Wayne County jail food service contract audited for possible millions of dollars in overcharges

DETROIT (WXYZ) - An investigation is underway to determine if Wayne County has been overcharged by millions of dollars for the meals served inside all of their jails.  7 Action News has learned there is an audit going on right now of the food service contract.

Privatizing prisoner meals inside Wayne County's four different detention facilities and jails was supposed to save money.

Back in 2010, Wayne County Executive Robert Ficano and Sheriff's Department Director Sue Hall recommended that Canteen Correctional Services be chosen to provide meals to the inmates and to 350 jail staff members.

Canteen Correctional Services is a division of Continental Distributors. 

The Wayne County Commission approved their five-year contract – which totals $26,143,976.

But the 7 Investigators have learned that allegations of suspicious overcharges are part of a massive audit. Sources tell us that Continental is being scrutinized for allegedly billing the county for more meals than there are inmates inside the various lock-ups.

"Is there any doubt in your mind that there are overcharges here?" asks 7 Action News Investigator Heather Catallo of Wayne County Commissioner Ilona Varga.

"No doubt in my mind at all.  No doubt.  Numbers don't lie," says Varga.

Varga also says a preliminary audit reveals that the taxpayers may have been overcharged by $6 million to $10 million for the meals.

"It's a lot of money, she adds. "You could buy a lot of sheriff hours with that for the jail. So we would not have to pay the overtime – that's for sure.  And every dollar counts here at the county."

In addition to the audit, a spokeswoman for CEO Robert Ficano says the county's Management and Budget Office started reviewing invoices from Continental/Canteen Correctional Services after they were "advised of irregularities."

A spokesman for Continental adamantly denies allegations of any overcharges for Wayne County.  He says the jail supervisors provide them with daily inmate population counts, which determine how many meals Continental Canteen serves each day.  The spokesman is also offering to allow 7 Action News to review its internal records, but told us they were not available to do that until next week.

A spokesperson for the Wayne County Sheriff also disputes that there has been millions of dollars in overcharges for the food service contract.

But Commissioner Varga isn't taking their word for it -- she wants to hold a hearing to get to the bottom of allegations.

"If we find anything wrong it will have to be turned over to the authorities," she says. "I'm sure with the FBI being in the room already, at the county, this will be just one more thing they need to look at."

The FBI Can't specifically confirm what they're investigating, but sources tell me this jail food contract could certainly fall within the scope of high value contracts in WC that are currently being scrutinized by the feds.

Meanwhile, they issued a statement today about a credit that it is due the Sheriff's Office regarding the food service contract:

"An unexpected credit is in the works for the Wayne County Sheriff's Office.  Officials recently discovered that food services were being billed at the same rate of the previous year when the agreement called for a 2.8 cent per meal reduction starting in the second year of the contract.  The change was outlined in the contract's appendix, but was never implemented to billing starting in fiscal year 2011-2012.  The discrepancy surfaced this week during an internal billing review by jail officials."

"While the oversight amounts to a few cents per meal, as you can see it adds up when you're serving thousands of meals a day.  Those are resources we can certainly use elsewhere in our operation," said Chief of Jails Jeriel Heard in the statement.

Continental issued a similar statement about the credit due to the Wayne County Sheriff's Office regarding the food service contract:

"Under a five-year contract with Wayne County, Continental Distributors provides inmate food services at the county's jail facilities, preparing and delivering nutritious meals three times a day for the adult and juvenile inmate population. 

Early this week, officials auditing outside contracts with Wayne County notified the Wayne County Sheriff's Department about invoices it received for inmate food services that appeared to be inconsistent with our contract with them.  We reviewed the bills and found that a multi-year discount triggered in the second year of our contract had not been applied – something that both county supervisors and the company had overlooked.  We will credit the county for $237,000 and have taken steps to avert the potential of a similar problem recurring.

Continental Distributors appreciates its partnership with Wayne County and its important duty in delivering the thousands of meals ordered daily by the Sheriff's Department. The Sheriff's Department places its orders for meals based on the daily census of inmates, juveniles and detainees, as well as other jail staff requirements, and we fulfill those orders in line with those requests.  Invoices are submitted to the county on a regular basis and pricing is adjusted to reflect the number of meals the Sheriff's Department has validated it has received."


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