Department of Corrections moves to take over inmate shopping system

Prison inmates in South Dakota who want to buy nearly anything beyond their state-furnished three meals a day can only order from one store: the prison commissary.

For years, the state Department of Corrections has contracted the management of inmate commissary orders and deliveries to private companies, which supply candy bars, cans of tuna, batteries, shampoo and soap, guitar picks, pinochle cards and hundreds of other items to inmates.

Inmates are allowed to buy up to $25 in items a week through their state-provided tablets, using money earned from their inmate work assignments and any funds transferred to the inmate accounts by family members or friends.

During a virtual meeting on Monday, the state’s Corrections Commission signed off on a plan for the DOC to take over management of the commissary program and its $3.5 million in annual sales.

The DOC would still need to contract with a supplier, according to the DOC’s proposed business plan for the takeover. But the operations and warehousing for commissary items would become the province of the prison system’s Pheasantland Industries.

DOC: State could bring in more money through prison store

Brittni Skipper, director of finance and administration for the DOC, told commissioners that 11 states already manage their own commissary programs, including Tennessee and Utah.

In South Dakota, a 5% cut of sales under the new system and an $85,000 annual lease payment from the supplier for use of currently open warehouse space in Sioux Falls would translate into more than a quarter-million dollars of additional revenue each year, according to the business plan.

That could mean a boost to the state budget, as well, since annual prison industry profits over $500,000 are transferred from the prison industries revolving fund to the state’s general fund.

“To do this would be a better use of our resources and space, and we think we can better provide the services than we’re currently receiving,” said Skipper.

The new commissary system would need three full-time Pheasantland employees to manage the warehouse, as well as 20-25 inmate laborers to manage orders and inventory. Starting pay for inmates is currently 50 cents an hour, with “lead workers” at Pheasantland eligible for up to 75 cents an hour.

The state would be reimbursed for warehouse labor costs, Skipper said.

“All labor expenses would be the responsibility of the company that we would contract with,” she said. “So they’re responsible for the labor, the cost of goods sold, and any equipment. That’s their part of it.”

The commissary business plan notes that the number of warehouse jobs in the United States is growing, and that inmates working in the commissary warehouse on the prison grounds would learn valuable job skills.

The nation will need a million more warehouse workers a year for the next decade, according to Bureau of Labor Statistics figures cited in the DOC business plan.

Inmates trained by the DOC could be eligible for those jobs, Skipper said.

“Are you looking at places like Amazon or Savers or the ReStore/Salvation Army?” said Commissioner Mark Anderson.

“Amazon would be a big one, especially involved for the warehouse,” Skipper responded.

Anderson questioned whether it’s realistic to think Amazon, which opened a massive distribution center in Sioux Falls in 2022, would hire felons.

“If you’re training them to work in a warehouse, but they don’t hire felons, it doesn’t do them any good,” Anderson said.

Skipper told the commissioner that some partnerships with commissary suppliers in other states involve agreements that guarantee jobs with the commissary supplier after a successful stint working in a warehouse behind the walls.

“I know a lot of these companies that provide commissary services will hire felons,” Skipper said. “And I mean, if you become forklift certified, that’s huge.”

Open questions on job options, contractors

Amazon spokesman Scott Seroka told South Dakota Searchlight via email on Monday that the warehouse in Sioux Falls now employs 2,100 people, and that the site needs about 600 more to manage holiday orders.

Seroka deferred questions on the hiring of felons at Amazon to a “team of PR associates.” As of Monday afternoon, those questions remain unanswered.

Commissioners voted unanimously to endorse the commissary plan. The DOC will soon release a request for proposals seeking a partner to act as supplier, Skipper said, with a goal of having the DOC-run commissary system up and running by early 2024.

Skipper told the commission that the supplier agreement could stipulate that any supplies contractor must agree to hire felons. DOC spokesman Michael Winder later wrote that the wages for the inmates who will work in the warehouse will be determined through the partner talks, as well.

“The wages would be negotiated in the contract, but offenders would receive at least $0.50/hour as that is the minimum for offenders working inside the secure perimeter,” Winder wrote in an email to South Dakota Searchlight. “However, that rate could be higher.”

It’s unclear what company might be interested in such a contract under the terms of the DOC’s new commissary plan.

The state’s most recent contract for commissary was awarded to Summit Food Service, according to opensd.gov, the state’s contract portal. It’s one of three commissary suppliers in the South Dakota region, according to the DOC business plan, and Skipper said it was the only company to apply in 2021.

One issue in 2021 was that the DOC required its contractors to have a warehouse in South Dakota, and Summit was the only potential vendor that had one. With the new setup, the warehouse would be on the prison grounds in Sioux Falls, potentially opening up the contract to all three potential suppliers.

Summit purchased CBM, the Sioux Falls-based prior contractor, in 2017, merging to create a $230 million company, according to a press release from Summit’s parent company.

A call and an email to Summit were not immediately returned on Monday.

EDITOR’S NOTE: This story has been updated since its initial publication to reflect additional information sent by the South Dakota Department of Corrections.