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Federal Halfway House Contractor Files Unsuccessful Suit Against Bureau of Prisons

On August 3, 2015, Bannum, Inc., a provider and operator of halfway houses for federal prisoners following their release, filed an amended complaint in the U.S. District Court for the District of Columbia against the federal Bureau of Prisons and various BOP officials, alleging they had “engaged in a pattern of conduct over the past several years that has had the effect of debarring Bannum from receiving any new contracts from the BOP.” The lawsuit requested declaratory relief, a permanent injunction and $10,000,000 in damages.

Bannum’s suit was unusual in that the company has been a BOP contractor since 1984 and in good standing for close to three decades. Until 2011, the company operated up to 17 halfway houses, also known as Residential Reentry Centers. But after a falling out with the BOP, that number plummeted to six.

According to Bannum, the issue was twofold: various federal officials were angry that the company dared to assert its contractual rights when the BOP violated them, and several high-ranking BOP employees left their positions and were subsequently hired by Dismas Charities, Inc., a Bannum competitor. Those employees included defendants Osoria Toston, formerly a BOP Contract Oversight Specialist and now a Dismas employee, and Andrea Johnson, formerly a BOP Community Corrections Regional Coordinator and now a Regional Vice President with Dismas. Other defendants in the suit were BOP Director Charles E. Samuels, Jr., Catherine Scott, Timothy Barnett and Cheryl Dennings.

The trouble, according to Bannum, started in 1993 when the company filed suit against the BOP in the U.S. District Court for the Western District of Tennessee, seeking to “level [the] playing field” with respect to the awarding of BOP contracts. Bannum settled the case after the BOP agreed to play fair when awarding halfway house contracts.

Following that settlement, the BOP initially acted in good faith and stopped its unfair practices for awhile, but then proceeded to “engage in a systematic effort to damage Bannum’s business reputation, to ultimately prevent it from being awarded contracts, and to put it completely out of business,” according to the amended complaint. This pattern of conduct involved spreading rumors and making inflammatory statements about the company, refusing to pay invoices, conducting malicious investigations, diverting released prisoners to halfway houses operated by competitors and filing erroneous poor work performance ratings.

The BOP filed a motion to dismiss in April 2016, which was granted by the district court on October 28, 2016. The court held that the United States was the only proper defendant in the case pursuant to the Westfall Act, 28 U.S.C. 2679. Since the federal government had not waived its sovereign immunity, Bannum’s tort claims were barred under the Federal Tort Claims Act, and the company had “not exhausted its administrative remedies.” With respect to the suit’s due process claim, the court found that Bannum had failed to state a claim. See: Bannum, Inc. v. Samuels, U.S.D.C. (D. DC), Case No. 1:15-cv-01233-ABJ.

Although the company’s lawsuit was dismissed, it served to shine a light on the murky waters of the federal contracting process and the “revolving door” of BOP employees who retire or resign, go into private practice and then exert influence on their former co-workers in charge of awarding millions of dollars in lucrative private-sector contracts. 

Related legal case

Bannum, Inc. v. Samuels


 

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