13 million more than it needed to for services.

The Department of Management Services audit stated that the Correctional Privatization Commission, which was disbanded in July, did not protect the state’s assets and paid private prison operators Corrections Corp. of America and GEO Group, Inc. more money than necessary.

The audit included CCA-managed Bay Correctional Facility, Gadsden Correctional Facility and the Colombia Correctional Institution, in Lake City, and GEO Group-managed South Bay and Moore Haven prisons. It was initiated after the department of Management Services took authority over the prisons following a 2004 vote by legislators to dissolve the CPC. Discrepancies listed in the audit include:

  • CCA and GEO were paid an extra $4.5 million because CPC did not require the companies to report position vacancies during most of the time the contracts were in effect. When position vacancies were reported, monthly per-diem payments were not reduced.
  • GEO received $3.4 million in “questionable payments” from Jan. 1, 1999 to Dec. 31, 2004, including $1.86 million in overpayment errors, which the CPC made no effort to recover. Also, per-diem rates were inflated to contribute to another $1.54 million in excess payment.
  • CCA spent about $170,000 more than the $645,000 budgeted for maintenance annually from 1999 to 2004.
  • Nearly $1 million from a trust fund for inmate welfare, generated from telephone and vending commissions, was used instead to help pay for contractually required programs and services.
  • The state's Prison Per Diem Workgroup, which is required by law to determine per-diem rates every year, has not met since 2002.

“The CPC consistently failed to safeguard the State's interests in its role as the steward of privately operated correctional facilities,” the report stated. “Our review showed numerous instances where vendors' interests were considered over the State's interests.”

Representatives from both the GEO Group and CCA say they are reviewing the audit and plan to work with the Department of Management Services to resolve the issue.

“We are currently in the process of reviewing the audit,” says Pablo Paez, GEO Group spokesman. “We will work with the department to address the issues.”