Bianca Pallaro and Reuven Blau, The City
In April 2022, the New York City Department of Correction signed a no-bid contract with a company called the Keefe Group to take over the commissary operations at Rikers Island, and offer a new web-based service that allows friends and family members to send food and other provisions to detainees.
The contract, which Correction Commissioner Louis Molina said would transition “the commissary process into the 21st century,” includes a list of items with fixed prices set at a rate that could not “exceed the market prices of the same products in non-discount stores (i.e., corner stores) in the City of New York.”
Yet, every product listed through the new service is being sold at a price higher than the one stipulated in the contract, and many of the prices there and at Rikers commissary more than double those at local grocery stores and online retailers, an investigation by THE CITY has found.
For friends and family using the Keefe website, a 1.3 ounce cup of Cheerios cereal costs $3.62. Its listed price on the contract is 16% lower, $3.12. At the Trade Fair supermarket and deli – a typical neighborhood store a short walk from the Queens bus stop nearest Rikers – it costs 65% less, $2.19, and you can get it delivered through FreshDirect for $1.49.
A 4-ounce package of Knorr stroganoff pasta and sauce sells for $4.41 on the new service’s website. The contract lists its cost as $3.80 and it can be had for $2.39 at Trade Fair, and for $1.99 at FreshDirect.
For incarcerated people using the Keefe-operated commissaries at Rikers and the Vernon C. Bain Correctional Center, which is also covered by the contract, a 4-ounce tube of Colgate toothpaste costs $3.30. It sells for $2.49 at Walgreens and CVS, and Target sells an 8-ounce tube for $2.99.
The price disparities hit hard for incarcerated people who finance their purchases through jobs that pay 55 cents to $1.45 an hour, and for their families, who typically come from many of the poorest neighborhoods in New York. Outsiders are only allowed to send food to incarcerated individuals through the new Keefe service, which is called Access Securepak.
The criticisms of the commissary operations go beyond price. Among a dozen people interviewed by THE CITY, repeated complaints emerged about failures to deliver orders and to issue prompt refunds in such cases.
Melissa Vergara said that last January she placed $125 in the commissary account of her son, who is on the autism spectrum and has been jailed at Rikers on a gun charge since May 2021. Her son used the money to place an order that never arrived. The same thing has happened twice since then, but she received a full refund only once, she said, after calling Keefe repeatedly for days.
“I have three kids, and I work 70 hours a week, so for them to lose $125 two more times it’s a lot,” Vergara said. “There is really no regard for people. I work from 8 a.m. to 10 p.m., I don’t have time to do that.”
Keefe’s year-long contract, originally for $7 million, was awarded on an emergency basis, allowing the Department of Correction to bypass the city’s usual competitive bidding process because of a pandemic-induced staffing crisis at city jails.
Three months ago, the department extended Keefe’s contract until June 20 for an extra $6.7 million, again without bidding, even though the staffing crisis had subsided.
Dana Wax, who served as chief of staff to then-Correction Commissioner Vincent Schiraldi at the end of Mayor Bill de Blasio’s administration in 2021, told THE CITY, “This to me is like the extension of the emergency orders. There needs to be a real evaluation of, ‘Is this the right thing?’ Not just, ‘We’re gonna keep doing it because it’s there.’”
Keefe is currently in talks with the Department of Correction about a three-year no-bid contract for a proposed $33 million, according to a posting by the Mayor’s Office of Contracts.
According to Department of Correction spokesperson Patrick Rocchio, that’s because the relationship with Keefe has worked out well. “The emergency procurement resulted in a unique commissary solution for the Department,” he said. “It was customized to meet our needs and it has been and continues to be very successful.”
Rocchio maintained that “the current prices being offered are comparable to local NYC stores including supermarkets,’’ citing a 3-ounce bag of ramen that sells for 60 cents at the commissary and 68 cents at a Food Bazaar supermarket. And he said that when detainees did not receive their food packages, it was likely because they did not have enough money in their accounts to cover the cost.
But each of those assertions is debatable.
THE CITY found several items at Food Bazaar at prices lower than what’s on offer through Keefe – even ramen when purchased in a typical six- or 12-pack. And several family members of incarcerated people said they were persistently frustrated when they tried to get a refund on an undelivered purchase.
Mervyn Haynes, 39, has been jailed at the North Infirmary Command on Rikers Island since 2019 and suffers from pancreatic cancer. Haynes told THE CITY that this February he ordered a 7 oz. Keefe-branded chicken breast for $5.11, but received a package barely half the listed size. After he and other detainees filed several similar grievances and complained to a correction captain, they began receiving the package sizes they paid for. But, he said, he never got his money back.
“Not only prices have almost doubled since Keefe took over, but they are ripping us off with these sorts of problems,” Haynes said.
A Massive Operation
For decades, the massive Rikers commissary was operated by jail officers with the help of detainees, who were paid, however modestly, and received training that might help them get jobs on their release. The jail population filled out order forms and presented them to officers operating the commissary. Later, they’d pick up their purchases at designated locations in each housing unit.
The system worked, but it was far from perfect and periodically became the target of city auditors who typically found thousands of dollars of items missing from jail inventories.
Then the pandemic struck.
Keefe was brought into the picture as correction officers called in sick on mass during the covid pandemic amid a surge in cellblock violence. Officials saw a way to redeploy officers to where they were most needed by turning over the commissary operations to the company, while also offering a new purchasing option to friends and family.
The company was already working with the Department of Correction as one of many suppliers. In April 2022, it became the only one.
Keefe’s two systems do not rely on physical commissary stores. Detainees call in their orders through telephones placed in their housing units and can order up to $125 in purchases per week, with the correction department collecting the money and paying Keefe based on sales. Rocchio said detainees order an average of 3,300 packages a week.
Through Keefe’s Access Securepak service, introduced in December, family and friends can spend up to $25 a month on a list of 125 items posted on its website. THE CITY determined Keefe was charging higher prices for these items than those in its contract by matching the website figures against contractual ones. This comparison could not be done for Rikers commissary prices because the transactions are completed by phone and the Department of Correction refused to send a current price list.
Rocchio said on average 295 packages a week are ordered through Securepak. That would mean a significant portion of the incarcerated population at Rikers and other city lockups — 20% or more — receives packages this way every month. But in volume terms, Rocchio said, “Securepak has a very small footprint relative to the commissary operation.”
Whether other companies could have performed the services better or cheaper was left unexplored, both at the time of the original contract and upon its extension this year.
The no-bid contract removed the possibility that one of Keefe’s national competitors could come in with a more attractive offer. And, as with other emergency contracts during the pandemic, also left on the sidelines were local minority- or women-owned firms that may have been interested in the work. Mayor Eric Adams has championed the increased employment of such companies by the city.
When it was first granted the system was still reeling from mass absences that reached 35% of the uniformed staff at the height of the pandemic. And by the time the city extended Keefe’s contract earlier this year, the number of correction officers calling in sick had dropped to an average daily total of 15%, according to official statistics.
In the end, according to the Department of Correction, the contract has enabled the redeployment of “the equivalent of approximately 15 correction officers from commissary work.”
“It was not a great idea when we were doing it,” said Wax, the former chief of staff, citing qualms about firms making money off an incarcerated pretrial population.
“I hate privatization in jails and wish I could have stopped it,” she added. “But it was just one of 1,000 levers that we were trying to pull to get more staff.”
A Frequently Criticized Giant
In 1975, Keefe made its foray into the correctional market by providing single-serve coffee packets to a prison in Florida, according to the company’s website. The company quickly differentiated itself from competitors by providing custom-made packaging in place of metal and glass containers, and became one of the largest for-profit operators of prison and jail commissaries nationwide. In 2016, the company was acquired by H.I.G. Capital, a Miami-based private equity firm known for its extensive investments in prison contracting.
Among Keefe’s supporters is Mark Cranston, who served as acting DOC commissioner early in the de Blasio administration and found the company an asset after he took charge of the jail system in New Jersey’s Middlesex County.
“Privatizing is the way to go,” Cranston told THE CITY, arguing that it allows correction officers to be deployed where they are most necessary. In New Jersey, the company’s profits, he said, are shared with the department’s inmate welfare fund, which pays for gym equipment and program services.
But Keefe has been embroiled in controversies going back years, including two bribery scandals and repeated criticism across the country for its prices.
In 2006, a former Florida state prisons chief and another prison official pled guilty to accepting $130,000 in kickbacks from a Keefe subcontractor that handled the company’s financial transactions.
In 2019, Keefe agreed to a $3.1 million settlement with Mississippi’s attorney general after being accused with other companies of channeling bribes and kickbacks to the former commissioner of the Mississippi Department of Corrections five years earlier. He was convicted and sentenced to 20 years in prison.
The company was not criminally charged in either case.
Over the years, Keefe has also been criticized by incarcerated people and advocates for charging high prices in states including Florida, Vermont, Michigan, Idaho, Arizona and California.
Two months ago, a man formerly incarcerated at the Men’s Central Jail in Los Angeles filed a lawsuit against the county and its sheriff’s department to prevent them from renewing contracts with private jail service providers like Keefe that allegedly charge detainees “extortionate and outrageous prices.”
Keefe did not respond to a list of detailed questions about its history and its Rikers and Vernon Bain operations.
Asked if correction officials were aware of the allegations against Keefe or the company’s full history, Rocchio, the department spokesperson said, “The Department based its initial decision to work with Keefe on its working relationship with us over the years and that they have worked in similar capacities throughout New York State and the nation.”
$5.63 for a Bag of Candy
Despite the fixed prices specified in the contract, every Keefe product offered on the website cost 20% more than those listed — with some items 50% higher, an analysis by THE CITY shows.
Starburst candy, for example, is being sold for $5.63 for a 7.2 oz bag on Keefe’s Access Securepak website, while the contract lists it at $3.75.
Products produced by Keefe, as well, are selling for higher prices than those listed in the contract. The company’s Brushy Creek 5-ounce Pulled Chicken in Buffalo Style Sauce is sold through Securepak for $6.79 when the agreed-upon contract price is $4.95.
When asked about the price increases, correction department spokespeople maintained they authorized increases only on certain items, citing supply-chain issues and a five-cent increase in the price of stamps.
As to the overall price disparity with neighborhood shops, Rocchio said the Department of Correction believes that all the prices are “equal and fair” when compared with local store prices.
“The current prices being offered are comparable to local NYC area stores including supermarkets,” he said. “For example, a commissary top seller, ramen noodles are 60 cents for a 3oz bag. Top Ramen Chicken Noodle at Food Bazaar (a NYC area supermarket) cost 67 cents for a 3oz bag.”
But Food Bazaar’s price list shows that Top Ramen is offered for 57 cents if bought in six- or twelve-packs, and a single 3oz bag of Maruchan brand ramen sells for 40 cents.
The store also sells other items at cheaper prices than those at Rikers commissary. Keefe offers Nutrigrain cereal bars to detainees for 75 cents through the commissary system, and to family and friends for 81 cents on the Access Securepak website. Food Bazaar charges 56 cents. Similarly, a three-ounce package of Ritz Original crackers that sells for $3.98 on Keefe’s website is $3.19 at Food Bazaar.
THE CITY also visited the closest grocery store to Rikers Island, the Trade Fair Deli & Supermarket on 21st Avenue and 80th Street in Astoria, Queens, and found that 20 of the 22 items checked can be purchased more cheaply there than on Keefe’s online website.
A 1.41-ounce package of Goya Con Azafrán seasoning is priced at $3.68 on Keefe’s Securepak website. At Trade Fair the price is $1.89 and at Food Bazaar it’s $2.19. (Seasonings are a valued product in jails because they give detainees the opportunity to liven up bland jail food and make it their own.) A Sugar Twin sweetener box with 100 packets, sold for $4 through Access Securepak, costs $1.99 at Trade Fair.
The drugstore chains present in scores of New York neighborhoods also undersell the commissary, in one case by 300%. At the Rikers commissary, Wet n Wild lipstick is listed for $7.10 in the contract. It’s $1.89 at CVS. A 6-ounce tube of Ultra Brite Advanced Whitening Toothpaste sells to inmates for $2.50 and for $1.69 at Walgreens.
Many items offered by Keefe can’t be compared to those in retail stores because at least 43% of the products the company offers are brands that it produces and packages itself, according to an analysis by THE CITY of the products’ trademarks.
Even the two vending machines in an area where Rikers visitors are sometimes initially searched sell items for less. A 1-ounce package of Jack Link’s Beef Tender Bites costs $2.75 at the vending machine, but $3.83 on the Access Securepak website.
Tasheira Jones used the Access Securepak website twice to send snacks to detainees but was shocked at the cost. “The prices are ridiculous,” Jones said. “They are gouging. How can they be more expensive in jail than out here on the streets?”
The complaints among those interviewed by THE CITY went on from there. “I ordered some things through the website but he never got them, so I called the company, the Keefe Group, and asked for a refund, but still nothing,” said Danika Palmer, speaking of her husband who has been held at Rikers since February and whose name she asked to be withheld out of fear of retribution.
Something similar happened to Bavarly Arzu, who ordered food for his brother Gerson Arzu through the Keefe website three times. Only two of the orders were delivered, he said. “There is no system in place to complain or get refunds, you just have to keep paying for those overpriced items and pray that he gets them,” Arzu said.
Rocchio said there is a grievance system open to users of the commissary and Securepak and that the number of complaints — 1,600 — was relatively small, and most were made in the early days of the system. He added that even though incarcerated people are informed of the balance in their accounts when they place their orders, the primary reason their packages aren’t delivered is that the system still allows them to make purchases beyond their available funds.
From $7 million to $33 million
The proposed $33 million renewal of the Keefe contract was posted last week on PASSPort, the City’s digital procurement platform, a few days after the Correction Department announced that it was cutting $17 million in contracts paid to five nonprofit organizations that provide social services and programs to people in and leaving jails.
Commissioner Molina and his staff maintain the social services work can be done better, and cheaper, by in-house staff than by contracting the work out.
As with all no-bid agreements between city departments and their vendors, the new Keefe contract has to be approved by the Mayor’s Office of Contract Services, the Office of Management and Budget, and the city’s Law Department. Comptroller Brad Lander’s office is also required to ensure there’s money in the budget to pay for the contract and there was no fraud in the awarding.
Lander’s office said it has yet to receive a copy of the new Keefe contract.
After THE CITY presented Lander’s office with its findings on the current contract, Chloe Chik, a spokesperson for the comptroller, released a statement saying: “The Department of Correction signed a contract that specifies certain prices for commissary items with Keefe Commissary Group and should enforce those terms to protect detained New Yorkers and their families from price gouging.”
Rocchio said the new contract will include changes. “There will be more definitive language in the new contract around when and how prices can be adjusted,” he said.
For some people with family members at Rikers, though, it’s irrelevant whether the company wins the contract renewal or not. “I’m never ordering from there again,” said Danika Palmer, who said she’s still waiting for a refund on the gift package her husband didn’t receive.
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