Corrections opens bids for privatization of key services

With the Legislature and Governor Rick Snyder having made the changes needed to allow the Department of Corrections to seek bids to contract out key services, the department has put out a request for proposals and is receiving bids for what could be the largest privatization of governmental services in Michigan’s history.

So far, the department has issued requests for proposals on food service and health care, Corrections spokesperson Russ Marlan said. Soon, the department will issue a request for proposals on the Special Alternative Incarceration Facility and Woodland Center Correctional Facility, he said.

In about a month, the department also will seek bids to handle 1,750 beds, which could either mean having a private firm run a state prison or move prisoners to a privately run facility.

Mr. Marlan said some 1,300 people work in the health and mental health fields in Corrections now, 136 of which already are contractors.

The new deal could affect about 400 state nurses, 30 medical record examiners and 900 administrative support workers, such as word processors and secretaries, according to a union fact sheet. State prison nurses make about $22-$40 an hour — in the range of private sector nurses — though the cost of benefits has historically been higher in state government.

“For our state employees, other benefits account for an additional 65% to 75% on top of their hourly salary,” Marlan said. “The private sector can be more nimble or creative on establishing compensation. That is, maybe a doctor doesn’t need health insurance coverage or paid leave time but wants a higher hourly rate.”

Michigan’s track record on privatization has been spotty. Because many of the jobs in the current deal involve health care professionals with marketable skills, such as nurses, critics say the state won’t be able to save as much on pay and benefits as it might in other cases.

Roland Zullo, a research scientist at the Institute for Research on Labor, Employment, and the Economy at the University of Michigan, said the complex contract — the request for proposals has 134 pages, plus 30 appendices — will be difficult and costly to monitor.

“Even if the state outsources this, the state still remains liable for what happens to those prisoners,” Zullo said.

If the department decides to bid out any of these services, it wants to have the contracts in place by January 1, 2013, Mr. Marlan said.

He said the department has seen increased efficiency and reduced costs as a result of privatizing previous services like mental health, but does not know what the potential savings are from contracting out other services.

Marlan said there is no guarantee that the state will privatize the jobs, but it wants to get bids so it can assess whether the move makes sense.

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