Prison food bill to go up $13.7M with new vendor

LANSING – The estimated cost of Michigan’s new prison food services contract with Trinity Services Group is $13.7 million more over three years than the problem-plagued Aramark Correctional Services contract it replaces.

And Trinity has received sweeter terms, including higher meal prices, potentially higher annual increases, and a waiver of experience requirements for kitchen workers, a Free Press analysis shows.

Though Gov. Rick Snyder’s decision to end the state’s problem-plagued relationship with Aramark was widely praised, the sweetened contract terms with Trinity raise new questions about the cost of the split, especially considering that Trinity also has been the subject of complaints on sanitation issues and providing inadequate meals in connection with contracts it holds in other states.

“Each vendor negotiation is unique, and it is not uncommon for there to be changes in the terms of a contract when there is a change in vendor,” said Caleb Buhs, a spokesman for the Department of Technology, Management and Budget.

Aramark’s $145.1-million contract required kitchen workers to be high school graduates with four years of food service experience. Under its $158.8-million deal, Trinity’s workers also must be high school grads, but no experience is needed.

The Trinity contract also allows the company to hike meal prices if there are unanticipated increases in the minimum wage or government taxes, or if there is a drop in Michigan’s prison population. The Aramark contract contained no such provisions.

Aramark’s per-meal price was set at $1.26 to $1.34, depending on how many meals were served. Trinity’s contract sets per-meal prices at $1.25 to $1.73, again depending on volume, with Trinity able to charge the state higher per-meal prices if fewer meals are consumed.

And while Aramark’s annual inflationary increase in the cost of its contract was capped at 1.5%, there is no cap on the inflationary increases Trinity can pass on to Michigan taxpayers, a state official confirmed Friday.

In the new contract, “there is not a capped increase, partially because of the fluctuating costs of commodities, such as the steep increase in the price of proteins going up during the last year,” Buhs said. “It was more appropriate to tie it to various national indexes.”

Nick Ciaramitaro, legislative director for Michigan AFSCME Council 25, which represented the 370 state prison kitchen workers Aramark replaced in 2013, said the state should have called for new bids and state workers should have been given a chance to compete on a new, three-year deal.

“I don’t see the savings, and I think we’re playing with fire,” Ciaramitaro said Thursday. “Making the same mistake twice is not a good thing.”

The state and Aramark opted to end their contract about 18 months early after the state balked at billing changes requested by Aramark. A transition from Aramark to Trinity begins this month, with Trinity fully taking over on Sept. 9.

The contract to feed about 43,000 prisoners at 33 facilities had been plagued with problems since it began in December of 2013.

The Free Press, using Michigan’s Freedom of Information Act, documented a litany of problems under Aramark’s watch: Issues have ranged from meal shortages, to maggots in the kitchen, to smuggling of drugs and other contraband by Aramark employees, to Aramark workers engaging in sex acts with prisoners and attempting to hire one inmate to have another inmate assaulted.

Trinity, which mostly operates in county jails around the nation, has also been the subject of complaints related to serving inadequate amounts of food and having rodents in kitchens in the last year.

Under its contract with the state, Trinity is to be reimbursed for $1.5 million in start-up costs — on an amortized basis — if the state decides to cancel the contract in the first three years for reasons other than Trinity failing to fulfill the terms. Aramark’s contract had no such provision.

And although Corrections Department Director Heidi Washington said she likes Trinity because, unlike Aramark, the Florida-based company focuses solely on prisons and jails and would be more security-minded, Aramark had more security duties than Trinity does.

The Aramark contract said its kitchen workers had to regularly perform pat-down searches of inmates in the presence of corrections officers. There is no requirement for Trinity workers to search prisoners.

Each contract provided the food vendor with an automatic 1% price increase after the first year. The Aramark contract allowed for up to an additional 1.5% increase per year based on inflation, but capped total annual increases at 2.5%. The pricing section of the Trinity contract also allows for inflationary adjustments on top of the 1%, but specifies no cap.

Required educational credentials for Trinity managers are also more lax than what Aramark faced. Aramark managers had to have a university or college degree. Trinity workers need only “prior experience in food management or a related area.”

State officials told the Free Press in December they were looking at easing the experience requirements for Aramark to make it easier for the company to hire the workers it needs. But they didn’t mention eliminating experience requirements for kitchen workers, and the state never took a proposed contract amendment to the State Administrative Board.

“We learned from experience with the current contract that (restrictions placed on Aramark hiring) eliminated highly qualified candidates with years of food service, such as those with military experience,” said Buhs. “In the new contract, we wanted to ensure that Trinity was able to interview and hire the best candidates possible.”

Karen Cutler, a spokeswoman for Philadelphia-based Aramark, said she was unable to comment on the differences between the contracts. “I’m sure you understand,” Cutler said in an e-mail.

Buhs sought to minimize the nearly $14-million difference in the total estimated cost of the two contracts.

Initial costs under Trinity will be only a little more than $400,000 a year more than what Aramark is now charging, because of upward price adjustments Aramark received and cost fluctuations based on the number of meals Aramark was serving, Buhs said. Though Aramark’s estimated total contract cost works out to about $48.4 million in each of the three years, Aramark’s costs for the 2015 fiscal year are expected to be $52.5 million, Buhs said.

Aramark was billing the state about $200,000 more a month for meals than anticipated, which was about a 4.5% difference, Buhs said.

Corrections Department spokesman Chris Gautz said there was “a discrepancy between the meal tracker system the department uses and what Aramark numbers showed.”

Buhs said this “discrepancy ... was one of the key differences in our contract discussions with Aramark that could not be resolved, and ultimately led to the mutual decision to separate.”

Michigan’s minimum wage is set to rise gradually from $8.15 per hour currently to $9.25 per hour by Jan. 1, 2018, with allowances for inflationary increases after that. Buhs could not say Friday whether those increases are already built into the estimated cost of the Trinity contract or whether they could be used as a basis for Trinity to increase meal prices.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.

Comparing the prison food contracts

Michigan’s new prison food contractor has a three-year contract that is more costly and has sweeter terms that could push the cost up even higher. Here’s a comparison between the new Trinity Services Group contract and the Aramark Correctional Services contract it replaces.

Trinity Services Group

Aramark Correctional Services

Estimated cost

$158.8 million

$145.1 million

Duration

Three years

Three years

Increases

1% annually or change in CPI for dining out in cities, whichever is greater

1% annually guaranteed, plus up to 1.5% more, based on CPI changes

Minimum wage

May hike meal prices to reflect impact of a change in the minimum wage

No such contract provision

Prison population

May hike meal prices if prisoner population drops

No such contract provision

Price per meal

$1.25 to $1.73, depending on the number of meals served

$1.26 to $1.34, depending on number of meals served

Security

No requirement for kitchen workers to help search prisoners

Required to pat down inmates in presence of corrections officers

Worker qualifications

High school graduates, no experience required

High school graduates, four years food service experience

Manager qualifications

Prior experience in food management, food preparation, or a related area

College or university graduates

Start-up costs

Can recover up to $1.5 million in start-up costs if state cancels contract

No provision for recovery of start-up costs

Source: Department of Technology, Management and Budget