Tab_1_-_Offer___Acceptance_BAFO.pdf

Proposal Submitted to:

Arizona Department of Corrections

Request for Best and Final Offer (BAFO):

750 Minimum and Low Custody Contract Beds Solicitation Number BPM004542 August 30, 2022

Jennifer Houston 4955 Technology Way Boca Raton, Florida 33431 Tel: 866.301.4436/561.893.0101 jhouston@geogroup.com

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TAB 1

Florence West Correctional & Rehabilitation Facility

Offer and Acceptance

Proposal Submitted to:

Arizona Department of Corrections

Request for Best and Final Offer (BAFO):

750 Minimum and Low Custody Contract Beds Solicitation Number: BPM004542 August 30, 2022

TAB 1

Offer and Acceptance

Title Page Table of Contents Transmittal Letter

a. Executive Summary Offer and Acceptance Form

August 30, 2022

Arizona Department of Corrections, Rehabilitation, & Reentry ATTN: Procurement Services Dave Brackney, Senior Procurement Specialist 1645 West Jefferson Street Phoenix, Arizona 85007

Re: Solicitation Number: BPM004542 / ADCRR Ref: 22-173-27 750 Minimum and Low Custody Contract Beds Best and Final Offer (BAFO)

Dear Mr. Brackney:

GEO Secure Services, LLC is pleased to submit our Best and Final Offer (BAFO) for the continued operation and management of the Florence West Correctional and Rehabilitation Facility (Florence West), in response to the above-referenced solicitation.

After careful consideration, GEO has reduced its originally proposed per diem rate of $76.95 to $74.50, providing an annual savings of $671,000 from our Original Proposal Pricing.

Our proposed pricing includes all the services described in our proposal and takes into account current market conditions reflected in an increasingly tight labor market, rising health care costs, ever-changing pandemic guidelines, and supply chain disruptions.

Several key pricing assumptions are reflected in our Proposed Pricing:

• 90% Occupancy Guarantee – Our pricing assumes the 90% minimum guarantee is effective on Day One of the contract.

• Staff Wages – To improve recruitment and retention, pay increases have been priced for all staff, with increased starting wages for Correctional Officers to be effective on the first day of the new contract. For example, starting wages for Correctional Officers have increased from $22.18 to per hour.

• Health Care Services – Health services have been priced based on 24/7 registered nursing coverage, increased mental health staff, increased health care staff wages, enhanced treatment protocols, and rising pharmaceutical costs.

• Electronic Health Record System – In accordance with Amendment 2, GEO acknowledges that the State’s new inmate correctional health care provider, NaphCare, will cover costs for the new Electronic Health Records (EHR) at the Florence West Facility, to include costs associated with equipment, installation, and user/seat licensing.

• Property Taxes – Based on the State’s responses to vendor questions in Amendment 2, GEO has not included property taxes in our pricing.

Corporate Headquarters 4955 Technology Way

Boca Raton, Florida 33431

TEL: 561 893 0101

866 301 4436 www.geogroup.com jhouston@geogroup.com

• Physical Plant Maintenance and Repair – According to the State’s response to Questions #30 in Amendment 2, the State will prospectively determine the optional $25,000 cap for capital repair expenditures on a case-by-case basis. Although the State will own the Florence West Facility under the new contract, the RFP requires the Contractor to provide full maintenance. GEO has priced maintenance costs with consideration for the age of the Facility and current operating equipment.

In addition to the foregoing, GEO is providing further context for its proposed per diem increases, which are being driven primarily by nationwide wage inflation and rising health care costs. Below is additional background information on each of these areas.

Wages Across the country, employers are struggling to fill jobs with qualified candidates. It has been reported that approximately 11.5 million jobs are available, with only 6 million candidates to fill them. Many positions are now operating in a hybrid mode, with a mixture of in-person and remote work available to candidates. This new work setting is drawing many desirable candidates away from positions in traditionally hard-to-recruit industries such as corrections. For those remaining candidates willing to fill in-person positions, these industries are often competing directly with transportation/logistics companies, many offering starting wages of $32.00 an hour.

Correctional & Detention Facilities within 25 Miles of Florence West

Similar to correctional jurisdictions around the country, including the Arizona Department of Corrections, Rehabilitation and Reentry (ADCRR), the Florence West Facility has faced increasing staffing challenges. Further exacerbating this situation is the fact that the Facility must compete with thirteen other correctional and detention facilities within a 25-mile radius.

Eight (8) of these 13 correctional and detention facilities are located less than five (5) miles from the Florence West Facility, and house Federal, State, and County inmates and detainees. The Wage Determination rate for officers working at Federal facilities in Pinal County is $24.12 per hour, plus health and welfare of $4.41 per hour, for an equivalent rate of $28.53 per hour.

Correctional and Detention Facilities within 5 Miles of Florence West

The starting Correctional Officer hourly rate at Florence West prior to July 1, 2022, was $18.48 for certified officers. In addition, the correctional officers received a temporary 20% stipend provided by the State between January and July 2022. This temporary stipend was discontinued in July, replaced with a 20% rate increase provided by the State, equating to the same rates as prior to July 1, 2022, but providing continuous funding for the wages.

Despite these efforts, the Florence West Facility is still experiencing an overall staff vacancy rate of approximately 22%, and a correctional officer vacancy rate of 42%. To further improve recruitment and retention, pay increases have been priced in our Proposal for all staff, with a starting wage increase to per hour for Correctional Officers. This starting rate would become effective upon the commencement of the new contract.

GEO believes it is critically important to get the Officer wages “right” to avoid the consequences of low wage rates – high staff turnover, low morale, and potentially unstable operations.

Health Care Service Trends and Increased Costs Since the current contract was executed in 2002, there have been significant changes in health care treatment and costs. Many of these changes were driven by:

• Nationwide shortages of qualified health care staff, particularly nurses In Arizona, hospitals and correctional facilities are experiencing a shortage in the number of nurses available to work around the clock to care for COVID-19 patients and those with other chronic conditions. Given the current nurse shortage, the demand for increased wages is a predominant factor in recruitment and retention of medical staff.

• Health care litigation Health care lawsuits such as Jensen v. Shinn and Parsons v. Shinn have had an overall impact on ADCRR’s health care directives and treatment protocols over the last few years and necessitated the need for additional staffing to ensure compliance.

The Parsons v. Shinn settlement agreement required ADCRR to improve its health care system and satisfy more than 100 health care performance measures, including medical care, mental health care, and dental care. Although only those inmates housed in state-run prisons are members of the Parsons class, there has been a general focus on both staffing levels and policies with the goal of improving the quality of mental health care throughout ADCRR.

• Changes in treatment protocols (i.e., HIV, Hepatitis C) In recent years Arizona adopted the Federal Bureau of Prisons (BOP) Hepatitis C clinical guidelines which were not in place during the initial contract period. The BOP Hepatitis C guidelines require extensive evaluation (lab, gastro specialty consults, and practitioner time) that incorporates a tiered level system for staging and treatment.

The number of Hepatitis C patients have increased on a state and national level and requires more staff to appropriately treat, track, and follow-up on all aspects of care pre and post treatment. Due in part to lifestyle, drug use, and a lack of information, inmates have a much higher chance of being infected with communicable diseases than other populations. The increase in Hepatitis C cases with significant pharmaceutical costs is present in every correctional setting. Hepatitis C treatment costs range from $18,000 to $28,000 per inmate, per month.

• Rising pharmaceutical costs Pharmaceutical costs continue to rise with increasing inflation and newer and enhanced treatment protocols. In addition, some diseases such as asthma, cancers, and diabetes, or autoimmune disorders, such as inflammatory bowel disease, rheumatoid arthritis, and psoriatic arthritis, may require the use of higher cost biologic-based medications, in addition to the lower cost traditional chemical-based agents, when traditional treatments alone are not effective.

• COVID-19 pandemic COVID-19 has significantly increased hospital admissions and post discharge aftercare needs. Additional staffing needs are required 24/7 to ensure aftercare is provided at the facility. The necessity for medical observation for those inmates stricken with COVID-19 necessitates the enhancement of medical staff.

Summary GEO appreciates the 17-year partnership we have had with ADCRR. Based on our corporate qualifications, operational experience, and pricing that reflects responsible wages and benefits for all facility employees, we believe the GEO Proposal provides ADCRR with best value in the operation and management of the Florence West Correctional and Rehabilitation Facility.

Should you have any questions regarding our Proposal, please feel free to contact me, or David Venturella, Senior Vice President - Client Relations, at 866-301-4436, extension 7343 or via email at dventurella@geogroup.com.

Sincerely, Jennifer L. Houston Executive Vice President, Proposal Development mailto:dventurella@geogroup.com

BAFO - August 30, 2022 750 Minimum and Low Custody Contract Beds – Solicitation BPM004542

Tab 1 – Offer & Acceptance: Executive Summary page 1 of 5

EXECUTIVE SUMMARY

Overview of GEO

The GEO Group, Inc. (GEO) is the world’s largest private provider of correctional and detention services specializing in the design, financing, development, and operation of secure facilities, ICE processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom.

The GEO Group is also a leading provider of enhanced in-custody rehabilitation, post-release support, electronic monitoring, and community-based programs. GEO’s worldwide operations include the ownership and/or management of 104 facilities totaling approximately 84,000 beds, including projects under development, with a workforce of approximately 18,000 professionals.

GEO is publicly traded and listed on the New York Stock Exchange (NYSE: GEO) and has an Enterprise Value exceeding $3.3 billion. GEO’s domestic and international revenues for 2021 were approximately $2.3 billion, with credit facilities in excess of $1.6 billion.

GEO’s Proposal

GEO Secure Services LLC, a wholly owned subsidiary of The GEO Group, Inc.

(collectively “GEO”), is pleased to submit our Proposal for continuation of our partnership in the operation and management of the Florence West Correctional and Rehabilitation Facility (Florence West), in response to Solicitation BPM004542/ADCRR Ref: 22-173-27.

Tab 1 – Offer & Acceptance: Executive Summary page 2 of 5

GEO’s proposal includes multiple benefits for the Arizona Department of Corrections, Rehabilitation, and Reentry (ADCRR). In addition to the clear advantages of continuity and consistency, continued partnership with GEO will provide:

Experienced senior facility leadership Current Facility Administrator, Ronald Credio, will continue to guide the operations at Florence West under the new contract. Mr. Credio began his career with ADCRR in 1994 as a Correctional Officer, and was continuously promoted to positions of increasing responsibility, last serving as Regional Operations Director. After 26 years with ADCRR, he joined GEO in 2020. His extensive experience as a long-term employee of ADCRR has given him a special level of expertise which supports his successful management of this important facility.

Commitment to recidivism reduction, demonstrated by investments in post-release support services GEO’s approach provides individuals with a dedicated Post-Release Case Manager who acts as an advocate, coach and crisis manager and is available 24/7 through GEO’s call center. Upon community reentry, post-release participants receive seamless assistance and support services. Depending on need, participants can receive resources for follow-up treatment, identification, transitional housing, employment, transportation, food, and clothing.

Pay increases for all staff, with increased starting wages for Officers All employees will receive a wage increase under the new contract, varying by department. Starting wages for Officers will increase to /hour. These increases are expected to have a positive impact on staff recruitment and retention.

GEO’s Experience in Providing Similar Services

Over the last 16 years, Arizona and GEO have successfully partnered on the operation and management of four adult male correctional facilities within the State of Arizona:

The 750-bed Florence West Correctional and Rehabilitation Facility (2005)

The 500-bed Phoenix West Correctional and Rehabilitation Facility (2005)

The 1,280-bed Central Arizona Correctional and Rehabilitation Facility (2005)

The 3,400-bed Kingman Correctional and Rehabilitation Facility (2015)

Each facility is operated in accordance with ADCRR policies and procedures, demonstrating GEO’s extensive knowledge and experience with ADCRR’s operational requirements. As testament to our operational excellence, GEO was recently awarded a new contract for the continued management of the Phoenix West facility.

Tab 1 – Offer & Acceptance: Executive Summary page 3 of 5

Overall, GEO has provided similar correctional services to 12 states and the Federal Bureau of Prisons within the last 10 years:

Alaska Department of Corrections

Arizona Department of Corrections, Rehabilitation & Reentry

California Department of Corrections & Rehabilitation

Federal Bureau of Prisons (BOP)

Florida Department of Management Services

Georgia Department of Corrections

Indiana Department of Corrections

Louisiana Department of Public Safety & Corrections

Mississippi Department of Corrections

New Mexico Corrections Department

Oklahoma Department of Corrections

Texas Department of Criminal Justice

Virginia Department of Corrections

GEO’s Ability to Provide the Services Sought: Company Resources

Throughout the last 16 years, GEO has provided a safe and secure environment for the inmates housed at each GEO-operated Arizona facility. Inmates are afforded quality educational, vocational and treatment programs and work opportunities. ADCRR can be confident that selecting GEO for this contract award ensures Florence West will continue to be managed and operated in accordance with all applicable ADCRR policies and regulations, ACA Standards, and the terms of the resulting Contract.

GEO’s Corporate and Regional Resources GEO is a Florida-based company with its Corporate Office located in Boca Raton, FL, and has a staff of approximately 400 employees. Our corporate and regional staff includes experts in prison design, finance, human resources, contract compliance, construction, administration, security, health services, education, vocational training, counseling, substance abuse treatment, food service, maintenance, procurement, and professional accreditation.

Tab 1 – Offer & Acceptance: Executive Summary page 4 of 5

Corporate Correctional Management Team:

The GEO Secure Services Business Unit is led by GEO Senior Vice President and President of GEO Secure Services, James Black, with more than 37 years of correctional experience. He is supported at the Corporate Office by nearly three dozen subject matter experts in corrections, administration, security, food services, and training. They oversee the three U.S. Regional Offices and operations in the United Kingdom, Australia, and South Africa. GEO Secure Services oversees the management and operation of over 74,000 beds in 57 correctional and detention facilities around the world. This department currently provides services on behalf of the Federal Bureau of Prisons, U.S. Marshals Service, and U.S. Immigration and Customs Enforcement, as well as seven state correctional clients and various county and city jurisdictions around the country.

GEO Regional Office Oversight - located in the Los Angeles, CA Regional Office:

Three GEO Regional Offices provide facility oversight and support, ensuring immediate and direct assistance to the facility management teams. The Western Regional Office, located in Los Angeles, CA, has nearly 20 staff who are responsible for daily operational oversight of Florence West. It is staffed with subject matter experts in security, health services, physical plant maintenance, risk management, contract compliance, business management, and information systems. The Western Regional Office is led by Regional Vice President Paul Laird with 35 years of correctional experience.

Contract Administration:

The GEO Contract Administration department is located in the Boca Raton, FL Corporate Offices. It is led by Executive Vice President Amber Martin with over 30 years of experience in corrections, contract administration and compliance, and legal administration. She is supported by 13 subject matter experts in contract management, policy development, client correspondence, contract finance, equitable adjustments, contract analysis, and negotiations. This department ensures that all GEO’s operations are conducted in accordance with contract provisions, applicable court orders, and in compliance with national standards.

Physical Plant and Design Oversight:

The GEO Design and Construction department is located in the Boca Raton, FL Corporate Offices. It is led by Senior Vice President Richard “Kent” Long with over 30 years of development and life-cycle management experience. He is supported by one dozen subject matter experts in facility design, project management, maintenance and repair, and physical plant support. They have been responsible for the life-cycle maintenance of 141 GEO-managed facilities, comprising 17.7 million square feet, and valued at over $5 billion.

Tab 1 – Offer & Acceptance: Executive Summary page 5 of 5

Correctional Health Care:

The GEO Health Services department is led by Executive Vice President Lisa Krueger with 20 years of experience in health care administration and operations, and Chief Medical Officer Dr. John Christakis with 40 years of experience in clinical medicine. They are supported in the Corporate Office by 16 subject matter experts in correctional health care, administration, dental services, mental health services, quality control, and off-site health care claims management, as well as clinical care support. On a continuous basis, the Corporate Health Services department monitors staff vacancies, clinical outcomes, special incidents, clinical encounters, outside patient care, medication management, and updates clinical guidelines.

Contract Compliance:

The GEO Contract Compliance department is led by Executive Vice President Daniel Ragsdale with over 20 years of legal and law enforcement experience. He is supported by more than 70 subject matter experts in security, health services, American Correctional Association accreditation, PREA, Joint Commission, NCCHC, PBNDS, FPBDS, and multiple agency standards. Contract Compliance personnel are located at the Corporate Office, each Regional Office, and on-site at all major facilities. The department provides ongoing compliance oversight with in-depth reviews and audits conducted monthly, quarterly, and annually. The department operates as an independent, headquarters-based monitoring team that reviews all operational aspects of the Company’s U.S. operations. In GEO’s Western Regional Office, a Director of Contract Compliance and two Managers provide regional compliance oversight, periodically visiting each facility, and participating in Annual Corporate and Follow-Up Audits, and accreditation preparations.

Human Resources:

The GEO Human Resources department is led by Executive Vice President Chris Ryan with over 30 years of human resources experience. He is supported by 65 subject matter experts in recruitment, compensation and benefits management, HR information systems and reporting, employee onboarding including orientation and training, and labor relations.

GEO Care Business Unit:

GEO Care is the world’s largest service provider of in-prison rehabilitation, community reentry, and electronic monitoring services. The GEO Care Business Unit is led by GEO Senior Vice President and President of GEO Care, Dr. Ann Schlarb. The in-prison rehabilitation services are overseen and delivered through the GEO Continuum of Care department which includes approximately 31 staff with subject matter experts in education, cognitive behavioral treatment, and substance abuse treatment. This department is led by Executive Vice President Dr. Derrick Schofield and provides enhanced in-prison rehabilitation programs including evidence-based treatment, integrated with post-release support services through the “GEO Continuum of Care” in the U.S. and Australia.

Jennifer L. Houston Executive Vice President , Proposal Development

GEO Secure Services, LLC.

07/22/22

Jennifer L. Houston Executive Vice President, Proposal Development

07/25/22

GEO Secure Services, LLC.