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No-bid prison medicine contracts were mismanaged, new boss says

Published March 14, 2006

TALLAHASSEE - After a scathing audit of two no-bid contracts for prescription drugs for prison inmates, interim prison boss James McDonough is considering scrapping the deals and having the state do the work itself.

"It was a poorly managed contract," McDonough said after testifying Monday before a legislative committee. "I think this is a classic case of mismanagement."

At issue are two contracts worth $84-million between the prisons and TYA Pharmaceuticals of Tallahassee: one to repackage medications for prisoner use, the other to split tablets. The larger deal, worth $72-million, began in 1998 under a Democratic administration. The second, worth $12-million, was inked last year.

The auditor general told legislators Monday that "deficiencies still exist" in the prison system's management of the two contracts, even after more than a year of scrutiny.

Among the problems cited: The Corrections Department did not seek bids, did not have adequate records of a former prison official who later went to work for TYA, did not run background checks on TYA employees and did not keep adequate paperwork.

Attorneys for the prison system okayed the decision to avoid bids, citing an exemption under Florida's competitive bidding law for health care services.

But lawmakers were never told that the prison system gave a second no-bid contract to TYA last year even as they were scrutinizing the first contract. Moreover, a former high-ranking prison health official, John Burke, worked for the state while the second deal was being negotiated and later worked as a $1,050-a-month consultant for TYA.

Burke listed his past ties to TYA on a financial disclosure form filed with the Florida Commission on Ethics.

Angry legislators ordered the pill-splitting contract to be competitively bid, but TYA was the only company that submitted a bid.

"It was rebid and we won both contracts again. Where do you go from there?" said Terry Yon, a pharmacist and president of TYA. "If it was so easy, then why don't I have peers and competition?"

Yon said it was an exaggeration to suggest his firm was getting rich from the two contracts. He estimated that up to half of the gross profit goes to the IRS in taxes.

During his testimony, McDonough also said a priority of his is ending what he called a "culture of intimidation" in which corrections employees are afraid to speak out when they see problems.

"Intimidation is going to stop," said McDonough, a retired Army colonel and veteran of Vietnam, Rwanda and Bosnia. "If there's any intimidation, I'm going to do it."

--Times researcher Deirdre Morrow contributed to this report. Steve Bousquet is at or 850 224-7263.

[Last modified March 14, 2006, 00:53:05]

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