CCA’s Eloy Detention Center is located in the city of Eloy and houses more than 1,500 inmates.

ELOY — A federal audit accuses the city of Eloy of being a “middleman” for collecting $438,000 annually while funneling funds for running a detention center in Texas.

The U.S. Department of Homeland Security’s Office of Inspector General released the audit last week, condemning Immigration and Customs Enforcement for how it contracted with the Pinal County city to open a detention center in south Texas four years ago.

The audit claims ICE “improperly” modified an existing contract with Eloy to open the Texas center, defying federal procurement guidelines during the process.

ICE had contracted with Eloy in 2006 to open a 1,500-bed detention center within the city. Eloy subcontracted with CoreCivic, a private company based in Tennessee, to run the detention center.

After a surge of families and unaccompanied minors crossed the U.S.-Mexico border in the summer of 2014, ICE sought to open another center in south Texas. CoreCivic made a proposal to ICE and the two entities began negotiating, reportedly without input from Eloy.

Instead of contracting with CoreCivic directly, ICE modified its contract with Eloy to include the new Texas detention center. The auditor said it was “unnecessary” to make Eloy a middleman in this arrangement.

According to the audit, ICE staff said it was more “expedient” to expand the Eloy contract rather than contract with CoreCivic directly.

The audit argued ICE went outside the scope of the Eloy contract because the new detention center was located 900 miles away and the Texas center would house children and families. The original ICE contract for the Eloy Detention Center was only for housing adults.

Furthermore, the audit criticizes ICE for how the agreement insulates CoreCivic from government scrutiny.

“ICE has no assurance that it executed detention center contracts in the best interest of the federal government, taxpayers or detainees,” the audit stated.

In a response to the audit, ICE argued modifying the Eloy contract was proper and said it was “free to take advantage of the broad flexibilities afforded” in modifying terms of original agreements.

ICE disagrees with the audit’s recommendation to discontinue modifying the Eloy contract for running the Texas center.

The Eloy City Council passed a resolution in September 2014 to accommodate $290 million in pass-through funds between ICE and CoreCivic to run the detention centers.

CoreCivic uses about $38 million of those funds to operate the Eloy Detention Center and the rest to operate the Texas facility.

During the council meeting, CoreCivic representatives said it was urgent for the city to act because of the flood of families crossing the Texas border.

City Manager Harvey Krauss called the resolution a “purely financial arrangement” at the time it passed. The $438,000 in fees Eloy collects through the deal is for being the fiscal agent between the two parties.

Krauss did not immediately respond to a message seeking comment on the recent audit.

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