Piliero Mazza &
Pargament, PLLC

Vol. 1, Issue 1
October 2000

An Update for Federal, State, and Private Prison Contractors

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BOP Ends the 2000 Fiscal Year with Two Losses, One Win

New DOJ Budget Offers Opportunities for Corrections Contractors


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

FY 2001 Set to be Another Record Year for Federal Prison Industries

Georgia, Arizona & Oklahoma Spend Billions in FY 2001 on Correction Contracts




BOP Ends the 2000 Fiscal Year with Two Losses, One Win

As the fiscal year came to a close, the Bureau of Prisons (BOP) was dealt two loses at the hands of the General Accounting Office (GAO).

The first loss involved a Federal Prisons Industries (UNICOR) contract for leather at the Federal Corrections Institution (FCI) Sandstone. In Power Connector, Inc., B-285,395, August 24, 2000, Power Connector, Inc. (PCI) successfully argued that UNICOR improperly awarded a small business set-aside contract to a source offering a foreign product when such set-asides are limited to sources supplying domestically-produced products.

Here, the solicitation included FAR clause 52.219-6, "Notice of Total Small Business Set-Aside (Jul 1996)," and incorporated by reference both FAR clause 52.225-9, "Buy American Act--Trade Agreements--Balance of Payments Program (Jan 1996)"; and FAR clause 52.225-21 "Buy American Act--North American Free Trade Agreement Implementation Act--Balance of Payments Program (Jan 1997)." The awardee, Day Leather submitted a single proposal offering foreign leather. By contrast, PCI submitted three proposals--one offering domestic leather, one offering foreign leather, and one offering a mixture of foreign leather and domestic processing that urged UNICOR to evaluate as a domestic end product. In reviewing the proposals, UNICOR selected Day Leather's proposal for award because it offered the lowest price and had the highest past performance rating. UNICOR gave no consideration to whether the proposals offered foreign or domestic leather.

Federal Programs

New DOJ Budget Offers Opportunities for Corrections Contractors

The U.S. Department of Justice (DOJ) Fiscal Year (FY) 2001 Budget request showed a continued increase in construction of new prisons and detention related services. Overall, DOJ's budget request was $23.35 billion, a $1.83 billion increase over the FY 2000 level. As a result, abundant opportunities exist for Federal contractors providing correctional services and supplies.

For the Federal Bureau of Prisons (BOP), DOJ requested $5.9 billion, which accounts for 21.3% of DOJ's total budget and is the largest appropriations request for any DOJ office. The request includes $6.8 million for the full construction costs of six new prisons, including two that will house long-term, non-returnable Immigration and Naturalization Service (INS) detainees. The request also includes an advance appropriation of $791 thousand for FY 2002 and $535 thousand for FY 2003. These advance appropriations will ensure completion of the new projects funded in FY 2001. In total, seventeen new prisons will be funded beginning in FY 2001, giving BOP 19,840 additional beds.


PMP News

Piliero, Mazza & Pargament, PLLC is proud to welcome Joseph Summerill to its practice. Mr. Summerill comes to PMP from the Federal Bureau of Prisons (BOP), where he was the Chief of the Commercial Law Branch. At BOP, Mr. Summerill defended numerous protests before the General Accounting Office and litigated contract appeals before the Boards of Contract Appeals and the U.S. Court of Federal Claims. In addition, Mr. Summerill participated in BOP's effort to privatize federal prisons. Mr. Summerill brings this knowledge and experience to Piliero, Mazza & Pargament, PLLC clients. You may contact him at (202) 857-1000 or e-mail him at .


Federal Privatization Efforts

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

In addition to funding new construction, services, and supplies, DOJ's FY 2001 budget includes a sizeable increase over FY 2000 for privatization efforts.

DOJ's FY 2001 budget includes $84.47 million for BOP to contract for an additional 6,520 beds to accommodate the increasing number of Criminal Alien Requirement (CAR). CAR Phase I was awarded June 9, 2000 to Corrections Corporation of America; the CAR Phase II RFP closes October 26, 2000; and the BOP anticipates the release of the CAR Phase III solicitation towards the end of October 2000. In addition, the BOP FY 2000 budget includes appropriations for the continued operation of previously awarded privatization contracts, such as Taft Correctional Institution (run by Wackenhut Corrections Corporation), Eloy Detention Center (run by Corrections Corporation of America), Moshannon Valley Correctional Center (run by Cornell Corrections, Inc.), and Rivers Correctional Institution (run by Wackenhut Corporation of America), Moshannon Valley Correctional Center (run by Cornell Corrections, Inc.), and Rivers Correctional Institution (run by Wackenhut).

The INS budget request includes $78.9 million to contract for detention space from state, local, and private corrections companies From this amount, $55.4 million will fund 1,000 new contract beds and $8.6 million is allocated to enable INS to implement INS detention standards in non-federal contract beds. INS began implementation of a set of detention standards in some of the largest state and local facilities from which it rents detention beds. An additional $8.5 million was also requested to fund 120 critically needed juvenile detention bed spaces nationwide. This will bring the total INS' average daily juvenile bed level to 562 bed spaces.

The USMS budget request includes $64.35 million to fund approximately 9.53 million contract jail days, which is a 7.8 % increase over the FY 2000 level. Approximately $100 thousand will be allocated towards contractual agreements with state, local, and private correctional facilities for both the USMS and INS. The USMS also requested authority to enter into multi-year contracts, pursuant to FAR 17.104, with private entities for Federal prisoner detention services.

Finally, the Office of the Detention Trustee will receive $26 million in appropriations to manage Justice Department detention resources. Of this amount, up to $25 million can be utilized to pay private contractors for the costs associated with the care, maintenance, detention, and repatriation of illegal aliens held outside the continental United States.


The UNICOR Contractor

FY 2001 Set to be Another Record Year for Federal Prison Industries

UNICOR is the trade name for Federal Prison Industries, Inc., whose primary mission is the productive employment of federal inmates. For FY 2000, UNICOR received contract awards from federal agencies, such as the Defense Logistics Agencyand the Department of Navy, to provide office supplies and furniture, industrial equipment, linens, and miscellaneous services, such as printing. To fulfill these contracts, UNICOR procured $275.7 million worth of services and supplies from private contractors. With a projected increase in the number of federal inmates, UNICOR anticipates awarding over $300 million worth of service and supply contracts in FY 2001.

However, UNICOR is likely to see continued congressional efforts to curtail its recent successes. On June 22, 1999 Rep. Robert E. Andrews (D-NJ) introduced H.R.2291, the Fairness in Government Procurement Act of 1999, which would restrict UNICOR purchases by the Secretary of Defense. The bill was referred to a House subcommittee July 12, 1999 and currently has no sponsors.


State Programs

Georgia, Arizona & Oklahoma Spend Billions in FY 2001 on Correction Contracts

Like the FY 2001 federal corrections budget, state Departments of Correction continue to show a steady increase over FY 2000 funding levels. Among the states with the largest FY 2001 correction funding levels are Georgia, Arizona, and Oklahoma. Further, a large percentage of their correctional budgets will fund privatization efforts.

For FY 2001, Georgia's Department of Corrections will experience a $40 million increase in funding from the FY 2000 levels. In addition, Georgia's FY 2001 budget includes a $6.5 million adjustment to the FY 2000 budget for bed expansion of private prisons located in Charlton, Coffee and Wheeler Counties from 500 beds to 1,500 beds. Overall, Georgia seeks to increase private prison capacity from 3,000 to 4,500 by FY 2002.


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