Piliero Mazza &
Pargament, PLLC

Vol. 1, Issue 2
November 2000

An Update for Federal, State, and Private Prison Contractors

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USMS Wins Bid Protest – A Warning to Contractors About Delaying Pre-Award Debriefings

Prison Labor and Private Industry – When Can a Company Hire Inmates?

DOJ to Contract in FY 2001 for Additional Bed Space from Private Vendors

Correction Contractors Should Conduct Periodic Legal Audits of Their Websites

FY 2001 Budget Battle Continues – DOJ Operating Under a Continuing Resolution



Bid Protests

USMS Wins Bid Protest – A Warning to Contractors About Delaying Pre-Award Debriefings

On October 25, 2000, the U.S. Marshal Service ("USMS") successfully defended a bid protest by United International Investigative Services, Inc. ("UIIS") regarding a Request for Proposals ("RFP") to provide court security services in the 7th and 9th judicial circuits. The RFP was issued on April 5, 2000, and on May 10, UIIS submitted its proposal responding to this solicitation. The USMS evaluated UIIS's proposal, but eliminated it from the competitive range. On June 8, the USMS notified UIIS that its proposal had been excluded from the competitive range, and upon learning of its elimination from the competitive range, UIIS immediately requested a debriefing. However, citing FAR 15.505(a)(2), UIIS requested that the debriefing be delayed until after award.

Consistent with UIIS's request, the USMS postponed the debriefing until after the September 13, 2000 award of the contract. A written debriefing was provided, and within ten days, UIIS filed a protest challenging the agency's evaluation of its proposal. However, the USMS argued that the protest should be dismissed as untimely, since UIIS specifically requested a delay in the debriefing until after contract award. The USMS noted that FAR 15.505(a)(2), which UIIS specifically referenced, warns offerors that requests for delayed debriefings "could affect the timeliness of any protest filed subsequent to the debriefing."

Prison Industry

Prison Labor and Private Industry – When Can a Company Hire Inmates?

With unemployment hovering at record-low levels, many private industries are viewing prison labor as an increasingly attractive option for their businesses. In particular, manufacturing industries have seized on this opportunity as a means to maximize the efficiency and effectiveness of their product. In October 2000 alone, companies in Iowa and Mississippi explored such opportunities in the area of manufacturing industrial and agricultural equipment, as well as demanufacturing computer components. However, inmate labor is not limited to these businesses. The following article addresses the Prison Industry Enhancement Certification Program and how a private company can take advantage of inmate labor. The Prison Industry Enhancement Certification Program (PIE) allows for the employment of inmates by private industries. All fifty states are eligible to participate in the program, and most states have correctional facilities that have either received certification from the Department of Justice (DOJ) or are currently going through the certification process. Companies seeking to employ inmates under PIE must meet certain conditions before they can hire inmates from a DOJ-certified correctional facility. Some of these conditions include paying offenders either the prevailing wage in the free market or the minimum wage, whichever is higher, and contributing at least five percent of the inmate employee's gross wages to a victim's compensation program. Companies must also consult with organized labor and private sector businesses that might be affected by the industry prior to start-up and provide written assurance that inmate labor will not displace non-inmate workers.


Alternative Disputes Resolution

BOP Resolves Lawsuit Between BOP and Brooklyn Contractor – A Lesson in ADR

By using Alternative Disputes Resolution (ADR) procedures, the Department of Justice ("DOJ") Federal Bureau of Prisons ("BOP") recently settled a lawsuit filed by a contractor involving the construction of the Metropolitan Detention Center, Brooklyn. The success of the parties in settling their dispute highlights the importance of ADR.

Encouraged by the Administrative Dispute Resolution Act and Federal Acquisition Regulation 33.214, Boards of Contract Appeals and the U.S. Court of Federal Claims have expressed an overwhelming interest in contract dispute resolution. To better assist our readers in designing ADR agreements and proceedings, the Corrections Contractor provides the following brief summary of tips.

First, while the agreement should be formalized in writing, the proceeding should be informal and flexible, with an emphasis on thinking "outside the litigation box." Although one arbitrator is acceptable, it is a good idea to consider establishing a panel of arbitrators consisting of a representative from the government, a representative from the contractor and a third party neutral to hear the case. The neutral third party should be conversant in procurement law, while the representatives from the government and the contractor should have authority to settle the case. The parties should also consider exchanging position papers, with exhibits, and describing each parties factual and legal position with regard to the dispute. It is also advisable that the parties exchange a list of witnesses of who will address the ADR panel at the proceeding. Finally, the ADR panel members should meet prior to the proceeding to discuss the format.


Intellectual Propety

Correction Contractors Should Conduct Periodic Legal Audits of Their Websites

With increased use of the Internet to develop and cultivate commerce, many correction contractors are establishing their presence on the Internet by creating and maintaining their own Internet websites. While creating a wealth of opportunities for businesses, the establishment and maintenance of these sites may subject site owners to a wide variety of unanticipated legal consequences. As a result, periodic legal audits of websites are needed to minimize the legal exposure and risks.

A legal audit of a website may begin by examining the issue of who "owns" the website. Many businesses are shocked to learn that, although they commissioned the construction of the site, they do not own the copyright to the design and "look and feel" of the site. If a company employee designed the site as part of his normal duties, then the company likely owns the proprietary rights to its site. If, however, design and construction of the site was commissioned to an independent contractor, the contractor may own the copyright, absent a written agreement to the contrary. Accordingly, a legal audit of any such written agreements will help to delineate those rights belonging to the company, and those belonging to the contractor or developer.


Legislative Update

FY 2001 Budget Battle Continues – DOJ Operating Under a Continuing Resolution

As the November edition of the Corrections Contractor goes to publication, President Clinton has announced his intention to veto the Commerce-Justice-State Appropriations bill. The conference report accompanying the measure (H.R. 4942) was passed in both the Senate and the House by slim and largely partisan votes. Both the House and Senate-passed versions of the bill were relatively similar in their funding for the Federal Bureau of Prisons, the U.S. Marshals Service, and the Immigration and Naturalization Service.


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