Legality of Fixed-Price Intergovernmental Agreements
for Detention Services
The Department of Justice has authority to enter Intergovernmental Agreements with state or local
governments to provide for the detention of federal prisoners and detainees on a fixed-price basis
and is not limited to providing compensation for costs under such agreements.
December 31, 2002
MEMORANDUM OPINION FOR THE DEPUTY ATTORNEY GENERAL
Your Office has asked us to advise whether the Department of Justice
(“Department”), in entering into so-called Intergovernmental Agreements, or
IGAs, under which state or local governments provide for the detention of federal
detainees, may agree to a fixed price for detention services. For the reasons set
forth below, we conclude that the Department may do so.
I.
The U.S. Marshals Service (“USMS”) and the Immigration and Naturalization
Service (“INS”) frequently enter into IGAs with state and local governments for
the detention of persons in connection with federal criminal and immigration
proceedings. These IGAs have typically set compensation for these services at the
cost actually incurred by the provider, as determined pursuant to OMB Circular
A-87, Cost Principles for State, Local, and Indian Tribal Governments (rev. May
4, 1995, as further amended Aug. 29, 1997). The Department’s Office of the
Detention Trustee, which is responsible for directing USMS and INS on detention
operations, Pub. L. 106-553, app. B, 114 Stat. 2762A-52 (2000), recommends that
the Department consider using fixed-price IGAs in the future in certain circum-
stances. Under a fixed-price arrangement, the price for detention services would
not be based solely on the provider’s costs and would not be subject to ongoing or
retroactive adjustment to reflect costs actually incurred. Instead, the price would
be set at a fair and reasonable level at the time the IGA was executed. This fixed
price might be above or below the provider’s expected or actual costs.
The Department’s Office of the Inspector General (“OIG”) maintains that the
Department lacks legal authority to enter into fixed-price IGAs for detention
services. It argues both that the Department has no statutory authority to enter into
such agreements and that such agreements violate OMB Circular A-87. 1
1
See Memorandum for the Deputy Attorney General, from Glenn A. Fine, Inspector General, Re:
Procurement of Detention Services (March 12, 2002) (“OIG Memorandum I”); Memorandum for Larry
D. Thompson, Deputy Attorney General, from Glenn A. Fine, Inspector General, Re: OIG Comments
on August 1, 2002 Memorandum from Federal Detention Trustee (Sept. 18, 2002) (“OIG Memoran-
dum II”).
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II.
We first consider whether the Department has statutory authority to enter into
fixed-price detention IGAs. Section 119 of Public Law 106-553 provides:
Notwithstanding any other provision of law, including section
4(d) of the Service Contract Act of 1965 (41 U.S.C. 353(d)), the
Attorney General hereafter may enter into contracts and other
agreements, of any reasonable duration, for detention or incarcera-
tion space or facilities, including related services, on any reasonable
basis.
114 Stat. 2762A-69 (2000) (emphasis added).
Although Public Law 106-553 was an annual appropriations act, section 119 is
clearly earmarked as permanent legislation by its use of the term “hereafter,” a
term that is regularly used by Congress to specify that particular sections of an
appropriations act constitute permanent legislation. See, e.g., United States v.
Vulte, 233 U.S. 509, 514-15 (1914); Cella v. United States, 208 F.2d 783, 790 (7th
Cir.1953) (“The use of the word ‘hereafter’ by Congress as a method of making
legislation permanent is a well-known practice.”); Permanency of Limitation on
Interstate Commerce Commission’s Approval of Railroad Branchline Abandon-
ments Contained in 1982 Appropriation Act, 70 Comp. Gen. 351, 353 (1991).
A.
Section 119 grants the Attorney General permanent authority to enter into
contracts “of any reasonable duration” for the use of detention facilities and
related services “on any reasonable basis.” The concluding phrase “on any
reasonable basis,” interpreted within the ordinary meaning of those terms, appears
to encompass all pertinent terms (including price terms) that would be reasonable
to include in an agreement of the kind described. Because a fixed-price term is
plainly reasonable, section 119 therefore appears to confer authority on the
Attorney General to enter into fixed-price detention IGAs.
OIG disputes this interpretation. Relying on its understanding of the legislative
history of section 119, OIG argues that the phrase “on any reasonable basis” is
“shorthand” for a phrase—“to acquire such space or facilities on a lease-to-
ownership, lease-with-option to purchase, or other reasonable basis”—that OIG
says was proposed by the Department as substitute language for an earlier version
of what became section 119. See OIG Memorandum II, supra note 1, at 4 &
attach. F. OIG further states: “There is no suggestion in any of the Department’s
communications [to Congress] that the Department sought this provision for the
purpose of entering into . . . agreements with state and local governments on a
basis other than cost.” Id. at 4.
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Legality of Fixed-Price Intergovernmental Agreements for Detention Services
Initially, we question whether resort to legislative history is appropriate to
determine the meaning of the phrase “on any reasonable basis.” As a general
proposition, resort to legislative history is inappropriate when the terms of a statute
are unambiguous. See, e.g., Barnhill v. Johnson, 503 U.S. 393, 401 (1992). In
context, we believe that the ordinary, and only natural, reading of the phrase “on
any reasonable basis” is that it encompasses all the terms and provisions, including
price, that ordinarily make up a contract.
But even if we were to entertain legislative history, the Department proposals
recounted by OIG in support of its interpretation of the phrase “on any reasonable
basis” do not constitute reliable evidence of Congress’s intent in enacting section
119. Even on the assumption that the Department communicated such proposals to
congressional staff, there is no reliable indication that these proposals were
actually communicated to, or seen by, any Members of Congress, let alone the
responsible committee chairmen, floor managers, or members of the Conference
Committee. Nor is there any indication in the Conference Report on Public Law
106-553 that the Department proposals in question were considered by, or had any
influence upon, the Conference Committee which introduced and adopted the
language of section 119. Consequently, it is highly doubtful that the Department
proposals recounted by OIG even qualify as legislative history. Cf. Gustafson v.
Alloyd Co., 513 U.S. 561, 579 (1995) (“Material not available to the lawmakers is
not considered, in the normal course, to be legislative history.”); id. at 580 (“If
legislative history is to be considered, it is preferable to consult the documents
prepared by Congress when deliberating.”)
In any event, even if the proposals in question could be viewed as legislative
history, the contents of an executive department’s communications proposing
statutory language narrower than that which Congress enacted simply do not
provide evidence that Congress intended the narrower objective sought by that
executive department. See Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363,
390 (2000) (Scalia, J., concurring) (“Executive statements and letters addressed to
congressional committees” do not provide “a reliable indication of what a majority
of both Houses of Congress intended when they voted for the statute before us.”).
If anything, they tend to support the view that Congress deliberately chose the
broader language that was in fact enacted, because a specific proposal for a
narrower provision was demonstrably available and yet rejected. While the
materials cited by OIG may establish the executive department’s intent in propos-
ing legislation, they fail to provide reliable evidence of Congress’s intent in
enacting legislation that is different from what the executive department proposed.
Thus, we disagree with OIG’s contention that the broad phrase “on any reason-
able basis” should be construed as “shorthand for the term ‘to acquire such space
of facilities on a lease-to-ownership, lease-with-option to purchase, or other
reasonable basis.’” OIG Memorandum II, supra note 1, at 4. We cannot read this
ordinary phrase to carry this coded meaning. If Congress somehow intended such
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meaning (and we see no reason to think that it did), it was obligated to say so. 2 We
instead conclude that the phrase “on any reasonable basis” has its ordinary
meaning and that section 119 therefore authorizes the Attorney General to enter
into fixed-price detention IGAs.
B.
Having determined that section 119 gives the Attorney General the authority to
enter into fixed-price IGAs for detention services, we next must consider how
broad that authority is. In particular, we must explore whether there are other
statutes that, by their terms, would prohibit the Attorney General from entering
into such fixed-price agreements, and, if so, whether section 119 overrides them.
The obvious starting point for analyzing the interaction of section 119 and any
seemingly conflicting statute is section 119’s opening phrase, “[n]otwithstanding
any other provision of law.” As the Supreme Court has noted, “the use of such a
‘notwithstanding’ clause clearly signals the drafter’s intention that the provisions
of the ‘notwithstanding’ section override conflicting provisions of any other
section.” Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993). In certain
circumstances, there may be some question about the extent to which Congress
actually intended to override other statutes. See, e.g., Oregon Natural Res. Council
v. Thomas, 92 F.3d 792, 796 (9th Cir. 1996) (“the phrase ‘notwithstanding any
other law’ is not always construed literally”). In general, however, a “notwith-
standing” phrase works in tandem with the substantive reach of the section to
which it is attached. (That is simply another way of determining which provisions
are actually “conflicting.” Cisneros, 508 U.S. at 18.) Thus, a statute that grants
prosecutorial powers “notwithstanding any other provision of law” will be read to
“mean[] that the conferral of prosecutorial powers should not be limited by other
statutes.” United States v. Fernandez, 887 F.2d 465, 468 (4th Cir. 1989). And a
statute that limits liability “notwithstanding any other provision of law” will be
read to “mean[] that the remedies established by the [statute] are not to be
modified by any preexisting law.” In re Oswego Barge Corp., 664 F.2d 327, 340
(2d Cir. 1981); see also Mapoy v. Carroll, 185 F.3d 224, 229 (4th Cir. 1999)
2
The Supreme Court’s observations in Gemsco, Inc. v. Walling, 324 U.S. 244, 260 (1945), have
force here as well:
The argument from the legislative history undertakes, in effect, to contradict the terms
of Section 8(f) by negative inferences drawn from inconclusive events occurring in the
course of consideration of the various and widely differing bills which finally, by
compromise and adjustment between the two Houses of Congress, emerged from the
conference as the Act. The plain words and meaning of a statute cannot be overcome
by a legislative history which, through strained processes of deduction from events of
wholly ambiguous significance, may furnish dubious bases for inference in every
direction.
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Legality of Fixed-Price Intergovernmental Agreements for Detention Services
(statute that strips jurisdiction “notwithstanding any other provision of law” means
“that all other jurisdiction-granting statutes . . . shall be of no effect.”).
In the case of section 119, the substance of the provision deals with the Attor-
ney General’s authority to enter into contracts for detention services. Therefore,
other legal provisions dealing with that subject, to the extent that they conflict with
section 119, are overridden by its “notwithstanding” phrase.
We illustrate the effect of section 119 by addressing various other statutes that
concern the Attorney General’s authority to enter into agreements for detention
services.
1.
Under 18 U.S.C. § 4002 (enacted in 1948), the Attorney General is authorized
to contract with state or local governments, for “a period not exceeding three
years,” for the “imprisonment, subsistence, care, and proper employment” of “all
persons held under authority of any enactment of Congress.” With regard to
permissible payments under such contracts, section 4002 provides:
The rates to be paid for the care and custody of said persons shall
take into consideration the character of the quarters furnished, sani-
tary conditions, and quality of subsistence and may be such as will
permit and encourage the proper authorities to provide reasonably
decent, sanitary, and healthful quarters and subsistence for such per-
sons.
Id. This language does not prohibit rates of payment for detention facilities or
services that are fixed without respect to cost (or that otherwise might be in excess
of cost). Indeed, the closing provision that the rates “may be such as will permit
and encourage” the pertinent state or local authorities to provide the kind of decent
quarters and subsistence described appears to contemplate and authorize rates that
could exceed mere costs in order to bring about the desired conditions.
We note further that insofar as the “reasonable duration” of a detention services
agreement may exceed the three-year limit under section 4002, section 119
overrides that three-year limit.
2.
Under 18 U.S.C. § 4006 (enacted in 1948), the Attorney General “shall allow
and pay only the reasonable and actual cost of the subsistence of prisoners in the
custody of any marshal of the United States.”
We first note the limited scope of this provision. It applies only to the subsist-
ence of federal detainees who are in the custody of U.S. marshals, such as persons
in custody awaiting trial, execution of sentence, or extradition. It therefore does
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not apply, for example, to detention agreements covering convicted federal
offenders serving sentences in prison (who are in BOP custody) or INS detainees
awaiting removal or deportation. 3
The Department’s Justice Management Division (“JMD”) addressed the effect
of section 4006 in 1998 (i.e., before the enactment of section 119 of Public Law
106-553 in 2000). See Memorandum for Janis Sposato, Deputy Assistant Attorney
General, Justice Management Division, from Stuart Frisch, General Counsel,
Justice Management Division, Re: USMS Agreements and Contracts for Detention
and Subsistence Under 18 U.S.C. § 4006 (Apr. 21, 1998) (“JMD Memorandum”).
JMD considered whether section 4006 limits the USMS to “cost reimbursement”
contracting for detainees’ subsistence or whether it permits other types of contract
arrangements, such as fixed-price contracts. JMD concluded that section 4006
does not limit the USMS to cost-reimbursement arrangements. JMD Memorandum
at 1. JMD primarily based its conclusion on its interpretation of the undefined term
“actual cost” in section 4006. Specifically, JMD determined that the term “actual
cost” could have any of three meanings: “the actual price charged for the goods
and/or services, the actual cost to the provider of producing such goods or
services, or the actual selling price after mark-up.” Id. at 3.
We need not determine whether we agree with JMD’s interpretation of “actual
cost” because we conclude that, insofar as section 4006 would restrict USMS
detainee subsistence agreements to “cost-basis” contracts, that restriction does not
survive the enactment of section 119. Section 4006 by its terms provides that any
agreement that the Attorney General reaches with state or local governments for
the subsistence of federal detainees in USMS custody must limit payment to the
“reasonable and actual cost of the subsistence.” Unless the flexible interpretation
of “actual cost” applied by JMD in its 1998 opinion is adopted, the “actual cost”
restrictions of section 4006 would conflict with, and therefore would be overrid-
den by, the Attorney General’s authority under section 119 to contract for
detention services “on any reasonable basis,” “[n]otwithstanding any other
provision of law.”
3.
Under 18 U.S.C. § 4013 (enacted in 1988), the Attorney General is further
authorized to make payments from appropriated funds in support of federal
3
See 28 C.F.R. § 0.111(k), which provides that the responsibilities of the U.S. Marshals Service
include:
(k) Sustention of custody of Federal prisoners from the time of their arrest by a mar-
shal or their remand to a marshal by the court, until the prisoner is committed by order
of the court to the custody of the Attorney General for the service of sentence, other-
wise released from custody by the court, or returned to the custody of the U.S. Parole
Commission or the Bureau of Prisons.
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Legality of Fixed-Price Intergovernmental Agreements for Detention Services
prisoners in non-federal institutions. Subsection (a)(4)(C) of this section, which
concerns contracts or cooperative agreements with state or local governments
regarding the construction or renovation of facilities for detention services,
specifies that “the per diem rate charged for housing such Federal prisoners shall
not exceed the allowable costs or other conditions specified in the contract or
cooperative agreement.” Id. § 4013(a)(4)(C) (emphasis added). This provision
expressly recognizes that “other conditions” specified in the contract or coopera-
tive agreement may permit the payment of per diem rates exceeding costs. Those
conditions, for example, might include provisions for payment on the basis of a
fixed price that is not co-extensive with cost. We therefore do not believe that
section 4013 is in conflict with section 119.
4.
Under 8 U.S.C. § 1103(a)(11) (amended by the Homeland Security Act of
2002, Pub. L. 107-296, § 1102, 116 Stat. 2135 (2002)), the Attorney General is
authorized to (1) make payments from immigration appropriations “for necessary
clothing, medical care, necessary guard hire, and the housing, care, and security
of” INS detainees under an agreement with a state or local governments; and
(2) enter into a cooperative agreement with a state or local government for the
provision of acceptable conditions of confinement and detention services for INS
detainees for whom that state or local government agrees to provide guaranteed
bed space. Nothing in this section prohibits the Department from contracting or
paying for detention facilities or services provided by State or local governments
on a fixed-price basis. This section therefore does not conflict with section 119.
C.
We therefore conclude that section 119 confers authority on the Attorney Gen-
eral to enter into fixed-price IGAs with state and local governments for the
detention of federal detainees.
III.
OIG also argues that OMB Circular A-87 prohibits the Attorney General from
including in detention IGAs a price provision that is based on terms other than
cost. OIG Memorandum I, at 6-8. OMB Circular A-87 provides in relevant part:
This circular establishes principles and standards to provide a uni-
form approach for determining costs and to promote effective pro-
gram deliver, efficiency, and better relationships between govern-
mental units and the Federal Government. The principles are for
determining allowable costs only. They are not intended to identify
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the circumstances or dictate the extent of Federal and governmental
unit participation in the financing of a particular Federal award. Pro-
vision for profit or other increment above cost is outside the scope of
this Circular.
OMB Circular A-87, ¶ 5 (emphasis added). OIG evidently reads the Circular’s
statement that “[p]rovision for profit or other increment above cost is outside the
scope of this Circular” to mean that such provision would violate the Circular.
The Office of Management and Budget (“OMB”) itself has repudiated OIG’s
reading of OMB Circular A-87. As OMB explained to OIG:
It is our understanding that DOJ uses inter-governmental service
agreements (IGAs) to acquire detention space from State and local
governments. DOJ’s General Counsel, the Marshals Service, and the
Immigration and Naturalization Service have determined that some
of the IGAs with certain States are fixed-price contracts, rather than
cost-reimbursement contracts. As such these fixed-price IGAs are not
covered under OMB Circular A-87.
Letter for Glenn A. Fine, Inspector General, U.S. Department of Justice, from
Joseph L. Kull, Deputy Controller, Office of Management and Budget (Aug. 22,
2002) (emphasis added). OMB’s view comports with the most natural reading of
OMB Circular A-87: it merely governs how properly to determine applicable
costs, not whether a government contract may authorize payments on a basis other
than costs. We therefore conclude that OMB Circular A-87 does not prohibit
fixed-price detention IGAs.
M. EDWARD WHELAN III
Principal Deputy Assistant Attorney General
Office of Legal Counsel
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