Piliero Mazza &
Pargament, PLLC

Vol. 1, Issue 3
December 2000

An Update for Federal, State, and Private Prison Contractors

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Recent Court Decision Illustrates the Need to Adopt Comprehensive Anti-Harassment Policies

SBA's New SIC Code System Will Affect Correction Contractors

Senate Approves Stricter Standards for Private Prison Transport Companies

Major Changes Unlikely for UNICOR in the 107th Congress

TINA Threshold Raised





Recent Court Decision Illustrates the Need to Adopt Comprehensive Anti-Harassment Policies

Recent decisions of the United States Supreme Court have made it more necessary for employers to establish and disseminate effective workplace harassment policies. Such policies can insulate correction contractors from liability for sexual harassment of employees by supervisors, and of inmates by private prison employees. The policy can also serve as an effective defense to punitive damages claims, although like all workplace policies, it should be periodically reviewed and updated to ensure that they satisfy applicable legal standards.

The need to update anti-harassment policies was illustrated in a recent decision by the United States Court of Appeals for the Fourth Circuit, which governs the states of Virginia, Maryland, West Virginia and the Carolinas. In Smith v. First Union National Bank, the Court held that the employer's sexual harassment policy did not serve as a defense because it did not cover harassment which, though based on gender, was not in the form of "sexual advances." The following is a brief discussion of the facts of the case and the Court's decision, as well as its particular importance to private prison corporations."

Small Business

SBA's New SIC Code System WIll Affect Correction Contractors

Effective October 1, 2000, the Small Business Administration (SBA) changed from the Standard Industrial Classification ("SIC") code system to the North American Industry Classification System ("NAICS"). The new NAICS industry descriptions will be utilized by the Federal Bureau of Prisons, U.S. Marshals Service and the Immigration and Naturalization Service when establishing small business size standards.

The SBA's decision to adopt the NAICS industry descriptions to establish small business size standards is based on its belief that the NAICS is an improvement over the SIC code system in identifying and describing industries in the current United States economy. Additionally, the SBA notes that the NAICS has already replaced the SIC code system for use by federal agencies in collecting economic data.


Federal Privatization Efforts

Senate Approves Stricter Standards for Private Prison Transport Companies

Private prison transport companies would face stricter standards of conduct in interstate prisoner transportation under a bill recently passed by the Senate. The "Interstate Transportation of Dangerous Criminals Act of 2000," also known as "Jeanna's Act," was passed without controversy by the Senate on October 25th and is awaiting action in the House of Representatives. The measure, S.1898, was sponsored by Sen. Byron Dorgan (D-ND) and has 9 cosponsors.

Interstate transportation of prisoners is usually conducted under the guidance of trained law enforcement officials. However, more states and other entities are using private prisoner transport companies as an alternative to government-aided transport. When prisoners are transported via private transport across state lines, the matter becomes one of interstate commerce. Thus, through this measure the Federal government would set minimum standards to prevent the escape of violent prisoners and establish safeguard procedures in the event that a violent prisoner does escape.


UNICOR Contractor

Major Changes Unlikely for UNICOR in the 107th Congress

The chances of major change for federal inmate employment policy are unlikely given the results of the November congressional and presidential elections. The 2000 elections will yield a Senate and House of Representatives in which over 90 percent of the membership from the previous Congress was reelected. As a result, UNICOR, the trade name for Federal Prison Industries, Inc., will likely not experience great changes during the upcoming Congress. UNICOR anticipates awarding over $300 million worth of service and supply contracts in FY 2001.

Proponents of reigning in or modifying UNICOR such as Rep. Robert Andrews (D-NJ) and Rep. Peter Hoekstra (R-MI) were easily reelected to an additional term in the House of Representatives. However, given that their attempts to modify UNICOR were unsuccessful in the previous Congress, it is unlikely that these individuals will have a greater say in this area in the upcoming Congress. UNICOR advocates lost a major ally in Rep. Bill McCollum (R-FL), who was unsuccessful in his bid for the Senate against former Rep. Bill Nelson (D-FL). Both men were competing for the seat held by retiring Sen. Connie Mack (R-FL). Rep. McCollum had been the sponsor of H.R. 2558 in the 106th Congress, the "Prison Industries Reform Act of 1999." This measure would have allowed UNICOR to contract with private companies to employ federal inmates. However, 10 of the bill's 12 cosponsors will return to the 107th Congress in January, and thus it is likely that one of these cosponsors will re-introduce this bill in some form during the course of the next Congress.


Government Contracting

TINA Threshold Raised

The threshold for submitted cost or pricing data for contractual actions under the Truth in Negotiations Act ("TINA") has been increased from $500,000 to $550,000. The $50,000 increase accounts for the impact of inflation since 1994. The increase will affect government contracts between the federal government and private prison facilities.

TINA requires government contracting officers to obtain cost or pricing data if the contracting officer determines that none of the statutory exceptions for obtaining such data (e.g., the existence of adequate price competition) apply. In an up-and-coming field, such as private prisons, adequate price competition and other statutory exceptions will often not be available, and thus the TINA threshold becomes all the more important in the contracting process. However, if the contracting officer has sufficient information to evaluate price reasonableness, he or she may request that the obligation to submit cost or pricing data be waived. The increase in the TINA threshold took effect October 11, 2000.


PMP News

You can now access the Corrections Contractor online at pmplawfirm.com. This website provides viewers with the ability to search articles by issues or by subject. The website also links to the home page of Piliero, Mazza & Pargament, PLLC and the services offered by this group of legal professionals. Finally, the website provides valuable links to other correction and government contract related websites.


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