SOURCE: Corrections Corporation of America (CCA)

Corrections Corporation of America (CCA)

August 20, 2014 16:05 ET

CCA Issues Response to Announcement of Resolution With Former California City Correctional Center Employees

NASHVILLE, TN--(Marketwired - Aug 20, 2014) - Corrections Corporation of America (CCA), America's largest owner of partnership correctional and detention facilities, issued the following response to media reports that CCA violated Federal Service Contract Laws at the California City Correctional Center (CCCC).

Steve Owen, senior director of public affairs for CCA said, "Any suggestion that we were in violation of contract requirements in this case is incorrect. Our company was in full compliance with the original contract that was in place at CCCC."

From October 2010 to December 2013, the federal government and the city of California City were parties to an Inter-Governmental Services Agreement (IGA) for detention services. In turn, the government of California City contracted with CCA to provide detention services at CCCC. Neither the original IGA nor the subcontract included provisions requiring wages and benefits to be paid based on the Service Contract Act Area Wage Determination.

In 2012, the U.S. Department of Labor (DOL) began a routine compliance review at CCCC. In the course of that review, the DOL concluded that the Service Contract Act Area Wage Determination should have been incorporated when services commenced. Shortly after the DOL reached that conclusion, the federal government issued a retroactive contract modification. That retroactive contract modification required the parties to pay employees at CCCC based on the Service Contract Act Area Wage Determination from the commencement of services in October 2010 to the conclusion of services in December 2013. 

"Once the retroactive contract modification was incorporated, we worked cooperatively and diligently with the DOL to identify the former CCCC employees entitled to back pay," said Owen. "At this time, other than three employees who we have not been able to locate, all employees have been paid in full."

In accordance with the process provided for under the Service Contract Act, a request for an equitable adjustment has been submitted to the federal government. In keeping with the Service Contract Act and CCA's prior course of dealing with its federal and local government partners, CCA anticipates that the contract price will be adjusted as a result of the retroactive contract modification, since those costs were not known or considered as part of the original contract pricing. The financial impact of the retroactive contract modifications were initially reflected in CCA's financial statements during the fourth quarter of 2013, as previously disclosed in its earnings press release issued in February 2014, and in filings with the Securities and Exchange Commission.

"We greatly value our employees and the important work that they do to keep our communities safe and secure," said Owen. "We've worked in good faith throughout this process to make sure the retroactive modification incorporating Service Contract Act rates, which was not in the original contract all parties agreed to, was implemented."

About CCA

CCA, a publicly traded real estate investment trust (REIT), is the nation's largest owner of partnership correction and detention facilities and one of the largest prison operators in the United States, behind only the federal government and three states. We currently own or control 52 correctional and detention facilities and manage 12 additional facilities owned by our government partners, with a total design capacity of approximately 84,500 beds in 19 states and the District of Columbia. CCA specializes in owning, operating and managing prisons and other correctional facilities and providing inmate residential, community re-entry and prisoner transportation services for governmental agencies. In addition to providing the fundamental residential services relating to inmates, our facilities offer a variety of rehabilitation and educational programs, including basic education, faith-based services, life skills and employment training and substance abuse treatment. 

Forward-Looking Statements

This press release contains statements as to the Company's beliefs and expectations of the outcome of future events that are forward-looking statements as defined within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) our ability to meet and maintain REIT qualification tests; (ii) general economic and market conditions, including the impact governmental budgets can have on our per diem rates, occupancy and overall utilization; (iii) the availability of debt and equity financing on terms that are favorable to us; (iv) fluctuations in our operating results because of, among other things, changes in occupancy levels, competition, increases in cost of operations, fluctuations in interest rates and risks of operations; (v) our ability to obtain and maintain correctional facility management contracts, including as a result of sufficient governmental appropriations and as a result of inmate disturbances; (vi) changes in the privatization of the corrections and detention industry, the public acceptance of our services, the timing of the opening of and demand for new prison facilities and the commencement of new management contracts; (vii) changes in government policy and in legislation and regulation of the corrections and detention industry, which may adversely affect our business, including the impact of the Budget Control Act of 2011 on federal corrections budgets, California's utilization of out of state private correctional capacity, and the impact of any changes to immigration reform laws; and (viii) increases in costs to construct or expand correctional facilities that exceed original estimates, or the inability to complete such projects on schedule as a result of various factors, many of which are beyond our control, such as weather, labor conditions and material shortages, resulting in increased construction costs.

CCA takes no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release.

Contact Information

  • Contact:
    Steve Owen
    (615) 263-3107