RITE OF PASSAGE: At the provider's juvenile facility near Alexander. BRIAN CHILSON

A representative of an Indiana-based company said on Thursday it intends to “vigorously protest” the state’s selection of a competitor to operate Arkansas’s youth lockup facilities.

The Arkansas Democrat-Gazette reported Wednesday that Rite of Passage, a Nevada-based company, was awarded a $15.8 million contract to run five lockups in Dermott, Harrisburg, Mansfield and Lewisville. (The Mansfield site consists of two facilities, one for boys and one for girls.) Rite of Passage already has a contract with the state to operate a sixth lockup, the Arkansas Juvenile Assessment and Treatment Center near Alexander.


The only company besides Rite of Passage to submit a bid to run the five lockups was Youth Opportunity Investments of Indiana. Both companies proposed a similar daily rate to run the lockups, but state procurement officials gave Rite of Passage a higher technical evaluation score. (The two proposals and the state’s request for proposal are made available by the Office of State Procurement, which issued the RFP on behalf of the Department of Human Services’ Division of Youth Services.)

In a written statement, Gary Sallee, the chief legal officer for Youth Opportunity Investments, said Rite of Passage “did not meet the minimum qualifications for a bidder as defined by the state.”


Sallee referenced a line on page 13 of the RFP stating that “Prospective Contractor shall not have received a contract termination due to non-performance within the past five (5) years.” Other states have terminated contracts with Rite of Passage in the past five years, Sallee claimed, citing incidents in Nevada and elsewhere. Youth Opportunity Investments will soon file a formal protest with the state, Sallee said in a brief phone interview.

Rite of Passage officials could not be reached for comment before the end of the business day on Thursday. A spokesperson for the parent agency of the Office of State Procurement said he was not immediately aware of any issue regarding Rite of Passage not meeting minimum qualifications.


When Rite of Passage began running the AJATC facility in 2016, it took over from a series of previous contractors that had faced criticism over incidents of misconduct, abuse and neglect. But as the Arkansas Nonprofit News Network and other media have previously reported, problems at AJATC continued after 2016, including a heavy reliance on solitary confinement and instances of physical abuse. Rite of Passage has said it has addressed such concerns.

Until recently, the state had eight youth lockups, including AJATC. One facility, in Colt, closed its doors just last month as part of ongoing juvenile justice reforms. Another facility, in Dermott, is expected to close later this year. (However, a second facility in Dermott will remain open.)

Since the beginning of 2017, all of the lockups except AJATC have been under the direct management of the Division of Youth Services. Before that, they were run for decades by two Arkansas-based nonprofits, South Arkansas Youth Services and Consolidated Youth Services. In 2016, the state gave the contract for the facilities to Youth Opportunity Investments. SAYS and CYS raised objections, and sympathetic legislators blocked the new contract in December of that year, which meant the state was headed into 2017 with no one to run the facilities at all. (AJATC continued to be operated by Rite of Passage throughout this time.)

Hutchinson then stepped in and directed the state to assume provisional management of the facilities effective Jan. 1, 2017. The state ran into problems of its own when managing the lockups directly, but elected to retain control of them for the next two years. The governor and DYS said in November it expected to re-privatize the lockups (minus the two slated for closure) by summer 2019.

Sallee’s statement Thursday appeared to reflect Youth Opportunity Investment’s frustration that it still has not secured a contract in Arkansas despite years of effort:


YOI has invested three years, countless dollars and man-hours, working within the processes established by the State to award management of the select juvenile facilities. YOI has established programs, sought best-in-class service providers, and retained superior management personnel with an eye toward elevating Arkansas’ facilities for the treatment and education of its at-risk youth. YOI was selected for the award on two prior occasions. It is a better company now, with better programming, than then. It met all criteria for bidding and winning then and now. [Rite of Passage] did not.

The cost of Rite of Passage’s winning bid for a $15.8 million contract is based on the company’s proposed daily bed rate of $235 per youth. Youth Opportunity Investment’s bid proposed a daily rate of $236. Both are much higher than the $145 daily rate paid to the two Arkansas-based providers before the state takeover.