The Office of the Inspector General (OIG), Audit Division has completed an audit of the contract proposal between the United States Marshals Service (USMS) and Corrections Corporation of America (CCA) for detention services in it Leavenworth, Kansas, facility.

Our review of the contract proposal and interim letter contract revealed that the per diem rates quoted by CCA are overstated. In 1997, CAA billed the USMS for 109,855 inmate jail days at an average cost of $76.60 per day, for a total of $8,415,334. In addition, through July 31, 1998, CAA billed the USMS a total of $5,161,010 for 64,650 inmate jail days at $79.83 per day plus an additional $20,170 for other contractual services. However, our audit of the proposed jail day rate revealed that CCA’s allowable expenses support a rate of $49.13. The amount used to compute this rate is exclusive of $1,944,280 which account for management fees, indirect costs, and state income taxes that are set aside pending further determination and negotiation by the USMS. Consequently, we concluded that the USMS:

• overpaid CCA about $3,017,717 for detention services in 1997;
  
  
• overpaid CCA about $1,889,720 under the letter contract, through July 31, 1998; and
  
  
• could realize savings of approximately $4,516,035 for the remainder of 1998 through December 31, 1999, by using the audited inmate per diem rate.