Courts bypassed open bidding for Allegheny County’s private juvenile detention contract

By Brian Conway and Brittany Hailer of Pittsburgh Institute for Nonprofit Journalism.

When the Fifth Judicial District of Pennsylvania issued a contract to nonprofit operator Adelphoi to take over Shuman Juvenile Detention Center, it did so with virtually no public input or other government oversight.

Internal documents and interviews with Allegheny County Controller Corey O’Connor confirm that the courts claimed multiple exceptions to allow the 5-year, $73.2 million contract between the Latrobe-based private detention and services provider and the county to be issued without a public bid process or a sole-source justification. 

The contract was signed in the final months of Allegheny County Executive Rich Fitzgerald’s administration and two months before the retirement of Fifth District President Judge Kim Berkeley Clark. 

It includes a clause that allows Adelphoi to renew the contract unilaterally, for a total value  over $150 million over 10 years. This and other details has raised the ire of some officials and attorneys, who, like the general public, only learned the scope of the agreement after the courts announced that Adelphoi would operate Shuman.

"There are so many red flags,” said county Councilor Bethany Hallam, who led a successful push for a council resolution to sue over the contract, alleging that the Adelphoi deal bypassed council's authority to approve how county property is leased to outside organizations.

The county operated Shuman beginning in 1974 as a place to house children accused of serious crimes, prior to court proceedings. In September 2021, the facility closed after the county declined to appeal the state Department of Human Services’ revocation of the county’s provisional license for repeated violations, including “gross incompetence, negligence and misconduct in operating the facility.”

Elected officials and lawyers are raising concerns, and both the county and courts have not been forthcoming in their answers, declining to respond to fundamental questions about how the contract was issued, and why the courts, and not the county, appear to have led the effort.

“The decision [of who should run Shuman] should have nothing to do with the courts,” said Duquesne University law professor Bruce Ledewitz. “That's a decision our elected officials should make. The courts have a role to play in enforcing the constitutional rights of the inmates, and if they’re involved too closely with the company running the place, you have a potential conflict of interest.”

Allegheny County spokesperson Amie Downs has consistently redirected questions about the contract to courts spokesperson Joe Asturi, who has repeatedly declined comment, citing council’s pending litigation. In October, President Judge Clark announced that she and all Fifth District judges would recuse themselves from hearing cases regarding counci’s lawsuit. 

County Executive-elect Sara Innamorato said she has “a lot of questions and concerns about the proposed contract with Adelphoi, and the procurement process seems like it suffered from a lack of clarity and transparency.”

Getting children out of the Allegheny County Jail does need to be a priority, she said, referring to children who are charged as adults and who are currently housed at the adult Allegheny County Jail. But, strict oversight “will be absolutely necessary for whoever is managing a facility.”

Adelphoi Vice President of Marketing and Strategy Karyn Pratt did not directly answer questions about how the contract was entered or negotiated. 

“As a nonprofit, Adelphoi has a noncompensated board of directors that assumes strategic and fiduciary responsibility for the organization. The organization maintains policies that help to ensure transparency and oversight,” she said. 

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At the end of August, Pittsburgh Independent and the Pittsburgh Institute for Nonprofit Journalism broke news that the county had issued a Request for Proposals for construction at the Shuman site. The county announced the contract with Adelphoi two weeks later.

In October 2022, the Redevelopment Authority of Allegheny County issued a request for development proposals for bidders to purchase and develop the former Shuman site, with a strong preference given to a developer/operator who “intends to redevelop the site for the continued operation of a juvenile detention facility.”

Adelphoi submitted a bid of $1 to purchase and renovate Shuman. But despite media reports to the contrary, that wasn't how the contract was issued–because the county never sold the property.

“The RAAC posting was for proposals for sale of the building,” wrote county spokesperson Downs in an Oct. 5 email. “There has been no sale, and that process is not related to the contract.”

Frank Alessio III, chief purchasing officer of Allegheny County, who oversees contract and procurement management for the county, confirmed that the contract was not awarded or solicited through his office. 

“I did not sign off on any contract,” said Alessio.

One private juvenile detention services provider active in PA confirmed that it did not have the opportunity to bid to operate Shuman and was only aware of the redevelopment proposal to purchase and renovate the facility. The organization confirmed this under the condition of anonymity to avoid compromising its relationship with Allegheny County. 

So how was the deal done? 

The courts claimed two exceptions to allow them to bypass the traditional bidding process: an exception for professional services and an exception for client services provided by nonprofit agencies, according to internal documents and confirmation from O’Connor.

“They ignore the charter when it suits them.” Hallam said. “And when they get caught, they grasp at straws to fabricate a revisionist history in which they did nothing wrong.”

The Administration of Pennsylvania Courts, which supervises and administers the commonwealth’s judicial branch of government, confirmed it was not party to the contract. Signatures from the courts’ administration would have been required had it issued the contract.

O’Connor said that he has never seen a contract of such value dispensed in such a manner, and that moving forward, he will work with the incoming county executive, Innamorato, to discuss a change in contract procurement policy in the county. 

“When you're doing something of this magnitude, it's incumbent for us to realize there's a new administration coming to the county and we should have these conversations, especially with procurement and transparency,” O’Connor said.

Brad Korinski, former counsel to former County Controller Chelsa Wagner, who worked in the office for a decade scrutinizing and processing county contracts, said the Adelphoi contract is “the most crooked contract I have seen issued in over a decade.”

“This is a county contract–the taxpayers are responsible for nearly $80 million over five years … without procurement transparency.” 

Adelphoi has not yet applied for PA Department of Human Services licensure to run the facility, but O’Connor confirmed that renovations have begun.He also said Adelphoi has not been paid–yet.

The issue of private juvenile detention is of special concern in PA 15 years after “kids for cash,” a scandal centered around judges at the Luzerne County Court of Common Pleas in Wilkes-Barre who received kickbacks for imposing harsh adjudications on juveniles in order to send them to for-profit detention facilities.

“When you look at private companies, they look at their bottom line. That is a concern. Obviously, we saw it years ago with ‘cash for kids.’ And I'm not saying that's happening now. But, that's why you have a public dialogue, especially if we're going down the road of spending $70-plus million,” O’Connor said.

This story was edited by Bob Batz, Jr. and Karen Carlin of the Pittsburgh Union Progress.