                     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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                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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             (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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             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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