An Update for Federal, State, and Private Prison Contractors  
   Vol. 3, Issue 1  Jan./Feb. 2002


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A R T I C L E S



STATE CORRECTIONS

FEDERAL CONTRACTING
UNICOR UPDATE


FEDERAL PRIVATIZATION

Private Prison Contractors Cannot Be Sued for Constitutional Violations

On November 27, 2001, the United States Supreme Court handed down its decision in Correctional Services Corporation v. Malesko.  As previously reported in the Corrections Contractor, Mr. Malesko was an inmate in a Correctional Services Corporation (CSC) facility, who brought suit against CSC for constitutional violations related to an incident where Mr. Malesko suffered a heart attack.  Mr. Malesko alleged that, despite a diagnosis that he suffered from congestive heart failure, he was forced to climb five flights of stairs at a quick pace.  During this climb, he suffered a heart attack. 

Malesko sued the guard that refused him use of the elevator, several other CSC employees and CSC itself.  Relying on Bivens v. Six Unknown Federal Narcotics Agents, Malesko argued that their refusal to let him use the elevator and their failure to obtain timely refills of his prescription medication violated his Eighth Amendment right against cruel and unusual punishment.  Bivens allows recovery of damages from individual officers who violate the rights of citizens under color of federal law.  Malesko sought $4 million in damages from CSC.

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STATE CORRECTIONS

Recent Decisions by State Supreme Courts Impact Corrections Contractors

In two recent decisions, state supreme courts have examined contracts between state departments of correction and local correction contractors.  In the first case, the Missouri Supreme Court overturned a lower court's award of future damages after the Missouri Department of Corrections (MDC) breached a contract with a service provider.  In the second case, the New Mexico Court of Appeals upheld the termination of an independent contractor of that state's Department of Corrections.

The first decision was by the Supreme Court of Missouri, which held that a rural electric cooperative that supplied electricity to MDC facilities was not entitled to damages for profits projected beyond the duration of its contract.  The case involved a 1988 contract between the Farmers' Electric Cooperative, Inc. and the MDC facilities in DeKalb County.  When the contract was signed, only one facility, the Western Missouri Correctional Center (WMCC), was located DeKalb County.  However, between 1994 and 1996, however, the MDC obtained a voluntary annexation of the WMCC property into the City of Cameron and also built a second facility B the Crossroads Correctional Center (CCC).  Despite Farmers' objections, the CCC purchased electricity from the City of Cameron.

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FEDERAL CONTRACTING

Supreme Court Dismisses Most Recent Adarand Challenge

Less than one month after it heard oral arguments in the long-running case of Adarand Constructors v. Mineta, the Supreme Court dismissed the case and let the lower court opinion stand.  Adarand challenged the constitutionality of the Department of Transportation's (DOT) recently-revised Disadvantaged Business Enterprise (DBE) Program.  In its dismissal, the Court found that because Adarand Constructor's (Adarand) appeal challenged DOT's direct procurement program, as opposed to the DBE program at issue in the original case, the Court could not render a decision on the issue

The case centered around a DOT program that required the inclusion of a Subcontractor Compensation Clause (SCC) in highway construction contracts awarded by DOT=s Central Federal Lands Highway Division (CFLHD). The SCC provided for a financial bonus of up to 10% to prime contractors that used DBE's as subcontractors.  To qualify, subcontractors were required to be certified as "disadvantaged" under the Small Business Administration's (SBA) 8(a) program, small disadvantaged business program, or another acceptable certification program.

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UNICOR UPDATE

Defense Appropriations Bill Reforms UNICOR

The National Defense Authorization Act for Fiscal Year 2002, was recently approved by Congress, included language which reforms the Department of Justice=s Federal Prison Industries (UNICOR).  In particular, the new language dramatically alters the way in which the federal government's prison industry conducts business with the Department of Defense (DOD).  Although this new legislation is limited solely to DOD's purchases from UNICOR, the success of the new law may lead to a further erosion of UNICOR's mandatory source status. 

Historically, if the DOD needed a particular product, it was required to purchase that product from UNICOR -- so long as UNICOR could provide the product in a timely manner and at a "competitive price."  Under the old provision, the determination as to whether UNICOR could provide a timely and competitively priced product to the DOD was made by UNICOR and not by DOD.  Accordingly, UNICOR routinely determined that it could meet the military's needs in an affordable and timely manner.

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