Corrections Contractor
An Update for Federal, State, and Private Prison Contractors      Vol. 2, Issue 2  February 2001

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Removing a Drug-Addicted Employee
A Lesson in the Rehabilitation Act of 1973 and the Americans with Disabilities Act

"Jeanna's Act" Becomes Law


Wackenhut Wins Guard Service Protest

On December 11, 2000, the General Accounting Office ("GAO") sustained a protest by Wackenhut International, Inc. ("Wackenhut") against the Department of State ("DOS"). Wackenhut was protesting the awarding to U.S. Defense Systems, Inc. ("USDS") of a guard services contract at the American Embassy in Bangkok, Thailand.

Wackenhut was the incumbent contractor of the guard services and had participated in DOS' bidding process to retain the contract. The request for proposals ("RFP") specifically stated that the DOS would accept the "lowest evaluated price" that was "technically acceptable." After a preliminary elimination process, Wackenhut was one of the final three bidders that was deemed to be acceptable, along with USDS and a third organization. After each of the three bidders was given an opportunity to revise their prices, DOS awarded the contract to USDS, which offered the "lowest evaluated price." Wackenhut's price was the highest of the three final bidders.

In its protest, Wackenhut acknowledged that its bid was higher than that of USDS, but argued that USDS' lower proposed rates would lead to a decrease in the quality of personnel and directly contravene the RFP's requirement that the successful bidder maintain "uninterrupted high quality performance of the guard services." In response, DOS argued that the only applicable standard under the RFP was minimum wage rates required under Thai law. However, DOS conceded that it did not contemplate a comprehensive review of each bidder's compensation plan when evaluating the bids of the three candidates.

The GAO agreed with Wackenhut that the DOS failed to evaluate the proposals under the stated evaluation criteria of the RFP. Specifically, the GAO recognized that lower wages for guards at the embassy could have a detrimental effect on contract performance. The GAO felt that DOS' examination of the competing compensation plans was "cursory" and insufficient, and a more thorough review was necessary to determine whether USDS' bid was "technically acceptable." Since a more thorough examination of compensation rates could have yielded a finding that Wackenhut had the lowest evaluated price that was "technically acceptable," GAO sustained Wackenhut's protest.

In the end, GAO recommended that DOS perform an "adequate review" of the compensation plans of each of the three final bidders. If DOS' review concludes that USDS' compensation plan will make it more difficult to recruit and retain personnel, GAO recommended termination of the contract and award to the more "technically acceptable"offeror.



Removing a Drug Addicted Employee – A Lesson in the Rehabilitation Act of 1973 and the Americans with Disabilities Act

The facts are becoming all too familiar to employers in and out of the correction industry. The Corrections Corporation of America ("CCA") was awarded a contract to operate a private prison in Youngstown, Ohio. CCA then hired a corrections officer at that facility, and shortly after he began his employment, this corrections officer requested help from his supervisor for an addiction to crack cocaine. The supervisor directed the corrections officer to speak with security, who directed him to the facility's personnel coordinator, who in turn notified the warden. When the corporate office was informed of the corrections officer's substance abuse problem, he was discharged for violation of CCA's policy against illegal drug use.

The corrections officer then filed a grievance with the Human Relations Commission for the City of Youngstown alleging that he was discharged because of a disability in violation of the Rehabilitation Act of 1973. The Commission agreed that CCA unlawfully discriminated against the corrections officer because of his disability, and ordered CCA to reinstate him with back- pay. CCA appealed, and a county trial court vacated the commission's decision, dismissing the corrections officer's complaint. Specifically, the trial court held that the corrections officer was not protected under the Rehabilitation Act or the Americans With Disabilities Act ("ADA") because he was a current drug user not participating in a supervised rehabilitation program. The corrections officer appealed the lower court's ruling to the Ohio Court of Appeals.

The first question posed to the Appeals Court was whether or not the corrections officer was currently using drugs. While both the ADA and the Rehabilitation Act prohibit employers from discriminating against individuals with disabilities, individuals "currently" engaging in illegal use of drugs are excluded from coverage. Attorneys defending the corrections officer argued that he was free from drug use and was participating in supervised rehabilitation programs at the time he was discharged.

The second question addressed by the Appeals Court was whether the corrections officer was participating in a drug treatment program at the time of his dismissal. Both the Rehabilitation Act and the ADA contain a safe-harbor provision that affords coverage to individuals who: "(1) [have] successfully completed a supervised drug rehabilitation program and [are] no longer engaged in the illegal use of drugs, or [have] otherwise been rehabilitated successfully and [are] no longer engaging in such use; (2) [are] participating in a supervised rehabilitation program and [are] no longer engaging in such use; or (3) [are] erroneously regarded as engaging in such use, but is not engaging in such use. 42 U.S.C. §12114(b); 29 U.S.C. § 706(8)(C)(ii). The corrections officer's attorneys argued that he only requested drug treatment from CCA because of a relapse that occurred approximately three days prior to admitting his drug problem. Further, the corrections officer also argued that at the time of his discharge, he was participating in a rehabilitation program.

After reviewing all facts, the Appeals Court answered the first question by holding that current drug use means "that the illegal use of drugs occurred recently enough to justify an employer's reasonable belief that involvement with drugs is an on-going problem." There is no requirement that the drug use be on the day or even within the week of the termination from employment. In other words, an employee illegally using drugs in the weeks and months prior to discharge is a "current" illegal user of drugs for the purposes of the ADA and Rehabilitation Act. Such employees are not protected by the Acts, and , in fact, are explicitly excluded from protection. In this case, the corrections officer admitted to using crack cocaine a week before his discharge from CCA.

With regard to the second question, the Appeals Court found that the corrections officer was not participating in a supervised rehabilitation program at the time he was fired. The evidence revealed that he only attended such meetings after he was discharged. Accordingly, the Appeals Court held that the corrections officer was a "current" user excluded from the protection of the ADA and Rehabilitation Act, and not protected by the safe-harbor provisions.

While CCA's decision to dismiss the corrections officer was eventually affirmed by the courts, the lesson for all employers deciding whether or not to fire a drug addicted employee is to first determine when the employee last engaged in illegal drug use. If the employer believes that the drug use is an "on-going problem" for the employee, that employee will not be covered by the Rehabilitation Act or the ADA. However, if the employee is not a "current drug user" and is participating in a supervised rehabilitation program, employers may be discriminating against the employee if they fire him.


Legislative Update

"Jeanna's Act" Becomes Law

Private prison transport companies will be subject to new stricter standards under the "Interstate Transportation of Dangerous Criminals Act of 2000," or "Jeanna's Act." The bill, which was examined in the December 2000 issue of the Corrections Contractor, was signed into law by President Clinton on December 21, 2000. The House of Representatives passed the Senate bill (S. 1898) without amendment on December 7th, shortly before the 106th Congress adjourned.

The measure requires the Department of Justice to set minimum standards to prevent the escape of violent prisoners being transported across state lines, and establishes safeguard procedures in the event that a violent prisoner does escape. Under the new law, the Attorney General now must promulgate regulations to meet these goals within 180 days. The Attorney General will develop these regulations in consultation with the American Correctional Association and the private prisoner transport industry. The Corrections Contractor will continue to monitor this issue and report on the new regulations in a future edition.


Construction Contracting

DOJ Adopts Design-Build Method for Prison Construction

The Federal Bureau of Prisons ("BOP"), the U.S. Marshal Service, and the Immigration and Naturalization Service have joined the growing number of state and local departments of correction in choosing "design-build" as the means for constructing prisons. In this first of a three-part series on design-build contracts, the Corrections Contractor examines the origins of this type of contracting and the benefits to both the government and the contractor. Future editions of the Corrections Contractor will analyze bid protest and claims involving design- build construction contracts and suggest ways for contractors to avoid common pitfalls.

Traditionally, the Department of Justice ("DOJ") has utilized the three-phase, design-bid-build procurement process to build its prisons. In a design-bid-build construction contract, the DOJ first contracts with an architect who designs the plans and specifications necessary to construct the prison. Once the plans are finished, the DOJ advertises for bids and awards the project to the lowest construction bidder. Authorized by the Federal Acquisition Reform Act of 1996 ("FARA"), the DOJ can now utilize a design-build construction contract, which incorporates a two-phase acquisition process. The DOJ contracts with only one company, which provides both the design and construction of the prison.

In phase one of the procurement process, the agency develops a statement of work which defines the project, and allows the offeror to focus on its technical approach and technical qualifications. However, the offeror is not expected to submit a detailed design or even its cost and pricing data. Instead, phase one proposals reveal the offeror's specialized experience and technical abilities, the past performance of the offeror's architect-engineer and construction team and other factors demonstrating the offeror's ability to perform. Once phase one submissions are received, the government reviews the proposals and selects a predetermined number of offerors who are both responsive and responsible. The number of offerors it will select is specified in the phase one solicitation, so offerors understand ahead of time the need to be competitive.

After the government composes a list of offerors from the first phase of the procurement, phase two of the design-build competition begins. In phase two, the government evaluates the remaining offerors' technical submissions and factors relating to cost and pricing data. However, before phase two commences, the government must determine whether: (1) three or more offers will be received: (2) the design work must be performed before an offeror can develop a price or cost proposal and (3) the offeror will incur a substantial amount of expense in preparing the offer. FAR 36.301(b). In addition, the government must determine: (1) the extent to which the project requirements have been adequately defined; (2) the time constraints for delivery of the project; (3) the capability and experience of potential contractors; (4) the suitability of the project for use of the two-phase selection procedures; (5) the capability of the agency to manage the two-phase selection procedures and (6) other criteria established by the agency. FAR 36.301(b)(3).

For the DOJ, design-build contracts provide many advantages. First, and most importantly, there is a single source of responsibility -- the DOJ relies on a single entity for the design, the construction and completion of the prison. Design-build contracts also result in a higher quality prison, since the contractor's resources are focused on the success of the project, and DOJ is not forced to accept the low bid submitted by the design-bid-build construction contractor. More attention is given to the contractor's past performance during the evaluation process. Design- build contracts are also performance based, with the contractor focused on the DOJ's expectations from the beginning. This results in fewer claims and less litigation -- a recent problem for entities, like the BOP.

With regard to cost, the government believes that design-build contracts will allow it to identify cost overruns earlier and address budgetary concerns early, rather than upon completion. On past projects, DOJ has had trouble accurately determining costs from a complete set of drawings. Finally, the overall time to build the prison is substantially reduced, since design and construction activities can overlap. This reduction in time results in lower interest, less project management costs, and a reduction of costs associated with earlier utilization of the prison.

From the contractor's perspective, design-build contracts offer control over the design phase of the project, ensuring that the builders are not undermined by an architect's attempt to save costs. All components of the prison construction are also addressed up front, from site work through the electrical systems. Concerns are raised and settled at the beginning, resulting in the contractor filing fewer claims, experiencing fewer problems with subcontractors, and avoiding litigation to resolve those claims and subcontractor problems. Finally, the contractor also benefits from a reduction in the time needed to build the prison, since the contractor's resources are freed up to assume new contractual obligations.

With the move to design-build prison construction, the DOJ hopes to receive higher quality prisons, for less cost and with fewer claims. The two phase process results in a single source of responsibility, and avoids the problems associated with accepting a low bid. For the contractor, there is greater control over all aspects of the process -- from start to finish -- and a reduction in the time needed to build the prison. Next month, the Corrections Contractor will examine recent bid protests involving design-build contracts.


Question & Answer

Bush Administration Aims to Increase Federal Privatization Efforts – Other Procurement Reform

Q. Has President George Bush expressed a position on privatization?
A. During the 2000 campaign, President Bush emphasized the need to privatize 900,000 Federal jobs not identified as inherently governmental under the Federal Activities Inventory Reform Act of 1998 ("FAIR"). FAIR specifically requires Federal agencies to inventory those activities which are commercial in nature and then use competitive procurement policies to fulfill such activities. FAIR also allows the agencies to exempt activities that would otherwise be identified as commercial, and does not provide a means for appealing such determinations. Bush has specifically said that he will sign an executive order mandating the privatization of these 900,000 positions currently identified by Federal agencies as commercial activities.

Q. What other procurement reforms has President Bush advocated?
A. Bush has advocated placing of all significant Federal procurement activities on the Internet by the year 2004. Bush has argued that the government would experience a $19 billion saving and could capitalize on the market-driven successes of "on-line" buying. In addition, Bush has proposed converting half of all Federal service contracts into performance based contracts, saving the government $28 billion dollars over eight years. Performance based contracts focus on the end result of the contract, instead of the method by which the contract was performed.


PMP News

Spring Seminars 2001

Piliero, Mazza and Pargament invites you to the Spring Seminars 2001. The spring seminars will be held at The Tower Club, 8000 Towers Crescent Drive, Suite 1100 in Tysons Corner - Virginia.

Teaming Arrangements in 2001
March 6, 2001

Given current government contracting trends toward larger contracts and FSS Schedules, contractors are more reliant than ever upon teaming arrangements. During this seminar we will discuss the following issues: benefits of mentor-protégé relationships; the HUBZone Program and regulations; and teaming under different preferential procurement programs, FSS Schedule contracts and for A-76 contracting opportunities.

Effectively Handling Workplace Harassment
April 3, 2001

Recent court decisions have made profound changes in the law governing harassment in the workplace. These changes extend not only to [email protected] harassment, meaning harassment consisting of sexual advances or sexually explicit conduct, but also to harassment based on race, gender, age and other protected classifications. This seminar will include coverage of the following issues: discussion of recent legal developments; identifying what constitutes unlawful harassment; investigating complaints of harassment; and implementing preventive measures, including anti-harassment policies.


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