- -..

~.~-.~..

. . -...- - -...- - -....

-~----~---

..

--~

...-

...-

-..

~-

..

ATTACHMENT A
EXHIBIT 1

....

--~~----

CV of Douglas A. Dawson
I received a Bachelor of Science in Accounting from the University of Maryland in 1977 and a
Masters degree in Mathematics from the University of California at Berkeley in 1985.
I began my telephone career in 1975 as a test technician building telephone switches for Litton
Industries in College Park, Maryland. In this position I did system integration testing and learned in
detail how early digital switches operate.
My next telephone job began in 1978 with 101m Staurulakis, Inc. ("lSI"). lSI is a telephone
consulting firm that specializes in consulting for independent telephone companies (those smaller
telephone companies that were not part of the Bell System). In this job, I worked on separations cost of
service studies for independent telephone companies. In this role, I had my first detailed exposure to
developing the costs of providing telephone service. Additionally, I performed numerous traffic studies
for switches. These studies were used to determine the patterns of customer usage for switches and
costs, as weU as the most efficient way to configure the switch and the netWork.
Next, in 1981, I became a Staff Manager of Industry Relations at Southwestern £lell Telephone'
Company, now known as SBC, in St. Louis, Missouri. My functions there included tracking issues that
impacted BeU's relationships with the independent telephone industry, calculating and negotiating
various interconnection and settlement rates between companies for local calling and other network
arrangements, and overseeing the review of an independent telephone company's traffic and toll cost
studies. In performing the traffic studies, I had hands on experience working with measuring usage on a
number of different brands of switches. I also served for a period of time as a member of the rate case
team for the Missouri operations. In working on rate cases, 1 further developed my knowledge of
calculating and developing telephone costs.
In my next position, beginning in 1984, I gained operating telephone company experience at CP
National in Concord, California. CP National was a holding company that owned, among other entities,
13 telephone companies. I had several jobs with increasing responsibility and ended as Director of

Revenues. In that capacity, I oversaw a large group that perfonned telephone accounting, separations
and traffic engineering studies for a seven-state area. My group also monitored earnings. developed
access and local rates, maintained tariffs, filed rate cases, and monitored and commented in state and
federal regulatory proceedings. In this role, I was directly responsible for setting rates and for defending
those rates in front of various regulatory authorities. Thus, I testified in a number of rate-making cases
and regulatory proceedings in California, Texas, Nevada, Oregon, Arizona and New Mexico. Part of my
responsibility at CP National included calculating costs and setting rates for four separate operator
centers where the company maintained telephone operators for completing collect and other types of
operator-assisted calls. While at CP National, I also becarne responsible for earnings monitoring and
rate case development for electric, gas and water properties.
In my next position, in 1991, I again joined John Staurulakis, Inc. in various capacities. My final
position there was as Director of Special Projects. In that capacity, I oversaw all projects and clients
who were not historically part of JSI's core cost separations business. Some of the projects I worked on
included assisting clients in launching long distance companies and Internet service providers; studying
and implementing traditional and measured local calling plans; developing optional toll and local calling
plans; perfonning embedded, Total Element Long-Run Incremental Cost ("TELRIC") and incremental
cost studies for products and services; assisting in local rate case preparation and defense; and
conducting cross-subsidy studies determining the embedded overlap between telephone services. In this
role, I gained more in-depth experience in long distance rate setting and the regulatory process. I also
became thoroughly familiar with the underlying costs of running a long distance company and providing
telephone service.
In 1997, I became a founder and owner of Competitive Communications group, LtC. My title at
CCG is President and Chief Technical Officer, and I am directly responsible for all of the consulting
work performed by our company. The company began with 3 employees in April 1997 and currently
has 18 employees.

2

As a firm, we offer the following telephone consulting products and services that are needed by
companies that are launching new ventures or entering new markets, all under my direct control and
supervision:
•

Engineering services, including: analysis of telephone hardware for switching and
networks; detailed network design and development; developing switching
specifications and provisioning new switches into service; developing RFPs and
analyzing vendors;

•

Development of financial business plans;

•

Market segmentation studies to better understand customers;

•

Competitive research, including rates and services of other providers;

•

Strategic analysis and planning;

•

Marketing plans;

•

Regulatory work, including: certification of companies to provide service;
development and filing oftariffs; and regulatory compliance oversight;

•

Implementation assistance for start-up companies, including: negotiating
interconnection agreements with carriers; negotiating network implementation .
and collocation of equipment with other carriers; choosing vendors for billing,
back office, operator services and other external requirements; ordering trunks
(telephone lines that go between different networks); detailed hands-on project
management;

•

Assistance in developing and implementing accounting systems;

•

Development of rates; and

•

Calculation of costs.

Previous Testimony
Illinois Commerce Commission. 2003. Docket No. 02-147. Complaint against Verizon concerning
Interconnection Issues and Sharing of Facilities.
West Virginia Public Service Commission. 2002. Case No 02-0809-T-P. Verizon 271 Proceeding.

3

West Virginia Public Service Commission. 2002. Case No 02-0254-T-C. Complaint against Verizon
concerning the Use of Numbers and the Sharing of Facilities.
Maryland Public Service Commission. 2002. Case No 8910. Complaint against Verizon concerning the
Availability of Dark Fiber.
Maryland Public Service Commission. 2002. Case No 8911. Verizon 271 Proceeding.
Maryland Public Service Commission. 2001. Case No 8881. Complaint against Verizon concerning the
Sharing of Facilities.
Washington Public Service Commission. 2001. Docket Number UT-000883. Investigation into Rate
Zones and Loop Pricing.
New York Public Service Commission. 200 I. Investigation into Unbundled Loop Pricing.
New York Public Service Commission. 2000. Case No. 99-C-1337. Dispute concerning Unbundled
Network Pricing between ALLTEL and Fairpoint Communications, Inc.
New York, Court of Claims. 2001. Case No. 103138. Competition in Prison Calling.
Federal Communications Commission. 2002. Docket CC-01-338. Facts and Data supporting CLEe
Competition.
Prior to these proceedings, I also testified approximately 50 times in the mid-1980's at the state
Commissions in California, Nevada, Oregon, Washington, Texas, New Mexico, Arizona and Utah.
These filings were all done on behalf of CP National, a regulated telephone company. Filings included
such topics as the establishment of access charge rates, the setting ofrates in local rate cases, the
deregulation of CPE, payphone issues, inside wiring and other issues.

4

ATTACHMENT A
EXHIBIT 2

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 10 OR lS!d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
(Mark. Onel
[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15!d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31. 2000

Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 151dl OF THE SECURITIES EXCHANGE
ACT OF 1934
to

For the transition period

Commission File Number 333-33639
EVERCOM, INC.
(Exact Name of Registration as Specifiea in its Charter)

Delaware

75-2680266
II.R.S. Employer

(State or Other Jurisdiction of

Incorporated or Organization)

Identification Number)

8201 Tristar Drive
Irving. Texas
(Address of Principal
Executive Offices)

75063
(Zip Code)

Registrant's telephone number, including area ccde-972.9S8.3i31

Securities registered pursuant to Section 12 (b) of the Act.
None

ITitle of Each Class)

Securities registered pursuant to Section 12(9) of the Act.

None
(Title of Class)

EVEReOM. INC.
Table of Contents
form 10-K Report
December 31. 2000
PART I,
Item 1.Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item

Item
Item

2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3. Legal Proceedings ..................................................... 15

4.Submission of Matters to a Vote of Security Holders .•................. 15

PART II,
Item 5.Market for Registrant's Common Equity and Related
Item
Item

Stockholders Matters .... ,', . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.Man~gement's Discussion and Analysis of Financial
Candi t ion and Resul ts of Ope rat ions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Item

7aQuantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . 36

Item
Item

PART
Item.
Item
Item
Item

a.Financial Statements and Supplementary Data .........•................. 37
9.Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ................................... 63
III,
·lO.Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . 64
11.Executive Compensation ....•........................................... 68
12.Security Ownership of Certain Beneficial Owners
and Management .............................•.......................... 74
13.Certain Relationships and Related Transactions ........................ 77

PART IV,
Item 14.Exhibits, Financial Statement Schedules. and
Report.s on Form 8-K ................................................... 79
Signatures
............................................................... 84

PA.'q'I' I
ITEM 1.

BUSINESS

General
£vercom, Inc. lthe ~Company~) is an independent provider of colle~t and
prepaid call ing services to local.
county,
state. federal and private
correctional facilities in the U.S. The Company derives subs~an~ially all c! i~s
revenues from its operation of inmate telecommunications systems located 1n
correctional facilities in 43 states and the Dis~rict of Columbi~.
The compan¥'s inmate telecommunications bUSiness consists of o~nin9,
operating. servlclng. and maintaining a system of automated operator switches
and telephones located in correctional facilities. Generally. inmates may make
only collect or prepaid calls fr~ correctional facilities. The Company
generally enters into multi~year agreements with cnrrer.tional
facilities
pursuant to which the Company serves as exclusive provider of telecommunications
services to inmates within the facility. In exchange for the exclusive serVlce
~ights,
the Company pays a percentage of its revenue. from each ccrrec~ional
facility to that facility as a commission. Typically, the Company installs and
retains ownership of the telephones ana related equipment.
significant costs typically associated with providing telecommunication
services to correctional facilities include uncollectible accounts, network. and
billing ~xpenses. The Company has developed an integrated call management and
billing system to help control these expenses. This system limits inmates to
collect or prepaid calls; validates and evaluates the payment history and
account statuS of each number dialed; confirms that the destination number has
not been blocked; and processes call records for billing through a third party.
To facilitate billing, the Company has encered into 29 separate agreements with
regional bell operating
companies ("RBOCs") and local exchange carriers
("LECs"). allowing the Company to primarily bill dir~ctly through the RBOCs and
LEes although the Company utilizes third party billing services to a limited
extent.
The Company uses i~s ~xperience in billing. collection. and control of
uncollectible accounts to offer specialized billing and collection services to
other inmate telecommunications service providers. These services are referred
co as the Company's "solutions" services. The Company provides Solutions
services to a major RBOC. under which the Company performs all of the
validation. billing. and collection services tor the RaOC's inmate calls. The
Company provides similar services to several other inmate telecommunications
providers.
The company was formed in December 1996 to consummate the acquisitions of
AmeriTel Payphones. Inc. ("AmeriTel") and tal ton Telecommunications Corporation
and its subsidiary ("7alton Telecommunications"). In addition to the acquisition
of its predecessors, AmeriTel and Talton Telecommunications. the Company also
acquired the operations of Tri-T, Inc.
("Tataka") on April 2, 1997, securit.y
Telecom Corporation ("STC") on June 27, 199'1, Correctional Communication_
Corporation ("CCC") on July 31. 1997. the inmate telecommunications division of
Communications Central. Inc.
("InVision") on Octol::ler 6. 1997, the inmat.e
telecommunications division of North Am~rican InTeleCom ("NAI" 1 on December 1,
199i,
~h~ inmate
telecommunications division of Peoples Telephone company,
(hPTC") on December lB. 1997, the inma~e telecommunications division of ILD
Teleservices, Inc. ("ILD") on January 1, 199B, MOO Communications. Inc. ("MOG")
on February 1, 1999, Sar~toga Telephone Co •. Inc. ("Sara~oga") on July 1. 1998.
and the inmate telecommunications divisions of Alliance Tel-Com. Inc .• KR¥K
Communications. Inc., U.S. Connect, Inc., Tele-Communications,
Inc .• and
Lake-Tel. Inc.
(collectively, ~Alliance") on June 1. 1999. (collectively the
"AcquiSitions").

Special Note Regarding Forward-Looking Information
Certain
statements in this Annual
Report on Form 10K
cons:i:u:e
forward-looking statements. These forward-looking statements are all statements
that are not statements of historical fact or that might otherwise be considered
opinion, belief. or projection. These forward-looking -statements involve known
and unknown risks. uncertainties, and other factors that may cause the actual

resul tIS.
leve Is of act. i vit.y, performance, or achievement.s of the Cct\',pany, or
industry results, to be materially different from any future results.
le'.. els o!
activity,
performance,
or
achievements
expressed
or implied by such

forward-looking statements. The risks, uncertainties. and other factors to which
forward looking statements are subject include. among others, those se~ for~h
under the caption ~Risk Factors". All subsequent written or oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by such factors.
In some cases. forward-looking statements can be identified by terminology
such as "may." "will," "should." "expects." "plans." "anticipates,1I "believes,"
"estimates," "predicts," "potential, ~ or "continue" or the negative of such
terms or other comparable terminology. Although the Company believes that the
assumptions and expectations reflected in such forward-looking statements are
reasonable, as a result of the foregoing and other factors. no assurance can be
given as to future results, levels of activity, performance, or achievements,
and neither the Company nor any other person assumes responsibility for tne
accuracy
and
completeness
of
.such
forward-looking
statements.
All·
forward-looking statements included in this Annual Report on Form 10~K are based
on information available to the Company on the date hereof. and the Company is
under no duty to update any of the forward-looking statements after the date
hereof.
Industry OVerview
The U.S. has one of the highest incarceration rates of any country in the
world. According to the United States Bureau of Justice Statistics, the number
of inmates incarcerated in federal and state prisons and in city and county
correctional facilities increased from 1.1 million at June 30, 1990 to
approximately 1.9 million at June 30, 2000. Of this total, the Company estimates
approximately two-thirds were housed in state and federal prisons, with the
remainder in city and county facilities. The United States Bureau of Justice
Statistics also reports that the number of inmates incarcerated in the U.S.
increased by 3\ between 1999 and 2000.
The inmate
telecommunications
industry
places
unique
demands on
telecommunications systems and service providers. Security and public safety
concerns
associated with inmate telephone use require that correctional
facilities use call processor technology. which allows the facilities to control
inmate access to certain telephone numbers and to monitor inmate telephone
activity. In addition, concerns regarding fraud and the called parties' failure
to pay for inmate collect calls require systems and procedures unique to this
industry.
Inmate telephones in the U.S. are operated by a large and diverse group of
service providers. Large telecommunications companies such as R8DCs. other LEes,
and interexchange carriers ("IXCs" j such as AT,T Corp. ("AT'T"j, MCl WorldCom,
and Sprint Corporation provide inmate telecommunications in addition to other
serviees. In addition. independent public pay telephone and inmate telephone
companies also focus on this market segment. The Company estimates that. as of
December 31, 2000, the

Products and Services
The Company has developed its products and services eo meee ehe needs of
the inmate ~elecommunications markee. The Company offers the following products
and services as part of its core inmate telecommunications business:
la)

Inmate Collect Call Services. The Company provides collect call services on
an exclusive basis to its inmate facility customers during the term of the
facility's
contract.
The
majority of calls made by inmates from
correctional facilities are collect calls, with the balance of the calls
being prepaid which in combination comprise a majority of the Company1s
total ~evenues.
Ib)
Prepaid Services. The Company provides prepaid services to inmates and
called parties. Prepaid services either allow the recipient of an inmate
call to pay in advance for collect calls placed to the recipient or allow
inmates to pay in advance for telephone calls placed by that inmate. The
Company sells prepaid accounts directly to the called parties. The Company
also sells prepaid accounts to correctional facilities a~ a discount to
their face value. which facilities in turn sell at face value to inmates at
those facilities. Prepaid services have minimal associated uncollectible
account expenses and minimal billing and collection costs. The Company's
'prepaid services revenues comprise a small percentage of the Companyl,s
7evenues. but these revenues have been increasing and are expected to.
continue increasing as a percentage of total revenue due to the Companyls
prepaid sales initiatives and overall increasing popularity.
Ie)
Solutions Services. The Company uses its experience in billing and
collections and management of uncollectible accounts to offer specialized
solutions services for other inmate telecommunications service providers.
The Company is pursuing opportunities to market these services to RBOCs,
LEes. IXCs.
and other inmate telecommunications providers. The Company
curren~ly
provides Solutions services to a major RBOC, under which the
Company performs all of the validation. billing, and collection services
for the REOC's inmate calls. Under the terms of the agreement.
the Company
acquires at a discount the related accounts receivable from the RBOC for
the calls that the Company processes. When the receivables are purchased,
the Company accepts responsibility for all validation, uncollectible
accounts. billing and collections costs. with no recourse to the RBOC.
However. under the terms of the agreement.
all purchased receivables must
be processed and validated through the Company's call management and
billing system. The Company's revenues from this service equal the
difference between the face value of the receivables purchased and the
amount it pays the RBOe for the discounted accounts receivable. The
contract term is through January 31, 2003 and has no minimum volume
commitment. In February 2001, the RBOC notified the Company of its plans to
exit the inmate market by the end of 2002 and consequently.
the Company
expects its revenues to gradually decline from this contract over the next
two years. The Company may not have the ability to replace this revenue
although it is reasonable to expect that some portion of this RBoe'.
customers will be converted to Evercom's traditional inmate business. The
Company provides similar Solutions services to several other inmate
telecommunications providers.
Id) Call Processor Services. The Company has developed proprietary call
processor technology to service its correctional facility accounts. The
Company also markets this technology to other inma~e telecommunications
providers and derives revenue from the technology in the form of hardware
and software sales.

Billing Arrangements
The company uses direct and third party billing agreements to bill and
collect phalle charges. Under direct billing agreements ",·itbo LE:s.
t!le LEe
includes colll!:ct. call charges for the Company's se!,pices on the local telephone
bill sent to the called party. The Company generally receives payment from the
LEe for such calls lO to 60 days after the end of the month in ~hich :he calla
are sul:lmittea to the LEC for billing. The payment received by the Company is net
of a service fee, write-offs of uncollectible accounts. and an est~mated reserve
for future uncollectible accounts.
Unlike

many

smaller
independent
service
providers
with
lower
traffic. the Company has been able to enter into direct
hilling agreements with local eXChange carriers ("LEes") in most of its markets
because of t~e Company's high market penetrat1on. The Company'. ~ncreased
telecommunic~tions
traffic has enabled the Company to enter into 29 d~rect
billing arrangement~ that allQ~ th~ Company to direct bill approximately 95\ ot
its collect call revenues in December 2000.
telecommunic~tions

In the absence of a direct billing arrangement.
the company bills and
COllects its fees through a third-party billing and collection clearinghouse
that in turn has a billing and collection agreement with the LEC. When the
Company employs a third-party billing and collection clearinghouse. the account
proceeds are forwarded by the various LECs to the clearinghouse. which then
f9rwards the proceeds to the Company.
less a proceSSing fee that varies from 2\
to 3\ of billed revenues.
The Company's specialized call management and billing system integrates itl
direct billing arrangements with LECs with its call blocking. validation. and
customer inquiry procedures. This system has also provided the company with the
opportunity to market its billing and collection services to third parties under
its Solutions services.
Systems
The company utilizes a call management and billing system that consists of
purchased and internally developed software
applications and specialized
equipment. This system limits inmates to collect or prepaid calls. validates and
verifies the payment history and account status of each number dialed for
billing purposes, and confirms that the destination number has not been blocked.
The Company installs its internally developed call management system (nCAMft'
within facilities that provides features such as call monitoring and recording
capability. The Company also installs third party call processor technology
primarily in smaller facilities.
The company's database of telephone numbers and call activity provides
valuable data to assist the Company in reducing uncollectible accounts and
allows the Company to provide extensive call activity report. to correctional
facilities and law enforcement authorities. These include reports of frequently
called numbers, calls of longer than normal duration. and calls by more than one
inmate to the same number, which can assist law enforcement authoritie. in
connection with ongoing investigations.
Other Operations
The company owns.
operates.
services.
and maintains a system of
microprocessor controlled public pay telephones that are ancillary to its inmate
telecommunications business. and occaSionally installs public pay telephones a8
an accommodation to. or pursuant to a contract requirement imposed by. its
correctional facility customers.

Compet.it.ion

In the inmate telecommunications businesa. the Company competes with
numerous independent providers of lnmate telephone systems. including aeocs.
LEes. and lXCs. Many of the Company's competitors are larger and better
capitalized with significantly greater financial resourCeS than the Co~pany. The
Company believes that the principal
competitive
factors in the lnmate
telecommunications
industry are (i) rates of
commissions
pald to the
corr~ct.ional
facilities.
tii) system features and functionality;
(iii. system
reliability and service;
eiv) the ability to customize inmate call processlng
systems to the specific needs of the particular correctional facility,· and tv}
relationShips with correctional facilities.
Inmate telephones in the U.S. are operated by a large and diverse group of
service providers. Large telecommunications companies such as RBOCs. other LECs.
and IXCs such as AT&T, MCl WorldCom. and Sprint Corporation provide inmate
telecommunications 1n addition to other services. ln addition. indeoendent
public p'ay telephone and inmate telephone companies also focus on this· market
segment.
Regulat.ion
The inmate telephone indust.ry ia regulated at the federal level by t.he
communi cat. ions commission (the "FCC") and at the st.ate level by the
public utility commissions of the various states. In addition. from time to
time. legislation may be enacted by Congress or the various state legislatures
that affects the telecommunications industry generally and the inmate telephone
industry specifically.
Court decisions interpreting
applicable laws and
regulations may also have a significant effect on the inmate t.elephone industry.
Changes in existing laws and regulations. as well as the adoption of new laws
and
regulations
applicable to the activities of the Company or other
telecommunications business could have a material adverse effect on the Company.

:F'~dera1

Federal Regulation
Prior to 1996. the federal government's role in the regulation of the
inmate telephone industry ~as limited. The enactment of the Telecommunications
"-ct of 1996 (t.he "Telecom Act"). however. marked a significant change in the
scope of federal regulat.ion of inma~e telephone service. Section 276 of the
Telecom Act directed the FCC to implement rules to overhaul the regulation of
the provision of pay telephone service. which Congress defined to include the
provision of inmate telephone service.
Sefore adoption of the Telecom Act. LEes generally included inmate
telephone operations as part of their regulated local exchange telephone company
operations. This allowed the LEes to pool revenue and expenses from their
monopoly local exchange operations with revenue and expenses from their inmate
t~l~phcne
cpe4a~ions.
This commingling ot operations made possible the
subsidization of the LECs' inmate operations through other regulated revenues.
The LEes were also able to shift certain costs from their inmate operations to
their local exchange monopoly account.. In particular, the LEes ~ere able to
pool the bad debt from their inmate operations with their other bad debt.
Because independent inmate telephone service providers act as their own carrier.
they bear the risk of fraudulent calling and uncollectible calls and other bad
debt. Bad debt is substantially higher in the inmate ~elephone indus~ry than in
other segments of the telecommunications industry. The LEes' practice of pooling
bad debt shifts the high costs of bad debt from inmate telephone operations to
the expense accounts of other LEe operations. presenting a vehicle for the
cross-subsidization of the LECs' inmate operations. 7his. in turn. has allowed
the LECs to offer commissions to correctional facilities that are

PART II

ITEM 5, MARKET FOR REGISTRANT' S CO~IMON EQUITY AND RELATED
STOCKHOLDER MATTERS

There is currently no
established
public
Registrant's issued and outstanding capital stock.

trading

marke:

As of December 31. 2000.
there were fifty· two holders of che
Class "A" common stock (the "Common Stock") and four holders of the
Class ItB" common stock (the Class "B" Common Stock) .

for

the

Compan:·· s
Company's

There have been no cash dividends declared on the Common Stock from the
period January 1,
1996.
through December 31.
2000. The Indenture
(the
"Indenture")
governing the Company's Series "A" and Series "8" Senior notes Due
2007 and the Company's senior credit facility.
as amended and restated <the
"Senior Credit Facility") contain certain restrictive covenants that are likely
to materially limit the future payment of dividends on the Common Stock. See
"Management.'s Discussion and Analysis of Financial Condition and Results of
Operations."

The following table sets forth information with respect to all securities
sold by the Company for the Company.' s. last fiscal year that were not registered
under the Securities Act of 1933, as amended (the "Securities Act"'. All
securities sold and not registered were sold in transactions not involving a
public offering under Section 4 (2) of the Securities Act.

Securities sold
Date

Person
Acquiring
Securit.ie.

Use of
Amount

·None·

consideration

Proceed,

Terms of
Conversion of
t~erci.e

ITEM 6: SELECTED FINhNCIAL DATA - (in thousands)
The following selected consolidated financial data of the Company and its
combined predecessors for each o~ the five years in the period ended Decembe~
31, 2000, have been derived from the Company's audited financial statements.
The selected
financial
data should be read in
conjunc~io~
with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and the no~es thereto
included elsewhere in this Form lO-K.

CQ<:\blned
Predecessors
Eleven
MOnttls

One Month
Ended
Dec 31.
In6

Ended
No\' 30.
1996

Open.t.ing Oete:
Operat.l.ng Revenue. ..............
Oper&'tlng Expen.e. ,
Teleco!ll!nuniclt ion co.ts
"leil1ty eOlllll'.i •• 1ona ..
r lI! Ie!. operatlonli ond
lOla inten.nee ...........
Sellillg. •general and
_dllll.nllltrltive ...
DepreClltloll ond 1 mpa.l:nnent
Arnorti:.ation ot intAngibles
Restructuring ond et.h.er
':h&rgel lincomel .......
Total eFenting expen.e.

..........

Operating Income !len)
Other lincoftlel expense. :
Interest. expen ••• not ........
Other lineollll!) expenses. no<
Tot.al ether (incol!le)
expense
InCOIMI !loaa) before incolM! taxes
.n' extraonHnary los.
E.xtr&Ordlnary 10 •• . . . . . . . . .
!nccllle "X (bend it) expense

.

Net Income (Lou)

OTHER PA.TAI

............

EBITOA
Net c0I5h provided by rUsed in'

"'

cperolt1ng aet1viu ••
Net ca.h 'U •• d in lrlVellting
aetiviti ••
Net caah provided by fused in)
flnancing .et.ivitl •• ...
Capnal expenditures
Ratio Or •• rnlngs
%lX.11
charglt.
.................. "
Deficieney
earnings to f il(ed
charg.a ........................

.....................

'"0'

BAl.1.H.,.

SHEET

'0

'"

YEARS [NOtO DECEMBER 31.
19.91

199'

19.99

53.1Ii63

5.506

'1.7"73

S:2:25,2U

5236,101

5234.510

.23.31 i'
13.962

;:.2U
1. "55

n.171
25.124

".143
'1.206

10 .... 316
'1.359

95.622
75.70:

l.eu

'"
III
'"'41

4.543

, .11"

6.42'

6.56'

8.540
2.219
14.243

11.661
'.U2
26.331

17.214
7.200
21.5:27

17.'4'
•. 144
H.9:0

40'

1.743
.- ....
,-231 .301
.. _- .. -.-

3.921
1. 53B
1.7U

...

----_._ .. --"--'-'
5.197
46.914
....
-... - ----....
6.

,n

1. .. "

30'

."

._------9),540
..- .... _-

228.03$

._-......

... -.. __ .
211,804
_--_ .
....

'.'"

16.0081

11.76')
11.ll1
1'761

In)
..-.,- ...

19.'1.

15,"0'
19.3&2

n.45'

... _ .."
_.'

- _.... _.-

...... -'-

_._-_._Lni)
..

.... -...r7'-

1551
... _.....

1.496
--_._._--

.. _-- ....
'"

.. _11.062
.. -.- .

.-. 19.402
-... _.

_

...19.451
-._-.

19 .307
.........

( 201

(2t31

S.llll

tl2, e2J)
". '740
(E42 I

(25,410)

........".
1.Hi

.........

. _.... , ..

_

J.214

.............

...............
"

.............

......... .........

9.936

S

1. 1t1

{231

260)

."

.. _.... -

13,601)

(lO.ns)

45.

.. -.-".'

'"

-_.'-'-"

...........

(525.886)

(511.115)

H.'771

52",2st

537.500

6.04a

... 2Sa

15. na

20.209

(SH.9271

(S4.1S4)

$38.125

7.300

fl.419)

17.515)

147.252)

190. 7 57\

(23.3141

112.1311

il2.1UI

48.9"

".

92.19)

13.0B
13.592

D.46)1

8.063

IS,eUI
10.222

$213

S12,129

525.410

$10,685

$l.601

1.'"
1'2.10'

4,1ts
162.4"

172, '"

146,61"

I !>4i J

.. ,

2.80'"

8.39"

DAT~:

(JoT END 0' YVoAI
C•• h .nd ca.h eQ\livalenta

Total ••• et..
Total debt
(including c::'Urrent maturities)
Total stockholder.' equi ty
Ideflc::it) ................

Sll
34.708

80.134

".

7, ""1
189,311

1.692
191,4"

14.845

153. llS

1615.'36

S 110.413

9,361

' ... 11

IS 10.020)

"

36.113)

IS

42. ".)

'S

41.(26)

(1)

(2)
(3)

For the purpose ot t~is Form lO-K. EE!TDA means income before interes~.
income taxes. depreciatlon, and amortlzation. Although £BITDA 1S not a
measure of performance calculated in accordance with generally accepted
accounting principles, t!'le Corr.pan)" has included informacion con:::erning
EBITDA in this Form lO-K because it is commonly used by ce~tain investors
and analysts as a measure of a company's ability to se~ice its dee~
obligations and is a component of the Company's debt compliance ~atios.
EBITDA should not be used as an alternative to, or be considerea more
meaningful than operating income, net income. or cash flow as an i~dicator
of the Company's operating performance.
Capital expenditures include only amounts expended tor purchases of
property and equipment and the implementation of facility contracts and
excludes cash outflows for acquisitions.
Earnings are defined as earnings (loss) before income taxes from continuing
operations and fixed charges. Fixed Charges are defined as interest expense
and a portion of rental expense representing the interest factor, ""hicn the
Company estimates to be one-third of rental expens~. and ~mortization of
deferred finanCing expense. This calculation is a prescribed earnings
coverage ratio intended to present the extent to which earnings are
~ufficient to cover fixed charges, as defined.

I7EM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The ~ollowin9 discussion and.analysis of the Company's financial condition
and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this report. Certain
information ccntained in the discussion and analYSis set forth below includes
forward-looking statements that involve riSKS and uncertainties. See "--Special
Note Regarding Forward-Looking Information."
overview
The Company is an independent provider of collect and prepai~ calling
services to local. county. state. and private correctional facilities in the
U.S. The Company derives substantially all of its revenues from its operation ot
inmate ~elecommunications systems located in correctional facilities in 43
states and the District of Columbia. As of December 31. 2000. the Company served
1,936 correctional facilities.
The Company's inmate telecommunications services consist of collect call
and prepaid services. The Company enters into multi-year agreements (generally
three to five years) with the correctional facilities. pursuant to which the
Company serves as the exclusive provider of telecommunications services to
inmates within each facility. In exchange for the exclusive service rights, the
Company pays a percentage of its revenue from each corre~tional facility as a
commission to that facility. Typically. the Company installs and retains
ownership of ~he telephones and related equipment and provides additional
services to correctional facilities that are tailored to the specialized need.
of the correctional industry and to the requirement. of the individual
correctional facility, such as call activity reporting and call blocking. The
Company also gene~ateB revenues from public pay telephones that are ancillary to
its inmate telephone business.
The Company accumulates call activity data from its various installations
and bills its revenues related to this call activity through LECs or through
third~party
billing services. In addition, the Company accrues the related
telecommunications costs for validating. transmitting. billing and collection.
and allowances for uncollectible accounts based on historical experience.

from 33.1' in ~99S to 35.7\ in 2000. This increase is due primarily ~o
higher facility commissions on contracts obtained by :he Company throu9h
acquisitions. competition for larger facilities, and increased commission rates
on renewals. Commission rates are expected to gradually i-ncrease as a percentage
of revenues in the future. The overall commission percentage to total revenues
of 32.3' in 2000 includes the effect of the Solutions services provided under
the Company's agreements with a major RBOC and other inmate telecommunications
carriers, under which no commissions are paid.

period.

Field Operations and Maintenance. Field operations and maintenance consist
of maintenance costS associated ~ith inmate phones and related equipment. These
costs are relatively small and more constant components of operating expense.
Selling, General. and Administrative. SG&A expenses consist of corporate
overhead and selling expense. These costs are also relatively small and more
constant co~ponents of operating expenses.
Restructuring Costs. The Company integrated its acquired operations into
its existing operations. which resulted in a restructuring charge of $1.2
million in 1996.
Company History. The Company became the holding company for the operations
of its predecessors. ArneriTel and Talton Telecommunications. effective December
1. 19'96. The Company also acquired.the operations of Tataka on April 2, 1997,
STC on June 27, 1997, CCC on July 31, 1997, InVision on October 6, 1997, NAI on
December I, 1997, PTC on December lB, 1997. ILD on ~anuary 1, 1998. MOG on
February 1, 199B. saratoga on July I. 1998, and Alliance on June 1, 199~. The
Company has completed the Acquisitions, which have been accounted for using the
purchase method of accounting and the Company's results of operations therefore
reflect the operations of these companies only subsequent to the effective dates
of their respective acquisitions.

The Company's overall telecommunIcations costs as a percentage of revenues
of 40.8' for 2000 and 44.1' fo~ 1999 include the effect of the company's
solutions services provided to a major RBOC and otne% inmate telecommunications
carriers as discussed in "Overview." These Solutions services ex.~ibit higher'
telecommunication
costs as a percentage
of revenue than the Company'.
traditional inmate business.
Facility commissions increased by S4.3 million. from $71.4 million in 1999
to $75.7 million in 2000. Facility commissIons represented 30.1' of operating
revenues in 1999 and 32,)\ in 2000, an increase of 2.2\. The overall commission
percentage to total revenue includes the effect of the billing and collection
services providea to a major RBOC as discussed in "OVerview.- Commission
expenses as a percentage of revenue for the Company's eraditional inmate collect
business was 33.8\ and 35.7\ for the year. ended December 31, 1999 and 2000.
respectively. Facility commiSSions are expected to gradually increase as a
percentage of revenue in the future.
Field operations and maintenance costS increased by SO.3 million. from $6.4
million in 1999 to $6.7 million in 2000. Field operations and maintenance costs
represented 2.7' of operating revenues in 1999 and 2.8' of operating revenues In
2000, an increase of 0.1%. The Company has substantially completed its
consolidation
and integration of its acquisitions.
Consequently.
field
operations and maintenance costs are expected to be a relatively constant
component of the Company's cost structure.
,
SG&A costs increased by $0.5 million.
from $17.2 million in 1999 to $17.7
million in 2000. SG&A represented {,1' of operating revenues in 1999 and 1.6' of
operating revenues in 2000. an increase of 0.3'. This increase is pri~ar1ly due
to increased staffing to support enhancements to the Company's information
systems and to execute new sales initiatives.

Total depreCiation and amortization

costs decreased by S5.6 million.

from

$28.7 million in 1999 to $23.1 million in 2000. Depreciation and amortization
costs represented 12.1\ of operating revenues in 1999 and 9.8\ of operating
revenues in 2000. a decrease of 2.3\. The decrease as a percentage of operating

revenues is primarily due to amortization associated with the acquisitions ot
inmate facility contracts by the Company. The Co~pany amortizes a~quired inmate
facility contracts over each contract's remaining term at the acquisition date.
As the contract terms expire, the acquired inmate facility contracts become
tully amortized and overall amortization expense declines. Amorti:ation expense
will continue to be a substantial portion of the Company's operating expenses.
Other (income) expense, consisting primarily of interest expense, remained
relatively constant at $19.5 million in 1999 and $19.3 million in 2000.
Net Loss, The Company's net loss decreased by $7.0 million. from S11.1
million in 1999 to S4.2 million in 2000 as a result of the factors described
above.
EBITDA increased by $1.3 million from $37.5 million in 1999 to $38.8
million in 2000. EBITDA as a percentage of operating revenues increased trom
lS.8\ in 1999 to 16.6\ in 2000 due to the factors described above,

Although EBITDA i . not a measure of performance calculated in accordance
generally accepted accounting principle_.
the company haa included
info~tion
concerning EBITDA in this Form 10·K because it i& commonly used by
certain investors and analysts as a measure of a company's ability to service
its dent obligations and is a component of the Company's debt compliance ratios.
EBITDA should not be used as ~n alternative to, or be considered more meaningful
than, operating income. net income or cash flows as an indicator of the
Company's operating performance. Several of the Company's subsidiaries are
subject to

with

I

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements and Schedules

Page
Evercom,

Inc. and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent A\l.di tors' Report . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . 3 B

Consolidated Balance Sheets at December 31.
1999 and 2000 . . . . . . . . . . . . , . . . . . . . . . . . • . . . . , ..•..........•...•..••..•... 39

Consolidated Statements of Operations for each of the three
years in the period ended December 31.

2000 . . . • . . . . . . . . . . . • . • . • . . . . . . . . 10

Consolidated Statements of stockholders' Equity {Deficit}

For each of the three years in the period ended
December 31, 2000 . • . • . . . . . . • . • . . . . . . . . . . . . . . . • . . . . . . . • . . . . . . • • . . . • • . . . . 41

Consolidated Statements of Cash Flows for each of the three
. years' in the period ended December 31, 2000 .. _ . . . . . . . . . . . . . . . . . . . . . . . . . 42
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

SUPPLEMENTARY DATA:
Consolidated Valuation and Qualifying Accounts for each of
the three years in the period ended December 31, 2000 ..... , . . . . . . . . . . . . 62

i

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and
Stockholders of Evercom. Inc .. and

Subsidiaries~

We have audited the accompanying consolidated balance sheets of Evercom. Inc.,
and subsidiaries
(the "Company"} as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity (deficitl
and cash flows for each of the three years in the period ended December 31.
2000. Our audits alsc included the financial statement schedule listed in the
Index at Item 8. These financial statementS and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express

an opinion on the consolidated
schedule based on our audits.

financial

statements

and financial

statement

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining. on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made·by management,
as well as evaluating the overall financial statement
prese~tation.
We believe that our audits provide a
reasonable basis for our
opinion.
In our opinion,

such consolidated financial statements present fairly, in all
respects. the consolidated financial position of the Company as of
December 31, 2000 and 1999. and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
2000.
in
conformity with accounting principles generally accepted in the United States.
Also. in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the- information set forth therein.

material

DELOITTE & TOUCHE LLP
Dallas, Texas

June 1. 2001

EVERCOM, INc.AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STAT.MENTS

1.

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POL!C!;S
BUSINESS - Evercom.

Inc. and subsidiaries

(the "Company" J owns,

operates

and maintains telephone systems under contracts ~ith correctional facilitleS In
43 states and the District of Columbia. The Company was incorporated on Nove~ber
20, 1996, and effective December 1. 1996. acquired all of the outstanding equity
interests of Talton Telecommunications Corpo~aticn and AmeriTel Pay Phones, tnc.
The Company has grown through numerous subsequent acquisitions, as discussed in
Note 2.

The Company ace~mulates call activity from its various installations and
bills its revenues related to this call activity through major local exchange
carriers
("LECs"~ or through
third·party billing services for smaller volume
LEes, all of which are granted credit in the normal Course of business ..... ith
terms of between 30 and 60 days. The Company also provides solutions services in
the form of validation, billing and collection services for ~he inmate calls of
a major
regional
bell
operating
company
and several
other
inmate
telecommunication carriers. The Company performs ongoing credit evaluations of
its customers and maintains allowances for unbillable and uncollectible losses
b~sed on historical experience.
The Company operates in only one Dusiness segment as its operating
activities are related to the operation and processing ot collect and prepaid
calling services to local, county. state and private correctional facilities in
the United States.
PREPARATION OF FINANCIAL
STATEMENTS
The preparation of financial
statements in conformity with accounting prinCiples,
generally accepted in the
United States,
requires manBgement to make estimates and assumptions.
such 41
estimates of allowances and reserves for
unbillable
and
uncollectible
chargebacks that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
~RINCIPLES
OF CONSOLIDATION ~ The accompanying consolidated financial
statements
include the
accounts ot the Company and its wholly
owned
subSidiaries, Evercom Systems, Inc. and EverConnect, Inc. As of January 1. 1999.
the company merged most of its then existing subsidiarles into Talton InVision.
Inc .• also a wholly owned subsidiary at that time. Concurrent with the merger.
the Company amended Talton InVision,
Inc.'s Certificate of Incorporation to
continue its existence as Evercom Systems, Inc.

CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand
and investments with a remaining maturity at date of purchase of three month! or
less.
ACCOUNTS RECEIVABLE - Trade accounts receivable represent amounts billed
for calls placed through the Company's telephone systems to the various LEes or
third-party billing services, net of advance payments

----_._---_._-------------

received. and an allowance for u~billable and uncollectible calls. based on
historical experience. for estima~ed chargebacks to be made by the LE:s. Unde~
account advance agreements with various third-party billing services. advance
payments equal to a percentage of the outstanding billed receivables are
remitted to the Company when calls are submitted to the third-party billin3
service, ana the Company grants a lien to the third-party billing service on the
related accounts receivable for the advance. The remainder of the billed
receivable is paid to the Company, net of the advance amounts. after ~he
third-party billing service has collected the amounts receivable :rom the
respective LECs. Interest is charged on the advance payment at varying ra~es.
INVENTORIES
Inventories are stated at the lower of cost. as determined
primarily using the weighted average cost method. or market. Inventory is
primarily composed of equipment for installation on new contracts and supplies
and parts. for the telephone systems serviced by the Company.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost.
Depreciation and amortization is provided on a straight-line basis over ~he
estimated useful lives of the related assets. The following is a summary of
useful lives for major categories of property and equipment.

ASSET
Leasehold improvements
Telephone system equipment
Vehicles
Office equipment

USEFUL LIFE
Lesser of life or lease term
3.5 to 7.S year.
3

years

3 to 7 years

Maintenance and repairs are expensed when incurred and major repairs that
extend an asset's useful life are capitalized. When items are retired or
disposed. the related carrying value and accumulated depreciation are removed
from the respective accounts. and the net difference less any amount realized
from the disposition is reflected in earnings.

INTANGIBLE AND OTHER ASSETS ~ lntangible and other assets primarily include
amounts allocated to acquired facility contracts. non-compete agreements.
goodwill and other intangible assets. which are stated at cost. along with the
long·term portion of customer advances. Amortization of intangible assets is
provided on a straight-line basis over the estimated useful lives of the related
assets. The following is a summary of useful lives for major categories of
intangible assets:

ASSET
Acquired facility contracts
Non-compete agreements
Deferred loan costs
Other assets and intangibles
Goodwill

USEFUL LIFE
Contract term
Agreement term
Loan term
2 to 5 years
20 years

4.

PROPERTY AND EQUIPMEN'!

Property and equipment consist of the following:

December 3!.
;;:000

1999
Leasehold

improvemen~.

Telephone system equipment
vehicles
Office

equi~ent

Less accumulated depreciation

S~ll. 420
3'. Uti. 66'
42',460
::2.540. :215

$944..292
46,285.050
430.541

43.549,762
Il!l,174,40!l)

50,387,801
(23,316,556)

$28.375.357

$27,069.245

:,727,911

DEPRECIATION AND IMPAIRMENT ~ Depreciation and impairment in 199B, 1999 and
2QOO includes depreciation expense of $5.996,816: $7,199.;37; and $ B,14t,lSl,
respectiv.ly. Also included in .depreciation and impairment in 1998 ia an
impairment loss of $695,138. representing the net book value of telephone system
equipment that was removed from service.
S.

IN'!ANGI8LE AND OTHER ASSETS

Intangible and other assets consist of the following:

December ]1,
1999

2000

Int$ngible and other asset.

Acquired telephone contract.
Noncompete agreement.
Deferred loan cost.
Good .... ill
Ocher intangibles

$67,761,060
568.611
8.636,059
8".5)0,834
766.502

-----------

Lea. accumulated amortization

Depo8!t.
Other aasets .. noncurrent portion
of commission advanc ••

~o

faciliti ••

$71,566,711
568.611
9,042.247
84,730.834
783,096

--- . -------

162,263,066.
{6S ,US. 703 l

166,691,506
(61.221,91.}

----------97.067.363

85,469,52'

--_ ...

-------

431. 996

418,150

22'.6'74

-----------

--- . -------

$97,129.033
...••••....

$85.991.382
..........•

103,10"

-----~--"".-,,-.-----------

ATTACHMENT A
EXHIBIT 3

.

'-'

SECTION C

STA TEMENT OF WORK
C.l

INTRODUCTION

•

This section describes the current functional and technical environments within the Federal
Bureau of Prisons (BOP) and specifies the work to be performed by a new Inmate Telephone
System (ITS-Il) which will replace the existing Inmate Telephone System (lTS). Offerors are to
submit proposals for the complete system as described within this Statement of Work (SOW) All
requirements within this SOW are the responsibility of the contractor.

CLI Structure of Section C
This

subse~tion

provides the structure of Section C.

Intqlduction (C,!): This section describes the mission of the BOP, its organizational structure,
and provides background information about the federal correctional environment. This section
also describes the services and functionality of the current the ITS, as well as the BOP's concept
of operations fur the new ITS-H.
.
functional Requirements (c'2): This section describes the functional requirements oflTS-I1
including services, operations, infrastructure, and system components. These requirements are
segmented into the following general categories:
•
•
•
•

Inmate Telephone Service Requirements
Management oflnmate Telephone Accounts
Administrative RequiTements
System Requirements

Tram it ion and Implementation Requirements IC31: This section describes the requirements
for the ITS-II transition process and implementation.
Maintenance ReqYirements IC4): This section describes the requirements for ongoing
maintenance suppon of the ITS-Il operations, including the maximum downtime allowed, "
escalation plans. and monthly repons
Traininl' Rnd Documentation (C-S): This section describes the requirements to provide
training and documentation
General Coniractpr ReqYirements IC,6): This section describes the requirements in areas such
as project and configuration management, quality assurance, and compliance with applicable
standards and regulations
~.
-"'"

.'

Col

•

•
General Overview

C.I.I.I

The onlv purpose of this section is to provide potential offerors general information on the
environ~ent of the BOP and the inmate community. and general requirements ofthelTS-lI
Offerors shall not provide responses'to information within this section.

•

Fedtral Bureau of Prisons
The BOP is a bureau within the Department of Justice (001). The contract that will pO!entiaJJ~
result from Ihis procurement will be administered and overseen by the BOP. Throughout the life.
of the comract. the BOP shall remain the sole authority and point of contact with the successful
offeror.
Mission of the BOP. The mission of the BOP is to protect society by confining offenders in
controlled environments of prisons and community-based facilities that are safe. humane. and
appropriately secure. and that provide work and other self-improvement opportunities to assist
offenders in becoming law-abiding citizens

or

the Trust Fund Branch. The Trust Fund Branch is a component of the BOP. and is
Mission
part of the BOP Central Office located in Washington. DC. The mission of the Trust Fund
Branch is to provide management and sen ice to the BOP. consistent with maintaining stability
and financial integrity of the Trust Fund and Inmate Deposit Fund. This branch oversees the
operation of the BOP·s Commissary. ITS. Warehouse. Laundry. and Clothing Issue operations
"'inion o(lhr Trust Fund Branch. ITS SwioD. The ITS Section is a component of the Trust
Fund Branch. located in Washin!,'1on. DC The ITS Section is responsible for the Bureau-wide
and on-Slle Implementation of the ITS·II. including development of policy and procedures.
o\'erslght of daily operallons. traIning. and continUing technical support.

"inion of COffecliona' Farjlily ITS SII!T. BOP correctional facility staff work in individual
BOP correcllonal facilities. located throughout the united States BOP correctional facility ITS
slafT are responsible for creating. changing. and deleting inmate accounts: updating inmate calling
parameters. uSing the ITS to generate and analvze call records. training the inmates on how to use
the ITS. and other necessary local admlnlstrall\'e functions
Cornelion.' [n"ironment. The follow,"g paragraphs provide information regarding the
correcllonal en'1ronment in which the ITS·II will operate
Federal Inmlte Popula!jon. The BOP currently operates approximately 90 federal prisons
tnrou..:hout the lnlled States and Puerto RICO Each correCtiona' facility houses between 300 and
~500-lnmales ...ith an average population of slightly over 1.000 inmates per correctional facility
and a total populalJon of approxlmatel, 100.000 Inmates See Eshibit J-I. CorrcclioDlal
Fadlit, Informalion for detailed ,"formallon re..:ardlnl! correctional facilities and inmate
populatIons

.

- -

CO:

"

,'II

'"

<I ..•.... '
~

•

•

Provided below is information on the BOP Central Office. BOP Regional Offices. BOP
Management and Specially Trairun£ Center (MSTC). and the correctional facilities y,ithin the
BOP.
BOP Central Office. The BOP Central Office is located in Washington. DC The BOP Central"
Office is the location for the administrative headquarters for the agency and for the operation of
the ITS An inmate telephone system is installed at the BOP Central Office and used by BOP
Central Office. Trust Fund Branch. ITS Section staff for administrative. testing. and training
purposes.
RuionalOfficn. The BOP is currently divided into six regional districts. each with a Regional
Office. The six Regions are: Mid-Atlantic. North Central. Northeast. South Central. Southeast.
and Western Each operates under the direction of the Director of the BOP. These six Regional
Offices do not currently playa direct role in the operation of the ITS.

MSrc. The BOP MSTC is located in Aurora. Colorado. The BOP provides staff training on the
policies and operation of the [TS at this facility. An inmate telephone system is installed at the
MSTC for these training purposes.
Correctional Facilities. Federal correctional facilities are divided into classifications according
to secunty level It is imponant to recognize that inmates' use of the ITS (and therefore system
traffic) may differ depending on the security level of the specific correctional facility and on the
BOP's administrative requirements for specific facilities. Inmates incarcerated at higher security
correctional facilities will typically have less calling privileges than inmates at lower security
correctional facilities
E~hibJ1s "'ithin this SOW refer to correctional facilities with designators identifying the level of
secunt\, The folloy,lng security level definillons are intended to aid the offeror in understanding
these designallons and to pro,ide some general information which mayor may not impact ITS-II
us.a~e

• Low: Lo" designates the lowest level of security These facilities house predominantly low
secunl\ le\'el mmates Some of these facilities function as independent facilities and others
operate as a satellite camp to a higher secunt\· level correctional facility. Low correctional
faCIlities ma\' be deSignated as a federal Pnson Camp (FPC). Federal Correctional Institution Low
(FC'1 Lo .... '. or Lo.... Secunty CorrecllonallnslIIullon (LSCI) These low security level
correctional facilities typically alloy, Inmates greater calling privile!,1cs than higher security level
faCilltle~

• ~Irdium: Medium designues a medium level of secunty These facilities house
predominantly medtum secunty level tnmates and sometimes perform the administrative functions •.
tnc!udlng ITS operations. for a satellite camp ~1edium security level correctional facilities may be
desllmated as a \ledium Secunt,· Correctional Institution (MSCI). or Federal Correctional
Inst~tutlon (Fel) Inmate access tn the telephones at these facilities is typically more restricted

C' -3

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_--, ..

-_._.-----------

•

than lower security facilities.

• High: High designates a high level of security These facilities house high security level
inmates and sometimes perfonn the a.dministrative functions. including ITS operations. for a
satellite camp. High security level facilities may be designated as a High Security Correctional •
Institution (HSCI) or United States Penitentiary (USP). InmateS' at these facilities typically have
restricted access to telephones at night.

-

-

.

• AD-MAX: Ad-Max desilZl1ates the hi2hest level of securitv in the federal system
Inmate
access to telephones is eXlreme1y restricted Only one correctional facility in Florence. Colorado
is currently designated as Ad-Max
• Detention Cenlers: Detention Centers typically house inmates for a shon period of time.
Inmate turnover is hiSh at these facilities. Detention Centers may be designated as a Metropolitan
Correctional Center (MCC). Federal Detention Center (FDC). Metropolitan Detention Center
(MDC). or Federal Transfer Center (FTC). Due to the amount ofinmate turnover at these
facilities. it is anticipated that inmates at these facilities will predominantly use collect calling
telephone services. However. direct dial calling capabilities shall be made available by the
co~tractor at !I1 fAcilities.
'.
..
• Medical Ctnltrs: Medical centers typically house all security levels of inmates. These
correctional facilities may be desi~nated as a united SlateS Medical Center for Federal Prisoners
(L'S\1CFP) or Federal Medical Center (FMC)
• Federal Correctional Complues (FCC): The BOP has several FCCs which consolidate
multiple levels of security and several facilities in one general location. Although the facilities
maintain some independent functionality. some ITS-II procedures could be consolidated for
complex facilities For example. iftechnicaJly sound and if deemed appropriate from a functional
pOint of vie". telecommunications equipment could be configured to suppon a complex of three
or four correCtional facilities within the same ~eo~raphical location. Of the approximately 100
correctional facilities (not including satellite camp environments) in use within the federal system.
approl(lmately 10 percent are pan of a complex
• Intens;"r Confinemtnl Cenlrr (ICC): ICes provide inmates with a strict regimen of
aClIlll1es and place restrictions on Inmate access to telephone calls. Currently all BOP ICCs
operate a~ satelhte facilities to hi~her security correctional facilities

.'

C.l.l.2

Description of the Current ITS

Currentlv
. the

BOP has three basic svstems
installed
.

•
•
•

•

-----

-.

Collect systems offering only collect calling;
ITS offering predominantly direct dial calling:
Automated Collect Call Operator (ACCO) ITS system ....ith ACeD offering both c611eet
and direct dial calling

Exhibit J-I. Correctional Facility Information contains information on each correctional
facility. including the type of telephone system installed and other statistics.
Inmale Cal!in~ Patterns. Telephone service provisioning information for each correctional
facility is presented in Exhibit J-I. Correctional Facility Information. Current estimates of
inmate traffic volumes are presented in Exhibit J-2. Traffic Volume [Slimates. Traffic volumes
presented in Exhibit J-2 are provided as estimates only These estimates are derived from past .
history only and do not imply a guarantee of future traffic volume to the contractor.
.
Reports. The present ITS pro\ides instantaneous detailed call information for each inmate and
each call Using this information. the ITS provides the BOP with approximately 25 standard
reports
Conntct;'·il)·. The existing ITS consists of stand· alone systems that do not provide any systemwide capabili\les Switches within each correCII.onal facility operate independently; no data is
passed to a central location (whether logical or physical) or to any other correctional facility.
Inwjarn. The ITS receives data input from the Trust Fund Commissary system which is
referred to as the Federal Prison Point of Sale (FPPOS) System. sends call record data to the
Automated Intelligence Management System (AIMS) used by correctional facility investigative
staff. and interfaces with a Dictaphone voice recorder provided by the government
The ITS is connected in a receive-only manner v.ith the FPPOS System. dictated by the need to
receive Commissary credits and perform other transactions of an accounting nature
The ITS IS connected in a send-only manner with the AlMS. under the control of a BOP staff
member called the Special Investigative Supervisor (SIS) The ITS transmits call record data to
1he AI\lS upon request from SIS
Refer to Eshibil J·3. Current ITS Archilrrture

C-5

•
System Components. The following paragraphs in this section provide an overview of the
system components that provide ITS functionality

Hardware. The hardware design of each current ITS includes the following
•
•
•
•
•
•
•

Telephone handsets.
Telephone switch.
Voicc proccssing unit (VPU)
Central processing unit (CPU) and database.
Local and remote terminals.
Primcrs.
Modems.

Software.· The current ITS operating system is a UNIX-based, multitasking operating system,
although ITS users do not interact dircctly with UNIX. .
System software controls events occurring 1T0m the timt;. an inmate telephone goes off-hook until
the call is tem,inatcd. The software stcps through a sequence of CVCntS during each call which
includes. but is not limitcd to:
•
•
•
•
•
•

Checkinl! the inmate's personal identifier and calling parameters.
Checking the carrier rate tables.
Directing the switch to eithcr connect or not connect a call.
Supporting real-time accounting functions. including debiting an inmate's account.
Providing a detailed audit trail of inmate calls.
Providing a detailed audit report of deposits and withdrawals.

System Backup. A complete system tape backup is performed daily at each correctional facility.
These tapes are kepI for five days before the information is erased and the tapes are reused .. In
the event ofa cataStrophic failure. such as corrupt backup files. a printout performed for each call
provides the BOP with information to manually re-key call account information into the ITS.

C-6

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C.1.1.3

Description of the l'"ew ITS (ITS-Oj

The purpose of this section is to provide offerors with a high level general description of the
purpose and scope of this procurement. including major ITS-II features and capabilities and rolesand responsibilities of the successful offeror. The emphasis is on providing an over.;ew of ma.ior
ITS-II characteristics and to provide an overall context to help offerors understand the scope of
this procurement. This section is for informational purposes only. it does not address all IT5-11
requirements. nor does it require responses ITom offerors.
ITS-II Overview

The purpose of the ITS-IJ is to provide inmates in federal correctional facilities operated by the
BOP with outbound telephone services and to provide the BOP with the means to ensure the
proper and lawful use of this system by inmates Insofar as the availability of such ser.ices is
imponant to inmate morale and hence correctional facility security. the ITS-II is considered by the
BOP to be a critical service element with stringent availability and quality of service objectives
The ITS-I~ will consist ofthefollowing componenlS
'
•

A centralized database. network based management system Refer to Exhibit J-4. ITS-II
Concept Design. for one possible design

•

One type of system for all BOP facilities which can be configured independently at each
correctional facility ..

•

Telecommunications capabilities located at each correctional facility which provide
outbound direct dial and collecl calling senices to inmates and administrative capabilities
to BOP personnel

•

.... dminimative and system suppon and training capabilities at the BOP Central Office in
Washington DC and the MSTC in Aurora. Colorado

•

," Central Operations Facility (COF) located at a contractor provided site

•

Direct dial and collect call capabilities

•

Wide area network facilities to link ITS-II components at correctional facilities with BOP
administrative systems and contractor maintenance and management systems.

"

The scope of this procurement is a nationwide deployment of the ITS-ll to federal correctional
facilities in the linites States. Pueno Rico. the BOP Central Office in Washington DC. and the
MSTC in Aurora. Colorado The ITS-II will provide telephone service to federal inmates. The
objective of this procurement is to have a contractor provide a network based centralized
database management system capable of providing a complete array of outbound calling services
C-7

•

•

to the BOP for use by its inmates The contractor shall install and maintain all ITS-II hardware
and software at all BOP facilities
The BOP will not lea~e equipment. s~fiware. or services from the contractor except as identified
in Section B-4.
•

JTS-II Direct Dial and Collect Inmate Calling Services
The BOP will establish an ITS·I1 account for each inmate to place calls. Inmates will be capable
of transferrin£ funds from their Commissary accounts to the ITS· II. The ITS-II shall provide a
voice response interface which will prompt an inmate through this transfer process. These
transferred funds are purely representative of actual funds held in accounts by the BOP The
transferred funds will be added to the inmate's ITS-II account to create an individual inmate
telephone account balance. It is this account balance which will be automatically and immediately
reduced by ITS-II as direct dial calls are taking place. ITS-II will not allow this account balance
to reach a negative balance.
The ITS-II will process local, long distance. and international direct dial and collect calling
. s~rvices for inmates al federal correctional facilities (International collect is optional). The ITS.II
contractor shall be responsible for providing local and international service using carriers it selects
for these services All long distance direct dial calls to areas within the U.S. and Pueno Rico
originating in the U.S will be routed over FTS circuits provided by the BOP.
Collect calling services will be fully automated and will not involve the use of a human "perator at
an\'. stal!e
bv the BOP in extraordinarv. circumstances. The ITS... of a collect call. unless anreed
. . .to .
11 COntraCtor will provide carriers for all local. long distance. and international collec, calls. The
ITS·II contractor will provide all services associated with collect services such as billinn and out·
cleanng The contractor shall. if ordered by the BOP. transition the BOP correctional facilities.
that currentl\' provide non-ITS collect only service to the contractor's collect service until the
contractor's full direct diaVcoliecl system can be implemented. Once the ITS-II is fully installed.
collect calls placed by inmates will be processed through the system in the same manner as direct
dial calls
The BOP's intention is to allow inmates the: opponllnity to place up to 120 minutes of collect i
calls per month for a four year penod follow,"!:,! the award oflhis contract At the end of thiS four
"ear penod. the BOP may re-evaluate its collect call requirements The BOP currently has no ~
general restnction on direct dial calls. but as with many correctional programs. telephone access is
!mder constant review and subject to change
iTS-II Administrativr Capabilities
In addition 10 inmate direct dial and colleci call services. the BOP requires various administrative
capabilities to ensure the financlillntegrily of the Inmate Trust Fund These capabilities are.
inmate account mana~emenl. audit trails. transaction rcpom. centralized management and repon
(' -8

I

I

•

.'

capabilities. capabilities to detect and eliminate fraud in order to protect the financial imel!nTv oi
the inmate Trust Fund and the public
• .
Quality or Service

•

Because of the imponance of ITS·II in maintaining inmate morale at a correctional facility. the
BOP seeks to obtain a very reliable. highly available service for federal inmates through thIs
procurement. The quality of system reliability and voice transmission on aIlITS·1I calls must be
in confonnance with all appropriate industry standards for voice communications in office
environments
ITS-II Contractor Responsibilities
The contraCTor has the sole responsibility for ensuring the ITS·II meets the requirements of this
contract at all BOP correctional facilities and locations on a daily basis. The contractor is
responsible for managing all subcontractors. including hardware and software providers. carriers.
and other service providers involved in supponing the ITS·II service throughout the term of the
contract . The contractor will manage all aspects of I1:S·11 installation at BOP locations. manage
and coordinate all aspects of subcontractor activity during installation. respond to calls from BOP
staff regarding system problems and assume complete responsibility for compliance with BOP
maintenance requirements. The ITS·I\ contractor will be solely responsible for payment of all
subcontractors and for the performance and conduct of all subcontractors involved with
supponiny the ITS·1I
The ITS·I1 contractor shalI consider FTS semces and access facilities to be "government
furnished equipment". and wilI not be responsible for paying the FTS vendor for long distance
ser.. lce used in pro\iding long distance direct dial service to BOP inmates. However. the
contractor .....iII be responsible for coordinating with the FTS vendor and the BOP as necessary to
he lp resolve all service problems
C.1.1.4

Contract Structure

The ob,ectl\'e of the BOP in this procurement is not to purchase or lease the ITS·II. but to enter
Into a reialJonshlp ..... ith the successful contractor In which the contractor provides ITS·II serVices
to the BOP In exchange for pontons of the revenues collected from direct dial and collect tails

•

(-9

•
C.2

•

FUNCTIONAL REQUIREMENTS

This section defines requirements which shall be provided by ITS· II Unless otherwise stated,
each requirement is mandatory and shall be evaluated as such. The contractor shall provide the
detailed technological and procedural methods of satisfying all functional requirements. These
methods will be evaluated as part of [he competitive award process [0 ensure that [he ITS·I/ as
procured provides the required functionality using sound technical methods.

C.2.1

lnma[e Telephone Service

R~quirements

The ITS·I! shall provide inmates with access to direct dial and collect call services as described
within this section. These services shall support a present inmate population of approximately
100,000 and anticipated growth to a future population of approximately 150,000 inmates in the
next 10 years. The contractor shall provide an ITS-I! which is capable of operating in I SO
correctional facilities in the United Stales and Puerto Rico. Correctional facility information and
traffic volume estimates are provided in Exhibits J-I and ]-2.
. .

·C.2.1.1

. Compliance with R~':'lalory Agencies

The contractor shall be responsible for compliance with all regulatory requirements imposed by
local. state. and federal regulatory agencies for all systems and services provided throughout the
performance period of this contract

C.2.1.2

Meeting New Industry Standards

The contractor shall be responsible for making all system modifications necessary to allow inmates
10 place calls as industry dialing requirements change. al no additional cost [0 the BOP
The contractor ~hall be responsible for complying with and updating the ITS-II for any regulatory
changes and requirements during the life of [he contract. These regulatory changes include
federal. slate:. count~·. and municipal modifications These changes shall be made at no additional
::o~t t(l [he BOP

C.2.1.J

C.I! Processing Infonnllion
.'

All call processtnp and call rating information shall be kept current by the contractor to ensure·
mlNleS can place calls to all approved numbers This information includes but is not limitcd to
local ellchanges. area codes. country codes. venical and horizontal coordinates. and any other
mfOTTnlIlOn necessary to accurately process and rate calls Thc Contractor shall provide the BOP
with rallng information for all calls when requested by the BOP

C·IO

•

•

•
C.2.1.4

Number Blocking

In addition to other methods of blocking calls as stated elsewhere in this SOW. the contractor
shall be responsible for blocking all calls made to telephone numbers which incur excess charges·
such as 972. 976, etc. The contractor shall also be responsible for blockin2 inmate calls to lon2
distance camer access numbers (i.e .. 10333, 10288). The contractor shall also be responsible for
blockinl! allloca! numbers which access lonl! distance camers such as 950-XXXX

-

-

-

C.2.1.S

-

Communications Interfaces

The ITS·II shall suppon all industry accepted telecommunications network interfaces required for
connectivity to telecommunications carriers to suppon all outbo'md calling services. The ITS·II
shall specifically suppon all interfaces required for connection to BOP provided FTS services.
The contr:actor shall be capable of interfacing with BOP provided internal telephone wiring via
Amphenol connectors
C.2.1.6

Direct T-I Digital Interface

Due to space limitations, the ITS-II shall be capable of accepting multiple direct T-I digital
circuits for the voice services necessary to fulfill the requirements of this contract. This
requirement shall not be fulfilled through the use of an eXlemal channel bank. The contractor mav
provide.a limited amount of services over individual analog lines if 12 or less lines are required 10'
complete the amount of circuits necessar:' to provide the required service.
The BOP will provide digital T·I circuits as necessary for processing direct dial long distance
calls through the ITS·II via the FTS The contractor shall provide digital T-I circuits for their
reqUired se ....ices. where available through the local telephone company. This requirement shall
be wal\'cd at those sites which the contractor is providing the Special Interim Collect Servic;e
descnbed elsewhere in this RFP
C.2.1. ':'

Outbound Only Calls

The ITS·II shall allow inmates to process only outbound calls Inbound calls shall not be
processed 1\\ the s\,stem
C!.I .•

Serond Dial Tont

The ITS·II shall not allow an inmate to obtain a second dial tone without hanging up the
tdephone after the first call
C,!.1.9

Timf

\0

..

Di.1 Tont

The ITS·II shall not take more than t\lo'O seconds to provide a dial tone 10 Ihe telephone once the
C·II

--

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•

•

receiver is·lifted off of the hook.

C.2.1.I0

Call Setup and Process Time

The ITS·II shaJltake a maximum oft~n seconds to process a call. from the last digit dialed ITom •
the telephone keypad until the last digit is sent to the service provider

C.2.I.ll

Maximum Ring Time

The ITS-f) shall provide a maximum ring time. for all calls, of two minutes prior to disconnecting
a call. The amount of ring time may be adjusted with the concurrence of the BOP COTR
C.2.1.12

Can Process Notification

The ITs-n shall provide notification to an inmate of the call status (i.e., ringing. busy). This
notification may either be in the form of ringing and busy tones or appropriate messages at ringing
intervals. This requirement is for both direct dial and collect calls.
. C.2.1.11

. Can Aruwer Notification

Once a call has been answered by the called party. the ITS-II shall immediately begin playing the
necessary voice interaction scripts and replay them until the called pany responds or the time limit
for responses el(pires. This requirement is for both direct dial and collect calls.
C.2.1.14

Separation

or Voice Path Until Call Acceptance

The ITS·I/ shall not allo",· the called pany or the calling piny to speak to or hear the other party
e)(cept for the prerecorded name. until the call has been accepted. This requirement is for both
dlfect dIal and collect calls
C.2.1.1~

Eltctrical Conditioning

The contractor shall be responsible for service outages due to electrical surges or reduced
voltages In any ponion of the system or ser....ice These include outages or reduced vohages due
to h~hlnln!! or poor electrical qualities provided from the correctional facility.

C.Z.I.15.1

II shall be the contractor s responsibility to provide electrical conditioning and
protection. such as l.:niversal Power Supplies and surge protection strips to protect
III ITS-II equipment against power outages. electrical surges. reduced voltages,
ancitor poor electrical qualities provided from the correctional facility_ Any
changes to the physical structure of a correctional facility for the installation of these
conditioning and protection deVices must be approved by and coordinated with the
BOP

C-12

•

•

C.2.1.15.2

The ITS·I1 shall be capable of recovering from a power outage automaticaJlv or
remotely once power is restored.
.

C.2.1.16

Called 'Pam Voice Message Announcements

•

The ITS-II shall have the capability to make the following types of voice message announcements
The exact announcements and lanl!ualle will be detennined by the BOP after award of contract
C.2.1.I6.1

The ITS-II shall provide the called pany with an opponunity to deny all future calls
of that same type iTom an inmate by responding to a voice response prompt when
answering a call. This feature shall be available for both debit and collect calls. The
BOP shall have the capability to tum this feature on or off.

C2.1_16.2

The ITS-II shall have the capability to provide automated messages to the called
pany in the language specified (English or Spanish) by the inmate for that called
number. This feature shall be available for both debit and collect calls.

C.2.1.I6.3 . The ITS-II shall have .the capability to accept the called pany's response via keypad
input iTom the telephone or a voice response and shall accept rotary dialed
responses.
C.2.1.I6.4

The ITS-II shall have the capability to interject messages into a telephone call at
random intervals (e.g .. "this call is iTom a federal correctional facility") as deemed
necessary by the BOr and at BOP determined intervals. This feature shall be
available for both direct dial and coHect calls. The BOP shall have the capability to
tum this feature on or off

C.2.1.165

The ITS-II shall be capable of announcing 10 the called pany that the call is collect
or direct dial. as appropriate The BOP shall have the capability to tum this feature
on or off.

C2.1.I6.6

The ITS-II shall be capable of providing an announcement message to the called
pany that the call is from a Federal Prison. conligurable by the BOP, and used as
determined by the BOP This feature shall be available for both direct dial and I
collect calls The BOP shall have the capability to tum this feature on or off. '

C2.1_16.7

The ITS-II shall be capable of announcing to the called pany the name of the calling
pany Offerors are encouraged but not required to provide a mechanism to record
an inmate' s name one time to be used each time this announcement is required. The
BOP shall have the capability to tum this feature on or off for direct dial andlor
collect calls

C.2.1_16.8

The ITS-II shall be capable of announcing to the called pany how to accept calls.
This feature shall be available for both direct dial and collect calls.

C-13

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C.2. 1.1 6.9

•

The ITS·II shall be capable of announcing to the called pany an instruction to
proceed talking. This feature shall be available for both direct dial and collect calls

C.2.1.l6.IO The ITS·II shall be capable of announcing to the called pany the collect call rate. •
prior to acceptance. when a collect call is placed.
C.2. 1.1 7

Trunk Group Availability

C.2. I. I 7.)

The contractor shall provide sufficient equipment and outgoing trunks to ensure that
the probability of blocking a call made by an inmate docs not exceed ten percent
during the busiest hour at any institution. The BOP will provide all FTS circuits
requested by the contractor to meet this requirement for direct dial Ions distance
calls.

C.2.1.17.2

The contractor shall evaluate the percentage of calls blocked by call type for each
institution on a monthly basis and shall increase the systemfservice capabilitie's o/ithin
30
days. to meet the minimum
of ten percent. call blocking.
.
.

Co2. I. IS

Trunk Rotation

Co2.I.IS.1

The contractor shall provide the ITS·JI so that when a trunk is unavailable. the call
shall be automatically rerouted to the next available trunk.

C2.I.IS.2

Trunks shall not be permanently assigned or affi)(ed to an individual telephone or
station Telephone stations shall access the next available trunk on a rotating basis

C2.1.IS.)

The contractor shall provide the BOP with a flow chants) of call processes including
\'oice response decision branches which the ITS·II will be required to follow. This
flow chants) shall be maintained current throu[!hout the life of this contract and
provided to the BOP as changes are made

C2.1.19

\"oicr Quality

The quality ofvoic:e connections pro\'ided by the ITS·I\ shall meet or exceed
appropriate industry standards in use in the Unned States and enacted by appropriate
standards organizations (Bellcore. IEEE. ANSI. NIST. FIPS) for transmitted and
recei\'ed levels. noise. cross·talk. and frequenc), range. The contrac:tor shall provide
the BOP with the standard to which their ITS·II will adhere.
C2.1.19.2 This "oice quality level shall be in place for all telephone services at all stages of a
call and shall not be affected by any other ITS·II feature, function. or capability.

C.2.1.19.1

("-14

...

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C2.1.20

Direct Dial Service

The ITS·I1 shall process direct dial Cil-lls through ser-ices provided by the contractor andthe
BOP. The contractor will not bill inmates for direct dial services.
C.2.1.20.1

IUles

The telephone rates used to generate revenue for direct dial calls shall be established
following manner:

In

the

•

The ITS-II contractor shall propose a per minute rate which will be charged to the BOP
for each direct dial call type within each maintenance service level.

•

The contractor shall charge the BOP the rate which corresponds 10 the maintenance
service level chosen by the BOP (refer to Section C.4 for a description of maintenance
levels). The BOP will choose the same maintenance service level for both direct dial and
collect calls and will choose one maintenance service level for all facilities.
.

•

The BOP will add a per minute charge io each direct dial call type within the maintenance
service level chosen. This charge plus the contractor's per minute rate within the
maintenance service level chosen by the BOP shall'constitute the total amount charged by
the ITS·I1 to the inmate account for each direct dial call minute. The ITS· II shall provide
the BOP with an input field for each direct dial call type to allow the BOP to enter a per
minute charge which will be added to the contractor's direct dial rates being charged

•

The ITS·I\ shall reduce inmate accounts in whole minute increments for all direct dial
calls

C.2.1.20.2

Rrvenues

The contractor will be compensated by the BOP on a per minute basis for all completed direct dial
calls placed by inmates over the ITS·II
Monthly. the contractor shall invoice the BOP for the number of direct dial minutes times the
contractor's direct dial rate for the maintenance service level chosen by the BOP. If the
contractor's maintenance level for that month is not met and is less than that level chosen by the
BOP. the contractor shall only invoice the BOP at the rates which correspond to the actual lower
maintenance level met

(·15

C.2.1.20.3

A.

General Direct Dial Service Requirements

Call charges for inmates shall, not begin until the called pany has accepted the call.

•
B.

C.

Call charges shall stop when either the calling or called pany hang up.
The ITS-II shall be capable of dialing a pre-programmed authorization code to access frS
circuits prior to initiating a call. This code is configurable by the BOP, may consist of eight
to eleven digits, and may be activated or deactivated by the BOP on a correctional facility
by correctional facility basis This code shall be capable of being changed at each
correctional facility by BOP Central Office staff as needed.

D.

Inmates shall not be charged for calls which result in Special Information Tones (SIT)

E.

The BOP will provide FTS circuits for processing direct dial long distance calls through
the ITS-II. This service will be available through the existing GSA FTS2000 contract as
well as any post-FTS2000 contract. The contractor's ITS-II shall use this service and
meet atl requirements oflhe SOW.

C2.1.20.4

Local Direct Dial Service

The contractor shall provide local direct dial telephone service at all correctional facilities where
the ITS-II is installed. The local calling area shall be equivalent to the local calling public pay
phone area at each correctional facility. The contractor shall be responsible for installing and
maintaining all telephone circuits necessary to provide this service through the ITS-II. The
contractor shall assure the 1TS-11 is capable of identifYing a dialed number as local, based on the
payphone calling area, and correctly rate and route the call.
C.2.1.20.5

Long Distance Direct Dial Service

The contractor is not responsible for providing long distance direct dial telephone circuits. Long
distance direct dial. for purposes of this contract, is defmed as any call not within the local area
defined in C.2.1:1O 4 and not considered international These telephone circuits will be provided
by the government using services available ITom the then current FTS contract. The ITS-II shall
process all long distance direct dial telephone calls placed by inmates over these government
provided circuits
C.2.1.20.6

Inlemalional Direct Dial Service

The contractor shall provide International direct dial telephone service at all correctional facilities
where the ITS-II is installed The contractor shall be responsible for installing and maintaining all
telephone circuits necessary to provide this service through the ITS-II.

C-16

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C.2.UD.7

Toll Free Access

The ITS·I1 shall be capable of providing limited toll free access calls to inmates as configured b~
the BOP through contractor provided access lines
•
The BOP allows cenain inmates the capability to place calls to designated toll free numbers for
security purposes and other various reasons The BOP does not allow inmates to place calls to
personal toll free numbers or telephone service provider access numbers. Therefore. the ITS-II
shall be capable of allowing BOP identified inmates to place calls to only those toll free numbers
approved by the BOP. over contractor provided trunks. All other toll free numbers. including
local access toll free numbers. shall be capable of being blocked. The ITS-II shall provide a
repon of the ITS·II accounts with loll free access numbers on their approved lists including the
telephone number and a repon for toll free numbers called by inmates, as requested by the BOP
C.2.1.21

Collect Call Service

The contractor shall provide the collect call services listed below through the use of an
Automated Operator.'
..
C.2.1.21.1

lUtes

The contractor's rates charged to the called pany for collect calls regulated by the State
regulatory commission shall not exceed that regulatory commissioning body's rale cap lor
reSidential collect call rates. In those states which the State regulatory commission does not
pro\'lde a rate cap fOT residential collect call rates. the contractor's rates charRed to the called
pan\' for collect calls shall not exceed the highest residential collect call rate being charged in that
state bv a telephone company other than the ITS-II contractor. The contractor shall charge to
the called pany those rates proposed to Section B
The contraCtor's rates charged to the called pany for collect calls regulated by the Federal
('ommunicallons Commission (FCC) shall not exceed the Message Toll rates for colleCt long
distance calls and the service charge for residential Operator Station Collect set by the interexchange carner ,,;th the highest yearl\' domestic long distance toll revenues (currently AT&T)
The contractor shall char~e to the called pany those rates proposed in section B.
C.:!.I.ll.:!

RC'\'C'nues

The contractor will collect all revenue from the called pany for collect calls placed by inmates.
The contractor shall credit the BOP on the same monthly invoice as direct dial calls an amount
equal to the percent of gross billable collect call revenue for the maintenance service level chosen
by the BOP Howe\'er. jfthe contraCtor's maintenance level for the month is not met and is less
than thai level chosen by the BOP. the contractor shall credit th~ BOP for the percent of gross
billable collect call revenue for the lower maintenance service level actually met.

C·17

C.2.1.21.3

General Collect Call Requiremenl5

A

Human operators shall not be used at any point during a collect call except under
extraordinary circumstances a,nd as agreed 10 by the BOP COTR.

B.

The contractor's capabililY 10 provide human operators during extraordinary
circumstances is a desired oplional fealure. This is a non-mandatory requirement

C.

Collect calls shall not be connected nor shall billing commence until Ihe called party
indicates acceptance of the call

D.

Billing for the called pany shall Stop when either the called or calling party hangs up.

E.

The contractor shall provide all services associated with collect call services such as
billing. out-clearing. and line information database (LIDB) verification, The ITS-II
contractor shall assume all responsibility for billing called parties receiving ITS-II collect
calls. and collecting payments for these calls.

F.

The contractor shall provide' a loll free number which will be clearly shown on the called
pany's bill for assistance in billing matters

G

The contraClor shall provide the BOP wilh a written copy of all collect call restrictions it
imposes in managing its collect call program. The contractor shall also notify the BOP in
wriung of any changes to these restrictions

C.2.1.21.4

Local Collect

The contractor shall pro\ide local colleci calling service at all correctional facilities where the
ITS.llls installed The contractor shall be responsible for installing and maintaining aU telephone
circuits necessary to provide this sCf\;ce Ihrough Ihe ITS-II
C.2.1.21.~

IniraLA TA Colleci

The conlraClor shall provide inlraLA TA collect calling service al all correctional facilities where
the ITS·IJ is Installed The contractor shall be responsible for installing and maimaining all
lelephone CIrCUitS necesszry to provide Ihls sef\'lce through the ITS-II
C.2.1.2J.6

InltrLATA Collect

The conlractor shall provide interLAT,A. colleCt calling service al all correctional facilities where
ITS·IJ is inslalled The contractor shall be responsible for installing and maintaining al\ telephone
circuils necessary 10 pro\1de this scmcc through the ITS·II

C·18

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C.2.1.21.7

•

•

Interstate Collect

The contractor shall provide interstate collect calling service at all correctional facilities where the
ITS-ll is installed. The contractor shall be responsible for installing and maintaining all telephone'
circuits necessary to provide tbis service through the ITS-II.
.
C.2.1.21.S

International Collect (1\ on-Mandatof)')

, International collect services are not a mandatory requirement for the ITS-II. although the
contractor is encouraged to offer the service to as many countries as feasible. The contractor shall
be responsible for installing and maintaining all telephone circuits necessary to pro~ide this ser.ice
through the ITS-n, if this service is provided
C.2.1.22

Speciallnlerim Collect

The contractor shall provide the capability to pre-install contractor provided collect services at all
correctional facilities currently operating without an ITS.
C.2,1.22.1

The contractor shall transition the BOP sites that currently provide collect only
service. as identified by Correctional Facility type "Collect" in Exhibit J-I,
Correctional Facility Information. to the contractor's collect service before and until
the contractor's full direct dial/collect system can be implemented, if ordered by the
BOP. Once the ITS-II is fully installed. collect calls placed by inmates will be
processed through the ITS-II as required by this contract.

C2.1.22.2

The contractor shall be capable of making the necessary arrangements to change
these correctional facilities current Primary Interexchange Carrier (PIC) with the
LEC to the contractor's services

C2.1.22.3

These collect services shalt include screen coding and/or automated operator for
inmate services and shall not allow dialed numbers to be changed at the request of an
inmate or allow charge reversal. or charge diversion to another number

C2.1.22.4

(l'on-Mandatoryl The contractor may also provide similar collect services to
inmates during the period of time the original ITS is being de-installed by the BOP
and the ITS·II is being installed Simultaneous de-installation of the existing ITS
and installation of the new ITS·II will most likely not be possible due to limited
space for two systems in the ITS room Down time may be allowed during the
actual cut-over process to allow for full system integration testing.

C2.1.22.!' The installation of these interim collect services shall be at the discretion of the BOP
COTR. as ordered by the Contracting Officer

C-19

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C.2.1.22.6

•

•

At correctional facilities where this collect service is ordered by the BOP. the
contractor shall remove the existing telephone station sets and install new station
sets The new statier. sets shall be those which will be used when the ITS·II is full\
installed.

C.2.1.22.7

The contractor shall coordinate the installation of these collect services. at the BOP
• requested correctional facilities. with BOP Central Office staff.
C.2.1.22.8 The contractor shall be responsible for providing these services to the correctional
facility's communication mainframe in the communications room. The BOP will
ensure cross connection to the individual inmate station selS.

C.2.l.22.9

The interim collect call service shall only provide collect call capability and no other
type of service.

C.2.1.22.IO The interim service is not required to adhere to the controls of the full ITS· II system
(i.e .. calling list. time of day restrictions. identifiers. repons).

C.2.1.22.11. The interim service shaH be provided atthe.rates proposed for collect services in
Section B of this RFP.

C.2.1.22.12 The contractor shall pay the BOP Central Office Trust Fund each month the percent
of the gross billable revenue for collect calls corresponding to the maintenance level
chosen by the BOP This payment shall be made monthly within 60 days of the last
day of each mO:lth ir. which the calls were placed The BOP will work with the
contractor to enable an electronic transfer of funds
C.2.1.22. I 3 The contractor shall pro\;de monthly revenue repons to the BOP Central Office
Trusi Fund for this interim service. summarizing. for each correctional facility, total
call revenue. the amount to be paid to the BOP. the number of collect call minutes.
and the total number of calls placed
C.2.1.23

Widt Area llittwork

The contractor shall desi!!n and install a wide area network (v.' AN) as pan of the ITS-II to
provide connectivity am;n~ the ITS-II systems at federal correctional facilities and to suppo;' the
capabillly for system-wide ITS-II admmislTal1vc operations and functions.
~

C.2.I.l3.l

The contraclor shall be responsible for providing and installing all ITS-II WAN
equipmenl at each of the· correctional facilities and locations covered by this
contract Contractors shall also specify Network Management Systems to be
pro\;ded Ihat suppon network slanup. maintenance. monitoring. and operations.
Contraclors shall fully consider the COSt of these components in their proposed rates
for direct dial and collect services

C-20

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.~.,"""

....""':", •.. ,.......... ,. __ ....... '....... _

•

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C.2.1.23.2

The contractor shall desi!!n its ITS-II WA-lI; coru;l!Urations assumin!! the use or5tkilobits per second (Kbps) transmission capacity provided through FTS-~OOO
Dedicated Transmission Senice for ITS-II W A-lI; connecti"ity Contractors shall
indicate the number of such circuits to be installed to suppon ITS-II functions
required in this RFP, but shall not include the COSt of such facilities in theinates for
ITS-II direct dial or collect calling services. The government shall provide as
Government Furnished Equipment (GFE) the FTS circuits to facilitate the WAl'
The contractor shall provide all equipment necessary to facilitate operation of the
WAN over these government provided services.

C.2.1.23.3

The ITS-" WAN shall not have a single point of failure.

C.2.l.23.4

The contractor shall provide capabilities to protect against network outages or loss
of Network Management Systems for the WAN.

C.2.L23.5

After award of the contract. the contractor is encouraged to design and deploy a
more efficient network design. using any FTS transmission seT'-ices available to the
BOP. Ifan optional WA-'Io:; configuration i~.proposed after award of contract. it will
be reviewed for approval by the BOP for cost effectiveness. speed. and redundant
qualities. The contractor may also include switched (or other) FTS services for
WAN backup in this optional design

C.2.l.23.. 6 The WAN shall be maintained and monitored by the contractor at its Central
Operations Facility and shall be capable of being monitored by BOP Central Office
staff
C.2.1.23.":'

A
B
C
D
E

'\etwork management for both wide area and any local area networks shall provide
at a minimum the following functions

Define. maintain. and monitor the status and performance of the network configuration
\'Iew equipment and software errors
\lonllor the status of any nen"ork nodes
\lonitor the performance of the workstations and main computers
Troubleshoot the network .....·orkstatlons. and servers

C.2.J.23.S

All software to suppon any local and wide area networks from the workstations. to
the local network components. to the WAl" components. shall be provided by the
contractor

C.2.J.23.9

The ITS-II information is sensitive Communication of information across the WAN
or dial up modems shall use a method of encryption The contractor shall usc either
DES or Type I encryption methods for data transferred via the WAN.

(·21

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C.l.l Management orJnmatt Ttltphont Accounts
This subsection states the requiremen!s of the ITS·I1 for management of inmate telephone
accounts. It is divided into the following categories:
•
•
•
•
•
•

Inmate Account Information
Inmate Access to Telephones
Inmate Use of Telephones
Inmale Telephone Account Financial Transactions
Management or Inmatt Transfers BClWttn Correctional Facilities
Repons

All information and audit record detail shall be available for viewing anellor reponing by any
authorized B9P user immediately upon completion of the transaction.

C.2.2.1

Inmate Account Information

. The information required by each subsection below shall lie available for viewing and data input
on an individual screen for each of the following subsections. These screens shall be capable of
being changed by the contractor to meet the needs of the BOP. at the request of the BOP. and at
no additional COSt to the BOP.
• Inmate Prolile Inrormation
• financial Transaction Information
• Telephone Call Information
C.2.:!.1. t

Inmate Prolile Inrormation

The follo ....ing inmate profile information shall be maintained for each inmate account:
C.2.2.1.1.1

Inmate Register !'iumber

This is an eiyht digit number separated by a hyphen after the first five digits assigned to each
inmate by the BOP (the hyphen shall be shown on the screen only and shall not be required for
input) The ITS-II shall provide the abihty to change an inmate' s register number through a ~
separate menu function All data related to the previous register number will be transferred to the
new register number

C.2.2.1.I.2 Inmate "'ame
Th~

inmates' name fields shall include Last ~ame. First Name. Middle Name. These field lengthS
shall be. at a minimum. 3 S characters fonh!! last name and 15 characters each for the first and
middle name

C-11

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C.2.2.1.I.3' Correctional Facilil)'

Each correctional facility has a unique name which will be used as the automatic default for
inmates assigned to that correctional· facihty The BOP Central Office will assign each
•
correctional facility with a three character designation to be used with the ITS·1l This three
character designation shall not be capable of being changed by correctional facility staff. Each call
record or financial transaction will be "stamped" according to the correctional facility where the
transaction was performed. BOP staff shall have the capability to transfer access to inmate
accounts among correctional facilities
C.2.2.1.I.4 Living Unit

Livim! Linits are named buildiDl!s within a correctional facilitv to which inmates are assilmed
sleepi';,g quarters Each corre;ional facility uses different n~mes for its buildings. Thi; field does
not require input at each correctional facility This field shall be capable of being configured by
the BOP for each correctional facility as a pick list for that individual correctional facility. This
field shall be a minimum of 15 characters
C.2.2.t.t.S Comments

This field shall be used by BOP staff to input miscellaneous comments related to an individual
inmate's ITS-II account and shall allow input of a minimum of 180 characters.
C.2.2. J. 1.6 Language Preference

Each Inmate profile shall be marked by BOP staff with the inmate's language preference of
English or Spanish Voice messages provided to the inmate shall be made using this preferred
lanyuayc
C.2.2.1.1. i

Alen

.'~Iem may be placed on inmate accounts which shall notify the user type which enabled the alen
that the account IS placing a telephone call The alen status shall only be capable of being viewed
b\ the user level which placed the alen on the account

C.:!.:U.I.I Account Acth'ltion Date

ThiS field shall be automatically generated when an inmate's ITS· II account is created. This field
shall not be capable of being manuall\' modified
C.2.2.1.1.9 Date of Arrival

The date of amval at a new institution shall be automatically gr.nerated in this field when an
Inmate's ITS·JI account access IS aSSigned to a different BOP correctional facility.

C·23

C.2.2.1.1.1 0

Status Codt

This shall be a one character input fie!d of zero 10 nine and letters A to Z. used to indicate the
status of an inmate' 5 account Inmate accounts v.ill automaticallv be assillned a status of A when
an account is active. Inmate accounts will automatically be assi~ed a sta~us of Z when an inmate
is released.
C.2.2. J.].I J

Suspension

The ITS-II shall provide the BOP with the capability to temporarily suspend inmate ITS-II
account calling privileges. Entry in this field shall require the number of days for suspension and
the stan date of the suspension. The system shall display the date on which the suspension
becomes inactive. The system shall deny all calls placed by the inmate until the end of the
suspension period at which time it will automatically enable calls for the inmate.
C.2.2.1.1.12

Telephone List

'The ITS-II shall be capable of maintaining a list of telepl)pne numbers for each individual inmate
... t.:oun: to which an inmate ";ilJ be allowed to place calls: These lists shall be capable of being
maintained by BOP staff with appropriate access rights These lists shall be capable of being
printed for one or several inmates.

The ITS·II shall also be capable of maintaining a special list of telephone numbers for each
institution. maintained by the BOP. to which inmates whose accounts are flagged to access these
numbers. can call without the requirement of these numbers being on their personal list.
C.2.2. I .1.12.1

The ITS·II shall suppon a minimum list size of 30 numbers per inmate. but
shall be capable or being adjusted to meet the needs or the BOP.

C.2.2. I .1.12.2

Numbers which are configured as denied. shaH be kept on an inmate' s list
rc!!ardless of the quantity of numbers maintained for an account. These
numbers. when marked as denied. shall be capable orbeinS deleted or
re-enabled only through a protccted mode (system prompt to confirm
requested actIon) by the appropriate BOP staff These denied numbers snail
not atrectlhe number of iCllye telephone numbers on an inmate's approved>
number list

C.2.2.1.1.12.)

The amount of active numbers available on a list shall be capable of being
configured as needed by the BOP. by individual inmate. correctional facility. or
nationwide

C.2.2.I.I.I:!."

The amount of actIve numbers on a list shall be displayed and dynamically
updated as numbers are bcmg inputted Duplicate numbers shall be immediately
C-24

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identified by the system and audibly alen the ITS staff performing the input
C.2.2.1.1.12.5

The ITS-II shall pro\'ide BOP staffv.ith the capability to enter. modi;:". and
delete numbers for inmate Approved Number Lists
-

C.2.2.1.1.12.6

Allow Calls-to f'umbers on Special List

The ITS-II shall provide the BOP v.ith the capability to flag an inmate's ITS-Il account to allo\\
that account to call numbers on the BOP's Special List described above. without the need to place
that number on the inmate' s approved list
C.2.2.1. 1.12.7

Telephone Number Information

The following information shall be available for each telephone number on an inmate's lis\.
C.2.2.1.1. 12.7.1

Telephone Number

The telephone number an inmate wishes to call.
C.2.2.1.1.1 2.7.2 Comment
This field shall be used by the BOP to input items such as descriptions of the number being called
and shall be a minimum of 40 characters in length.
C.2.:!.1.1.1:!. ";.3 Direct DiallCollectfBoth
This designation shall control the method by which a call to an individual number may be placed
The BOP shall be capable of setting a global default for all inmates
C.2.2.!. 1.12.7.4

Do !liot Record

This designation shall control whether Ihe voice path of a call is routed to the correctional facility
recorder If a number is flagged as an allomey call on the ITS· 11. when the call is placed. the
"olce palh of the call ~hall be di~connected from the correctional facility recorder. Once the;
VOIce path of the call has been disconnected from the recorder. a tone shall be direcled 10 the
recorder path in lieu of the voice The BOP shall be capable of enabling or disabling this feature.
The default sening for this field shall be to record each call This feature shall be capable of being
globally enabled and disabled nationwide or by correctional facility by BOP staff with appropriate
access levels
C.2.2. J. 1.12. 7.!' Called Party Language Preference
This setting shall be either English or Spanish English shall be used as the default setting This
preference setting determines the language the ITS-II will use to present voice messages to the
[-25

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called pany. This shall be capable of being indi\iduaJly set for each telephone number on an
inmate's list.
C.2.2.1.J.12.7.6

Allow Call

This senimz shall control whether an inmate can place a call to the individual number The default
setting for this field shall be to allow calls. A telephone number on an inmate's account which is
set to "Not Allow" will not affect another inmate's ability to place a call to that number
Telephone numbers which are set to "Not AlloW" will not affect the amount of numbers on that
inmate's approved list .
. C.2.2.1.1.12.7.7

Date of Activation or Deactivation for Each Number

The date of activalion or deactivation field shall be aUlomatically updated by the lTS-l\ as a
telephone number is input on an inmate's authorized telephone number list and as a number is
deactivated ITom the list.
C.2.2.1.1.12.7.8

AleJ1

The ITS·II shalf be capable offlag!!ing individual telephone numbers for alen. If a call is placed
10 a telephone number which is flagged for alen, the system shall notify the user level which
placed the alen on the account A1ened telephone numbers shall only be seen by the user level
which enabled the alens. A1ens shall also be capable of being reponed as described in the
REPORTS section of this SOW

c.2.2. 1.1.1 1

Total lliumber of Call Minutes Remaining

The ITS-I! shall have the capability to allow the BOP to configure the total amount of minutes an
inmate may call per a user specified time period The Total Number of Cali Minutes Remaining
field shall display the difference between the BOP·defined maximum number of call minutes for an
inmat e and the 100al number of minutes the inmate has used for the specified period of time. It is
possible for the BOP defined maximum time limit to be unlimited. thereby, automatically disabling
thIS feature The Total 1'\ umber ofeall Minutes Remaining fIeld shall be automatically updated as
Ihe inmate places calls to reflect the total number of minutes remaining for the user specified tiine
penod The ITS·II shall automatIcally reset the number of call minutes remaining at the beginning
of thc ne~t IImc period
"
C.2.2.1.1.14

Collcrt Minutes Remaining

The ITS·II shall have the capability to allow Ihe BOP 10 configure the amount of collect minules
an inmale may cali per a user specified time period The Collect Minutes Remainins field shall
display the difference between the BOP.defined maxImum collect calling minules for an inmate
2.nd the total minutes for collect calls the tnmate has used for the specified period of time. It is
possible for the BOP defined maximum time limn 10 be unlimited. thereby. automatically disabling
[·26

•

this feature. The Collect Minutes Remaining field shall be automatically updated as the Inmate
places collect calls to reflect the number of collect minu:es remaining for the user specified time
period. The ITS-II shall automatically reset the number of collect minutes remalrung at .the
beginning of the next time period. Minutes shall only be deducted for answered calls
C.2.2.1.1.1 S

DireCI Dial Minules Remaining

The ITS-Il shall have the capability to allow the BOP to configure the amount of direct dial
minutes an inmate may call per a user specified time period. The Direct Dial Minutes Remain,"g
field shall display the difference between the BOP-defined maximum direct dial calling minutes for
an inmate and the total number of minutes for direct dial calls the inmate has used for the specified
period of time. It is possible for the BOP defined maximum time limit to be unlimited, thereby,
automatically disabling this feature. The Direct Dial Minutes Remaining field shall be
: automatically updated as the inmate places direct dial calls. ITS-II shall automatically reset the
number of direct dial minutes remaining al the beginning of the next time period. Minutes shall
'. only lie deducted for answered calls.
C.2.!.1.1.16

.. ,..

Total Number of Calls Remaining ..

The ITS-II shall have the capability to allow the BOP to configure the total number of calls an
inmau: may place per a specified time period. The Total Number ofCaJls Remaining field shall
display the difference between the BOP-defined maximum number of calls for an inmate and the
tOtal number of calls the inmate has placed for the specified period of time. It is possible for the
BOP defined maximum number of calls to be unlimited. thereby. automatically disabling this
feature The Total Number of Calls Remaining field shall be automatically updated as the inmate
places calls to reflect the tOlal number of calls remaining for the time period specified The ITS-II
shall automatically reset the total number of calls remaining at Ihe beginning of the next time
period Only answered calls shall be deducted Minutes shall only be deducted for answered
~lls
.
C.2.2.U.17

Number ofCollecl Calls Remaining

The ITS·1I shall have the capability to allow the BOP to configure the number of collect calls an
inmate may place per a specified lime period The Number of Collect Calls Remaining field shall
displa~' the difference belween the BOP-defined maximum number of collect calls for an inmale
and thc IOt21 number of collect calls the Inmate has placed for the specified period of time It is·
possible for the BOP defined maximum number of calls to be unlimited. thereby, automatically
disabling this feature The Number of Collect Calls Remaining field shall be automatically
updated as the inmate places collect calls to reflect the number of collect calls remaining for the
lime period specified Only answered calls shall be deducted

C-27

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C.2.2.t.U8

Number of Direct Dial Calls Remaining

The ITS·II shall have the capability to allow the BOP to configure the number of direct dial calls.
an inmate may place per a specified time period. The Number of Direct Dial Calls Remaining field
shall display the difference between the BOP·defined maximum number of direct dial calls for an
inmate and the total number of direct dial calls the inmate has placed for the specified period of
time. It is possible for the BOP defined maximum number of calls to be unlimited. thereby.
automatically disabling this feature. The Number of Direct Dial Calls Remaining field shall be
automatically updated as the inmate places direct dial calls to reflect the number of direct dial calls
remaining for the time period specified. ITS·" shall automatically reset the number of direct dial
calls remaining at the beginning of the next time period. Only answered calls shall be deducted

C.2.2.1.1.19

Balance

Transfe~

from FPPOS

The ITS·I1 shall be capable of allowing the BOP to enable and disable an inmate's capability to
transfer funds fTom their Commissary accounts to their ITS·II accounts. This shall be
configurable on an individual inmate basis or for a group..of inmates.

Co2.2.t.I.20

Balance Inquiry Allowed

The BOP shall be capable of enabling or disabling inmate capability to request and receive ITS-II
and Commissary balance inquiries over the telephone. This shall be configurable on an individual
inmate basis or for a group of inmates or an entire correctional facility.

C.2.2.t.t.21

Number of Telephone Initiated Fund Transfen

The BOP shall be capable of setting the number of times an inmate is allowed to transfer funds
from their Commissary account to their ITS· II account per day or per week. This shall be
confil!urable on an individual inmate basis or for a SHOUP of inmates or an entire correctional
facility The ITS·II shall also provide a method of scheduling the time of day and day of week in
which such transfers shall be allowed This schedule shall be contigurable by the BOP.
~

C.2.2.t.1.22

~

Assign IRmatf to Ttltphone

;

T~e ITS·" shall be capable of assi!,!ning an inmate(s) account to an individual telephone or groilp
of,lclephones so that the inmate(s) account may only plate calls from those designated telephones.
However. those telephones shall still be capable of being used by inmate accounts not specifically
assigned to them

C·28

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Personal Identifier

C2.2.1.1.23

The ITS-]) shall be capable of identifying the specific inmate account that initiated each
transaction made on the telephone. This identification shall be made through a unique identifier •
assigned to each inmate account. This feature is required for all direct dial calls but may be
enabled or disabled for collect calls as required by the BOP
C.2.:U .1.23.1

This identifier may be a Personal Access Code (P AC). a voice recognition
match. or some other method the contractor may propose which is unique and
secure.

C.2.2.1.1.23.2

This identifier shall be the only means through which an inmate can access their
lTS-1l account unless otherwise configured by the BOP.

C.2.2.1.1.23.3

This identifier shall remain assigned to a specific inmate account regardless of
transfers to other BOP correctional facilities. If a PAC method is used. the,
ITS-II shall provide the capability fo~,the BOP to assign a new PAC in case of
a lost or stolen PAC.

C.2.2.1.1.23.4

The ITS-II shall prevent personal identifiers from being used at multiple
telephones simultaneously.

C.2.::!.l. 1.::!3.!"

If the contractor uses a PAC as a personal identifier it must be'

A
B

C

D
C.::!.::!.I.::!

a minimum of nine digits,
randomly generated from one nationwide pool of numbers in such a manner that any
inmate may be automatically and randomly assigned any unused number from that
pool.
capable of be ins printed on a secure, carbon transfer envelope which only exposes
the inmate's name and register number for internal BOP distribution purposes The
contractor shall provide the carbon transfer envelopes for this purpose; and
capable of being viewed by BOP stafT with the appropriate user level.
Financial Transaction Information

The ITS·II shall maintain a detailed audit record of every financial transaction made to an
lOmate'S account and shall indicate the IOslIIution at which the transaction occurred.
Throughout the duration of a call, the ITS-II shalitrack time and status information about a call
and lenmnale a call if the ITS-II account balance limits for direct dial calls is reached.

C·29

•
C.2.2.1.2.1 ITS-II Account BaJanct
The ITS· II shall maintain a separate and indi\;dual account balance for evel}' inmate account
This account balance shall be the sum total of alllTS·lI financial transactions occurring for an
individual inmate account. This account balance shall be automatically updated in realtime for
each transaction made to an inmate' s account.
C2.2.1.2.2 Viewing Availa bility

Information associated with an individual inmate account shall be available for viewing by all
authorized users at all times regardless of other system activities.
C2.2. 1.2.3

Imm~diate

Update of Financial Information

All audit detail information related to inmate financial transactions shall be immediately and
automatically updated for each ITS·IJ account so that at all times the integrity of the account .
balance can be verified against the tinancial transaction d:tail audit records for that account
C2.2.1.2.4 Transaction Types

At a minimum. the following financial transaction activity types shall be recorded as a separate
line Item on each inmate's IT5·1\ account This information shall be available for viewing or
printing as required by the appropriate BOP staff.
A)
B)
Cl
01
EI
F)
C.2.2.1.:Z.~

Inmate·initiated transfer of funds from FPPOS to ITS·\I.
Commissary. initiated electroniC transfer of funds from FPPOS to ITS-II
Direct dial calls.
Manual financial transactions on JTS-1\
Transfer of funds from JTS-llto FPPOS.
Refunds on JTS·II
Transaction Informalion

.-\s applicable. each account transaction entry shall contain the following audit detail information
and shall be applied 10 an individual Inmate's ITS·II account audit detail record:
A) Date of transaction
81 Ttme oflransaction
(' 1 Amount of transaction
01 Indi\;dual initiating the transaction
EI CorreCtional racility identifier
F) Type oflransaction
G, liser entered reference number
C·30

_._--------------------

•
C.2.2.1.3

Telephone Call Record Information

C.2.2.1.3.1

Call Record Availa biliry

All calls shall generate call records which shall be accessible and available for reponing.. analysis.
or viewing. immediately upon the termination of a call. Any process requiring a delay in making
call records available (for example. on a daily basis or through a dov.nJoad process) is
unacceptable

C.2.2.1.3.2 Call Record Dau Structure for Direct Dial and Collect Calls
For the purposes of viewing call records. all call records shall reflect the most current record first.
followed in a descending date order to the least current call record. The ITS-II shall maintain
identical call record data structures or formats for direct dial and collect cans. The onl\'
acceptable differences shall be any indicators which identify calls as being either direct dial or
collect.

C.2.2.1.3.3 Call Record Storage
The ITS-II. at a minimum. shall suppon a call record database storage capacity of the most recent
12 month period per correctional facility for queries and repons. This storage shall be for all
incompleled and completed calls. It is eSlimaled that the number of records will ranee ITom 1
million to 4 million call records. per correctional facility. depending on the size ofth; correctional
facility for a 1:Z month period. Informational calls placed by inmates. such as balance requests.
call minutes remaining. etC, shall nOt affect this call record capacit)'. nor shall they be stored as
pan of the call record database.

C.2.2.1.3.4 Calls )';ot Completed
The ITS-II shall record the reason for a call not being connected in the call record using English
constructs The use of notification messages in the form of codes that must be looked up to
ascenain their meaning is unacceptable Records for collect calls shall indicate if the call was
refused and for what specific reason

C.2.2. 1.3.~ Call Rtcord Format
The followin!! information shall be captured and stored for all calls attempted where a personal
identifier has been used
A)
B)
C)
D)

Inmate register number
Inmate name
Correctional facility from which call was placed
Date

C-31

.....~

_._-------------

E)
F)
G)
H)
I)
1)
K)
L)
M)
N)
0)
P)
Q)

R)

•

Time.
Dialed digits.
Destination (city and state. or city and coumry for international calls).
Reason for call not completed
Duration from answer or acceptance.
Trunk definition (FTS. local. international. etc.).
Telephone location.
Station set number.
Charge for call.
Description as~igned to telephone number called.
Call type (interLAT A. intra1.A T A. local. etc.).
Alen (whether an alen was issued for that call).
Type of Alen (account or telephone number).
Recorder channel number.

C2.2.2

Inmate Accus to Telephones

The ITS-II shall provide features which provide the BO~.with the capability to manage inmates'
I!biiities 10 plil.;:e telephone calls Th·ese features, at a minimum. shall be capable of being applied
by the BOP as described below and as summarized by Elhibit J-6, Futures, Feature
Parameters. The ITS-II shall provide the BOP with an easy to use method of setting and
changing system parameters which can be applied 10 various groups of inmates or individual
inmates as deemed necessary by the BOP.

C.2.2.2. I

Future Groups

The ITS·II shall be capable of maintaining multiple groups of BOP configurable features derived
from ,·arious combinations of the features listed below

C2.2.2.1.1 The contractor shall state the number of feature groups which shall be made
available for configuration There shall be a minimum of six feature groups.
C2.2.2.1.2 The ITS-II shall pro~ide BOP Central Office stafi'the capability to assign access
pri,·ileges 10 user le,·els for any indi"idual feature. allowing those users to modift or
change features for individual inmates andlor individual telephone numbers only.
~

C.2.2.2.l.l A call shall be completed only iftne mmate anempting to place that specific call is
allowed to do so within the confines of the applicable feature group configuration.

C.2.2.2.2

Class of Str\'ict (COS)

The BOP shall be capable of configuring COS by configuring the parameters for each feature
within a ~roup The values of these parameters are listed below in Feature Descriptions. These
(OSs shall be capable of being assigned by BOP staff with appropriate access levels to individual

•

inmates or' groups of inmates as defined by groups of institutions, individual institutions. or li\ing
units.
C.2.2.2.2.1 The lTS·II shall be capable of providing multiple COSs for each feature group.

•

C.2.2.2.2.2 A COS shall be capable of being assigned as a default configuration to the follOl..;ng
levels.

A.
B.

C.2.2.2.3

Individual inmates
Groups of inmates as defined in sets oflivin!! units. correctional facilities. groups of
correctional facilities. or nationwide.
Feature Descriptions

The following features shall be made available for inclusion in each feature group as defined by
the BOP. If a feature is not included in a feature group, its function shall be considered not
applicable.
C.2.2.2.3.! Inmate Access to Inrormation

The BOP shall be capable of enabling and disabling an inmate's ability to receive account
information over the telephone. Each item of information (i.e .. ITS·1l account balance,
Commissary account balance) shall be capable of being enabled or disabled independently of the
other. by the appropriate BOP staff
C.2.2.2.3.2 Require or !'\ot Require Approved Telephone !'\umber List

The ITS·II shall have the capability to only process cails to telephone numbers on an inmate's
approved list This shall be capable of being configured by BOP staff with appropriate access. to
require or not require the use of a list for direct dial. coUect. or all calls.
C.2.!.!.3.3 Calling Schedules

The ITS· II shall be capable of providing the BOP with a means of setting various calling
schedules These schedules will control when telephones cut on or off within a correctional
facilny or when individual inmates are allowed to place calls within the correctional facility >
schedule The ITS· II shall provide the capability to configure multiple calling schedules for each
day, by correctional facility and individual !Ornate
C.2.2.2.3.4 Time Between Completed Calls

The ITS~1I shall be capable of being configured to control the amount of time between inmate
completed calls' The system shall be capable of placing this !imit on direct dial, collect, or both
types of calls The BOP shall be capable of enabling or disabling this feature. This time shall be

C·:;3

set by minutes and shall range rrom 0 to 9.999

•

C.2.2.2.3.S MlIlimum Number ofealls
The ITS-II shall be capable of being c,!nfigured for the maximum number of calls allowed per day.
week, month for an individual inmate or groups of inmates or all inmates. The system shall be
•
capable of placing this limit on direct dial, collect, or both types of calls. The BOP shall be capable
of enabling or disabling this feature. This setting shall range from 0 to 999.
C.2.2.2.3.6 Maximum Number of Minutes
The lTS·1I shall be capable of being configured for the maximum number of minutes of calls
allowed per day, week, month for an individual inmate or groups of inmates or all inmates. The
system shall be capable of placing this limit on direct dial, collect, or both types of calls. The BOP
shall be capable of enabling or disabling this feature. This time shail be set by minutes and shall
range from 0 to 9,999.
C.2.2.2.3.7 Call Duration
.The ITS-II shall be capable of assigning a maximum call duration for each type of call; direct dial,
collect or both. The BOP shall be capable of enabling or disabling this feature. This time shall be
set by minutes and shall range from 0 to 99.
C.2.2.2.3.8 Extra Dialed Digits Prevention
The ITS·II shall be capable of preventing the processing of additional digits from the inmate after
all call processes have been completed for an authorized call. This feature shall be capable of
being enabled or disabled. It shall also be configurable for the number of extra dialed digits
allowed before the call is cut off'. The system shall be capable of enabling or disabling this feature
for individual inmates and individual telephone numbers.
C.2.2.2.3.9 Branding Calls with a BOP Message
The ITS· II shall be capable of providing a BOP configured message to the called pany at the
beginning of each call for an individual inmate or groups of inmates or all inmates. The BOP sllall
be capable of modifying this message The BOP shall be capable of enabling or disabling this;
feature

.'

C.2.2.2.3.IO

Inlerminent BOP Message

The ITS-II shall be capable of providing a BOP configured message which is heard by the called
pany at variable limes during a call The BOP shall be capable of modifying Ihis message. The
BOP shall be capable of enabling or disabling this feature

('-34

•
C.2.2.2.3.11

Called Part)' Blocking

The ITS-II shall provide the called pany through a voice prompt v.ith a method 10 block all calls
placed ITom an inmate account. Calls blocked for an inmate account using this method shall not •
affect other inmates wishing to call that same number. Calls blocked using this method shall be
identified separately in all tables as blocked by the customer. Under no circumstances will the
contractor alter or interfere with the ability of the called pany to receive other collect caUs
originating from non-BOP correctional facilities (i.e .. placing LIDB blocks).
C.2.::.3

Inmate Use of the Telephone

This subsection describes the functions which shall be available to inmates through use of the
telephone
The ITS-II shall provide inmates with information relative to their ITS-II accounts and
Commissary accounts through the use of the telephone as described below.
C.2.2.3.1

ITS-II Account Balanet

The ITS-II shall be capable ofpro\;ding inmates with their ITS-II account balance information
and cost of their last call in dollars and cems \ia the telephone.
C.2.2.3.2

Comminary Account Balanct

The ITS·II shall provide a method
balance information
C.!.:!.3.J

b~·

which inmates may obtain their Commissa!)'

ac~ount

Dirtct Dial Minutes Rrmaining

The ITS-II shall provide a method b\' which inmates may request. and be provided. the number of
direct d,al minutes remaining as specified in their inmate profile
C.:!.2.l.4

~ umber

of Dirtet Dial Calls Remaining

.'

The ITS-II shall provide a method b\' whIch inmates may reGuesl, and be provided, the numb,r of
dlreCl dIal calls remaining. as specified In their inmate profile
C.l.:U.~

Collw Minutes Remaininl!

The ITS-II shall pro\ide a method b\' which inmates may reGuest, and be provided. Ihe number of
collect call minutes remaining as specified In theIr Inmate profile

•
C.2.2.3.6

•

Number of Colleel Calls Remaining

The ITS· II shall provide a method by ~'hich inmates may request. and be provided. the number of
collect calls remaining. as specified in their inmate profile.
•
C.2.2.3,7

Funds Transfer 10 ITS-II Accounl

The ITS-II shall allow an inmate to transfer funds ITom the Commissary system to the ITS-II
account via the telephone in whole dollar amounts only. This function shall require the contractor
to interface directly with the Commissary, FPPOS System. Please refer to Section C.2.3.4.1 for
further details. Upon selection of this function. the ITS·]) shall provide the inmate with account
balances of both the ITS-lJ account and the Commissary available balance.
The ITS-II shall determine if there are funds available in an inmate's FPPOS account to transfer to
the ITS-II. If there are funds available. the ITS-II shall prompt the inmate for an amount to
transfer. The inmate shall enter the amount via the telephone, Once an inmate has entered an,
amount. the ITS-]) shall provide the inmate with an opportunity to confirm the amount entered
·Tl1e lTS·1J shallth.:n deduct funds from the inmate's Comnussary account and add that amount of
funds to the inmate ITS-II account The ITS-II shall not allow funds to be transferred to inactive
ITS-II accounts with a status code of"Z ,.
Ir'there are insufficient funds available in the Commissary account. the ITS-II shall provide a
message to the inmate indicating that the Commissary balance is insufficient to process the
transfer request and shall terminate the transfer process
C.2.!.3.B

Placing Calls

Due to the various locations of BOP correcllonal facilities throughout the country. the contractor
shall propose a method by which inmates shall place calls to local long distance and international
locallons using a consistent dialing pattern nationwide Due to the fact that inmates transfer to
and from co"ecl1onal facililies on a frequent basis. the BOP desires a dialing method which is
standard for all co"ectional facilities The contractor shall be responsible for informing inmates
of the proper call process either through a voice message via the telephone or directions
"
permanentl\' affixed on each telephone In addItion. if PACs are used. dialing instructions shill be
pnmed wnh the PAC' "umber inSIde the carbon envelope
~
C'~lIs

;j

shall only be processed according to the procedures set forth below .
.",5 configured by the BOP, each inmale shall be required to input a personal identifier and
a valid telephone number for a call to be processed Once this information has been input,
the system shall perform all reqUired checks necessary to process the call. An inmate may
place only onc call 10 one telephone number after entry of his personal identifier.

(-36

•

B.

If any checks fail. the call shall be denied and a descriptive message shall be given
inmate indicating why the call was denied

C

If the call is processed. the illl)late shall be given the appropriate call processing tones (Ie.

\0

the

ring. busy. SIT tones. informational messages)
D.

Prior to the ITS·I1 terminating a call due to expiration of time limits or exhaustion of
funds. the inmate shall be informed at 60 and JO second intervals of the impendmg
expiration.
Voice Response and Message Capability

C2.2.4

The ITS·II shall be capable of providing prerecorded messages to inmates and called panies The
contractor shall ensure that the ITS·II provides sufficient access to voice storage and response
capability tb support the voice message and inmate interaction requirements pertaining to all
calling services. and to the ITS·I1 account management functions specified in this RFP Under no
circumstances shall an inmate with access to an ITS-II handset experience delay in placing. a call
or accessing their ITS-II account due to insufficient voic~ messaging and response resources
C2.2.4.1

Capability to Change Messages·

The contractor shall provide the BOP ",ith the capability to change all voice messages provided
by the sySlem
C2.2.4.2

Responding to Voice Prompts

The ITS·II shall be capable of accepting voice responses. andior DTlVIF keypad and rotary
telephone input as a means ofinpul for answering all sySlem provided questions or prompts from
. the inmate and called party
CZ.2.4.3

Usr or Voice Messaging

The ITS-II shall be capable of using the voice message capability 10 provide inmates information
or prom pI responses regarding
A

B

C
D

Call SCIUP
Call processing.
Reasons call could not be completed
Account information and transactions

C-37

~------.~

----------------

•
C.2.2.4.4

•

Keypad Input

The ITS· II shall be capable of using the voice response capability or keypad input to allow
inmates to'
A.
B.
C.
D.

Obtain account information
Perform call setup.
Process a call.
Perform account transactions

C.2.2.S

Inmate Telephone Account Financial Transactions

The following section provides information on the accounting processes which shall take place on
the ITS-II and. where necessary. interface with the Commissary system. The flowchans shown in
Exhibits ).7 to )·12 include general descriptive information on the following account transactions
and are not meant to be all inclusive. but rather to illustrate the general flow of the process. .
,~

B
C
D
E
F

Inmatc-ir;iti3ted transfer of funds from the comritissary account to the ITS-II account
(Exhibit J-7)
BOP initiated electronic transfer of funds from the Commissary account to the lTS-II
account (Exhibit J-8)
Debiting the ITS-II accounts for telephone charges (Exhibit J-9)
BOP initiated manual transactions made directly to the ITS-II accounts (depositS.
"ithdrawals and exceptions) (Exhibit J-IO)
BOP initIated transfer of ITS-ll account funds to the Commissary accounts for .inmate
releases (Exhibit J- \l)
BOP initiated call charye refunds made directly to ITS· II accounts (Exhibit J- I 2)

C.2.2.S.1

General Account Transaction Information

C.2.2.S. 1.1

S~stem

Interfaers

The ITS·\! shall be capable of interfacing with the Commissary system and manipulating all files
necessary In both the Commissary system and ITS·II. to complete each transaction and ensure
accountabilny of funds .
C.2.2.S.I.2 Accountability ofTransaclions
All orthe transactions identified above shall affect the inmate's ITS-II account. The result of
these transactions (in summary) shall be recorded and reponable for the BOP Central Office
account reconciliation process described in thIS section

C-38

-----~~----------

•
C2.2.5.1.3 Negative Balances
No transactions shall create a nelZative balance in an inmate's ITS-II account or Commissar.'.
account. It is incumbent upon the ITS-lito prevent such an occurrence
~

C2.2.5.1.4 Contractor Provided Flowchans
The contractor shall provide dctailed flowchans. consistent with the requirements outlined herein.
depicting how each of these transactions shall be accomplished and verified by the ITS-II
C.2.2.S.I.S Site Specific Codes
All of the ITS-II financial transactions shall be traceable to the rorrectional facility that performed
the transaction using site· specific codes to trace the transactions.
C.2.2.S.2

Inmatt-Initiated Transfer of funds From the Commissary Account to the
ITS-II Account (Exhibit J-7)
' .

An mmate shall be able to

tr:ln~fer funds from the com~issary system to the ITS-II through the

ITS·II telephone set. The BOP will not allow this fund transfer during certain periods of activity
on the FPPOS System. Therefore. the ITS·II shall provide the BOP with the capability to
manually cut off this function on an "as needed" basis and provide the BOP with a method of
creating a schedule for each individual correctional facility (i.e" after 4:00 PM)
A

The inmate shall begin the process by using the ITS·II telephone set to request an
electronic transfer of funds from the inmate's Commissary account to hiS/her'ITS-1I
account

B

The ITS-II will check to determine if the Commissary system is available to process the
transaction If not. the ITS·II will generate a message to the inmate stating. for example.
that "the Commissary system is not available at this lime"

C

If the Commissary system is available. the ITS· II will determine if their Commissary
account is currently in use Irthe account is in use. the ITS·II will generate a message to
the inmate stating that the transaction cannot be completed 3t this time

o

,

If the Commissary account is available. the ITS-II will inform the inmate ofthc amount of
funds available for transfer and prompt the inmate to enter a whole dollar amount for
transfer The inmate will then enter the amount. in whole dollar amounts. to be
transferred. The ITS·II will then determine whether this amount is less than or equal to
the CommissarY account balance If the amount of the transfer request exceeds the funds
available in the Commissar.' account. the transaction will abort and the inmate shall
receivc an insufficient funds message

C·39

•

•

E. . If sufficient funds are available for the transfer amount requested. the ITS·I1 will deduct
the funds. calculate the new Commissary account balance and insen the new balance into
the Commissary system The Commissary account for the inmate shall then be verified to
ensure that the transaction has. taken place correctly. All completed transactions shall be
appended to a temporary file on the Commissary system as a separate record. A record is·
also placed in an "error" file on the Commissary system if the transaction did not occur
properly. The inmate's ITS·II account shall be increased by the amount of funds deducted
from the inmate's Commissary account.

F.

Completed transactions shall be capable of being printed as an Electronic Transfer Repon
(ETR) at the correctional facility. Upon demand, this repon shall be capable of being
printed on a daily basis and shall contain. at a minimum, the following information
I.
Inmate Register Number.
2.
Inmau: Name.
3.
Date of Transaction.
4.
Time of Transaction.
S.
Amount of Transaction.
6.
Telephone initiating transfer.
7. . Correctional facility site code.

G.

The time period in which inmates may make a transfer shall be controlled by the BOP.

C.2.2.5.3

BOP Initiated Electronic Transfer of Funds From the Commissary Account to
ITS·II Account (EJhibit J·B)

Inmates may be allowed to buy telephone credits through the correctional facility Commissary
sales process All telephone credits purchased through this method are initially recorded in the
Commissan'. system
as an ASCII file The ITS·II shall be capable of interfacim! with the
.
Commissary system and applying this file to the proper ITS·II accounts. once initiated by the
appropriate BOP staff on the ITS·I1. The flowchan in Exhibit J.g includes the process now
performed .within the Commissary system. to aid the contractor in understanding how the entire
process takes place The ITS·II shall be responsible for processes within the area marked
"ITS-II ..

-

A

During the transfer process. the ITS·" must determine whether each of the ITS-II inmate
accounts is available for update and either process the transaction or print as "excepliofts"
those which cannol be processed on a Commissary Electronic Funds Transfer Exception
«EITE) repon. This Tepon shall include the following information for each exception:

2
3
4

Inmate Name.
Inmate Register Number
Amount ofiransaction
Reason for rejection

C-40
, 1

.,

, " ..

••

B.

All exceptions must be capable ofbemg entered in the ITS-II manually when the mmate's
ITS-II account becomes a\'ailable

C

An ITS-II account will not be a\'ailable if the account does not exist or if the inmate is
using the account at that time and the transaCllon being processed will reduce the ITS-II •
account balance. If an account is no! available. a transaction cannot be performed and
the exception rep on described in this section shall be printed

D

For ITS-II accounts which are available. ITS-II account balances are updated. and a
Commissary Electronic Funds Transfer (CEFT) repon is subsequently produced at the
correctional facility initiating the funds transfer (in both summary and detail format) This
repon shall contain the following information
I
Inmate Name.
2
Inmate Register Number.
3
Date of Transaction.
4
Amount of Transaction

C.2.2.5.4 '. Debiting ITS-II Accounts for Triephone.Charges (Exhibit J-9)

The ITS-ll shall be capable of debiting an Inmate's ITS-II telephone account automatically and in
real time as a call is taking place The ITS-II shall not be designed to require that the total cost of
a call is a\'ailable prior to allowing a call to be placed. Rather. an inmate shall be capable of
placing a· call if the ITS-II account contains enough funds for a twO minute call and the call shall
be terminated when the inmate's ITS-ll account balance is depleted to the point of not having
enou!!h funds to continue the call This shall occur prior to creating a negative inmate ITS-II
account balance
...

The process begins when an inmate initiates a direct dial call through an ITS-II telephone
set The ITS-II first uses the unique personal identifier to determine whether the inmate
possesses an active ITS-II account Ifnot. the ITS-II generates an error message to the
mmaie and abons the process

B

If an mmate has an active the ITS-II account. ITS-II determines whether the inmate has
suffiCient funds In the account to make a direct dial call

('

If an mmale has suffiCient funds to complete at least a IWO mmute direct dial call. the
1\ shall allow the call to be processed

o

... calliS first processed for admmistratlve checks (e g . whether the call is on that inmate's
allowed calliistl If any check IS unsuccessful. the ITS-II shall generate a message to the
mmate and abon the process If all checks complete successfully, the call is processed.

E

The mmate's ITS-II account IS then debited in whole minute increments automatically, in
real time. as the call is taktnl! place The ITS-II shall prevent this process from creating a
C -41

~II'S-

.' ..
'

negative balance in the inmate's ITS·11 account.

•

F.

The call record detail shall be updated. as shall the balance, on a real· time basis.
available for viewing immediaLely after the call is completed.

G.

If the inmate does not have sufficient funds in their ITS·II account to process a call. the
ITS·II shall generate an error message to the inmate and abort the process.

H.

There shall be no deductions made against an inmate's ITS·I1 account and no inmate call
usage tracking measures shall be compiled if the inmate hangs up or otherwise terminates
call setup prior to completion of the call to the called party.

C.2.2.S.S

8:ld

r.e

BOP Initiated Manual TranslICtions Made Directly to the ITS-n Accounts
(deposits. withdrawals and exceptions) (Exhibit J·]O)

It is anticipated that there will be times when the ITS·1l and the Commissary system will be
unable to communicate. or for some other reason a manual transaction will be necessary. There
must. therefore. be a screen for. input of manual transactions.
"
..
A.

The process shall be initiated when an ITS staff member accesses the ITS·II "manual
transaction" screen. Data for the manual deposit or withdrawal is then input on the
screen. and the inmate's ITS·II account is updated on a real·time basis. Input fields for
this function shall be:
Inmate name
Inmate register number
Date of transaction (automatically generated)
Type of transaction (defaulted from previous transaction. and selectable from a pick
lis\)
Amount of transaction
Comment (not a mandatory cnt!)·)

B

l'pon press,"!! thc COler key on Ihe last Input field of a transaction. a new transaction shall
be available for input and the previous transaction information shall be printed in
successIon

("

AI Ihe end of alltTansaclions. the repon will total all amounts and count the number of
transactions The Manual Transaction repon shall include. at a minimum:

.,

-3

Inmate register number
Inmale name
Date oflransaction
Type of transaction
Amount of transaction

6
7

C.Z.2.S.6

•

Total transaction amount
Total number of uansaCllons

BOP lriitiated Transfer of ITS·II Account Funds to the CommissaI')' 'Accounts
for Inmate Releases (Exhibit J-\\)
•

An inmate release occurs when an inmate leaves the BOP system In such a case. the BOP will

transfer any remaIning ITS-II account balance back to the inmate's Commissa~' account in lime
for out-processing of the inmate. An ITS-II "release input screen" shall be used for this purpose
A

The process shall be initiated when an ITS staff member accesses the release input screen
and enters information on that inmate, This creates a rcieaseJtransaction input form

B.

The ITS-II shall determine whether the ITS-II account is currently in use If so. the ITSII shall generate a response to the ITS-II terminal that the account is in use If not. the
ITS-II shall reduce the inmate's ITS-II account to zero and mark the status field of the
inmate account as "z," This transaction shall generate an Inmate Release Transaction
Repon which shall include at a minimum

..

-

~

4

5
6

C

Inmate register number
Inmate name
Date of transaction
Type of transaction
Amount of transaction
Comment

The ITS-ll shall simultaneously access the Commissa~' system. record the transaction.
and be capable of creating a file of the transactions that can be printed from the
Commissary system

C.2.2.S.7

BOP Initialed Call Charge Refunds :\1ade
(Exhibil J-12)

Directl~' 10

ITS-II Accounts

Ccnain situations occur which can cause an Inmate's lTS·11 account to be refunded a cenain i
amount of funds An ITS-II refund screen shall be used for thiS purpose
~

A

The process shall be initiated when an ITS staff member accesses the ITS-II refund screen
The ITS staff member will enter the Inmate register number. the telephone number for
which the refund is being given. and the amount of minutes to be refunded. The ITS-II
"'iIlthen calculate the refund to be given to the inmate A reason for the refund shall also
be entered on the screen The result oflhis transaction shall be an increase in the inmate's
ITS-II account equal to the amount of the refund

B

This transaction shall then generate a summary transaction repon at the correctional
(,-43

•

•

facilities printer This can record refund transaction repo" shall include. at a minimum

1.
2.
3.
4.
5.
6.
7.
8.
9,

C2.2.S.S

Inmate register number
Inmate name.
Date of transaction
Time of transaction.
Type of transaction.
Amount of transaction
Comment.
Telephone number called.
User name (automatically generated from the login),
BOP Central Office Account Reconciliation

At the end of each day (or as requested). a summary of all ITS· II financial transaction activities
(by type) for that day shall be capable of being viewed and printed, The repo" shall be capable of
being run by the BOP Central Office. as a summation of all correctional facilities or for individual
correctional facilities as requested In addition, a sum of aIlIIS·II account balances shall be
provided ccirT~sponding to the type 'ofrepon requested, '.'
A

The contractor shall determine and communicate in its technical approach. whether the
ITS· II wilt need to shut down due to this procedure, If 50. the contractor will indicate
the length of time that the system will need to be disabled to perform this procedure,

B

In addition to processing accounting: transactions at the correctional facility level, the
contractor shall provide the BOP's Central Office with the ability to balance and reconcile
the ITS·lltransactions for all correctional facilities against all of the ITS·II account
balances as needed Information to be included for periodic balancing are:

..'

Previous balance (from previous Tepon)
Electronic transfers (~i.)
a
Inmate (-)
b
Commissary (- )
c
Releases H
d
Subtotal of electronic transfers
Refunds 1-)
a
Local
b
Lon!! distance
c
International
d
Subtotal of refunds

('-44

•
4.

5.

6.
7.

Manual transactions (~,-)
Deposits (-)
a
Withdrawals (-)
b.
(.,.1-)
Exceptions
c
Subtotal of manual transactions.
d.
Direct dial calls (-)
Local.
a.
Long distance.
b.
International.
c.
Subtotal of direct dial calls
d.
Net sum of transactions.
ITS-ll account balances (0)

(0) The "ITS-II Account Balances" information shall be determined by acquiring the true sum of

the inmate balances within the system. not a calculated sum from transaction numbers in the
repon. The contractor must demonstrate how this balance is derived.
C.

These reconciliation rerom· shall be recoverable' for future use and organized with a
numbered tracking s y s t e m . ·
-

D

These reconciliation repom shall receive data from the identical. exact time frames for
each correctional institution included in the repon (e.g., 10/1/98 to 10131/98). They shall
aiso be capable of reponing data since the time of the previous repon and include the
balances from the previous repon

C.2.2.6

Management of Inmate Transfers Between Correctional Facilities

An inmate' s personal identifier shall be capable of being used at all BOP correctional facilities to
place collect calls immediately upon arrival at a new correctional facility, when transferred from
one BOP correctional facility to another The inmate's account. however. shall remain the
responsibility of the correctional facility from which the inmate transferred until such time that
staff at the new correctional facility change the inmate's correctional facility assignment ITS-II
shall pro\'id~ the BOP a method of changing the site assignment of accounts when inmates
transfer between correctional facilities (all call records shall be stamped from the correctional
facility the call actually uriginated from)
A

Cpon transfer of the inmate. the inmate' s ITS-II account shall remain designated at the
original correctional facility until such time as staff at the receiving correctional facility
change the designation ..

B

~o financial transactions shall be conducted upon an inmate's account except by the
correctional facility to which the inmate account is designated. If an ancmpl is made to
perform a Commissary transfer from a phone designated at a correctional facility other

(-45

•

·;-'~

than the correctional facility the inmate account is assigned. the inmate shall be pro\;ded
with a message such as, "this transaction is not authorized from this correctional facilit\'"
and cancel the transaction. If a staff member enters the register number of an inmate .
already created in the ITS-II but assigned to another correctional facility, the system shall
inform the staff member. (example) "this account is assigned to John Doe at Fe)
•
Somewhere. Would you like to retrieve this account? Yes or No." Upon the staff
member responding "yes," this account will become designated \0 the new site
C.

Once the account is designated by the receiving correctional facility. aU subsequent
account transactions made for or by that inmate shall be coded to that correctional facility
for purposes of reponing. querying. and balancing.

D.

The rrs-I1 shall be capable of providing rcpom of aCCOl!nt movement specific to
correctional facilities so that correctional facility staff may determine which inmates have
transferred to and from their correctional facility. These reports shall print each day at
those correctional facilities that have "gained" or "lost" inmate accounts. The repol"! shall
include inmate name, register number, and the ITS-II account balance. This repon shall
selZrelZau: and provide separate totals for "gained" accounts and "lost "accounts balances.

--

E

..

'.

The ITS-II shall also be capable ofrepol"!ing personal identifiers which have been used at
correctional facilities different from the correctional facility to which the inmate's account
is assigned.

C.2.2.7

Queries and Reports

The BOP requires repol"!ing and querying methods and capabilities which provide maximum
flexibility. a user friendly interface. speed. efficiency, and accuracy. The contractor shall therefore
make available a sophisticated information retrieval system with maximum flexibility, speed. and
ease of usc ..
C.2.2. 7.1

Queries

The ITS-II shall provide the BOP the capability to retrieve. analyze. and n::pon IT5-1\ information
according to its dynamic mission-defined needs
C.2.2. 7.1.1 All data dealing with inmate use of the ITS-II. telephones. telephone numbers called.
call types. restrictions. and all other data residing in the data base shall be accessible
to BOP ITS staff. limited only by user access level. as determined by the BOP
Central Office
C2.2.7.1.2 50ning shall be able to be performed on data base queries to a minimum oftive
levels.
~:
,

C,.2.2.7.1.3 All queries shall be able 10 be sent

10

a screen and/or printer.

C-46

... ....

·

-

'

•

,

I

C.2.2.7.1.4 All queries shall be capable ofbetng saved for future use and available from a pick
list at the access level and loca1l0n ITom whICh they were created
C.1.2.7.1.5 All queries created by Central Office ITS staff shall be capable of being saved and •
distributed to user levels for use ITom a pick list
C.2.2.7.1.6 The contraclOr shall pro\lde a screen·oriented form of data retneva!. in which BOP
personnel with the proper access level shall have the following options to

A
B
C
D

Pick ITom standard. defined Queries with no modifications (from saved central Irst)
Pick from standard. defined queries with no modifications (lTom saved local Jist l
Pick from standard. defined queries ";tn modificatfOns (which can then be saved
under another name either centrally or locally)
Put Together queries in a free·form manner (which can then be saved. either cenTra\l~
or locally).

C.2.2.i.l.7 The COntraC1or shall pro\ide all three oftbe following methods for the BOP to
format and modify quenes

A
B
("

Direct typing of Query information r·SQl·like·· structure)
Cse of a "pick list"· for fields. logIcal operators and relationships betweell.'among
fields
English.language query creatlOn (via utiliution of a user interface in COmbinallOn
with the data base)

C.1.:!."7.1.& All queries shall have a "drill·down" capabihty in which users are capable of using
the results from one Quer\" as Input to a second or tRlrd query: to a minimum of three
levels ThiS capabilu\" shail be made available through the use of an ··SQl·like"
Slructure or an Enghsh·language user Interface syslem
C.:!.2."7.1.'I .... 1 no lime shall a BOP ITS slaffmember be forced to use a native dala base
language. such as Ihe SOL 10 relnevc Informal Ion. although this capability shall be
made available to BOP ITS staff
i
C.l.:!. - .1.I 0

BOP COTlCCllona\ facihl\ personnel shall be limned to data relneval specifically
to which
the\' are associated unless
deahnc ""th the correctional faeiluv
.
,
specifically granted Increased access by the BOP Central Office

C.l.:!. ':' .1.11

BOP Central Office ITS personnel shall have unlimlled access to data retrieval"
Central Office ITS personnel shall. therefore. have access to ITS· II data on a

-

s\"stem·wld~ basl~

C.:!.l."7.l.Il

The contractor shall prOVide the maximum lime the ITS·II will take on a fully

loaded database to retrieve the following screens:

A.
B.

C.2.2.7.2

Any Individual Inmate Account
Any Individual Inmate ~all Record(s)

General Report,Capabilities

The BOP requires an lTS·1I which pro~ides extremely flexible reponing capabilities. as well as.
an easy to use interface for users to create new repons as needs arise. The ITS-IJ shall also
provide reponing capabilities with speed and accuracy. Speed ofrepons is highly desired by the
BOP. therefore. the ITS· II software and hardware shall be designed to maximize all repon
processing speeds. The contractor shall work with the BOP throughout the life of this contract to
attain maximum repon speeds.
C.2.2.7.2.1 All repons shall be capable of being generated by correctional facility or
combinations of correctional facilities dependant on the user level requesting the
repon.
C.2.2.7.2.2" . SOP Central Office staff shall have the capability to assign access to repom to
various user levels BOP Central Office staff shall also have the capability to limit a
user's access to a correctional facility or combination of correctional facilities.
C.2.2.7.2.3 The BOP shall have the ability to change the type ofinforrnation presented in each
report. that is. the BOP shall have the ability to custom design reports to show
specific information BOP requires Customization includes repo" information
(content) and the information soning sequence and presentation
C.2.1.-:-.2.4 BOP Central Office staff shall have the capability to assign reports to categories so
that reports with similar functions can be grouped together under one menu item.
C.2.2.7.2.!' The BOP requires the capability 10 program repom to be generated automatically.
These repom shall be pnnted. as determined by BOP personnel. when a cenain call
IS made. "'hen a cen.in transaction with the Commissary system andlor the AIMS is
made. or al a cenain time of day This capability is intended \0 act as a notification
to BOP staff when targeted CIrcumstances occur.
~

C.2.2.-:-.2.6 The automatic repon generation programming shall be able to be performed at each
correctIonal facility or system· wIde
C.2.2. i .2. i

Printed repom shall Include only necessary infonnation and pages. Blank pages
shall not be insened into repons unless a legitimate reason exists.

C.2.2.7.2.1 The cOntraclor shall provide rapid report searching and printing capabilities.

(-48

':'

•

.....

C.2.2.7.2.9 All reponed data shall be capable of being stored on electronic media teg . tape.
CD-ROM. or diskette)
C.2.2. 7.2.10

Repons shall be capable ofbemg created and viewed on-line at all terminals b\
a user with the proper access level and shall be able to be printed as determin~d
~BOPst~
.

C.2.2.7.2.11

All repons shall be capable of being recreated \\o;thout the need to slOre the
original Tepon to electronic medium.

C.2.2. 7.2.12

All printed repom shall include. at a minimum. the following basic informauon

B.· Time.
C Terminal making request.
o Parameters of the repon
E
Number of pages.
F .. Repon heading.
G End oi repon foot::r
H
Repon heading on each page
I
Repon title on each page
C.2.2. i .2.13

A
B
C

o
E

C.2.2.i .2.14

A

B

C.2.2. '7 .2.1!'

The header of the repon must be on the same page as the beginning of the
repon and on each page of Ihe repon and contain the following basic
information.
Correctional facility name
Repon name
Date and time of repon
Page number
Field headin!.!s
The repon fooler mUSI be on Ihe same page as Ihe end of the Tepon except
when normal page breaks occur and include Ihe following:
All columns cOnlammg dollar values shalitotal at the end of the column
I<
If the repon contains mmale mforrnalion. the repon shall include a tOlal count of
inmales
All columns containing mmUles of call durallon or countS of calls shall include a lotal
of this information
The BOP shall have the capability to create groups of related information such
as telephone numbers. inmate register numbers. correctional facilities. units.
which can be used as input for search cmeria These groups or batches shall
(-49

•

•

be capable of being named and saved for use as search criteria input for future
queries and reports.
C.2.2. 7.3

Specific Repons

The ITS·II shall provide the following standard reports:

C.2.!.i .3.1 Chronological List of Calls Repon
Produces a list of call records within the specific start time/date and end time/date ranges
specified.
This report shall include the following information in chronological order:
A.

B.

e.

D.
E.
F.

G
H
I
J

Inmate register number.
Date of call.
Time call started.
Duration of call.
Dialed number.
Call type (local. long distance. international)
Trunk.
Station set number.
COSI of call.
Recorder channel number.

C.2.2.i.J.2 Daily Call Volume and Charge Repon
Provides a daily sum of call charges. call count. and call duration for each type of direct dial and
colieCI call

Search criteria include slart dale. end dale. and correctional facility. The report shall be capable
of reportin!! multiple days and multiple correctional facilities if requested.

"

C·SO

•

•

C.2.2.7.3.3 Telephone Account Statement
This repon shall be a comprehensive.repon of an inmate's ITS-I! account transactions It shall
include collect calls. This shall be similar to a typical bank statement. ha\ing a separate line for •
each transaction. beginning with an account balance and shall include a running balance after each
transaction. The statement shall include a bel!inninll and endinl! balance. The bel!mnin!! balance
shall be the balance as of the requested repo; "fro~" date Th~ ending balance shall the'
balance as of the requested repon "ending" date

b;

This repon shall provide an option to include zero dollar transactions such as collect calls.
Search crit~ria shall include:
A.

B
C.

Inmate register number(s).
Beginning date
End date

Each iine of de!ail on the statement' shall include
A
B
C
D
E
F
G
H

Date of transaction
Time of transaction
Transaction type (call. deposit. transfer)
Correctional facility site code (where transaction occurred)
Call duration (ifapplicable)
Dialed number (if applicable)
Amount
Balance

The repon shall be printed in order from oldest date to the most recent date.
C.2.2.i.J.4 ITS-II AccountS Transferred and Receiyed

The ITS-II ~hall be capable ofreponing to the BOP Central Office which accounts have been
transferred for a user specified penod ofume It shall also provide this repon of accounts
transferred and received for correctional facilnv ITS staff The repon shall be soned by site then
date It shall Include
A
B
C
D
E
F

Inmate register number
Inmate name
Transferred from correctional facility site code
Transferred to correctional facility ~'te code
Date of transfer
ITS-II account balance at the lime of transfer
CoS I

•

G. . Total amount of transferred account balances.
H.
I.

•

Total amount of received account balances.
Net amount.

C.2.2.7.3.5 Frequently Dialed Numbers Report

Lists all telephone numbers meeting the user input parameters of number of times dialed within a
specified time frame.
Search criteria include start date. end date. and the minimum number of times a telephone number
must have been called to be included in the repon.
Output shall contain information relative to each of the frequently called numbers included in the
repon. This includes: inmate name. register number. date. time. recorder channel number.
correctional facility site code of the inmate. and shall be soned by telephone number and
chronologically according to the starting date and time of each call.
C.2.2.7.3.6 Telephone Number Usage Report

The repon lists calls made to a user specified telephone number or numbers.
The search criteria is the telephone number or any wildcard combination of number and other
criteria allowing the user to filter the output if necessary for completed calls. uncompleted calls.
direct dial calls. collect calls. andlor user defined duration of calls.
Output lists calls to a specified telephone number (or pattern) sorted bv telephone number and in
chronologIcal order The output shall contain the following.'
.
A
B
("
D
E
F
G
H

I

Inmate name
Inmate regIster number
TeJephone number
Date of call
Time of call
Telephone used
Recorder channel number
Cost of call
Correcllonal facility site code of the inmate

C·52

;.

•
C.2.2.7.3.7 Suspended Telephone Accounts Repon
Lists all inmate telephone accounts whose calling pri\ileges have been suspended either
temporarily or indefinitely.
The search criteria shall be for current suspensions andior expired suspended accounlS
Output is soned by inmate register number and date of suspension.
C.2.2.7.3.8 Approved Telephone Number Search Repon
The repon lists inmates who are authorized to call a specified telephone number. or multiple
numbers or number pattern defined by using wildcards.
he search criterion is the telephone number (or number pattern).
Output is soned by telephone number and by inmate register number.
C.2.2.7.3.9 Alen 1'iotiticalion Repon
The ITS-II shall be capable of providing a repon for all telephone numbers or accounts which
have been placed on alen status by BOP staff
Search criteria shall include a stan date and time. and an end date and time.
Output shall include in chronological order the following as applicable
A

B
C
0
E
F
G
H
I

Type ofalen
Inmate name
Inmate register number
Telephone number
Date of call
Time or call
Telephone used
Recorder channel number
Cost of call

~

C-53

.-_ .........

_-_ ....•._ - - -

•

•
C.2.2. 7.3.10

Telephone "'umbers Called by More Than One Inmate

The ITS-II shall be capable of produ~ing a detailed and'or summa!)' repo" of aJltelephone
numbers called by a user defined amount of inmales for a usel defined time period. nOt to exceed"
the previous thiny days, The repon output shall be grouped by telephone number and contain
A,
B.

e.

0,
E.
F.
G.
H.

Inmate register number
Inmate name.
Date of call.
Time of call.
Telephone used.
Recorder channel number.
Cost of call.
Corr.ectional facility site code of inmate.

C.2.2.7.3.1J

Telephone Numbers Listed on

Mo~~

Than One Telephone Account

The ITS-II shall be capable of producing a repon which lists all telephone numbers which are
listed on more than one inmate's telephone account The repon output shall be soned by
telephone number. then by inmate. and contain.
A Telephone number
B
Inmate register number
C
Inmate: name
D Date placed on list
E
Correctional facility site code of inmate
C.2.2. '; .3.12

Quanti!)' of Calls Placed

The ITS-II shall be capable of reponing all inmates who have placed calls in excess of the
parameters defined for the repo" by the BOP user The user shall have the option of selecting
this repon for direct dial calls only, collect calls only. or both The user shall be able to input the
amount of calls within a defined time period that the repo" will generate output for. The rep on
shall be capable of being printed as a detail and lor a summary. The output shall be soned by calls
in descending order and shall include
,
A
B
C
D

~umber

of calls
Inmate register number
Inmate name
Correctional facility site code of inmate

..

•
C.2.2. i .3.13

Quantit), of :\linutes Called

The ITS·II shall be capable of reponing all inmates who have placed in excess ofa user defined
number of minutes ofealls within a user defined amount of time. The user shall have the option •
of selecting this rep on for direct dial calls only. collect calls only, or both. The rep on shall be
capable of being printed as a detail or summary The output shall be soned by minutes in
descending order and shall include
A.
B.
C.
D

Number of minutes
Inmate register number.
Inmate name.
Correctional facility site code of inmate

C.2.2.7.3.14

Blocked Telephone

~umbers

The ITS-II shall be capable of producing a repon of telephone numbers blocked from calling
This shall include numbers blocked system· wide. for individual accounts, and shall indicate the'
;'caso" for being blocked (ie. blOCKed by staff. t>locked"f)y called pany). The repon output shall
include
.
A.
B
C
D
E
F

Telephone Number
Reason for block (comment or description)
\\'ho placed the block
Register number (if blocked for individual inmate)
Inmate name (if blocked for Individual Inmate)
Correctional facility site code ofmmate

C.2.2. 7.3.1!'

Extra Dialed Digits

This repon shall provide information for each call which the ITS-JI detected extra dialed digits
ThiS repon shall be capable of being generated ITom a user defined period of time. The output
shall be In chronological order and shall include
A
B
C
D
E
F
G
H

Date
Time
Dialed number
Register number
Inmate name
Telephone
Recorder channel number
CorreClional facility site code of inmate

.'

(·55

.----_._-_._-------------

•
C.2.2.7.3.16

•

Local Exchanges

This repon shall provide each correc~ional facility with a repon of all exchanges which ate
designated within the local calling area for that panicular correctional facility.
C.2.2.7.3.!7

•

Percentage Grade or Blocking Report

This rep on shall provide information on a line by line basis for the percentage of calls blocked at
specific hourly time periods for either telephones or call types (i.e., FTS Long Distance. local.
international. collect local). The output shall include the number of calls anempted. the number of
calls blocked. and the percentage of blocking.
Search criteria shall include stan date. end date. and time interval in minutes.
C.2.2.7.4

BOP Central Office Administrative Reports

The BOP Central Office shall have the ability to create reports on a system-wide basis and for
. each correctional facility.
..'
C.2.2.7.4.1 The BOP requires the ability to program reports that would be generated at
predesignated times or on an ad-hoc basis.
C.2.2.7.4.2 All repons. whether site specific or ITS-ll-wide. shall be accessible ITom any
terminal at any correctional facility. Limited only by user level of person logged into
terminal.
C.2.2.7.4.3 The BOP Central Office shall have the ability to query the database and generate
repons from all correctional facilities or any group of correctional facilities.
C.1.2.7.4.4 The database shall allo ..... multiple correctional facilities
simultaneously
C.2.2.7.~

10

query the database

General Revenue Repon Requiremenl5

The ITS-II comractor sholl provide revenue repons to the BOP COTR and Contracting Officct
withm thiny days of the close oflhe month being reponed upon. These repons are separate
from Ihe monthly maintenance repomng process described elsewhere.
C.Z.2.7.S.1 The ITS-II contractor shall provide these repons. in hard copy andlor electronic
medium formats All revenue figures shall be calculated and displayed in U.S.
dollars and cents
C.2.2.7.S.2 For purposes ofthcsc repons. call types are defined as follows. Other call types
C-56

•

shall be added as necessary
A

Direct Dial Call Types
1.
2.
3
4
5

B.

Direct dial local
Direct dial long distance
Direct dial international (excluding Canada and Mexico)
Direct dial Canada
Direct dial Mexico

Collect Call Types
2
3.
4

Collect (other than international)
Collect international-.-ifprovided and for countries serviced (excludine Canada
and Mexico).
Collect Canada
Collect Mexico

C.l.2.7.6 . Specilic Monthly Revenue Rcpons

The contractor shall provide the BOP with the following repons.
C.2.2.7.6.1 Summary Minutes

b~'

Call Type

The contractor shall provide as pan of the monthly revenue repons a Summary Minutes by Call
Type repon which shall include the follo,""ng
A
B

'umber of calls (by each call type)
of calls (by each call t~.. e)

~1mutes

C.2.2. 7.6.1.1

Totals shall be calculated and displaved for direct dial calls. collect calls. and
total calls for each correctional facility

C.2.2.7.6.1.2

Totals shall be calculated and displayed for direct dial minutes. collect minutes.
and total minutes for each correctional facility

C.l.l. 7.6.1.3

Totals shall be calculated and displayed for each call type. direct dial calls.
collect calls. total calls. direct dial minutes. collect minutes. and total minutes
across all correctional facilities and shall include sub-totals and totals for each
of the categories

C-57

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C.2.2.7.6.2 Monthly Distribution of Revenues
The contractor shall.provide as pan qf the monthly revenue reports a Monthly Distribution of
Revenues report. This repon shall be the summation of all calls placed through ITS for the entire
BOP. The following information shall be included for each call type:
A.

B.
C.
D.
E.
F.
G.

H.

Totals minutes by call type for direct dial.
Rate per minute due contractor by call type for direct dial.
Amount due contractor by call type for direct dial.
Grand totals for direct dial minutes and amount due contractor.
Gross billable revenue by call tyPe for collect calls.
Percent due the BOP by call type for collect calls.
Amount due BOP by call type for collect calls.
Grand totals gross billable revenue and amount due BOP.

Net revenues due contractor or BOP shall be calculated and presented at the end of the report.
Payments due to the BOP shall be submitled within 60 days of the end of each month in whi~hthe
al!s~rurnd
..
The contractor shall provide supporting documentation for the Monthly Distribution of Revenues
report by providing the following information for each individual correctional facility.
A
B
C

o

E
F

G
H
I

J
..
L
\1

,

Correctional fac:lity name
Direct dial minutes by call type
Rate charged to the BOP by the Contractor for direct dial calls by call type.
Amount due contractor for direct dial calls by call type.
Summary lotals for direct dial calls (minutes and amount due the contractor) by
correctional facilit),
Summary totals for direct dial calls (minutes and amount due the contractor) across all
correctional facilities
Collect call minutes bl! call type
Summary of collect call minutes by correctional facility
Summary of collect call minutes across all correctional facilities.
Gross billable collect call revenue by call type
BOP percentage cf gross billable colleCt call revenue by call type
~
Amount due the BOP by the Contractor for collect calls.
Summary totals for collect call revenues (gross billable and due the BOP) by correctional
facility
Summary lotals for collect call revenues (gross billable and due the BOP) across all
correctional facilities

C-58

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•

•

C.2.2.7.6.3 Monthly ITS-n Direct Dial and Collw Revenue Analysis

The contractor shall provide as pan of the monthly revenue reportS a Monthly ITS-II Direct Dial
•
and Collect Revenue Analysis Repon which. at a minimum. shall include.
A
B.

C
D.
E.
F.
G.

-

Primary
. son: direct dial and collect caIliniz
SecondaT)' son: by correctional facility.
TeniaI)' son. by month in fiscal year (beginning of October through end ofSeptemberl
Fields: revenue for each call type
Totals: total revenue across all direct dial or collect call types per month in fiscal year
Subtotals for each call type for a correctional facility across the fiscal year (to date)
Grand totals of all subtotals shall be calculated and displayed.

C.2.2.7.6.4 Direct Dial Sales by Correctional Facility

The contractor shall provide as pan of the monthly revenue reportS a Direct Dial Sales by
Correctional Facility Repon which. at a minimum. shall il)clude:
A
B
C
D

Fiscal year average inmate population to date (derived !Tom the number of inmate ITS-II
accounts that have had account activity during the period).
Total direct dial revenues.
Annualized average total direct dial revenue per inmate.
For each direct dial call type
Revenues.
Annualized average revenue per inmate
The number of active inmate accounts with no activity during the period.

Totals shall be calculated and displayed for each field
C.2.2.7.6.~

Inmate Usa1!e

The contractor shall provide as pan of the monthly revenue repons an Inmate Usage Repon
which. at a minimum. shall include
A
B
C
D
E
F
G
H

~umber

oflTS accounts that have had activity during the period (inmates).
Minutes per inmate per month (for each direct dial call type).
!'umber of calls per inmate per month (for each direct dial call type).
Minutes per inmate per month (across all direct dial call types).
,,"umber of calls per inmate per month (across all direct dial call types).
Mmutes per inmate per month (for each collect call type).
Number of calls per inmate per month (for each collect call type)
Minutes per inmate per month (across all collect call types).
C-59

•

•
I.

J
K.
L

. Number of calls per inmate per month (across all collect call types)

Number of active inmate accounts with no acti\;ty during the period
Minutes per inmate per month (across all call types)
Number of calls per inmate per month (across all call types).

Totals and averages shall be calculated and displayed for each field and for both minutes and
number of calls.
C.Z.Z.7.6.6 Cumulative lisage for Fiscal Year

The contractor shall provide as pan of the monthly revenue repons a Cumulative usage for Fiscal
Year repon which, at a minimum. shall include:
A.

B
C.

o

Percentage of total call minutes (for each direct dial call type).
Percentage of total call minutes (for each collect call type).
Percentage of total call minutes (across all direct dial call types).
Percentage of total call minutes (across all collect call types).

Tmals and averages shall be calculated and displayed for' each field
Note Inmate usage and Cumulative Usage for fiscal year repons may be combined into one
repo"

C·60

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C.2.3 Administrative Requirements
This section describes BOP admmimallve requirements

•

Data Security

C.2.3.1

The ITS·II contractor shall work with the BOP te maintain control of all data y,;rhm the ITS·II
and all data stored on backup or archived medium. This data is considered "sensitive" and shall
not be disseminated to anyone without prior approval of the COTR or as designated within thiS
contract.
C.2.3.1.1

a.
b.
c
d.

The minimum measures which shall be taken by the contractor to ensure this data
integrity include.

Degaussing or wiping of hard disk prior to being used in any other system.
Degaussing or wiping of hard disk prior to being shipped to any outside vendor,
..
Reports shall be shredded prior to disposal,
Backup and ar.::hive data shall be maintained in a fireproof companment and in an area
separate from that which contains ITS·II.

C.2.3.1.2

The ITS·II shall also be protected ITom access via the Internet. If the contractor's
proposed ITS·II solution is connected either directly or indirectly to the Internet. the
contractor must provide a secure firewall protection scheme to protect the ITS·II
The contractor shall also describe this protection scheme to the BOP in liS response
to this SOW

C.2.3.2

ITS-II Backup Capability

The BOP is seeking a system which can recover quickly ITom any failure Due to the fact that
inmate funds will be maintained on the ITS·II system. the contractor shall provide all backup and
archival hardware. supplies. and recover)" procedures which wili ensure that no data will be losl.
The followlllg are the minimum requirements for thiS capabiht\,
C.2.3.2.1

The COntractor shall provide a backup and archiving facility capable of performing
backups concurrently ",th ongomg full operation of the d.atabase with no readily
apparent affect on any applicallons running concurrently with the backup activity.

C.2.3.2.2

The backup shall protect against loss of data or service at any BOP correctional
facility for any type of system failure

C.2.3.2.3

The contraClor shall be capable of recovering all data.
operation. USIIl£ a syslem backup

(·61

10

the point of full system

.- ---.--.. -

C.2.3.2.4

•

•

The contractor shall pro\;de at a minimum a weekly system backup that shall be
maintained at a location distinct and separate from the location of the contractor's
(ent,al Operations Facility. to be available in case of oat ural disasters. such as fire or
flood. .

•

C.2.3.3

Dala Archiving

The ITS-II shall provide hardware and software capable of archiving all inmate dala' A/I data
older than 12 months may be archived and shall be maintained for six years This archived data
shall be capable of being viewed. queried. and reponed on. by BOP Central Office staff in the
same manner as the ITS· II realtime operations without having to disrupt ongoing operations
C.2.3.3.)

The ITS·IJ shall support a data archival capabiliry th"t allows search and retrieval
functions of historical inmate telephone account information.

C.2.3.3.2

The ITS-II shall support the full administrative query and reponing functions on
archived data that were possible on the data at the time it was generated'

. C.2.3.3.3 . The ITS-II may be configured to automatically archive data from all correctional
facilities that is older than 12 months The most current 12 months of information
shall be maintained in the working database
C.2.3.3.4

Archived data shall be kept for a minimum of six years.

C.:!.J.3.!'

The data archival system shall have a minimum data transfer rate 0000 kilobytes
per second

C.2.3.J.6

The contractor shall provide all magnetic or other media necessary for this archiving
process

C.2.J.3.7·

If any financial data is removed due to the archival process. one entry shall be placed
the financial record of each account to renect the balance of the archived entries
which have been removed

In

C.Z.J.4

ITS-II Extemallntrrfacrs

The nop maintains computer systems and networks with which ITS-II must be capable of
Interfacing
C.2.3.4.l

Fednal Prison Point of Sale (FPPOS) System

The BOP provides inmates with an opponunlty to purchase Commissary items which are
approved by Ihe Warden at each correcllonal facihl~' which are not otherwise provided within Ihe
correcllonal facilllY Correctional faciltty Commissaries provide these items to inmates under a

c-6::

•

•

controlled environment. Inmates pro\ide their requests for Commissary itcms to BOP staff The
requested items are sold to inmates and the funds are deducted from the inmates' Commissar.'
account
The FPPOS System is the accounting and inventol)' software package used to maintain inmate •
Commissary accounts and Commissary inventol)' The FPPOS System pro\ides BOP staffwltn
automated Commissary sales to inmates through the use ofUPC scanning equipment and sales
rcceipt printers FPPOS Commissary accounts are the source of credits for debit accounts in the
ITS-II The FPPOS System and ITS-II must interact to exchange accuratc credit information
between systems.
FPPOS System is not a centralized system and is deployed and operated as independent LANs at
each correctional facility. The contractor' s ITS- II solution shall be required 10 int erface ",th each
of the FPPOS Systems in operation at BOP correctional facilities served by the ITS-II The
.
contractor shall configure the FPPOSnTS-1I interface to be implemented locally; the contractor
shall not configure a single point of interface to all FPPOS Systems.
The FPPOS System currently operates on a Novell Net~ork Version 3.12 LAN based system,
using DOS Version 5.1. The·program software is wriuen in COBOL programming language
utilizing a file based Novell program for record management called Btrieve. The FPPOS System
currently generates 18 data files in both Btrieve and ASCII format. The ITS-II shall interface
v.ith the FPPOS System by accessing these files directly. In no case will the contractor be
required to create or modify FPPOS application software. The ITS-II shall suppon the following
capabilities for the FPPOS interface
A

The ITS·II shall physically connect to the LAN supponing FPPOS and provide all
necessary software and hardware 10 facilnate this connection

B

BOP Central Office staff shall be capable of accessing all FPPOS LANs through the ITSII WA!\

r

The ITS·II shall be capable of accessing the FPPOS file systems as a NetWare user.

o

The ITS·II shall be capable of the following operations on Btrieve files: open, close. read.
edn records. delete records. create records

E

The ITS·II shall not corrupt FPPOS files in the event of ITS-II failure

C2.3 .... 1.1 Mulliple FPPOS Symms·al BOP Facililies

The contraclor is ad\;sed there may be configurations for which a single ITS-II configuration shall
be required to logically and physically Inlerconnectto more Ihan one FPPOS system. This
confiy.urallon IS most likely to be found at FCCs where the contractor may choose to deploy a
Single ITS·II as a solulion 10 the requirements .....ith multiple FPPOS systems installed at each of
C·63

.

.. -

the independent correctional facilities v.ithin the FCC.

•

C.2.3.4.1.2 FPPOS Transactions
The contractor shall configure the ITS-II hardware and software to interface with FPPOS files to •
perform the functions required of this SOW. The following transaetions are to be implemented in
this interface.

A.

lrunate-initiated transfer of funds from their Commissary account to their ITS-I! account
(requires modification of existing FPPOS Btrieve data files).

B.

BOP initiated electronic transfer of funds from the Commissary account to the ITS-II
account (requires transfer of an existing FPPOS ASCII-format data file to ITS-II).

C.

BOP initiated transfer of ITS-II account funds to the Commissary account for inmate
releases (requires modification of existing FPPOS Buieve data files).

D.

Inmate Commissary account balance inquiries (requires reading exiSting FPPOS Btrieve
data files).
.
.

C.2.3.4.1.3 Access to FPPOS Application and Files

Subsequent to contract award. the contractor will be provided FPPOS program and data files and
shall work with BOP Central Office staff to design and implement the software required. The
contractor shall write the necessary programs and make the necessary software modifications to
perform the ITS-JIJ FPPOS financial transactions described elsewhere in this SOW.
C.2.3.4.1.4 Future FPPOSflTS-lIlnarface Deployment

Other modifications to the FPPOS/ITS-II System and interface may be necessary over the course
of the contract life These modifications will be made through task orders issued by the BOP
Contracting Officer
C.2.3.4.2

Institution Voice Recorder

The BOP records inmate conversations uSing recordmg equipment which is physically located in
the invesllgallons office at each institution This recording equipment is provided by the
government The voice recording equipment records a separate inmate conversation on a single
recorder channel A channel number is assigned to each inmate telephone within the correctional
facility The ITS-II shall provide an input field for the recorder channel numbers which will be
used by the ITS-II automatically on repons and other data display elements as required in this
SOW The ITS-II shall provide an analog voice path to the correctional facility recording
r~uipment

C-64

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C2.3.4.3

•

Automated Intelligence Management System

•

The ITS-JI shall provide data to the BOP SIS AIMS at each indi\idual site

•
C2.3.4.3.1 The ITS-II shall physically connect to the AIMS via a serial pon and provide a
method by which call record information can be downloaded ITom the ITS-lJ to the
AlMS. The SIS offices are typically located several hundred feet ITom the ITS-II
office. Therefore. shon-haul modems may be required for this transmission of data

C.2.J.4.J.2 The data to be transferred shall be call record data available on the ITS-II for a

specific correctional facility and shall be capable of being transferred at any
requested time by an SIS staff at that correctional facility. The contractor shall
provide SIS staff at the correctional facility the capability to request this transfer of
data from v.ithin the office at the site which contains the AIMS computer. The
foJlov.ing data shall be provided for this transfer:
A .. Inmate register numb&;r
Date of call.
C Time call was initiated
D. Duration of call.
E Telephone number dialed
F.
Station set number
G Recorder channel number

B.

C.2.3.4.3.3 This information shall be capable of being requested for a user defined time and date

and shall be output in chronological order for the period requested. The data
transfer rate shall be a minimum of 300 Kbps.
C.2.J.4.3.4 Other modifications to the interface may be necessary over the course of the contract

life through the issuance of II task order
C.2.3.4.4

Financial Management Inrormation System (FMIS)

The BOP is currently migrating to a new accounting system. FMIS. FMIS is the BOP's official
accounlIng system and is a completely sepaT31e system from the FPPOS System. Once this )
migration is complete. some interface v.ith the ITS-II may be necessary. The contractor may be
requested. through a task order. to .... ork with the BOP at a later date to interface v.ith this
system
C2.3.4.S

BOP LANIW AN

The BOP currently operates a LA!' (which is separate from the FPPOS LAN) at each
correctional facility which is connected nation·wide through a WAN. The contractor may be
(-65

.-

•

requested. through a task order. to work with the BOP at a later date to interface with this
system
C.2.3.5

Access Control

•

The ITS-II shall provide a secure. multilevel database access control configuration ....;th a
minimum of six definable user levels.
C.2.3.S.1

The ITS-II access software shall allow creation of access levels and assignment of
multiple users to those access levels. The BOP Central Office shall be the highest
access level and shall be capable of creating the lower levels of access.

C.2.3.S.2

. The ITS-II shall provide the BOP Central Office access level the capability to assign
specific menu functionality on an individual basis to each lower access level. This
functionality shall include but is not limited to the assignment of repon capabilities.
menu functions. data input capability, query capability. screen view capability. menu
functionality assignment. and other system administrative functions.

C.2.3.S.3

D~tabase access shall be provided in a hierarchical fashion, beginning with the
Central Office level for BOP Central Office personnel. Access shall then be defined
by Central Office personnel for the lower levels. Other levels may be created
throughout the term of the contract.

C.2.3.S.4

The ITS-II software shall provide an easy-to·use logon procedure that requires the
user to entcr an idcntiflcation and a password BOP Central Office staff shall create
the Trust Fund Supervisor user at all correctional facilities. The Trust Fund
Supervisor shall have the capability to create users for all other access levels at that
correctional facility

C.2.3.S.5

. Once a user has been created. it will require a password for access to the system at

that user level The following type of password system is required for the ITS-II
environment
A
B
C

o
E
F
G
C.2.3.S.6

Len!:'lh range 4-8
Composition Cppercase lellers (A·Z). lowercase letters (a-z). and digits (0-9).
Lifetime b months (With an automated prompt for the user to change when
necessary)
Ownership individual
Storage encrypted passwords
Entr)' non-printing keyboard and maSked-printing keyboard.
Transmission clcanc)(t
The Trust Fund Supervisor shall have control over all users and passwords within
the assigned correctional facility
("-66

•

•

C2.3.S.7

System software shall allow the BOP Central Office to configure the s~'stem to alio,,"
either multiple or single instance logons for BOP user accounts

C2.3.S.8

Passwords used for authentication must comply ",ith the requirements of Federal •
Information Processing Standards Publication (FIPS'PUB) II:!. Password Usage. or
its successor

C2.3.S.9

The Contractor's staff\\.ith a need to access the ITS·II database shall each be
provided a separate and unique lD and password \\.ith identical requirements as
those for BOP staff. This lD and password shall allow BOP staff the capability to
monitor and control contractor staff access to BOP data.

C.2.3.S.IO

Remote terminals and network workstations shall be identified to the system.
preferably through a hardware·generated identifier such as the network interface
card node address or controller pon address.

CZ.3.S.11 . Communication links which utilize public networks shall be protected. All necessarv
security functions shall be enabled to protect sensitive information while it is being .
processed or transferred
C.D.!'.IZ

._-

All users shall be -given notice durin!!-101Z0n indicatinlZ- that bv "silZninlZ on" to the
ITS·II they consent to monitorinl! of their activities. This shall be done throulZh an
.
appropriately worded "sign·on" screen described as a banner. which shall include the
following wording

-

-

"WARNING! B~' accusing and using this computer system you are
consenting to system monitoring for law enforcement purposes.
(jnaulhoriztd use of. or access to. this computer system may subject
you to criminal prosecution and penalties."
C.2.3.5.13

The contractor shall provide a mel hod for tracking aCllvilies and transactions
conducted on the ITS·II al Ihe user level This audit trail shall include. at a
minimum. failed access attempts

C.2.J.~.14

Automatic archi\ing of the log files shall be accomplished without requiring mahual
intervention or degradation to the use of the ITS·II

C.2.3.!U~

The audit Iraillog file shall be able to be 5earched using English language.type
search criteria. and printed on demand

C.2.3.S.16

BOP Central Office staff'shall have the capability to assign access 10 multiple
correcllonal facilities to the Trust Fund Supervisor at another correctional facility.
This capability is predomanantly necessary for use in BOP complex's where one
(·67

•

•

group of ITS staff are responsible for several correctional facilities. and other users
are responsible for only indl\idual correctional facilities within that complex· The
Trust Fund Supervisor shall then be able 10 assifn tbs same mUltipie access or some
limited form to lower le"e1 users
C.2.3.S. J7

Users with access to multiple correctional facilities shall be capable of performing
functions and running reportS on those correctional facilities or any combination of
those correctional facilities

C.2.3.6

Fraud Detection

The ITS·II shall provide features and repons which allow the BOP to maximize its effortS to
detcct and prevent fraudulent. illicit. or unauthorized activiry aut'llpted by inmates through the
I)se of the JTS·II against either the Trust Fund or the public. The contractor may propose
reportS and features in addition to those requested in this SOW which it believes will contribute to
identiFYing
. fraudulent. illicit. or unauthorized activity.

-

C.2.3.6.1

.

Contractor Proposed Fraud Detection Fefltures (Non-Mandalory)

C.2.3.6.I.t Each proposed detection feature shall allow the BOP the option of:
A
S

Enabling or disabling the feature
Reponing or not reponing detected activity.
C Enabling or disabling realtime notification of detected activity
o Terminating or not terminating ongoing telephone calls.
C.2.3.6.1.2 As pan of the technical approach of the proposal. the Contractor shall list and fully
describe all its deteclion and prevention capabilities related to fraudulent. illicit. or
unauthorized activity. on the proposed system
C:2.3.6. J.3 The contractor shall identify specific activities the proposed capabilities shall detect
a~d/or prevent The contractor shall also identify possible methods inmates may use
to C1rcumvent these capabilities
C.2.3.6.2

BOP Requesltd Fraud Detection Capabilities

The BOP deSIres the following capabilities "'lIh,n the ITS-lito detect fraudulent or illicit activiry
Some of the follow1ng features are identified as non-mandatory requirements.
C.l.3.6.1.t Exira Dialed Digiu
The ITS-II shall be capable of detecting extra dialed digits from either the called pany or the
calhn~ pam"s telephone
C.2.3.6.2.1.I

The ITS-II shall be capable of automatically terminating or reponing, as
('-68

•

configured by the BOP. the call if the number of extra dialed dil1its detected b\'
the system is equal to or greater than the number of digits confi~ured b\' the .
BOP.
.

C.2.3.6.2.1.2

The ITS-II shall be capable of providing a Tepon of all calls which the ITS-IJ •
detected with extra dialed digits This repon will provide the BOP "ith
information needed to locate the detected attempt on a recording See Section
C.2.2.6.3.15 for the repon requirements.

C.2.3.6.2.2 Unusual or Suspicious Dialing (Ilion-Mandatory)

The BOP is requesting a means of detecting unusual or suspicious number sequences dialed or
dialing part ems which the system identifies as possible 3aemptS to commit fraud. Contractors
who provide this type of detection shall provide the BOP with a list of the types of activities they
detect and'how this information will be reponed
C.2.3.6.2.3 Third Party Calls to Correctional Facilities (!lion-Mandatory)
The BOP is requesting a non-IT,andatory capability of detecting calls which have been connected
to other BOP correctional facilities through a third party method. This capability may be
accomplished through inaudible signal passing and detection from each correctional facility This
feature should also be capable of identifying the specific correctional facilities, the inmate's
register numbers, as well as. print a daily repon of such occurrences.

C.2.3.6,2.4 Detection of Thrte

Wa~'

Calls and Can Forwarding

ITS.II shall be capable of detecting three way calls andlor call forwarding The contractor shall
explain in detail the type of three way callin~ or call forwarding their system is capable of
detectlnL! The contraclOr shall. at a mlntmum, indicate whether their proposed ITS-II is capable
'
of delec~mg each of the following types of three way or forwarded calls.
A

B

r

o
E

Calls to telephone numbers which have been automatically forwarded to another telephone
number by the local telephone company
Calls to telephone numbers which have been automatically forwarded by called panies
throu~h the use of feature groups provided by the local telephone company
Calls to telephone numbers ""h,ch "hook nash," dial another number and complete the.'
three way call
Calls to "follow me" numbers
Conference calls facilitated through customer provided switching equipment

If a contractor's system is capabk of detecting three way calls andlor call forwarding it shall be
capable afbeing configured by the BOP to either automatically terminate suspected calls. rep on
the suspected calls. or both

C-69

•

Display of Calls in Progress

Cemin BOP staff. as designated by the BOP Central Office. shall have real·time access I \;a a
display) to information on all calls in progress. This feature "'ill give BOP staff'v.ith the proper
access level the capability to see. real lime. the fo!lov.ing information al a mirjmum on all
telephone calls currently in progress.
A.
B.

C
D.
E.
F.

G.

H.
I

J.
K.
L
C.2.3.!

Inmate register number.
Inmate name.
Telephone number called.
Called pany information
Any association with a silent monitor number.
Recorder channel number.
Duration of call.
Charge of call.
Correctional faciliTY account assigned to.
Location of telephone
Type of call.
Cal! denial reason.
Call Cuto/T Capability

The ITS·II shall provide the BOP wiTh the capability to immediately and remotely Tum telephones
on and off This shall be capable of being accomplished by indi,idual telephones. groups of
telephones. or an entire correctional facility by BOP staff with the appropriate access level.

C.2.3.9

80 P !Ii umber Blocking

The ITS·II shall provide the BOP v.ith the capability to input telephone numbers which shall be
automatically blocked from being called by inmates Telephone numbers shall be capable of being.
blocked as an individual number or as a block or range of numbers (e.g .• 800·000 to 800.540)
The ITS·II shall provide the capability for BOP staff to produce a repon of all numbers which
have been bloc\.:ed in the database. the reason for their being blocked. and where appropriate the
inma1e account for which they are blocked The ITS·II shall allow BOP staff with appropriate
access the ability to block and remove number blocks for either an individual correctional facility
or all correctional facilities Calls to telephone numbers which have been blocked in this manner
will not be allowed by the ITS· II

(·70

•

•
C2.4 System Requirements
The following section describes the specific system requirements of the ITS-n. consisting of
correctional facility requirements. Cemral Office requirements. and general hardware and software
requirements
C2.4.1

General System Requirement!

C2.4.1.1

The contractor shall not use physical items such as smart cards or magnetic sWipe
cards as means of stOring ITS-II account information or balances or accessing the
telephone.

C2.4.1.2

The ITS-II shall incorporate remote system alarms which automatically alert
contractor staff to real or potential system andior service problems to reduce down
time.

C.2.4.1.3

The contractor .shall provide on-line recovc:.ry of the database durin!! a failure. which
allows the system to continue to operate while a failed portion is re~overed. This
may be accomplished by the use of a Redundant Array oflndependent Disks
(RAID)

C.2.4.2

Wiring and Cabling

The BOP maintains a demarcation point in the correctional facility communication room For
ease of access. the demarcation point for inmate telephones is extended by the BOP to the ITS-II
room The contractor shall provide all wiring and cabling in accordance with the following
A

When allowed by the LEe. the contractor shall have all services terminated in the ITS-II
room If this is not possible. services shall be terminated in the BOP communication room
and extended by the BOP to the ITS-II room In any case, no ITS·II system equipment
shall be inslalled in the BOP communication room unless specifically agreed to by the
BOP COTR or designee

B

The contractor shall be responsible for providing all cabling necessary to bring the
required services of this contract to the demarcation or extended demarcalion point in.,the
correctional facility The BOP shall provide wiring and cabling. to the ITS-II room for
installation of all FTS servtces

C

The Contractor shall provide all winng and cabling necessary to connect their equipment to
the service blocks in the ITS-II room The contractor shall also provide all wiring and
cabling necessary to connect their equipment to the BOP provided blocks for internal
"'iring '" the ITS·I! room

(-71

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•••••

D.

_

. . . . . ._

••

4

•
_

• • _ _. _ . _ _ _ . . .- - _ _

• •_ _ _ • • • • _

..........

All IT 5·11 wirim! and cabline infTastructures shall meet current industn' standards and
commercially ac~epted prac~ces All ITS· II wiring and cabling shall be concealed !Tom
plain view.

C2.4.2.1

Contractor USt of BOP Provided Wiring

The BOP will provide all internal wiring from the demarcation block in the ITS-II room to the
following areas outside the ITS-II room using Category III wiring.
A
B.
C.
D.
E.
F.
G.

All telephones.
All towers.
All workstations.
Correctional facility recording equipment.
All monitoring equipment.
Satellite camps.
BOP communication room.

C2.4.2.1.1 The ITS· II shall be capable of providing aU. data and voice services overthis BOP
provided Category 1IJ wiring.
.
C2.4.2.1.2 The contractor shall provide all signal amplification equipment necessary to send and
receive signals across BOP provided wiring.
C.2.4.3

Environmental Requirements

This subsection describes the environmental factors which may affect operation of the ITS-II.
These factors consist of power requirements. UPS needs. HVAC. physical space requirements.
and physical security requirements associated with ITS-II equipment
C2A.3.l

Powcr Requirements

The contractor shall provide the BOP with a wriuen description of the power requirements
associated with ITS-II hardware components The contractor shall clearly delineate what power
is required to operate each hardware component at each correctional facility. The contractor is
advised that the BOP performs teStS of its backup generators at least once per month. During this
testing the power will be tcmporarilv disabled Ihroughoutthe correctional facility including the
ITS-II room
C.2.4.3.1

Uninterruptible Power Source

The contractor shall provide a sufficient number of uninterruptible power supply (UPS) systems
that also h.ave surge protection and line conditioning at each correctional facility and the ITS-ll
location. capable of supponing all key ITS-II system components for a minimum oftwenly
minutes 10 allow error free system shutdown of telephone call processing equipment and all ITS-

c·n

..

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~

. .-

'

•

II workstations

•

•

C.2.4.3.2.1 The contractor shall be responsible for prol'idinl:!. installine. and maintaimng all IT,-

II UPS system equipm~nt at each of the correctional
by this contract

C.2.4.3.3

facili~ies and loc31ions-covere~

Heating, Ventilation and Air Conditioning

The ITS-II shall be capable of operating in an environment which is sixty to ninety degrees
Fahrenheit. and a non-condensing fony to ninety percent humidity.
C.2.4.4

Physical Space Requirements

The contractor shall provide the BOP with a ",;lIen description of the space requirements
associated with the ITS-li hardware components. The contractor shall clearly delineate how
much physical space is required by each hardware component. and the contractor shall provide a
recommended equipment layout configuration Due to limited space available in BOP
correctional facilities. a smaller rather than larger space. requirement is desired.
C.2.4.5

System Capacities

The contractor shall provide system capacitie!J\imits for the system they are proposing At a
minimum. specific capacities for the following areas shall be provided.
A
B
C

D

E
F
G

H
I

Individual inmate accountS
Call Records
Simultaneous users (administrative. not telephone)
I
'at ion-wide
~
Correctional Facilit}'
Workstations
I
'ali on-wide
~
Correctional Facility
Silent monllors (shall mclude all necessary equipment for this purpose)
Simultaneous users of silent mOnitor equipment
Telephones
;.
I
'alion-wide
~
Corrccllonal Facility
Lme card or CO pan (contractor shall provide the vanous combinalions available).
Telephone calls
"'alion-wide
I
~
Correctional Facility

c· 73

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C.2.4.6

HardwlIre

This section describes the general requirements for the ITS·Il hardware. Specific hardware
solutions are the choice of the contractor. which should be fully defined in the contractor' s
proposal Offerors shall indicate if the proposed equipment is new' or used.
C.2.4.6.1

' •."C~'.'

Documentation of Hardware Engineering

The contractor shall provide engineering specifications for all major hardware components used to
meet the requirements of this contract· This shall include all switching. computer telephone
integration (eTI). interactive voice response (lVR). workstations, and WANIl.A1'< equipment
These engineering specifications shall provide an explanation of each component's capability to
adequately perform the requirements of this SOW. AIly future changes to the hardware or a
component" s configuration must also be documented and provided to the BOP.
C.2.4.6.2

Switching Equipment

The contra~lor shall be responsible for providing and in~ialling all of the ITS·I1 switching
equipment necessary to perform the requirements of this contract.
C.2.4.6.2.1 The ITS·II switching equipment shall provide an interface with the public telephone
network and the FTS·2000fPost FTS·2000 network.
C.2.4.6.2.2 All of the ITS·II switching equipment Shall be compatible with all other ITS·II
components including the telephone sel equipment. IVR equipment. CTI equipment.
and call monitoring equipment
.,

..

.~--;

C.2.4.'7
This section describes the general software requirements of this contract
C.2.".7.1

Sofnure Documentation

Software documentation shall be prO\ided by the contractor
C.2.".;.1.1 Software design and documentation shall conform to current established engineering
standards and shall be provided 10 the BOP as requested.
C.2.".';'.1.2 The contractor shall pro\ide IOformarion on the pcrsonnel who developed the ITS·II
software and the companlcs invol\'ed 10 developing the ITS·I1 software, including
pannersnips ...itn other compaOles. qualifications. background, number of
employees. and relallonshlp to tne pnme contractor

C·74

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•

•

C.2A.7.1.3 The BOP shall be provided all software licenses necessary to legally operate the ITS.

II
C.2.4.7.1.4 All electronic data used or created in the ITS·;I.. including call records database.
archived data. and repom and study results shall remain the property of the BOP •
C.2.4. 7.2

Software Features

Several general features shall be provided with the ITS·II software.
C.2A. '7 .2.1 All software shall provide easily accessed on· line help utilizing help menus from each
screen.

C.2.4.7.2.2 The system shall provide a "print screen" capability that allows the BOP operator to
immediately obtain a hard copy of displayed information. In addition. the BOP
operator shall have the capability to scroll and lock information on the terminal.
screen. Scrolling through screen views of rep om shall be capable of being
accomplished through the use of keyboard arrow keys. Page up and page down
keys shall be capable of being used to movt between pages orscreen reports
C.2.4.7.2.3 The ITS·I1 shall provide a menu feature that allows the operator to cancel any
individual or all print jobs in progress
C.2.4. i .2.4 The software shall use graphical user interfaces and menu·based command structures
comparable to a Microsoft Windows environment
C.2.4.7.2.~

Function keys shall be programmed to operate similarly and consistently throughout
the ITS·JI system (e.g .. FI is "help" for ali screens. F2 is "print" for all screens)

C.2.4.7.2.6 Hidden menus to swap from one screen to anothcr without exiting from the cUrTent
. account shall be provided
C.2.4. 7.2.7 The system shall usc Point and Click technology
C.2.4.i.!.S Tab keys shall be capable of being used to move between fields on screens
C.2.4. i .2.9 The keyboard escape key shall be capable orbein!! used to escape from any screen.
print job. or data commit. without an adverse effect on the system
C.2.4.7.3

Software Changes and Updates

Following a..... ard of the contract and through the installation of the second correctional facility.
the contractor shall make changes and adjustments to the softwarc as detailed in Section H of this
RFP at no additional cOSt to the BOP
(·75

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. C.2.4.7.3.1 Software updates for "bugs" shall be scheduled for implementation twice per Year.
coordination with the BOP COTR Additional updates may be made as neces'sar\"
for corrective actions in coordination with the BOP COTR
.

In

C.2.4.7.3.2 All software updates proposed by the contractor shall be fully ducumented and
tested. The BOP shall have the right to observe and panicipate in this testing
process. Documentation of software updates and testing must be provided to the
BOP COTR.
C.!.4.7.3.3 Implementation of software updates. Beta testing. and scheduling of

implementations must be approved by the BOP COTR.
.... ... ....,--

,~

C.2A.7.3.4 The ITS·I1 shall be designed to provide implementation of software changes and
updates at individual sites. such that all other sites continue runninl!. on the existinlt
software until the changes or updates are fully tested and approved at the Beta sit~s

Operating System Software

C.2.4.7.4

I., -:nder for the ITS-lito be flexible' in its expansion and' Integration capabilities. the operating
system architecture shall be based on a multitasking open system concept. using widely accepted
slandards of hardware and software interfaces. dislributed architecture. networking and platformindependent software
C.2.oS.i.""1 The ITS·II shall be configured so that new applications can be added

existing
processors or so thaI existing applications can be moved to a different processor and
be fully compatible with the hardware and software environment.
10

C.2.oS. ':'..1.2 Time of Da>' and Dale Changes

The ITS-II shall maintain consistent and accurate time and date slamping. consistent nationwide
for all ITS-II slles
C.2.oS.':'A.:!.!

C.2A.';.oS.:!.!

The accurate date and time of day shall be distributed to all workstations'
processors uSing or dlspianng the date and time of day.

>
Software shall be capable of automatically adjusting for daylight savings lime
Changes. standard lime changes. and dates in the year :2000 and beyond The
contraClor is ad'1sed that some correctional facilities operate in areas which do
not recol!nize or chanl!e limes for davlil!ht
savinl!s
.

-

C.2,... ':'.4.2.3

-

~

~

Time of day and date changes shall be capable of be in!! accomplished without
causing interrupllon to svstem operations
(.76

•

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C.Z.4.7.5

'.

'.

Telephone Call Switching Control Software

•

Switching control software shall be a programmable. flexible telephone control software package
that manal!es the switchinl! of inmate telephone calls from the correctional facilit\· Offerors shall
indicate in-their proposal how changes are made to this s\>,itching control softwa~e andthe degre;
of difficulty involved in making changes or improvements to the eXisting control processes
C.2A.7.5.1 The ITS-II is an outgoing calling system only and switching control software shall.
therefore. not connect an incoming call to an ITS-II telephone
C.2.4.7.5.2 All switching software shall be compatible and funClion efficiently v.ith the inten-aces
between the telephone system and the carrier services. the ITS-II computer
software. the automated messaging function. and tne computer-telephony funCtIon
C.2.4.7.S.3 Switching system control shall interface with FTS-20001Post FTS-2000 ser\ice. the
local exchange carrier service. and the international carrier ser\;ce to direct the
collect and direct dial calls over the proper trunks.
C.Z.4.7.5.4 Switching software shall interface with the ITS-II software to allow or disallow a
telephone call based on criteria determined by the ITS-II software. t·o maintain a
real-time record of call in process. and to update the inmate call records
C.2.4.7.S.5 Switching software shall interface with the automated voice response system to
pro\ide account information to the inmate
C.2.4.7.5.6 Switching software shall interface with the computer-telephony application
providing the connectivllY access and protocol conversions required for call
processing applications

C.2A.7.5.i Control switching software shall also provide and be capable of printing. standard
traffic measurement and standard telephone call accounting information This
Information shall be accessible to BOP ITS staff both on-line and in a repon format
C.2A.B

Correctional Facilit,· Requirements

The equipment required for the ITS-II installation at each correctional facility
section Sec [shibit J-13. Contractor Wiring Responsibilities
C.2 ..u.l

IS

described in this

Station Stts

The contractor shall be responsible for providing and installing all the ITS-II inmate station set
equipment at each of the correctional facilities and iocatlons covered by this contract These
telephone sets will be used by inmates to place calls via the ITS·I1 ElChibit J·I. Correctional
Facility Information. presents the number of station sets currently installed at each correctional

C· 77

•

facility and location. The contractor shall be responsible for all modifications to existinll
enclosures. necessary to mount the proposed station set.
~

C.2.4.B.1.l Quantity of Stalion SC\5
C.2.4.S.1.1.1

The ITS-II contractor shall inilially provide inmales wilh a nation-....ide average
ratio of 20: I inmates to station sets across all correctional facilities Some
correctional facilities may requ:re more station sets and some may require less

C.2.4.S.1.l.2

The contractor shall be required to install additional station sets over Ihe life of
the contract because Ihe inmale population is projected to increase dunng. the
nelCl ten years. However. the nation-wide average 20: 1 ratio is expected to be
maintained.

C.2.4.S.1.2 Station Set Features
The majority of the ITS-II station sets installed shall predominantly be permanently mounted wall
phones with a heavy-gauge steel case. heavy-duty metal..keypad. bonded handset. steel reinforced.
a:ld metal-wrapped cord.
.
A limited number of movable telephone sets shall be required at each correctional facility.

The contraClOr shall also provide "ail-weather" telephones 10 be used as required by the BOP It
is estimated Ihat Ihere will be approximately 100 "all-weather" telephones needed throughout the
BOP
C.2.4.S.1.2.1

The contractor shall be responsible for installing the station sets at BOP
defined locations and making any modificalions to existing enclosures
necessary 10 mounl the proposed station set·

C.2.4.S. I .2.2

The contractor is responsible for the proper operating condition of alllhe ITSII telephones

C.2.U. 1.2.3

All orthe ITS-II station sets shall be dual-lone multifrequency (DTMF)
compatible

C.2.4.S.I.2.4

Station sets installed al correctional facilities shall not be programmable for any
purpose

C.2.U.1.2.~

Stalion sets shall nOI be capable of being used 10 program any fealure oflhe
ITS-II

C.2.4.S.I.2.6

Station sets shall nOI contain card reader capabilities used to identify inmate
telephone accounts or for the purpose of debiting inmate telephone accounts.
C-78

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C.2.4.8.1.2.7

The contractor shall pro\ide a unique number. physically imprinted on each
station set at a correctional fa.:ilit~, so that the number can be seen bv BOP staff
for the purpose of reporting troubles and troubleshooting problems As
•
telephones necessitate replacement, they shall be renumbered by the
contractor As new telephones are added they shall be identified in the same
manner and all approprtate paper work shall be updated to reneet the addition

C.2.4.8.1.2.8

Station sets shall be capable ofreducinl! backl!round noise throul!h the use of
confidencers or directional microphones in the handset.

C2.4.8.1.2.9

All of the ITS-II s'tation sets shall provide volume controls which allow
inmates to amplify the called party's voice

C2.4.8.1.2.IO

The contractor shall provide dialing instructions in English and Spanish on
each telephone in a manner which reduces the possibility of being destroyed
The contractor shall maintain these instructions for legibility and accuracy

-

-

.,

C.Z.4.8.t.3 Amnican Disabilities Act Compliance Rtquirements
All of the ITS-II station sets shall be capable of being ADA compliant. Due to security concerns,
the BOP shall be capable of requiring the contractor to modify cenain features on station sets
such as cord length and mounting height The ITS-II TOO equipment will be protected and
secured b\' the BOP when nOI in use
CZ.·I.8.I.3.1

All of the ITS-II stall on sets shall be compatible with telecommunication
devices for the deaf !TDD) equipment

CV.8.1.3.2

The conlraClor shall be responsible for providing a single TOO device for the
ITS-II at each BOP locallon

C2A.8.1.3.3

The ITS-II TOD equipment shall be portable, such Ihal it can be used wilh any
ITS-II slalion set at a correctional facility

C2.4.8.1.3A

The ITS·II TOO equipment shall allo\o' inmates to communicate via keyboard
ent~

Cl.4.8.t.3.~

C.lA.S.l

The ITS· II TOO equipment shall contain a display and a printer device
Administralive Position Equipmrnl

The ITS·II conmeler shall be responsible for prOViding and installing up to a nationwide average
of three workslauons at each of the correcuonal faciliues and locations covered by this contraCI.
The BOP \0, ill determine the actual number of ITS-II workstaliOns at each correctional facility.

·

•.

._--•.

- --."W'

The BOP may require additional workstations at some correCtional facilities Additional
workstations requested by the BOP beyond the nationwide average of three per site \l.ill be leased
in accordance with the prices proposed :n Section B
C.2.4.8.2.1 The ITS-II workstations shall allow BOP staff to a:cess and perform the
administrative functions associated with the ITS-II as defined "ithin this SOW
C.2.4.8.2.2 The ITS-II workstations shall include. at a minimum. IS-inch color monitors.
standard-extended keyboard. mouse. dot matrix printer. and shall have the capability
to perform eleCtronic transfer of data to a removable medium such as 3.5 inch floppy
disk.
C.2.4.8.2.3 All of the ITS-Il workstations shall operate independently of other workstations in

the same correctional facility even when accessing the same stored data.
C.2.4.8.3

Call Monitoring

The ITS-II shall provide call monitoring stations for the p'urpose of audibly monitoring inmat~
ca!ls and providing information relative to the call in progress.
C.2.4.8.3.1 Call monitoring stations shall provide indicators for each phone in use at a

correctional facility assigned to the user
C.2.4_8.3:2 The ITS-II shall be capable of supponing ten monitoring stations at each·

correctional facility. each capable of monitoring any telephone in operation at that
correctional facility The amount 'of monitoring stations is currently estimated at
four per site and not expected 10 exceed len al correctional facilities with guard
tOWers The contractor shall provide the BOP with the amount of monitoring
equipment requested at each site Additional monitoring stations requested by the
BOP beyond the nationwide average of four per site will be leased by the BOP in
accordance with the prices proposed in Section B
C.2.4.S.3.3 Call monitoring capabililY shall be an imegral pan of the ITS-II and require no

additional winng to the ITS-II for the addition of slation sets.
C.2A.B.3A The call monitoring Stallons proposed shall be different equipment than that

.'

proposed for workstations Due to space limitations. a smaller display device
capable of providing the required data is reqUIred
C.2_4.B.3.~

Audible Call Monilorine Requirements

The ITS-II shall provide BOP staifthe capabilny to audibly monitor inmate calls in progress. The
BOP wi'lI provide its staff with this capability in various offices. towers. control centers, and other
locations throughout each correctional facility
C-80

•

~:.

C.2.4.8.3.S.1

The analog interface used ior this capability shall not impact the \'olce path io,'
an inmate' s call In any way DC voltages. voice transmission ieveis. a~d VOICe
quality on the connection 10 the Inmate stallon set shall not be efie~ted bv the
status of the mOnilOnn'1 interface (e'1 .. whether a station set IS alta_hed;o the
interface or on or off hook)
•

-

C.2.4.8.3.S.2

It shall not be possible for either pany in the call to detenmne the presence or
status of this analog monitor interface through detection of changes In "olce
signal quality. vOice transmission level. or external background Interference
such as impulse nOise. crosstalk. or white nOIse

C2.4.8.3.S.3

BOP staff shall be provided with the capability to identify the call which they
wish to morutor and easily access the voice path for that call

C2.4.8.3.6 Call Monitoring

Di5pla~'

Requirements

The ITS· II shall provide instant identification and access to monitoring of inmate telephone calls
Calls placed by inmates to alened numbers and/or tTom~lened accounts shall be considered a
pnority and tht: iTS·I1 shall notify BOP staff of the call in progress
C2.4.8.3.6. J

The time between the first possible detection of a call in process by the remote
telephone equipment and a display of the call status shall not exceed
twO seconds

C2.4.8.3.6.2

BOP staff shall have access to a stallon set equipped with a display that will
indicate to the staff member the follo"'1ng.

A
B
C
D
.E
F
G

~egister number of inmate
1\ame of inmate
Telephone number _ailed
Lo_ation or identification of telephone
Duration of call
Time of call
Recorder channel number

C2A.8.3.; Call :\1onitoring Equipmenl Requirements

.10.
'") II'

Call monnoring stations shall require a minimum amount of space due to the locations in which
the\" may be installed
C2A.B.3.7. J

Call monitorin£! stations shall be capable of operating at distances £!reater than
from the station set bemg monnored

LWO mil~s

C2.4.8.3. i.2

.' . Call monitoring capabilities shall include. at a minimum. station sets with
C·81

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•

speaker phones and headsets
C.2.4.8.3.7.3

The ITS·II shall have the capability to suppon multiple call monitonng s:at:ons
within a correctional facilllY as deemed necessary.

C.2.4.S.3.7.4

Call monitoring equipment shall be capable of monitoring every slalion set at a
correctional facility.

C.2.4.9

BOP Central Offier Requirements

The ITS-II contractor shall provide the BOP with an ITS·II administrative system at its Central
Office to oversee and administer system· wide operations and service. compile data on inmate use
of the svstem. reconcile financial acti\;ties. facilitate training of BOP staff on ITS-II operation and
capabilities. and perform system tests This system will be used by BOP Central Office staff only
Therefore. call volumes will be exceptionally low. Call volumes at this site will not exceed 300
minutes per month. The contractor shall not bill the called party or the BOP for any of these calls
However. the contractor shall still fulfill all of the requirements stated in this section.
C.2.4.9.IThe ITS-II shall provide BOP Central Office staff'the capability to remotely call into
the system using PC laptops. emulate the ITS-II terminal. and perform functions
using the same keyboard functions as would be used if directly connected to the
system This remote capability shall require a system logon procedure and all data
transmissions shall be fully encrypted Transmission speeds shall be no slower than
33 6 kbps
C.2.4.9.2

The database informallon used to 5uppon the BOP Central Office systef!1 shall be
paniuoned from all other correctional facilities. such that financial transactions.
Including calls. will not be reflected as a pan of the Central Office reconciliation
repons However. this capability shall not preclude the possibility of performing
tests for centralized functionality between the BOP Central Office system and the
BOP \1STC system

C.2.4.9.3

BOP Central OlTtce ITS staff currently use eight. 120 MHZ. Pentium processor.
desktop Personal Computers. utilizing the Windows 95 operating environment. The
ITS· II shall be capable of InterfaCing with the Windows 95 environment and
conneclln_ctly wllh each of these PCs to perform as a w.orkstation. Additional
connectl\. . . . up to I ~ PCs may be requested in the future

C.2.4.9."

The ITS·II shall also prOVide electrOniC mail capabilities. complete with electronic
notificallon. for BOP Central Office to correspond with individual correctional
facihty ITS staff. user groups defined within the system. user access levels. or
specific termmals

C.2.4.9.~

The lTS·ll system Installed at the BOP Central Office facility shall include all

C·82

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•

hardware. software. and service. corresponding to all equipment installed at any
BOP correctional facility All services shall be installed. however. less quantities will
be required. The BOP Central Office facility shall require eight functioning inmate
telephones. with service types and quantities capable of meeting the percentage
grade of blocking required of this contract. Four workstations shall be required. as
well as all peripheral equipment such as silent monitor stations. printers. FPPOS. and
AlMs interfaces. etc.
C2.4.10

Management and Specialty Training CCOIer

The BOP provides training 10 correctional facility Financial Management slaff at the MSTC in
Aurora. Colorado. The contractor shall not provide training to these BOP staff. However. the
contractor shall provide a system comparable to those installed at each correctional facility. at the
MSTC for BOP staff to perform this training. This system will be used by BOP staff only.
Therefore. call volumes will be exceptionally low. Call volumes at this facility will not exceed 300
minutes per month. The contractor shall not bill the called party or the BOP for any of these calls.
However. the contractor shall still fulfill all of the requirements stated in this section.
ClA.l O. f . Due to space liinitations. the ITS·lI shall b't capable of using the existing PC

workstations at the MSTC in the place of lTS·lI workstations. There are currently
thiny five (35) workstations which shall be configured by the contractor to provide
the same functionality as the ITS·lI workstations.
C2A.IO.2

Since this is a training environment. the contractor is advised that the system shall be
capable of accepting the same keystrokes for the same functions from all
workstations simultaneously Simultaneous printing capabilities are also required.

C2A.10.3

The ITS·lI system installed at the MSTC shall allow multiple simultaneous login of
the same user types

C2.4.10.4

Training classes typically occur once every month. The contractor shall provide
methods of Clearing previous training databases and selling up the system for new
classes

C2.4.10.5

The ITS·II system installed at the BOP MSTCfacility shall include all hardware.
software. and service. correspondmg to all equipment installed at any BOP
correctional facility All typical voice services shall be installed. however, less
quantities will be required The MSTC shall require eight functioning inmate
tdephones. with seT\;ce types and quantities capable of meeting the percentage
grade of blocking required of this contract All peripheral equipment such as silent
monitor stations. printers. FPPOS and AIMs interfaces. etc., shall be required.

C2.4.10.6

The database information used to suppon the MSTC system shall be panitioned
ITom all other correCllonal facililles. such that financial transactions. including cails,
C·83

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will not be reflected as a pan of the Central Office reconciliation repons However.
this capability shall nOl preclude the possibiliry of perfonning tests for centralized
functionality between the BO? Central Office system and the MSTC system
C.2.4.1l

Contractor Central Operations Facility (COF)

The contractor shall provide their own facility (non-BOP) to house all ITS-II equipment which is
not specifically required at a site and is necessary to provide centralized operations. includirfg
database processing and data storage. The contractor shall allow BOP staff access to this facility
The contractor shall provide disaster recovery plans for this facility in case of destruction of the
site .
. C.2.4_11_1

Security

The contractor shall provide the BOP with a written description of the system security plans the
contractor shall put in place to prOtect the ITS-Jl data. and hardware components. The methods
of physical security may include. but are not limited to. combination of key lock. motion
detectors. and alarm systems.
C.2.4.11.2

BOP Access

BO? Central Office staff shall have access to the contractor's Central Operations Facility and any
information stored or generated in relation to the ITS-II.
C.2.4.1 1.2.1

BOP Central Office shall maintain the right to perform site visits to the
contractor's Central Operations Facility without prior notice to the contractor.

C.2.4.11.2.2

BOP Central Office staff shall maintain ownership of all information stored or
generated at the Central Operations Facility that is related to the ITS-II
operations

C.2.4.11.3

Disaster Reco\'e,,'

The contractor shall provide the following products as a plan to restore system operations in case
of a disaster at the contractor provided Central Operallons Facility and for each installed BOP
locallon The contractor shall be required to adhere to these plans in case of a system disaster.
These products shall be submitted on electronic medium to the BOP COTR within four months of
award of contract and become the propeny of the government These plans shall be updated
\'earr~ These plans will be reviewed for adequacy and approval by the BOP.
C.2.4.11.3.1

Risk Analysis Repon

The contractor shall pro\~de a repon of the ris\.: analysis identifying threats to information assets

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and existing vulnerabilities The contractor shall provide plans which recommend mel hods 10
minimize the risk ofloss
C.2.4.11.3.2

Contingency and Disaster Recovery Plans

The contractor shall provide the plans and arrangements which aTe necessary 10 ensure continuity
of the critical functions of the ITS-II This plan should cover all events or total or panial
cessation of operations or destruction of the data base or physical facility These plans should
include procedures for both automated and manual recovery.

C-8~

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-

C.3

...•.--..

"'-'

..-,,_......-- " - ...- .... _............

_--_ .

TRANSITION AND IMPLEMENTATION REQUIREMENTS

This section describes the requirements for the transition period during the installation of the ITS·

11.
C.3.1 Transition and Implementation Plan
The contractor shall provide a transition and implementation plan which will include a time line
for installation of all BOP sites and correctional facilities consistent with requirements outlined in
this section. This time line shall address all aspects of installation for each site and correctional
facility.

C3.1.1

The plan shall describe the activities involved in the transition to and implementation
of the ITS-B.

C3.1.2

The contractor shall coordinate the transition and implementation of each site with
the BOP Central Office.

C3.1.3

The focus of the transition plan shall be to minimize service disruption during the
implementation process

C3.1.4

The contractor shall provide a plan to include all aspects of the installation process.
This plan proposed by the contractor shall be the baseline plan for each ITS-B
implementation at a BOP correctional facility. The contractor shall include imy other
components for this baseline plan deemed necessary in addition to the elements in
"A"' through "'E"' below Inspection and acceptance testing procedures discussed in
Section E of this RFP must also be fully reflected in this plan. The plan shall include.
at a minimum. the following
A

Pre-installation procedures

~

3
4

B

Staffing requirements
Site visits
Site evaluation
System requirements check

Service coordination

2
3
4

Local service arrangements
Interexchange and international service agreements.
FTS-20001Post FTS-2000 coordination
Time requirements for installation of services

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Software preparation
I.
2

D.

Equipment delivery.
Time required for installation.
Equipment security.
Cut-over.
Cleanup.

Post-installation procedures
I.
2.
3.

C.3_2

Data conversion.
Data input.

Installation procedures.

J.
2.
3.
4.
5.
E.

•

Sch~dule

System testing.
System acceptance
. After acti.on reponing
For Installation

Exhibit J-S. Cornetional Facility Installation Sequence provides a general installation order
that the BOP intends to follow. Any changes to this sequence ofinstallation must be approved by
the BOP.

C3.2.1
Contractor C~ntral Operations Facility
Because of its critical suppon of the ITS· 11 program. the contractor-provided Central Operations
Facility shall be the first location installed This site shall be installed within the first three months
after award of contract
C3.2.2

BOP Central Office Facility

The BOP Central Office Facility shall be the contractor's first installation of ITS-II. This site
shall be installed within the first four months after award of contract. Depending on the ITS-II
system proposed. this system mav be used for input of data for correctional facilities to be
installed

C.3_2.3

BOP Training Facility. MSTC

The MSTC shall be the second site installation of the ITS-II. This site shall be installed within
the first four months after award of contract

C3.2.4

Correctional Facilities
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-.-.o:'"

The BOP wishes to install the ITS-II as quickly as possible in all cOlTectional facilities However.
it is also the intent of the BOP to ensure a proper working system prior 10 full scale
implementation. For .these reasons. the follov.ing guidelines are anticipated for installation of the
first site and all additional sites thereafter.
The BOP will work with the contractor to install the ITS-II in the first BOP cOlTectional facility
within the first four months after award of contract. It is anticipated that this site will operate for
tWO months prior to the installation of any additional sites. After all system changes and
adjustments have been made and the Beta slIe has performed properly. the BOP shall approve
installation of the ITS-ll at additional sites. The ITS-II will then be installed at cOlTectional
facilities based on the installation order in Exhibit J-5. Correctional Facility Installation
Sequence Additionally. pursuant to delivery orders issued by the BOP. the contractor will be
required to install the ITS II at the first 38 correctional facilities listed in Exhibit J.5 within 18
months of the contract award date and in the order listed in Exhibit 1-5, unless the BOP directs
otherwise

c.J.J Prf'-inslallation Process
The following paragraphs describe the activities which shaH occur prior to the installation of the
ITS-II at a correctional facility

C.J.3.!

Siaffing Requirements

The contractor shall provide information on ho"" it will provide sufficient staffing to instaH the.
s\·stem. whether these personnel are contraclor staff. subcontractor staff. or temporary employees
hired for Inslallation purposes onl~'

C.J.J.2

Silt Visits

The contractor shall perform site ';sits as necessary 10 prepare for the installation oflhe ITS·II at
each slle The contractor shall rely on the information gathered from these site visits to size the
~"Slcm and !!aln an understandiny of that correctional facilily" s needs for installation. These visits
shall be coordinated with BOP Central Office staff and support the installation schedule. The
contraclor' ~ field techntcian shall be requlfcd to. at a minimum. visit the cOlTectional facility
dunn!! ImplementallOn oflhe ITS-JI to ensure familianution with Ihe equipment and correctional
faclhl\ access procedures

Cl.l.l.1

Silt [\·llu.lion

The contractor shall pro\~de the BOP with an Installation plan. site checklist. and an installation
checkhst to further ensure proper cut-over oftne ITS-II

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•

System Requirements Check

The contractor shall pro,;de the BOP v.ith any concerns it may have regarding installation of the
ITS-Il at each site, as a result of the site survey. The BOP and the contractor shall work together
to resolve any concerns.
C.3.4 Software Preparation
The transition and implementation plan shall cover how the contractor will perform the transfer
and input of data priorto cut-over of the ITS·II.
Data Input

C.3.4.1

The contractor shall be responsible for installing inmate-related information iTom the existing ITS
into the new ITS-II. The contractor will be provided with an ASCI! data file(s) download iTom
the previous ITS which contains the following:
A.
B
C

o
E

Inmale name.
Register number.
Inmate calling lists.
Inmate balance.
Descriptions.

C.3.4.1.1

The contractor shall provide a data input device at correctional facilities wiihout an
existing ITS which will allow the BOP to input inmate information two months prior
to implementation and maintain the information current through implementation. It
may be possible to use this same data input device at correctional facilities with the
current ITS prior to implementation

Col.4.1.2

The contractor is solely responsible for convening the ASCII data downloaded from
the pre,;ous ITS and ensuring the information is accurately uploaded to the ITS·II.

Col.!' Installation Process
The contractor shall be responsible for all equIpment. tools. and materials required in the
IOstaliallon orthe ITS·/I The contractor is advised that all tools and personnel will be checked
pnor to entrance IOto a BOP correctional facility All tools will be accounted for at the end of
each work 109 day

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C3.S.l

.~.

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BOP Responsibilities

The BOP is responsible for de-installing the present ITS. The de-inSlallation for each correctional
facility is expected to take less than 24 hours.

.,
C3.S.2

Installation Procedures and Schedule

The contractor shall provide an amicipated time line for the installation of a single ITS-II at a
BOP correctional facility.

C3.S.2.l

The time-line shall provide specific details on each component from the beginning of
the installation process to cut-over. induding significant milestones,

C.3.S.2.2

The time-line shall include variable time-frames. if necessary. based on the number of
telephone sets a correctional facility requires,

C.3.S.3

Equipment Delivtry

The contractor shall be responsible for the delivery of all the ITS-ll related equipment to each
BOP site and correctional facility

C.3.S.3.1

The contractor shall be responsible for ensuring the delivel)' of proper equipment in
working condition.

C.3.S.3.2

The contractor shall provide information on the means of delivery for the ITS-II and
whether the means consists of contractor or subcontractor personnel.

C.J5.4

Cutover

The contractor shall propose the time required to perform the physical cutover of an ITS-II
location
.

C.3.S.4.1

Within the transition and installation plan. the contractor shall provide specific
details on the process of the aClUal cutover to the ITS-II

C.3.5.~

Clranup

The contractor shall be responsible for ensuring the areas of installation are emptied of all
matenals used and discarded durin!! the installation

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C.3.S.6

Additional Equipment Orders after Original InstJlllalion

The BOP may require the addition of equipment at its correctional facilities after the original
installation of the ITS-II. The contractor shall install additional equipment ....ithin 30 days upon
notification from the BOP Contracting Officer. This installation of this equipment shall be at no
cost to the BOP if the quantities do not exceed the nationv.ide averages stated elsewhere in this
RFP The BOP will issue a Task Order for the addition of equipment which exceeds the
nationwide averages stated elsewhere in this RFP.
C.3.S.7

!liewly Constructed Correctional Facilities

When a new correctional facility is opened by the BOP (but before occupancy by inmates). the
contractor and BOP shall determine a schedule for installation of an ITS-II at that location to
ensure service as soon as practicable at the new site. The number of sites to be opened during the
life oflhe contract is unknown. but may surpass the 30 correctional facilities now in planning or
construction stages. The contractor is advised that installation dates for the ITS-11 at new BOP
correctional facilities occasionally ~hange due to conSlTl,l.i=tion delays or the BOP's needs.
C.3.S.i.1

The contractor shall be required to work v.ith the BOP to adjust to these delays or
changes in implementation dates at no additional cost to the government

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C.4

MAIII'TENANCE RLQUlRLMEII'TS

The contractor shall not configure ITS-II to require on-site suppon under normal operating
conditions. After installation of the ITS-II at a correctional facility. contractor personnel will be
permitted access to the correctional facility for the repair of equipment. restoration of services.
and remedial and scheduled maintenance activities. Restrictions on contractor on-site
maintenance activities are discussed in Section C.4.2.

C.4.1 Maintenance and Service Levels
C.4.1.1

Service Level Requirements

This section discusses the various service level requirements that may be ordered by the BOP.
This section also defines the criteria the BOP will use to determine if the service level
requirements ordered by the BOP have been met by the contractor.
The BOP shall order one specific maintenance service lexel for both direct dial and collect calis.
fer all sites.' 'If the contractor meets' or exceeds the criteria for the maintenance service level
ordered for the entire month. the contractor shail be compensated at the rates in Section B that
the contractor has bid for the maintenance level selected by the BOP. If the contractor fails to
provide the service level ordered by the BOP for that month. the contractor shall not be
compensated at the rate for direct dial calls and the percentage for collect calls corresponding to
the service level ordered. but rather the contractor shall be compensated at the rates and
percentages which corresponds with the lower level of service actually provided for that month.
This lower level of compensation shall be applicable to all calls from all institutions for the month
in which the maintenance service level provided fell below the service level ordered by the BOP.
The contractor shall change the level of service provided upon receipt of 120 days written
notification from the BOP ordering such change

C4.1.2

Catastrophic Downtime

Catastrophic downtime of the ITS-II is defined as any event which results in the loss of phone call
processing from twenty-five percent (25%) or more of the ITS·JI inmate handsets installed at a
BOP site or any event which resuhs in the complete loss of availability of any single ITS-II
service Such events include the following fauhs of the ITS-II components. including a single
fauh limited to a single correctional facility or multiple related faults at several correctional
facilities simuhaneously. loss of network services supponing direct dial and collect calling
services. loss of system operation to accommodate routine or remedial maintenance activities
which occurs during a time in which the ITS-II is available for use; voluntary deactivation ofan
ITS·II at a correctional facility by BOP management. in response to an ITS-JI fault. that is
deemed necessary to ensure the safe and orderly operation of the BOP correctional facility or to
prevent financial loss to the Trust Fund Catastrophic downtime will be the time the ITS-II

C·92

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services are affected by catastrophic failures and will be measured as beginning at the time the
trouble repon for the catastrophic failure is called into the contractor's Maintenance Operations
Control Center. and ending when BOP acknowledges that the Catastrophic Failure has been
resolved. This time will be measured and reponed each month for each BOP site served by an
ITS-II system installed by the Contractor as indicated in Section C.4.6. Maintenance Repons.

C.4.1.2_1

Maximum Acceptable Catastrophic Downtime

The Contractor shall design and maintain all ITS-II systems and installations to ensure that
Catastrophic Downtime does not exceed the requirements of the maintenance level chosen by the
BOP.

C.4.1.2.2

Catastrophic Failure Restoration

The contractor shall respond to and resolve all Catastrophic Failures within the time frames
specified by the maintenance level chosen by the BOP .

C.4.1.3

. Ilion-catastrophic Failures

i'ion-cataSlTophic failures will be any events causing loss oflTS-I1 inmate calling services or
ITS-II administrative capabilities (i.e .. such as running repom or queries. transferring funds.
monitoring calls. inputting information) due to ITS-II faUlt. malfunction. or deactivation for
maintenance purposes that are not defined as catastrophic failures. Non-catastrophic failures will
be meas~red as beginning at the time the trouble repon for the non-catastrophic failure is called
into the contractor's Maintenance Operations Control Center. and ending when the BOP
acknollo'ledges that the non-catastrophic failure has been resolved at that site. This time shall be
measured and reponed each month for each BOP site served by an ITS-II system installed by the
contractor. as indicated in Section C.4.6. Maintenance Repons.

C.4.1.3.1

Mnimum Acceptable Son-catastrophic Downtime

The contractor shall design and maintain the ITS-II systems and installations to ensure that
non-catastrophic downtime does not exceed the requirements of the maintenance level chosen by
the BOP

C.4.1.3.2

!'ion-catastrophic Failure Restoration

The contractor shall respond to and resolve all non-catastrophic Failures within the time frames
required of the maintenance level chosen by the BOP

C.4.1.4

S~'51tm

Downtime Repons

The contractor shall track catastrophic and non-catastrophic failures and down-times for all the
iTS-II installations and compile per-site records of these measures every month.

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•

Maintenance Levels

The following criteria for monthly catastrophic and non-catastrophic dO,,"Tltime will be
established to define the maintenance levels for which the contractor shall propose rates for ITS-II
services in Tables lA through ID as defined in Section B.
.

A.

Levell (Table I A)
1. The nation-wide average of cataslTophic downtime shall not exceed 0.:5 hours per
site.
2.
No correctional facility shall experience catastrophic downtime in excess of six hours
for the month.
3
The number of catastrophic downtime trouble tickets shall not exceed one at any site
in any individual month.
4.
The amount of time to resolve any non-catastrophic failure shall not exceed 12 hours
for any correctional facility.
5.
The number of non-catastrophic trouble tickets shan not exceed one at any site in
any individual month.

B

Leven (Table I B)
I
The nation-wide average of cataStrophic downtime shan not exceed 0.5 hours per
site
No correctional facility shall experience catastrophic downtime in excess of 12 hours
2.
for the month.
The number of catastrophic downtime trouble tickets shall not exceed two at any site
in any individual month
The amount of time 10 resolve any non-catastrophic failure shall not exceed 24 hours
4
for any correctional facility
The number of non-catastrophic trouble tickets shall not exceed twO at any site in
any indi~;dual month

(

Level 3 (Table I C)
I
The nation-wide average of catastrophic downtime shall not exceed one hour per
site
., !>:o
correctional facility shall experience catastrophic downtime in excess of 24 hours
for the month
The number of catastrophic downtime trouble tickets shan not exceed three at any
site in any individual month
4
The amount of time to resolve any non-catastrophic failure shan not exceed 48 hours
for any correctional facility
The number of non-catastrophic trouble tickets shall not exceed three at any site in
any individual month

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•

Level 4 (Table ID)
I.
The nation-wide avcraEe of cataStrophic dov.ntime shall not exceed two hours per
site.
2.
No correctional facility shall experience catastrophic downtime in excess of 48 hours
for the month.
3.
The number of catastrophic dowmime trouble tickets shall nOt exceed four at any
site in any individual month
4
The amoum of time to resolve any non-catastrophic failure shall not exceed 96 hours
for any correctional facility
5.
The number of non-catastrophic trouble tickets shall not exceed four at any site in
any individual month.

C4.1.6

Failure to Meet Maintenance Service Level Ordered

The contractor shall pro'vide a system that meets or exceeds the service level ordered by the BOP
If the contractor fails to provide the service level ordered by the BOP. the contractor shall not be
compensated at the rates and. percentages for the servic~.1evel ordered. but rather the contractor,
shaH be compensated at the ser.rice level rates a,nd perceinages which correspond with the lower
level of service actually provided. The BOP COTR will inform the contractor in writing within 15
days of receipt of the monthly maintenance repons of the contractor's need to adjust the monthly
invoice to compensate for the lower maintenance service level actually met by the contractor.

C4.1.7

Waivers for ITS-II Maintenance Service Level Measurements

The BOP reserves the right to grant the contractor waivers for catastrophic or non-catastrophic
downtime andlor trouble tickets in a given month due to specific failures and events, The BOP
rna\' I!rant waivers if the BOP determines that the event or events that lead to specific catastrophic
andior non· catastrophic failures and the resulting downtimes due to extraordinary circumstances.
However. the BOP will retain the final authority in making such determinations.

C4.1.!

Exrmptions for ITS-II Maintenance Service Level Measurements

The number of trouble tickets resulting from inmate pamage to individual telephones shall be
exempted from the calculations related to meeting maintenance level criteria. However. the time
to repair telephones damaged by inmates shall not be exempted from the calculations related to
meeting maintenance level criteria Additionally, downtime caused by the BOP for reasons such
as refusal to allow entry_ or requesting a delayed repair. may be reduced from the total downtime
by an amount equal to that caused by the BOP
The following events shall be exempted from the maintenance level measurements required by this
contract

(-95

•.
A.

..

Downtime caused by'
I.
2
3.
4.
5.
6.
7

B.

_--_

FTS problems.
Internal wiring.
BOP operator failure.
BOP environmental disasters.
Natural disasters occurring at BOP sites.
Local telephone company caused problems.
Planned semiannual software upgrades as agreed to by the BOP.

Trouble Tickets generated by
I.
2.
3.
4
S.
6

Items one through six above.
Inmate damage.
BOP approved "bug list" issues.
Erroneous reponing of a trouble.
Local exchange and area code updates.
Redundant tickets for 'same problem.

The contractor shall notify the BOP COTR or hislher designee in writing of the contractor's
intent to claim exemptions from a maintenance level measurement for a specific trouble ticket.
This notification shall be made through the daily trouble reporting process to the COTR.
Regardless of any exemptions claimed. the contractor shall be responsible for the repair their
sernce. hardware. and software

C.4.2 General :\1ainlenance Requirements
The contractor shall provide the Government ,\lith on·call maintenance service for the full
contract pencid of performance including exercised option years for all equipment and services
prOVIded under this agreement
C.4.1.1

The contractor shall respond to all troubles reponed on the ITS-II. If the contractor
dctermines that a malfunction cxists due to equipment or services provided by the
government. such as FTS or Internal \oviring. the contractor shall notify the
appropnate BOP staff of the malfunction and shall assist the BOP or its contractor
as necessary or requested. to help diagnose the malfunction.

C.4.2.2

The contractor shall not require the use of an on· site administrator to fulfill the
maintenance or any other reqUirements of this contract The BOP will allow the
contractor access to correctional facilities for the repair of services and equipment.
and remedial maintenance needs Physical access shall be coordinated with the

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individual correctional facilities

C.4.l.3

The contractor shall not schedule routine and preventative maintenance more than
once per month for any BOP site This shall include all subcontracted maintenance
.
activities for any lTS-1! component

C.4.2.4

The contractor shall provide detailed plans of its troubleshooting and maintenance
procedures and schedules including any remedial maintenance deemed necessary by
the contractor to fulfill the requirements of this contraCt.

C.4.2.S

The contractor. at the request of the BOP. shall perform any work that may
adversely affect inmate use of the telephones during off peak hours.
The contractor shall provide skilled technicians who will be available to perform
maintenance work on the ITS-I! at each of the correctional facilities and the ITS-I!
locations covered by this contract.

. C.4.l.6

C.4.2.7

In general. the contractor shall not assume.that the BOP will provide space in its
correctional facilities for spare pans for the ITS-II.

C.4.l.S

A trouble ticket shall be established at the time a trouble is reponed by a BOP site.

C.4.2.9

Each trouble ticket shall be assigned a unique sequential number and given to the
BOP staff member at the time the trouble is reponed

C.4.l.IO

Each trouble ticket shall include. at a minimum. the follov.ing information

A

B
C

o
E

F
G
H
I

J
K

Trouble ticket number.
Date and time trouble reponed
Date and time trouble resolved
Total time to resolve
'ame of person reponing trouble
Site at which trouble was reponed
Component affected
Reponed description of trouble
.",ctual description of trouble
Descnptlon of solution of !rouble
Any exemption claimed

C.4.3 !\1aintrnance Operations Control Center
The contractor shall maintain a 24-hour-per-day. 7·day-per-week maintenance operations control
center for response to the BOP in conjunction with operating the ITS-II.

(-97

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.0 ...• _.

0"

•

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~

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.- ._--".--- - ..... --...

C.4.3.1

The maintenance operations control center shall serve as the single point for
generating trouble tickets that are established as a result of a system or service
problem. BOP access to this center shall be through a contractor provided toll free
telephone number

C.4.3.2

The ITS-II shall be designed to minimize the need for BOP Staff to repo" troubles
such that the system and services shall automatically generate alens to the
maintenance opemions control center for malfunctions or detected service
degradation.

C.4.3.3

The contractor shall maintain sufficient facilities and staff for receiving information
on trouble calls so that the Government waiting time to provide such trouble
information to a live person does not exceed 5 minutes from the time the call is
placed.

C.4.4 Maintenance Status Updates
During a catastrophic system problem. the contractor shall be required to update the BOP hourly,
if requested' by IheBOP. until the problem is resolved. .
C.4.4.1

The contractor's update shall include. at a minimum. the following information.
A.
B
C

C.4.~

Current status of the problem.
Projected solutions.
Estimated time needed to resolve the problem

Escalation Plan

The contractor shall propose escalation procedures. processes, and personnel procedures for use
during an ITS-II system failure
C.4.S.1

The contractor's ITS-II escalation procedures shall be subject to BOP approval and
all contractor staff identified in the escalation plan shall be capable of being
contacted

C.4.S.2

During a system failure. the contractor shall adhere to the approved escalation
procedure

C.4.S.3

The contraclOr shall provide one contacl person plus one alternate point of contact
from its organization to address unanticipated difficulties (installation concerns.
system downlime. degradation of services. etc.).

C:4.5.4

The contractor shall also provide additional escalation policies and points of contact.
including contact numbers Itelephone. pager. facsimile. E-mail). titles. and chain of

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command, for the use of BOP in case the contractor's effons by the single point of
contact are insufficient in resohing a panicular situation.
c'4,5.5

If the main contact point is not the ITS·II project manager. the contractor shall
clarify the relationship of the project manager in the escalation process
.

C,4.6 Maintenance Repons
The contractor shall develop, prepare. and provide monthly maintenance repons to the BOP
COTR and Contracting Officer to keep the BOP informed about the ITS·II performance.
C,4.6.1

The contractor shall present and discuss these monthly maintenance repons as a pan
of the monthly ITS· II maintenance meetings with the BOP.

c'4.6.2

The contractor shall provide the BOP with monthly maintenance repons which
thoroughly document and analyze system performance. trouble ticket repons, and
trouble trends.

C,4.6.3

The contractor' shall ~ork ....ith the BOP tri' develop these repons in a meaningful
and informative format

C,4.6.4

Monthly maintenance repons shall be available in both hard copy and electronic
format. The database or spreadsheet file used to create these repons shall also be
provided to the BOP on electronic medium.

C,4.6.!'

These repons shall be provided within 15 working days after the end of the previous
month

c'4.6.6

The contractor shall continue to prepare and provide monthly maintenance repons to
the BOP for the duration of this contract

C,4.6. i

The contractor shall provide service level compliance repons on a monthly basis
which shall include. at a minimum. Ihe following information. This information shall
be presented in two formats. one which includes all troubles reponed. including any
exemptions. the second shall include all troubles reponed. excluding any exemptions
and waivers
A

Catastrophic downtime repon

3

The repon shall list catastrophic downtime for each individual BOP site for the
previous month
The repon shall list the catastrophic downtime for the entire BOP for the
previous month
The repon shall list the catastrophic downtime for each individual BOP site by

(·99

. ___ .__ ... " .. _ _ _ _
.3_ _.,.,..._...',..:0::..
;:......."':
. . . . O?

4.
5,
6.

B.

O:' ... ~."'. '.'"

"

- " , ' - ' . . ' • •"_. , , - -•• ~-- . . .

-

month for the previous six months.
The repon shall list the nation·wide average of catastrophic dO ....'I1.time per site
for the previous month
The repon shall list the number of catastrophic dO\l,'!1·time trouble tickets b\'
site for the previous month.
.
.
The repon shall indicate compliance or non.compliance with the maintenance
service level ordered by the BOP, If the maintenance service level ordered by
the BOP is not met. the repon shall indicate which level was actually met by
the contractor

Non·catastrophic downtime repon
I,
2.
3
4
5
6

C.4.6.8

_..

The repon shall list non·cataslTophic dO\l,'!1time for each individual BOP site
for the previous month
The repon shan list the Sliming time. ending time. and total for each non·
catastrophic failure experienced at each site during the previous month,
The repon shall list the non·catastrophic dO\l,'!1time for each individual BOP
site by month for the pre,;ous six months,
The repon shall JiSt the nation· wide average of non·catastrophic dO\l,'!1·time
per site for the pre\ious montli
The repon shall list the number of non-catastrophic dO\l,'!1-time trouble tickets
by site for the pre"ious month
.
The repon shall indicate compliance or non-compliance with the maintenance
service level ordered by the BOP, If the maintenance service level ordered by
the BOP is not mel. the repon shall indicate which level was actually met by
the contractor
.

The contraclor shall pro\ide Ihe BOP COTR with daily rcpons of all trouble tickets
reponed on the previous day Trouble tickets reponed on weekends and Federal
Holidays may be reponed on the next workday. This'repon may be faxed or Emailed 10 the BOP on a daily basis

C4.':' 'Ionlhl, :\lainlrnancr !\Irrtinj!s
The contractor shall meet monthly with the BOP Central Office staff These meetings shall be for
lhe purpose ofpresenllnll ITS-II pnor month's mamtenance repons and discussing resolutions to
program Issues and concerns These meetmlls may be scheduled less frequently at the discretion
of the BOP The site for the meellngs shall be determined by the BOP, Travel may be required 10
vanous BOP SlIes, contractor Slles, and subcontractor's sites. The contractor shall provide
representa\lvesfor each of its subcontractors at each of these meetings if requested by the BOP

C-100

,

•

•
CS

TRAINING AND DOCl'MElIiT A TIOS

CS.I Training
The contractor shall provide training to a maximum of twelve BOP ITS-II Central Office
personnel in the use and technical operation of the ITS-II. It is anticipated that this training will
require from 40 to 80 hours of classroom time The BOP ",ill cover the costs of its travel •
expenses to the contractor's location for this training

CS.1.1

The first training session shall be provided v.ithin four months of award of contract

CS.1.2

The training shall be designed to provide BOP Central Office staff v.ith a thorough
working knowledge of the various the ITS·II components, their integration. and
system operation.

CS.1.3

The contractor shall provide annually, upon the request of the BOP, updated
.. refresher training for ,!ny major or signific!\\1t changes to the administration,
maintenance, or use of the ITS-II The BOP v.ili cover the costs of travel expenses
to the contractor's location for this training.

C.5.2 System Documentation
The contractor shall provide complete system documentation at each site for all software. and
hardware components of the ITS·I1 BOP will use the documentation for internal purposes only.
This documentation shall be updated by the contractor as necessary to remain current with the
system
The contractor shall also provide two Implementation Engineering Plans (lEP) for each site which
detail the site specific wiring, trunking and routing data One plan shall remain at the correctional
facility and the other plan shall be provided to the BOP Central Office. The IEP shall be updated
as changes to the system are made and shall be used by the contractor's local technicians and BOP
staff to aid the troubleshooting process

C.5.2.1

Reference Cards

The contractor shall provide reference cards. which have been approved by the BOP, that
provide inmates v.ith instructions on the use of the ITS-II The contractor shall provide proof
copies of all reference cards which may be copied by the BOP as required for distribution to its
inmatepopulalion

C.S.2.1,1

These cards shall be prepared in English and Spanish. and shall become the propeny
of the BOP

(·101

--,'7- ',--'-;--. ". / . • '...... ~

:,....

,

.-.:

..

'.

"

".,.-.-_

.•.

--_.•..•. _.._-_.-.-._......

_

...•.

C.S.2.!.2

The cards may be copied andlor distributed by the BOP as desired.

C.S.2.!.3

The contractor shall provide a quantity of cards equivalent to the inmate population
of each institution at the time the ITS·II is being installed at that institution.

C.S.2.!.4

These cards may only be produced out of paper. Lamination is not allowed.

C.S.2.!

User Manuals

The contractor shall provide and maintain current operation manuals for each BOP site. One type
of operating manual. addressing the full capabilities of the ITS-II is acceptable.
C.S.2.2.!

These manuals shall contain detailed and clear instructions on the operation of the
ITS-II software.

C.S.2.2.2

These manuals shall be provided within one month after installation of the second
correctional facility.

C.S.2.2.3·

These manuals ·shall be updated at. each siiti as software version updates are made.·

C.S.2.2.4

The contractor shall provide a user manual(s) for each workstation at every site.

C.S.2.2.S

The contractor shall allow the BOP to make copies of these user manuals for internal
use only.

C.6

General Contractor Requirements

A

The contractor shall be responsible for complying with all state and national laws and
regulations concerning the delivery of these services.

B.

The contractor shall be held responsible for any noncompliance to these laws and
regulations

C

The contractor shall provide goods and services at the prices proposed in Section B as
ordered by the BOP

C.6.!

Language Requiremcnts

All contractor and subcontractor personnel supponing the ITS-II shall speak and understand
English

C·J02

•

•

C6.2 Organizational structure

Offerors shall provide information (organizational chans and explanatory chans) on the following
organizational structures:

A.
B.
C.

Overall company structure: how the company is organized.
Project structure: staffing struclUre for the ITS-TI project and how this project is
positioned within the company.
Detailed structure for the Central Operations Facility: to be staffed by the contractor

C6.3 Subcontractor Management
The contractor shall be responsible for all subcontractor personnel at all times.

C.6.3.1

The contractor shall propose and adhere to a comprehensive plan regarding
subcontractors.

C6.3.2

The contracior shall J)rovide BOP with it~ policies and procedures of subcontractor
management incbding the following:
A.
B.

<::
D.
E.
F

Contractor's level of experience with the subcontractor.
References to the subcontractor's performance.
Points of contact.
Financial stability.
Quality control measures.
Replacement policies (contractor replacements attributed to situations such as
corporate mergers, acquisition or insolvency, and poor performance).

C6.4 Quality Assurance
The contractor shall propose and adhere to quality assurance (QA) plans and procedures.

C6.4.1

The contractor's QA plan shall address, at a minimum, the following:
A

B
C

Hardware.
Software testing procedures
Corporate and project-specific quality assurance methods to be used.

C6.-1.2

QA shall address all aspects of the totallTS-ll.

C.6.-I.3

QA plans shall specifically address. in addition to hardware and software. all system
documentation and all aspects of program and configuration management.

C-IO)

.

-

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,-..~

.... --.

';-..

.......
...:..

.

....,..,~.--'

•

.. -..

......

- .- ...

C.6.S Configuration Management
The contractor shall propose and adhere to Configuration Management (CM) plans and
procedures.
The contractor's CM plan shall be updated as necessary and include at a minimum
the following.

C6.S. J

A.
B.

C.
D.

Hardware installed,
Planned hardware upgrades.
Softwarelfinnware versions.
Planned software upgrades,

C6.S.2

Configuration management plans and procedu.res shall be available to BOP at any
time throughout the contract

C6.S.3

Configuration management data shall be updated whenever any software or
hardware is changed or replaced. This data shall be provided to the BOP at the time
of update.

C6.6 Completion of Contract
The Contractor shall be responsible for removing all equipment related to the lTS·1I at the
tennination or completion of the contract. The schedule for the removal of equipment shall be
determined by the BOP. Immediately upon the completion or termination of this contract the
contractor shall provide the BOP Central Office with a stand·alone system which contains al\
financial records and call records for the previous six years and the software to easily retrieve and
output this information within the same parameters of the repons provided in this SOW. This
system will be provided by the contractor at no cost to the ¥.lOP.
'

C·104

..

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ATTACHMENT A
EXHIBIT 4

r

FEDERAL
COMMUNICATIONS
LAW JOURNAL
Formerly
F£PERAL COMMtJN1CATlQNS DAR JOURNAL
VOLUME 54

MAY 2002

NUMBEK3

Ankles
AN EmCIENCY ANALYSIS or CONTl!.ACTS FOR TI;It PKOVISlON OF
T:tLtPHON£ SElt.VJcts TO PIUSOIIS

By Justin Carver .......................................................................................391
As the numbots of prlSOll$ and priso.e", rondoue 10 inmase. SO docs !he
market for prison .....ice&. One of th. me.. lucralive "'IlmenlS of this induJIIy

l

is tho telepho•• markeL To Ihe e••mt lb., tile servlm ore provided 1I)·1lIe
prisonm. tile ",lationihip ",..moln a third pad)' bentflCiaf:y conll"aCl, but dllCt
to Ihe pc:rver.;c. financial incentives .00 Ihe political ellmale surround In, prisons
and pruonor>. IItitber Ihe stale nor IlIe prlvau: enuty ..,. ill Ihe !>at illlemIS of
tile <onsumm in particular or of oode!y in ,eneta!. Thil Article will onalyzo !he
efficiency of Ihese CO''''.'''5. Inoodua: 01_ at/1IIlIemetllS, and camp.... tile
efficiency of tit. plesent con_IS to Ibe al""".ti.os.

. i

.I

i

I

An Efficiency Analysis of Contracts
for the Provision of Telephone Services
to Prisons
Justin Carver·
I.

n.

m.

IV.

V.

I

VI.

lNTRODUCflON .•......•..••..•....•.•..•.. '" .....•.......••........•...•.•....•.•.•.... 392
NATURE OF PREsENT CONlRACTS ............................................. 393
A. Exclusive Provider Provisions ............................................ 393
B. Calling Options .................................................................. 396
C. COSI of Call.s ....................................................................... 396
D. Stales' Use of Revenue ....................................................... 400
E. The Need 10 Maximize Access 10 Tefephones ....................... 401
TEl...E.COMMUNlCAnONS ACT OF 1996........................................ 401
A. Removal of Barriers to Emr)' .............................................. 402
B. Inrerconneclion .................................................................. 402
C. Universal Service or Just Rates ........................................... 403
EmClENCY ANAl.YSIS .............................................................. 404
STRUCTURE OFTIlECONlRACTS AND GAME THEORY ............... 407
A. The Payoff Matrix ..............................................................407
1. State Incentives for Requiring Conunissions ................. 407
2. Incentives for Utilizing an EXClusive Dealing
Provision ...................................................................... 409
B. Game Theory in the Awarding of Contracts ..........................41 1
ANALYSIS OFTIlECONlRACTS .................................................. 413

• The Author practices law at Mariea & Sigmund. LLC. in lefferwn City. MiAowi.
$lUI sp""iati ... in civil litigation and busin... law. The Author wishes to ••press his
gratitude to his wife and his cell"Bues fIX Ihtlr continued support of this project. and to his
former law "'bonl professor. David Sloss. fIX his genctoas advi.. and counsel.
;.

391

•

...
r·
. ;:.'

;'

392

FEDERAL COMMUNICATIONS l..4W JOURNAL

A.
B.
C.
D.
E.
VB.

{Vol.S4

Present Contracts .. ~ ............................................................ 413
No Kic}cback. COmpelilion .................................................. 414
Kickback. COmpetilion ...... ~ ............... ~ .........
~
416
Stare·Owned Emerprisf! ...................................................... 417
Comparison 0/Approaches ................................................ 417
u ••• u •••••• .,. .... . . . . .

.t~

r

,

•

CONCLUSION ............................................................................. 419

I. INTRODUCTION

The prison population in the United StalCS has dramatically increased
since the 1970s. and as recently as 1998. thele were nearly two millioo
inmates incarcerated in the United States.' As the numbers of prisons and
prisoners continue to increase, so docs the market fOl prison services.
Indeed, the prison industry has already grown into a multibillion-dollar
industry with its own !lade shows and trndc newspaper:
One of the more luctalive segments of lhis industry is the telephone
market. In the prison context. the state contracts with a private emily. and
the private emily provides services 10 the prisoners and also to the state. To
the extent that the services are provided to the prisoners. the relationsbip
resembles a third Parly beneficiary contract. Due to the perverse financial
incentives and the political climate surrounding prisoos and prisoners.
howevC/, neither the state nor the private enlily acts in the best interests of
the consumers in particular or of society in general.
With respect to the financial incentives. it is estimated that inmate
calls generate a billion dollars or more in annual revenue.' One prison pay
phone can generate $1 S,000 annually; a Iypical public pay pbone generates
only one·fifth of that atnount.' Faced with the possibility of such revenues.
Mel installed its inmate phone service in prisons throughout California at
no charge to tbe state.' As part of the deal. in excbange for the rigbt to be
the sole provider of telephone services to the prisons, Mel pays the
California Department of Corrections a 32% sh_ of all TCvenue derived
from the calls.' Mel adds a three-dollar surcbarge to each call: The

Dee:

I. Eric Schlosser. "'" Pris",,·Jndustriai Complex. 1'HE A11.ANT'IC MONTIlLY,
199.8••151·$2. aval/abl~ at hnp:/lwww.theadanlk.cOOllissucol'l8declprisons,bUII.
1. id. Ii 6344.
3. Id. lit 63.
4. ld.
5. /d.
~ 14 This i, standard prllCtice. A 1995 study orSlalc depa.ronents of .:mecum
r..po<1t:d that 38 al41 ",spondenu ft<Xive4 oommissi"", from inmate pbOlle systems. Su.

f'

~
..

".,.....

'-i>
. :'¥
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Number 3)

TELEPHONE SERVICES TO PRISONS

393

california example is by no means unique; it is the rule. rather than !he
exception.
'
.
.
nus Anicle will analyze the efficiency of these contraCts. inlrOduce
altcr1late ammgemcnts. and compare the efficiency of the present contracts
to the alternatives. In so doing. this Article will demonstrate that !he
present contraCts are inefficient. More specifically. Section n discusses
proble01S that are unique to the provision of phone service to prisoners. and
intrOduces the practical shoncomings of the current contracts, The
Telecoaununications Act of 1996, the source of Federal Communications
Commission ("FCC") regulatory jurisdiction. is discussed in Section m.
Section IV introduces a few basic principles used in pcrfonning an
efficiency analysis. Section V uses payoff matrices and game thcory to
demonstrate how the award process for the contracts causes inefficiencies
to arise and perpetuate indefinitely. Section VI introduces alternate contract
structures and demonstrates that certain alternatives are more efficient than
the present contracts. Section vn contains a brief conclusion that calls for
the FCC to adopt regulation that preempts existing state contracts which are
inconsistent with the most efficient alternate structure.

n.
A,

NA~OF~BITCO~~

Exclusive Provider Provisions

The contract between the telecommunications provider and the state
typically provides that the telecommunications provider wiU be the sole
provider for a particular prison or prison system.' Parties to these
agreements often cite the high costs of the security systems associated with
the operation of a phone system in a prison as justification for the
exclusive·dealing provisions.' Stated differently. the assened justification is
,.g., JOINT Ums. AUDrr AND REVIEW COMM'N OF THE VA. GEN. ASSEMa .. REVIEW OF TIlE
DEP'T OF C0RJl£C110NS' INMATE TEL. Srs., House Doc. No. 70, 1997 Se.... al 3 (1997).
availabl. 01 hap:lljlarc.state.va.usl,eponslrpll99.pdf (hereioafle' JOINT UOIS. AUDIT). nus
Article will ~fcr to the share of the revenue as ··commission·· or "kickback."
7. Schlosser, 'upra nOle I, •• 61
8. JOINT Ums. AUDIT. '"pro nOie 6, al 16.
.
9. David Fischer. Reach 0., and Gouge So,""one, U.S. NEWS'" WORLD REPORT, May
S, 1997, II 51. Clearly, I seturil)' system is boIh desirable and necessary. II is imperative
!hat priscners be precluded from ruMing • druS rina while in prison. coo/acrin, 81M!
rampcrins wi!h wilnesses, and so on. Most if nOl all s13te •• for example, ~qui~ tha1 lItE
prisoner submit a list of persons that !he prisoner would lik. 10 be abl. to contact by
telephone. The persons arc then investigated, and if approved, the names of !hose persons
arc then placed on the inrnat<:'s lisL The inma.. may contact by lelephone only those
pe""'" who .... on the approvedlisL Eacb inmate i. allowed to place a limited nwnber of
persons 00 !he inmate', USI II a given lime. Set Pl.". H.R.. lurna COUNCIL, COM>!. ON
C0IUIECl10NS. MAINT "I NINO FAMIL YCONT"CT WHEN A FAMIL Y MEMBER GoES TO PIuSOl<:

I

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394

FEDERAL COMMUNICATIONS LAW JOURNAL

[Vol. 54

that the market is a natural monopoly. or a market that "can be served most
efficiently by a single incumbent fum. ,,"
There are two reasons why the market is believed to be a natural
monopoly: (1) the provision of telecommunications in general is best
accomplished by one fum; and (2) the costs of the security system make it
impracticable for more than one firm to service a prison. The first reason is
based on bad economics. and' as a matter of public policy. it has been
abandoned by Congress." The second reason is factually unsubstantiated as
well as pretextual. At least one state. New Jersey. has authorized
competition in the provision of telephone services to inmates, and in so
doing. the only articulated concerns were security related. U The New
Jersey Board articulated no "efficiency" concerns.
The truth is that states stand to earn additional revenue when a
monopoly is providing the service. because the state will receive both a
commission and tax revenue based on the monopoly profits." In fact, most
states are not responsible for operating the security system; thai task is
delegated to the service provider. In 1998, New York estimated that the
annual cost of overseeing the maintenance of the phone system, including'
the security system. was a mere $283,000." Incidentally, the New York
State Department of Correctional Service receives a 60% commission from
MCI in exchange for granting MCI the right to be the sole service provider

1
,

AN ExAMlNAnON OF STAn PoLlOes ON MAlL. VlsmNO. ""o1UEPHONE ACCESS. at 2()'21
(Nov. 1998). <II http://www.rcc.stale.n.uslfccl~amily.pdf lht.einafter M~NTA1IIING
FAMn.vCoNTACTI·
10. E. THOMAS Sm.uv AN & HERBERT HOVENltAMP. ANlTntuST LAw. PoLICY &
PROCEDURE 912 (4th ed. 1999).
I I. S.. Telecommunications Act of 1996. Pub. L. No. 104-104. 110 S"'1. 56 (codified
., scanered sections of 47 U.S.C.).
12. ExtCUtonelnfonnation Systems. Inc.• 141 p.U.R. 4th 519 (NJ. Bd. Reg. Comm'n
Apr. 5. 1993). avoiltJb/< ar http://www.westlaw.com.
13. For more detail. su infra Pan VI.
14. John Sullivan. N.... York S,at< wms Top Dollar From Colin" Calls I>y lIS In""'It••
N.Y. TtMa. Nov. 30.1999. aI AI. Where the stales are ,"sponsible for the security system.
the costs are higher. For example. in Oklahoma, the state received SI.9 million in the year
2000. spent SI.2 mimon on security. and retained a profit of $700.000. Bobby Ross, Jr••
CoS! of Calls May DlCrttJJt for Inrna«s: Boord Asks for Chang. in Prison Phon. S>~I.m.
THE DAll.Y OKLAIIOM"'. Jan. 26. 2001, 4A. Accordin& to. press release by Massachuselia
CURE. the average cost of a collect call made in the state of MassachuseftS is SO.20.
minute. In Massachusetts prisons. calls are limited to a length of Iwenty minutes each. The
minimum cost of a call made out of a prison in the Massachu.ens 413 arca rode i. S8.~ ..
SO.43 per minute for twenty minutes. Pres. Release. Massachuseus CUJe. Prison Telephone
Charges to 413 Area Triple 'Those Elsewhere - Rep. Swan Renews Call 10 Urnit TOils IS
Na.ional Boycott Begins (Aug. I, 2000). avaiwbl< at bnp:Jlwww.masscure.ora/
prtSs.elease0800.hunl (on file with author) {hereinafter Swan Renews CaIlJ. This ArUcle
explo= whether the security system used in MassathuseftS really doubles the cost of the
calls or ....hether the 40% kickback imposed by the stale docs•

....

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!'lumber 31

TELEPHONE SERVICES TO PRlSONS

395

'sons in New York-" In 1998 alone. the Department received $25
topn
. arrangement. "The Depanment has recCIV
'ed
milron pUTSQant 10 thiS
~llimatdY 568 million since !he inception of !he arrangement." States
earn tens of millions of doJlars in annual revenue from !he telephone
o.~n
.
grc:ements. as do the telephone companies.
a
States also seek to justify !he ellclusivc dealing provIsIons by
asserting that !here is competition for the award of the contract. and the
tJJrea1 of competition for the contract encourages the telephone service
provider to act as though !hen: is competition for the provision of the
services. This argument is based on the theory of contestable markets.
Where !he identiry of a monopolist is detennined by a competitive bidding
process. ~d where then: is no c.ollusion among bidders. the th.eory ?f
contestabihty holds that the pnce charged by the monopoitst will
approximate that which is charged in a competitive market." Because the
price charged by the monopolist is substantially similar to the price that
would be charged in a competitive market. !hen: is no need to regulate !he
monopolist. I' There arc a number of problems with the application of the
!heory to this situation. First. note !hat for !he !heory to function properly.
the bidding for the contract must be renewed regularly. because once a firm
begins operating in the market. then: is no incentive to price
competitively.:!II II is also important to note !hal contestability has not
worked well where the sunk costs are high. as they are here. ~I
More crucially. the manner in which these contracts arc actually
awarded does not fall wi!hin the traditional understanding of the
contestability theory. which presumes that the contract will be awarded on
the basis of cost and/or qualiry of service. Here. the contracts are usually
awarded solely on the basis of which company will provide the state wi!h
the largest commission. and nOI on the basis of which company will
provide the services al the lowesl price." As the award process does not
create an incentive for the firm to behave competitively, this practice is not

ap!.

I

I

I!
I
\

IS. Associated Prc~s. Suit TCJ~~IS ROlrsJor Prison Phones. NEWSDAY. Mar. 22,
at A32. tIl'ailahl, 01 2000 WL 10003231 (hereinafier Sui' TOTS<u Ro"s],

2000~

16. Id.
17. Id.
18. SUl.LtVloN &: HOVENKAMP.

,upr. note 10.01913·14,
19. Id.
20. Id at 972. A common Ierm for the contracts is five yean. which is probably too I":,

a time for conlestability to affect the beh.vior of the incumbenL
21. Id. al913.
22 . Fischer. supra nole 9. 01 52 (noting thallhe sWe of Florida .warded a contract 10
Sprint airt:r Sprint outbid compc:titors and offered "0 ",rum. SluMina 57.5 percent of its
revenu.. to the swe"). PrevioU5ly. Florida had been receiving a 4()% kickback. Id.

, ;

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396

FEDERAL COMMUNICATIONS LA W JOURNAL

[Vol. 54

in accord with the economic theory of contestability.
~'
<

B.

Calling Options

C.

.'

t•

j

J

f-

•t

~

,k
~

,

Cost of Calls

,I

The cost of the phone calls varies from state to Slale. depending on the
amount of the surcharge imposed by the company, the amount of the
kickback to the state, and the amount of the cap 10 whicb the rates ale
subject. In some states, the rates charged by the telephone company for
collect calls made from prisons are capped at the rate that would be charg~
on collcct calls made from a pay phone outside of prison.u Of course, the
surcharges do nOI count against the cap, so the actual rate charged for calls
from inside a prison still exceeds the rate cbarged on external calls.
It is also important to nOle thaI telephone companies are often
required by regulatory authorities to install and maintain a number of
public pay phones in the area served by the phone company." The
installation of these pay phones is considered by rellulators to be a
compulsory public service, and this service is made mandalory by
regulators who believe thaI greater access to pay phones increases public
access to 91 I emergency service. This requirement is very unPopular with
23. See Global Telcoin. Inc.. No. U·20784-B. 1995 WL 59684. al "I (La. Pub. Serv.
Comm'n Jan. 17. 1995) (noting thal inmates are nOl free 10 chaose the operalor service ...
long·distance carrier of their choi" due to concerns aOOUl fraud). How fraud would be: moTt'
of a problem when the family is responsible for paying the bill is nOI entirely c1....
Presumably, the family has long-<lislance ",rvice in its residence. Dots the Louisiana Public
Service Commissioo believe that the family can be trusted \0 pay the loog-distanct bill from
the rtBular long·c!iSWlce provider. bul tIOI the bill for the call from the prison? Even if the
answer is yes. does thai answer justify the rule precluding a prismer from choosil'll •
provider? 'The rule effectively granls the carrier the power to charge a monopol~ price;
prtSumably, as prices incrtase. the rale of fraud increases. So perhaps the ",Ie CTCalCS tile
fraud. which in lum matts the need and justification for the rule.
>
24. MAlI<!AINl"C FAMILY Com ACT, s"prO nOle 9, at 24.
25. AT&T Comm. of N.H.. Inc .. 79 N.H. P.U.c. 639. 639 (N.H. Pub. Util. Comm'n
Noy. 14, 1994), oyailabi. ar 1994 WL 854500. or course, the ....., cap i. usuall)' set OJ
match the highest tale charged althe peak times by any provider in the stal<.
26. Re Rates and Charges Paid by Pay Telephone Service Providers 10 Local Exchange
Carriers. florida Public Service Comm'n. Feb. 14, 1991, 120 P.U.R. 4th 530 at '28.

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Even where prisoners are required to place all calls through a
panicuJar provider, prisoners generally do not have the ability to choose
between multiple calling options. The vast majority of states require that all
calls made by inmates be made "collect," and therefore it is the prisoner's
family or friends who actually pay for the cal!.2' Prepaid calling cards are
generally banned for fear that they contribute to or further a black market
for contraband."

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I hone companies. which are often required to install and maintain pay
tC ep es in unprofitable locations with low caIl volume. 1' ReguJatorli have
h
p o:raIlY been responsive to these concerns and have allowed telephone
ge~panies to increase the rate charged on all pay t'hones. effectively
~owing the unprofitable pay phoncs to be subsidized by the profitable
onCS. As noted above. prison pay phones have an inordinately high amount
f call volume. as compared to public pay phones. Where the rates are
~apped. they are often capped to match the highest of the ratcs charged by a
firID providing service outside a prison." Also. depending on the state. the
cap inside the prison does not necessarily reflect time of day discounts."
Therefore. even where the cales for collect calls from prisons are capped at
the "outside" rate. the inside rate cap is based on false assumptions about
phone use in the outside market. As a result, the charges for the inside calls
are disproportionately higher than the cost. Inmate challenges to the rates
are generally unsuccessful."
In other situations. the rates are not capped in such a manner that they
correspond to the rates made for outside calls." Because the state is not
paying for the calls. it seems reasonable to conclude that it would be less
concerned with the cost of the calls than if it were responsible for paying
the bill. Stated differently. the state receives the benefit of having a service
provided, but does nol have the corresponding burden of paying for that

27. Id.

28. Operating Practices of Alte!1laDVe Operator Servo Providers. No. U.179S7. 1993
WL 561415. aI "2 (La. Pub. Servo Comm'n Sept. 23. 1993) (comparing the rates charsed by
four providers. and noting thai guidelin~ required that the rate cap match the highest rate
chuged by one of the four).
29. Id. (ordering thai the construction given to the rate cap be changed. allowing the
rate cap to be coo,trUed to renect time of day discounts).
30. S... '.g.. Jackson v. Taylor. 539 F. Supp. 593.595 (D.D.C. 1982) (holding thai
prison officials we~ immune from an antitrust claim arising out of an aJleged practice of
(i7Jng the price of phone calls made from the prison): Comm. Workers of Am. v. Pac. BeD.
61 C.P.U.C.2d 647 (Col. Pub. Util. Comm'n Oct. 5. 1995) (holding that the prison il5Olri.
the customer, and thai pri'ODc:rs were nOl consumers of • telephone system. and !hal
th=fore. only the prison was guaranteed access under Slate regulations); Basham v.
Mountaineer Power Sys .. No. 92·102f>.COCOT·C, 1995 Wl. 447123. aI "9 CW. VL Pub.
Serv. Comm'n June IS. 1995) (categorizing prisoner complaints into four calesories: . ' _
",garding the type of system offered. those regarding whether the system complies with the
Commission's rules and regulations. those reganling the functioning or the system. W
those regan:ling the rateS charged"). The West Vir,inia Public SCTl'ice Commission found
thai only those claim. dealing with the functioning of the system can be brought by an
inrnlllC before the Commission. Id. Camplainu regarding the cost of the service wen found
not 10 be "enten.ained by the Commission in the context of a complaint case but are instea4
reviewed in the service provider's next rate proceeding."Id.
31. MAlI<TAlNlNG F""ULVCOI"TACT. supra nOle 9. at 22.

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benefit. That burden falls on the families of the inmates.
The states and the phone companies seek to juslify the COSI of the
calls on a number of grounds. Phone companies cile 10 a high rate of "toll •
fraud," where bills are sent 10 invalid or incorrecl addresses." Again. why
fraud is more of a problem in the conteXI of calls received from a Frison
than in the context of routine long-distance calls is not entirely clear.)
The cost of the calls can be partially justified by the expensive
security systems that are a necessary componenl of the prison Ielephone
systems. Of the asserted justifications, this one has actual merit. for the
security systems are clearly necessary. Nonetheless, one has 10 question
whether the security systems currently in place are the most cost-efficient
systems available. Since the service provider operates without any real
threat from competition, the provider has fewer incentives 10 keep costs
low.
Most states are candid enough to admit that the kickbacks they
receive from the service provider do increase the cost of the calls. for the
consumer." Nonetheless, these states argue that the telephone system is not
without costs, and that it is only fair that those who use the system pay tor
part of the costs of the system. Of course, this argument fails 10 nOle thaI
for the state. the syslem may very well be without costs. As noted above. in
California. MCI installed the entire system at no cost to the Slate. and MCI
allows state employees to make calls for free. Effectively, the families an
paying for the state's use of the system. Isn't it only fair that those who use
the system pay for part of its costs1 Note that even where the system is not
without COSI 10 the state. the state earns much more from the system than it
spends on the system."
A number of telecommunications providers supplying service to
prisons have engaged in unscrupulous billing practices. such as:

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32. S.. Rates, Terms and Condition fQr Inmate Tele<;omm. Serv" No. 368. 1999 WI.
179812. at ·2 (Ky. Pub. Serv. Comm'n Jan. 15. 1999). This view assumes that an enor in
billing must necessarily be the fault of the consumer. and the:"'forc, increased prices are
e.ntil"tly justified. Note thai. when the company does not @:ct paid, the consumers are accused

of .ngaging in fraud. or course. where the company charg.s consumers for calls that were
never made or overcbarges coosumcrs for caUs. then it is not fraud.
•
33. As prices incr..... so does the rate of fraud. Ther.fore. it is possible that the
slnlcture of the agreements incn:ascs the cost of 1M calls. creatinB the: increased fra9d
Higher rates of fraud in tum create the: apparent justification for the higher costs.
34. MAINTAINING FAMILY CONTACT. supra nOle 9. al22 (admining that the cost 01 the
calls is alfccled by the: "sizable commission" received by lbe sUlle).
35. Id. at 29. Ailer costs. New York ,tale pock.led S2()'21 million from the
commissions in 1997·1998. Id Are the users m.rely paying their fair share for

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rogramming phones to stan billing before the recipient accepts the call;"
hnposing surcharges in excess of those allowed;" failing 10 discount calls
made at off·peak times;" and charging for unauthorized calls." The
potential for fraud on the pan of a provider is exemplified by the recent
behavior of Global Tel·Link Corporation ("Global"). which operates
inmate phone systems in several states, Global was found to have engaged
in a number of illegal activities. including the following: starting the
internal time clock on the phones either IS or 36 seconds ahead.... charging
rates that exceed the authorized rates," adding time and money [0 each
caJl." and billing a call more than once," Another provider was found to

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36. Equal Access Corp .. No. FCU·9().S, 1991 WL 519835. II °3 (Iowa Util. Bel. Feb. 6.
1991).
37. MCI Telc,comm. Corp .. No. 960617·n, 1998 WL 391688. II 01 (AL PIIb. Serv.
Comm'n June 9. 1998) (noting thll MCI imposed surcharges thll were, II various times,
$2.00 or Sl.2S in ..cess of the penniaed surcharge). This maner also iUuslrales the
difficulty of dealing with the overcharies. Pursuant to a previous Aorida PIIblic Service
Commission order, MCI attempted to issue refunds to those individuals who were
overcharged. Id. A large number of those per>ons could no longer be located. however, MCI
requested that the funds be placed in a trUSt fund for prisoner advocacy groups, but the
Commission ordered an immedille rate reduction. Id. As a side note, when Mel sent bills to
invalid ~ddn:sses, MCI cried "fraud" and went to the Cotnmission,
38. EqUDI AcCtss Corp.• 1991 WL 519835, at °3.
39. ld. at "4. See also La PIIb. Servo Comm'n V. Quest Correctional Conun-, Inc .. No,
U·21318, 1996 WL 532169, at °4 (May 14, 1996) (noting that one finn used 309 pay
stalions at a prison. but the company only paid for 168 of those lines). This case is not
necessarily imponanl for its impact on the rate charged on inmate caBs, but it could impatt
the quality of service. Also, it is illustrative of an additional manner in which a provider
could circumvent any applicable regulations,
40. La. PIIb. Servo Comm'n, No. U·20784, 1995 WL 59684, at °5 (Jan. 7. 1995) (nOlin,
that this programming is made man: significant by the fact that Global, as well as moot
telephone companies, round up the time of me calilo the next minule).

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42. Id. at "6 (noting that Global may have used as many as twenty·five different add-on
techniques).
43. ld. at n.S. Apparently, Global would also combine these lechniques. For example,
on any particulu call, Global may have 'tatted the imernal clock ahead. charged a rat< in
excess of that allowed. added on additional rime ond money to the call. and then billed the
customer more than once for that same caU. The lOtal amount of the overcharges, in
Louisiana alone, was calculated 10 be $1.243.000. Id. II 01 I. S.. also Global TeloUnk

Corp .. No. 93·C·OSOI, 1995 WL 782983 (N.Y. PIIb. Servo Comm'n Dec. II, 1995) (order
approving a reimbursement plan submined ofler Global's practices were discovered); Globu
TeloUnk Corp .. 68 C.P.U.C. 2d 149, al '6 (Cal. PIIb. Util. Comm'n Sept. 20. 1996) (notin,
that on the date of the decision. Global had refunded over 53.4 million). This beh.vior is JII\t
limited 10 Global; a different company operating in Louisiana was found 10 have commiacd
simjJar actS: charging customers for two calls that wert made at the same time. charging
customers for calls that were: not even made from the facility. overcharging calJs, and adding
time to calls. La. PIIb. Servo Comm'n V. Vendonnatic. Inc .. No, U·2211S, 1998 WL 201681
(La PIIb. Serv. Comm'n Feb. 17, 1998). In any event. the ,ituation could be worse; in T....
an inmate is allowed to make one col1ect call every ninet), days, so long as Ihe inmate has

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FEDERAL COMMUNICATIONS LAW JOURNAL

[Vol. 54

have overbilled r",o-Ihirds of the intmtale caIls made from II particular
prison." In .Florida, in a five-year time span, three companies were found 10
have overbilled consumers by a total of over $2.1 million."
.

D.

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States' Use o/Revenue

States use the revenue derived from the commissions in different
ways. Most states claim to use the funds to offset costS of operating a
prison, either by funding progtam5 operated by the Department of
Corrections. or by placing the funds in a prisoners' welfare account." For
example, the proceeds may be used to fund health care for prisoners, cash
for work-release. and bus tickets home:' Interestingly enough. one stale
was recently found to have failed to establish "controls to safeguard.
reliably account for, or efficiently use the telephone commission monies
and was usinJ inmate funds for staffing positions not directly related to the
Trusl Fund.'
Other states place the funds in the general revenue coffers." Where
this is the case, the surcharges on the phone calls can be said to take on the
nature of a regressive tax thaI is imposed eXclusively upon the families of
those who are incarcerated. One has 10 question whether such a tax regime
is the best method. nom a tax policy standpoinl, of funding the activities of
the state.
However the funds arc ultimately used by the stale. one could go even
further than calling the surcharges a "tax." Indeed. Oliver Wendell Holmes
might suggest that from the point of view of the person paying the
surcbarges, the surcharges are nol so much a "tax" as they are a "fine.""
That is, the ultimate consumer would likely view the excessive cOSI of the
calls as an additional punishment imposed on the consumer for no reason
refrained from violating any prison rul •• , lames 1>\, 0da1O. r0T8rrin8 Profits from Pri_
Cells, TIMES UNION, Sept. 4. 2000. Texas dots nO( reccivt a lcickl>ack. MAIh'TAINlNO
FAMILY CONTACT. supra nOle 9. at 28-29.
44. Set V.nd<Jrmanc. 1998 wt 201681 • .at *4 (finding thai of !he 9O.1!i9 tolled calls.
Vendonnatic c.,.,...,uy charged 13$49. undercharged 12,157. and overcharged 64.S73).
45. MAlNTAlNlNC l'AMIL Y CO~" ACT. supra nolO 9. at 27.
46. FIscher. sup'o note 9... 52.
47. OdaIO. sIIp,a nOle 43.
48, ROllOA UGISU1'tJltE OmCE OF PROORAM Pol.ICY ANALYSt. AND GoVERNMUIT
ACCO\INTABILm. FOLLOW-UP REroRl 0" 1lIE 1"""'1"£ WELfARE TRUST FIJNn ~D

INS1T!VTlON·BAS'EO ACCOum AIlMtNISTERfD

BY

1lIE DEPARTMENT Of CORI\ECTlQNS. No.

%-46(1997).

49. S.. Swan Renews Call. ,uP'o note 14; FIScher. supro note 9. It 52. St•• '.8.• JOINT
LEelS. AlJI)IT. S"P"" nOI< 6. at 36.
so. S.. Oliver Wendell Holmes. Th. fGlh of the Law. 10 IW\v. l. REv. 457. 461
(1897).

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TElLPHONE SERVICES TO PRISONS

401

that a family member of the consumer has been· incarcerated.
an
other. th t the matter in this light would raise a number of justice. fairness.
l.,oOidng a s even due process concerns. "
and pcrhaP

E.

The Need 10 Maximize Access to Telephones

Most prison officials recognize that it is in the beSt interests of all
.es affected by an incarceration that the incarcerated person maintain
partJtaCt with frien dsand .amI
~ '1"
.
.
y. Th'
at 15, pnson
0 ffileI'a! S seem to recogmze
:~ conUict with family is very imponant not JUSt for the prisoner. but also
. f a the sUite and the family of the prisoner. Contact with families helps
~cialS maintain order in the prisons, and it faciliUltes the prisoner's
o integration into society. Therefore. the stated goal of many official
~licies relating to inmate use of telephones is that prisoner access to
telephones should be maximized."

m.

TELECOMMUNICATIONS Acr OF 1996

In 1996, Congress revolutionized the telecommunications market by
passing the Telecommunications Act of 1996 (the Act). The impetus'
behind the Act was a finding that "[tJechnological advances would be more
rapid and services would be more widely available and at lower prices if
telecommunications markets were competitive rather than regulated
monopolies:'" In light of this finding. Congress sought to introduce
competition into the telecommunications market, for the purpose of

51. Therefore. most lawmaJcjng bodies would likely look al the matter from an entirely
differen, perspective. Mosl cenainly. the phone companies and the: states thJu receive a
commission would nOl Lake this point of view.
S!. See Rates. Tenns. and Condition for Inmate Telecomm. Servs .. No. 368. 1999 WL
179812. at '1 (Ky. Pub. Serv. Comm'n Jan. IS, 1999). The Depanmenl of COITeCliol15
testified before !he Commission thai !he Deparunent intended !hal !hose who pay for collecl
phone calls made: (rom prisons pay no morc than the amount for a similar caJi made from
outside the prison. Jd Stt also AJ~ Pub. Servo Common v. AU Customer#owned. CoinOperated Tel. Serv. Providers Serving Confinement Facilities, No. 23871. 1995 WL
337071. al 't·2 (Ala. Pub. Servo Comm'n May I. 1995) (citing testimony of an .conomi~
e.pert ",<ained by the AI.bama Attorney General's Office who lestified thai no valid
purpose would be served by establishing higher rales for inmate phone calls). In hoth cases.
the Public Service Commissions apu:d 10 cap the rates on calls made from prison to malch
outsido rates. Rates. Teon.. and Condition for [runate Telecomm. Serv., 1999 WL 179812.
II '3; AJa. Pub. S.",_ Comm· •• 1995 WL 337071. at"S.
53. One has III wonder how often the actual aluludo. of prison officials reOm this
stated potitY. Upon ,e""iving infonnation thai the stale had just been sued for allegedly
monopolizing the provision of l.elep~one services 10 prisoners. one stale official·s only
response was thal "[ilnmalC5 do nOl have a constitutional righl to make phone tails." Suir
TargtU Rmu. SlApro note l!ii.
54. H.R. REp. NO. 104-204. al 48 (1995).

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FEDERAL COMMUNfCATlONS LA W JOURNA.L

[Vol. 54

protecting consumers from potential monopoly abuses." To promote
competitiop, Congress removed state and local barriers to entry, required
providers to interconnect with competitors, and placed an affinnative duty.
on the commission and the states to ensure that universal service is
available at rates that are just, reasonable, and affordable. These changes
will be analyzed individually.

A.

Remol'ai of Barriers 10 Enrry

With respect to the removal of the state and local barriers to entry. the
Act has broad provisions for the preemption of state and local regulations
that impede the Act's operation. The Act provides: "No State or local
statute or regulation. or other State or local legal requirement. may prohibit
or have the effect of prohibiting the ability of any entity to provide any
interstate or intrastate telecommunications service,'''' These provisions
grant the FCC the authority to set aside any slate law that is deemed
inconsistent with the Act's purpose."
Clearly, by allowing only one company to be the provider of service
to a prison, the state has put into place a "legal requirement" that prevents
entry into the market. This legal requirement is essentially a governmentgranted monopoly. Section 253(3) of the Act is directed squarely against
this practice, because the practice is inconsistent with free entry into the
market. Further, the state requirement conflicts with the congressional
belief that technological advances would be more rapid, and services would
be available at lower prices, if telecommunications markets were
competitive marketplaces rather than regulated monopolies.

B.

Interconnection

Congress funher imposed a general duty on telecommunications
providers to interconnect with the facilities and equipment of other
telecommunications providers." The incumbent is to be compensated by
55. Id.
56. S.. 47 U.S.c. ~ 253(3) (Supp. V 1999).
57. Set 47 U.S.C. § 253(a). (d) (Supp. V 1999). Set al,o S. REp. NO. 1()4.230,8t.l26
(1996) (noting that the bill preempts almost all state and local barriers to competition). '
58. S.. 47 U.S.C. § 25l(a) (Supp. V 1999); 47 C.F.R. § 51.3DS (2000). Note thll t
251(a) requires a provider to share infrastructure and facilities. Section 251(b)(4) im~
the duty to afford access to rights·of.way. poles. conduits. and ducts. 47 U.S.c. § 2S1(~4)
(Supp. V 1999). However. local e.change carriers would "not be required to take any action
thlll is economically unreasonable Of' thaI is COllITar)' to the public intereSL" 47 C.F.R. t
59.2(0) (2000). The obligation to ncgoti.t< imen:onnection applies to a local exchange
carrier mar is detennined by the FCC to have market power in providing exchange services.
S. REP. No. 104·230. at 117 (1996). The Act creates the potential for competition w~
fonnaly there was a natural monopoly.

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TEUPHONE SERVICES TO PRISONS

40;\

. tor at reasonable terms. which generally has been construed to
. .
. a
the Compeu
th 'cos lS of the incumbent." Essentl'all y. these provISions
requrre
m~ at e lease its facilities to a rival. The provisions are designed to
provld~r : to enter the market without sustaining a substantial amount of
alloW nVfixed costs up front: when the rival leases access. these costs are
sunk ord lover time. Therefore. the provision lowers a barrier to entry.
allocate
. . . th
_....
b promoting competlnon In e m"" ...el.
there The
Y interconnection
·.
.·f
prov1S1ons.
t app l'cd
I to th e contracts. wouId
ire an incumbent to lease the necessary facilities and lines to a rival.
:;;:UoreticalIY. both providers could share everything, even the already
i:ting security system. Recall that the states seek to justify the exclusive
~~ing provisions by assening that the costs are too high for two firms to
both install and operate systems. But by interconnecting and using one
ystem. tWO firms could compete without incurring the expenses associated
~ith installing and operating two duplicative systems. Further. it is likely
that competitive pressures would force each finn to drive down costs." If
so. then it is possible that two firms could operate at lower cost than a
single firm. Finally. note that the exclusive dealing provisions also prevent
interconnection.

C.

Universal Service ar JusrRales

To effecruate the ultimate goal of promoting consumer welfare.
Congress imposed an. affirmative duty on the states to prevent
unnecessarily high rates from being charged. Specifically. the Act provides
that "[t]he Commission and the States should ensure that universal service
is available at rates that are just, reasonable. and affordable.'''' Therefore. it
is not sufficient for the states to promote competition; the stales must also
take affirmative action to ensure that all consumers have access to service
ar reasonable rares. The states have violated this duty in three material
respects: by requiring that a commission be paid to the stale. by allowing
the provider to impose additional surcharges (which in part pay for the
commission). and by granting a monopoly to the provider. The states have
violated this duty because it is profitable for them to do so. not because the.
present situation is beneficial to consumers. This practice is in direct
59. Some question has arisen as 10 how "costs" should be measured. St< ••. g.. 'William
1. B.umol &. Thomas W. Merrill. Der<gularo,y Takings. Breach oflhl! Rogwalo? C0'!lracl.
and ,hi! TelecommUllica/jons Acl of /996.72 N.Y.U. L REv. 1037. 1039 (1997) (ar,uin,
that efficiency requires pricing by forward·1ookins costs. and Ihat the Takings Clause does
nol preclude pricing on a forward· looking basi,!.
60. What costs are left? Managerial. administrative. billing. and any other costS which
do not pcnain directly to the costs associated with the ljn~ and facilities.
61. 47 U.S.c. § 254(i)(Supp. V 1999).

FEDERAL COMMUNlCA170NS LAW JOURNAL

[Vol. 54

conflict with the congressionally imposed obligation to ensure that service
is provided at reasonable and affordable rates.
Ultimately. one is left with the distinct impression that sllite
requirements are in direct conflict with both the plain terms and the spirit of
the Act. Consequently. the FCC should exercise the powers conferred by
the Act. and preempt any state contraCt that requires a commission 10 be
paid 10 the stale. or thai granls a monopoly to a provider.

IV. ErnclENCY ANALYSIS
The alleged superiority of law and economics. as a body of
jurisprudence. is based on the faci thai il uses economics to lest the validity
andlor efficacy of rules. and the fae. that economics is a less subjective
measure than those measures employed by rival jurisprudential theories.':
Generally speaking. law and economics suggests that the role of the law is
to maximize weal tho and that all laws should be construed so as 10
maximize wealth. Wealth maximization is. by some. measured in dollars;
dollars are less subjective than general notions of "justice" or "fairness."
Therefore. an efficiency analysis performed on twO competing pieces of
legislation. for example. is a less subjective measure of the merits of the
proposed laws than a discussion about the comparalive justice of the
respective proposals. or the impact of the proposals on natural rights.
Whose wealth is sought to be maximized: consumer wealth or social
wealth? What is the difference between the two? Social welfare is defined
as the sum of consumer welfare and producer welfare. The distinction
between the two is important because they may not necessarily point in the
same direction. A panicular policy may enhance social wealth but
adversely affect consumer wealth. or vice versa. Those who subscribe to
law and economics would generally assert that maximization of wealth
should be analyzed in terms of social welfare." The issue arises. however.
because the current approach in both antitrust jurisprudence and
telecommunications law generally involves looking [0 consumer welfare."
Perfect competition maximizes consumer welfare bener than
monopoly. Competition is also preferable to regulation. perbaps even
where it is a natural monopoly that is being regulated." Therefore.
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62. Thc~ is at lcast some menl '0 this assertion. It is probably easier 10 pro~ Lhat •
panicular rutc is inefficient than it is to prove thaI the same rule is unjusL
63. See GUiOO CAl.ABR£SI. THE COSTS Of ACCIDENTS 18·20 (1970)
64. ROBERT BORK. THE MTIT1<UST PARAOOX: A PouCY "T W AA WI1H ITSELf 81
(1978).
65. At leasL this Article posits that this must be Congress's belief. for this is really tho '
only justification for the Act.

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tition generally maximizes consumer welfan: benet than monopoly
compe
I
r narural monopo y.
o
The diagram below depicts the economic consequences Q{ the current
crure of !he contnlClS." In it. the label "MP" denotes the price !hat •
SU:ld be charged by a monopoly. Similarly, ..MP.... denotes the monopoly
w~ce when a commission is ~uired by !he stale. "CP" refers to the
pnmpetitive price. and "CP·" refers to the cQmpetitive price wilen a
cOmmission is required. "MQ" refers to !he quantity !hat a mQnopoly
c~ou)d be expected to produce. "MQ·" denotes !he quantity produced by a
:onopolY wilen a commission is imposed. "MC" represents !he marginal
cost of production. "CQ" represents the quantity produced when !here is
competition. And. fioaUy. "CQ." represents the quantity produced when
there is competiliQn and a CQmmission is imposed.
Figure 1. Prices Charged by Monopoly lIlId Competitive Finns

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cp'
cp

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A monopolist will produce its goods al a level such thai marginal
revenue equals marginal cost. Therefore. the amount produced by a
monopoly may be dClennined by locating (on figure I) !he intersection of
the marginal revenue and marginal cosl curves. Note. however. thai the
actual price charged by a monopoly i$ that which corresponds '10 !he
demand for the amount produced. Accordingly. the price charged by a
monopoly may be detennined by drawing a venical line from !he
intersection of the marginal revenue and marginal COSI curves to !he
66. See SUUlV All &< Hov..,,,",,,,,. s.pra"au 10, at 61-62.

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demand curve. Therefore, the circles depict the price charged and the
quantity produced by a monopolist. ContraSt the output of and price
charged by· a monopoly to that of a finn operating in a competitive
environment A finn operating in a competitive market will produce its
goods such that the market price equals the marginal cost of production.
Stated differently, in competition, ftnns will also price their goods at the
price that corresponds to the intersection of the marginal cost and demand
curves. Therefore, the rectangles in the diagram depict the price charged
and quantity produced by a firm operating in a competitive market. Clearly,
competition results in a lower price and higher output than a monopoly.
The upward shift in the marginal cost curve represents the effect of a
kickback. The consequences of the impoSition of the kickback are higher
prices and less output. Clearly, from the perspective of the consumer, a
monopoly and commission are disfavored. But consumer dislike for a
policy'does not necessary imply that the policy is detrimental to social
welfare. Recall that social welfare takes into consideration the effect of the
policy on the consumers and the producers. If the consumers are harmed 10
the extent of X, and the producers are benefited 10 the extent of X. then the
poliCy simply causes a transfer of wealth from the consumers to the
producers; in the aggregate, the policy does not adversely affect the social
welfare. In other words, because the policy does not adversely affect the
social welfare it is not to be condemned on those groundS.
From the social welfare perspective, is the monopoly. or the
commission, preferable to the alternatives? There are two theories thaI may
be used to answer this question. The theory of Pareto Optimality states that
a new rule is superior to the old when the new rule improves at least one
person's ~sition and no person's position is devalued by the rule's
adoption.' The principal shoncoming of this theory is thaI il has limited
application. Often. someone will lose under the new rule, and even if the
amount of the loss is negligible, the theory is unable to evaluate the value
of the new rule.
An alternate approach is taken by the Kauldor-Hicks theory. This
theory holds that a new rule is superior to the old rule when the winners
(under the new rule) gain more than the losers lose." Judge Posner
modifies this theory in one imponant respect Posner asserts that a JegIiJ
rule is wealth maximizing if the winners would be willing to pay more for
its adoption than the losers would be willing to pay for the rule not to ljie

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67. ROBERT COOTER &. THOMAS UlEN.LAw AND EcONOMICS 12.43 (3d cd. 2000); D""
Do••s. LAw OF REMEDIES 30 (2d cd. 1993).
68. DoBBS. supra note 67. at 30:. COOTER & ULEN. supra noce 67. ac44.

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TELEPHONE SERVICES TO I'RlSONS

407

adopted." It is crucial to note that the winner does not acrually ha\"~ to pay
the loser. As 19n9 as payment is theoretically possible. the rule is wealth
maximizing. WiUingness to pay is one measure of people's preferences.
and it is easier to measure "dollars versus dollars" than it is to measure
"preferences versus preferences." In this respect. Posner's version of the
Kauldor-Hicks theo!), is superior (in its application) to the traditional
fonnulation of Kauldor-Hicks. Accordingly. this Article will define wealth
maximization in tenns of Posner's version of Kauldor-Hicks efficiency.
Concerns of "fairness" will be given no weight in assessing the various
·, ,.
poIICles.
V. STRUCTURE OF THE CONTRACTS AND GAME THEORY

This Section consists of two subsections. The first subsection will
develop a series of payoff matrices. and use the matrices to show how the
existing structure of the contracts arose. The second subsection will use
game theo!), to demonstrale chal Ihe award process causes the inefficiencies
of the curreRI contracts to perpetuate.

A.

The Payoff Matrix

A payoff matrix is a simple device. Here. two matrices will be used to
depict the incentives to the state for adopting a particular structure to the
contracts. The first matrix illustrates the incentives to the state for
structuring Ihe contract so the state receives a commission on the revenues
derived by the telephone company. The second matrix depicts the
incentives for structuring the agreement so a single telephone company wiD
provide the service.
1.

State Incentives for Requiring Commissions

In Table I. the left column depicts the potential political gain thaI may
be derived from structuring the contracts in a particular manner." NOle that
69. RichArd A. Po,ner. Utilitarianism. Economics, and 1..<801 Theory, 8 l. LEGAL
STL'DIES 103, 119-22 (1979).
70. According '0 Kaplow and Shavell. a nonnative assessmen' aOegal policy should be
driven excJusively by considerations of social welfare. and notions of faimess should be
given no independent weighl in as,essing rhe policy. Louis Kaplow & Steven Shavell.
Faime" Vtrsw Wel/ar<. 114 HARV. L. REv. 961. 966 (20011.
71. Political gain is the political cUITCncy or benefil Ihe state receives when il grants
benefits 10 its residents. There is an inherent difficulty in auempting to measure the political
gain 10 lhe: slate. This difficulty is augmenlcd when one seeks 10 compare the projected
political gain 10 Ihe financial gain. and to determine which is fTC"",r. One measure of
political loss (at gain) 10 'he slate is the negative value of the fmanei.! gain (or loss) 10 the
Slate. That is. if ,he SIa'. passes" Ia. that benefits the Stat. to the extent of "3" (dollars II'
units), then me: Slate has caused the consumer to incur a financial Joss of "3." Since me sWC

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FEDERAL COMMUNICAnONS LAW JOURNAL

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if the state continues to r~uire the commission. the state sustains a political
loss of "I."

Table 1. Incentives for requiring commissions

Kickback
No Kickback

Political Gain
-J
1

Financial Gain
4
-4

Total Gain
3
-3

The families of prisoners are the only group hasmed by this policy:
they are not' an organized body, nor are they seen as a particularly
sympathetic group. Similarly, the state may derive some political gain from
structuring the contract in favor of the families, but the gain would not be
significant. The company is largely ambivalent about the ~uirement of
the kickback, because most of the cost of the commission can be passed on
to the consumer in the form of surcharges."
The right column in Table I represents the potential financial gain to
the state. As the table indicates, the state can require the commission, and
thereby derive a financial gain of "4," and a total gain of "3."
If the state waives the commission, the state suffers a financial loss to the
extent of the forgone commission." The lotal loss if the state waives the
commission is "3." The state clearly has a strong financial incentive to

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has imposed this financial loss on the consumer. the stale suffe... a political loss of "3"

because the consumer's political suppon of the state wanes when the consumer is made

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pay the state.
This approach is nOl without defect'. First of all. a porson', political suppon of tile
state is nOl necessarily based on. or even influenced by. one decision made by the swe.
Further. the state receives the aggregate amount deri"ed from the individual payments made
by all the consumer.;. If used properly. this aggregate amount can benefit the stale ITKlI'C than
the smaller amounts benefited the individuals. While there is probably an inv"""
relationship berween political suppon and financial costs imposed on consumers. it is

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unlikely thai the ttlationship is a onc~to-one ralia. When the Postal Service increases the
price ora stamp by a ponny, for example. my political ,upport of the Postal Service does nOl
fall by a corTr:sp:mding amount To the consumer. the loss of one penny is miniscule:; but the
Postal Service's loss of everyone·s pennies matters a great deal. [n the situation of Ute phoDe
cona-acU los, i, imposed on a group that does not wield great political clout. Therefore. the
state does not suffer i substantial political loss when it imposes a financial loss 01\ this
particular group. For purposes of this illu'll'ation. the Author assumes that the ratio between
financial Bain to the state and political loss to the state is four to one. Therefore. the s...
will have • financial gain of four and political loss of one.
72. Of cou,," an additional ,urcharge would result in higher tOlal prices, causina
demand for the service to fall and a loss of sales for the company. In this particular marlo:t.
however. it is likely that the demand is 001 very responsive 10 price changes..
73. The lost commission is an opportunity COSL This cost must be factored in because
the stale will have to replace the lost commission.

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TELEPHONE SERVICES TO PRISONS
require that the telephone company pay a commission. As poutical
incentives are. substantially outweighed by financial incentives, a rational
state will require a commission.

Z.

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Incentives for Utilizing an Exclusive Dealing Provision

In Table 2. the column on the left depicts the esrirna:ed l1et political
gain or loss. 'Three groups will exert political pressure on U!e state:
families. the incumbent. and the prospective competitor. As before. the
value of the political loss (or gain) to the state is generally equal to the
negative value of the frnancialgain (or loss) to the constituents."
Table 2.lncentives for Utilizing an Exclusive Dealing Provision

Political Gain
Exclusive
Non-exclusive

-0.073
0.073

Financial Gain

$0.083
·$0.083

Total Gain

0.01
-0,01

Assume that a monopolist can charge a monopoly price and derive a
profit of $0.25 on each phone call. If there is competition. then the
incumbent can no longer charge a monopoly price. The incumbent will be
forced to accept a lower profit level of $0.15 per phone call. Therefore. an
incumbent stands to have a financial ~ain of $0.10 per phone call if the
state grants the incumbent a monopoly.
.
If the competitor is allowed to enter the market, the competitor will
eam $0.15 per phone call. Conversely. if the competitor is never allowed to
access the rr.arkeC. then the competitor loses the opporrunity to derive SO. 15
in revenue. This lost opporrunity has a value equal to the lost revenue.
Therefore. the competitor will lose $0.15 if U!e stale grants a monopoly to
the incumbent.
As discussed infra, the cost difference between monopoly and
competition. 10 the consumer. is $0.225. Accordingly. the consumer wilJ
incur a financial loss of $!l.22S if the stale grants a monopoly. For the
reasons previously discussed. however. the political loss incurred by U!e
state because of monopoly will be much less than the direct fmancial 10$5
incurred by the consumer." In this hypothetical, the political loss is valued
74. Although the political gain (or los.) i. cakul.",d on the basi. o(the negative value
0( the flnancialloss (or lain). the political lain i, not adju.u:d to ",l1..:t w; consequences
(i .... the 'tlll"S financial eains will f....or in additional "'" ",ven•• }. The Author does nOl

beli.ve that this difference in the calculation of the gains ct '''''''.. undennin.. the analysis.
7~. Th... numbers an: the same as those used in lilt: schematics in Part VI. irifl'tl.
76, Again. it is unlikely that there is a onc..~e ratio in this scenario. Tbt: familic$ we

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[Vol. 54

at $0.023.7"1
Therefor~.

the political loss incurred by the state. when the state
grants a monopoly. is calculated as follows:
0.10 - O.IS - 0.023 = ..(j.073.
The political gain derived from pennitting competition is calculated
in the same manner. but by using the negative values of the same numbers:
-0.10 + 0.15 + 0.023 = 0.073.
The middle column in Table 2 depicts the direct financial gain that
may be derived by the state if the telephone company is allowed to be the
exclusive service provider. If the state grants a monopoly. then the state
will derive $0.25 in revenue from the commission charged to a monopolist
But the state will also earn a commission if the state allows competition.
Therefore. to detennine the financial gain derived solely from the grant of
monopoly. one must flISt take the difference in the commission between
monopoly and competition. If the commission derived by the state in the
context of a monopoly is $0.25 per call. and the commission derived from a
single phone call in a competitive environment is $0.175. then the
difference is as follows:
$0.25 - $0.175 = $0.075.
The stale will also receive income tax" from the profit derived by the
company. The additional amount of tax from granting a monopoly" at a
10% tax rate is calculated as follows:
$0.Q75 X 10% = $0.008.
Finally. the state's revenue is calculated by adding the tax revenue to
the amount of the commission:
$0.075 + SO.008 = $0.083.
Consequently. the state has a financial incentive of SO.083 to grant a
monopoly. If the state refrains from granting a monopoly. then the state
incurs an opponuniry cost of $0.083. When the financial incentives are

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unorganized. politically weak. and perhaps even uninfanned aboul the effecI of monopoly.
The stale may more easily JUSlify the monopoly than the commission. FUnher. a monopoly
is less likely tQ inflame the public than a commission. That is. the requirement of the
commission may appear 10 the public as driven by gn:ed. bad lax policy. or bad money
management All of the state's justifications for the commission revolve around the need ca
generate revenue. and this is ranly popular. The stale can more easily justify a monopoly to
the American pubHc. which is easily confu~od by rhetoric leven where the rhetoric is
. baseless). 1ne Author therefore assumes thai on dus particular issue. the ratio of politic.
loss to financial gain is len 10 one.
77. SO.US 110' 0.023.
78. This assumes a 10% tax on net income.
79. Monopoly profil is higher than Ih. profll derived by a firm operating in a
competitive market 'When the state pants a monopol)', they are able to tal. this higher profil
level.

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TELEPHONE SERVICES TO PRISONS

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considered in conjunction with the political incentives. it is apparent that
the state. when acting to maximize its own welfare. will grant a monopoly.
When ex~ned in the ag~gate, these financial incentives are far
from trivial. Tables I and 2 are calculated on a per-call basis.'" but as of
1998 nearly two million persons were incarcerated nationwide. If each
inmate makes one call per week on average. the numbers above can be
multiplied by 104 million to reflect the number of calls placed in one year.
Taken together, Tables 1 and 2 indicate that the state has both
political and financial incentives to require a commission and to grant a
monopoly to the telecommunications service provider. A rational state will
act on these incentives and strUcrure the contracts accordingly. Unless the
underlying incentives change, this behavior will continue indefinitely.

B.

Game Theory in the A warding of Contracts

Game theory is an economic theory that can be used to gain insight imo
legal rules. The theory is used to identify the optimal strategy for one actor
when the conduct of that actor depends on a course of conduct chosen by
another actor." As applied to the present contracts between the stale and '
the telecommunications provider. game theory will demonstrate that the
award process perpetuates the inefficiencies of current contracts. Game
theory will show that the award process creates a permanent market failure
that will not correct itself until the process is modified.
Assume that there are only two firms competing. Company X and
Company Y. Each competes for a single comract. Further assume that both
X and Y know that the state will award the contract on the basis oCthe size
of the kickback offered to it. The companies are both motivated by profit,
and therefore each will conduct itself to maximize its own profit. '

SO. Also oote that the "cost of the call:' as used here. is much lower than the actual cost
in the real world.
81. S.. Coon. & ULEN. supra nOIe 67. aI 34-38.

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Table 3. Game theor), in ihe award of contracts

f
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Company X

Company
y

Large
Commission

Small
Commission

Large

A

Commission

(High, High)

C
(Low, High)

Small
Commission

B
(High. Low)

D
(Low. Low)

The choice variable for each fum is the commission offered to the
state. The fums may offer either a large commission or a small one. The
tenns of "high" and "low" in Table 3 indicate the payoff for each firm
under each choice. given the choice of their rival." In the context of this
game. the large commission strictly dominates the low commission for
each fum. The payoff to Company X when choosing a large commission is
greater than when choosing a small commission. regardless of the bidding
strategy of Company Y. The same is true for Company X. Both fums will
therefore choose the high commission. competitive outcome "A." While
both would be marginally better off if they would choose to cooperate.
there is no incentive to cooperate because there is no guarantee that a rival
finn will also choose the cooperative solution. Each fum chooses the
competitive solution because they are better off than if they cooperated. but
their rival did not.
The solution to this game highlights a fundamental defect in the
award process. Taken as a whole. the award process inevitably leads to a
contract containing an exclusive dealing provision and a high commission
for the state. With the telephone company and the state acting rationally in
their own best interests. the consumer inevitably loses. Until the incentives
change. or until the state begins to elevate the interests of the consumer
above those of the state. this situation will continue indefinitely. This is a

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82. The payoff for a large comnusslOn is "high" because by offenns a high
corrunission. th. firm is more likely to be awarded the COnttact. Since the
telecommunications service provider does not pay the cost of the cornJTUssion itself. the fact
thal the corrunission is high does not reduce the payofflO the fum. If the firm wen: the only
bidder. it would off.r a low kickback. because the lower the kickback. the higher the
demand for maldng calls.

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TELEPHONE SERVICES TO PRISONS

413

pennanent nontransitory market failure.
VI. ANALYSIS OF THE CONTRACTS

This Section will introduce alternative structures to the conttacls. and
then detennine whether the adoption of an alternate structure would be an
efficiency-enhancing move. To provide a meaningful frame of reference.
the discussion will begin with a brief analysis of the present contracts. In
the discussion of each alternative. a number of simplifying assumptions
will be made. These assumptions will remain the same in the analysis of
each a1temati,>;c.
The company is assumed 10 be responsible for the full cost of the
security system. and this cost is included in the company's total cost in
administering the contract. Where the state requires a commission. the
commission will be calculated as 50% of gross revenues. The commission
is passed directly on to the consumer in the fonn of a surcharge added to
the cost of the call. Where the state waives the commission. the surcharge
is eliminated. Assume that the state imposes a tax of \0% on the net
income of Ihe provitler(s). Funher. and perhaps most imponantly. the
analyses of the competitive arrangements presume that the market is not a
natural monopoly."
Finally. each structure will be analyl.Cd iII tenns of the cost of. or
revenue derived from. a single phone call. Two phone calls will be depicted
in a situation where competition is permitted, only to iIIustrale the effect of
competition. However. where two calls are depicted. the analysis will still
focus on costs and revenues associated with one cal\.

A.

Present Contracts

Figure 2 iIIustrales the structure of the present contracts. The individual
pays $0.75 for a phone call. Of this amount. $0.25 represents the'
commission. and this amount passes through the company to the state. The
remaining $0.50 is retained by the telephone company. Of thaI amount.
$0.25 is allocated 10 the costs incurred by the company in providing the
services. and $0.25 represents the monopoly profit retained by the
company.
The profit of $0.25 is taxed by the stale at the rate of l<i%.
Therefore. the S!atc derives $0.025 in tax revenue. and $0.275 in total
revenue:.

83. Proving the validity of this assumption is beyond the scope of this paper. The
Author believes the assumption accuralcly reflects the actual operalion of the market. The
evidence supponing the ....rtion of natural monopoly i. wealc. Su ;rifra Section II.A.

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FEDERAL COMMUNICATIONS U W JOURNAL

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Figure 2. Diagram ofpresent contracts
i'

r:,.

I,.,\

$0.25 prolit
$0.25 cOlI

so. 25 Kickback

.,

State •

Compal'1'

$0.75
Individual

B.

No Kickback, Competition

Consider a situation where the state forgoes the kickback and allo~s
competition to be introduced. In this scenario. illustrated in Figure 3. the '
individual pays $0.35 for the phone call. Of that sum, the company retains
$0.15 profit, and $0.20 is allocated to cover the costs of providing the
service. The company's total cost of providing the service falls from $0.25
to $0.20. The cost savings are driven by the threat of competition and the
related need to increase efficiency and to reduce costs. Also. after a
competitor has been introduced. the incumbent may pass on a portion of
sunk costs to the challenger, reducing the incumbent's fixed costs."
Competition forces the companies to accept a lower Jrofit level. and
therefore only $0,15 of profit is retained by the company.

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84. This prediction assumes that the companies are subject 10 a «prot like the:
Telecommunications Act of 1996. which requires an i11Cumbcnl to Jea.'\f' access to'
competitor. Thele ..e payments are driven by the.incumbent·s costs. Presumably. whenlhe
incumbent acquired the contract. the incumbent incurred a high number of o",,·time
expenses. Under traditional accounting techniques. ,hes. expenses can be p,oponionan;
allocated to each call. The,efore. when the chall.nger l....s access to the system. the
incumbent may pass these expenses onto the challenger. effectively relieving the incumbent
from incwring those expenses.
SS. As price. continue to fall. consume' use of the system will increase. and companies'
fixed coots may therefore be a1loca,ed over a greatCf number of calls. although "ariable
costs will increasc.

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TELEPHONE SERVICES TO PRISONS

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Figure 3. Diagram of compelilion wilhoul kickback
SO,10 profit
SO.20 cost

No kickback

State

Comp~

SO.1 5 profit
$0.20 cost

Comp~

$0.35

Individual

$0.35

Individual

As Figure 3 illustrates. the state earns no revenue from commissions.
but it taxes the company's revenue of SO. 15. Therefore. the state derives
revenues of SO.015. For the consumer. the cost of the telephone call has
fallen from $0.75 to SO.35. saving her S0.40. Therefore. this scenario is a
significant improvement from a consumer welfare point of view.
There is also room for a bargain in this situation. That is. this scenario
represents a change that would increase the social welfare. The caller
would theoretically pay up to S0.40 10 acquire this arrangement. because
she will save this amount on the cost of a call. Therefore. if the caller paid
$0.39 for this arrangement. then she would be bener off by $0.01. The
telephone company would requirc at least $0.10 to offset the loss of profit.
and the state would require at least $0.26 to forgo the kickback and the
taxes imposed on monopoly profits.
S0.40 > $0.26 + $0.10.
Consequently. the individual could pay the state and the company
these amounts. and the social welfare would be improved by an amount
between $0.02 and $0.05. depending on the precise nature of the bargain
struck by the panics.
The adoption of this structure would be an efficiency·enhancing
move. It is important to note that the individual need not actually
compensate the state or the company. As long as compensation is
theoretically possible. the new regime is an improvement over the old.
NOIe also that this structure most closely resembles the public policy
of the Act. Here. there are no state barriers to entry in the
telecommunications market. This structure also most advances consumer
welfare by "ensur[ing] that universal service is available at rates that are
just. reasonable. and affordable.""
.

86. 47 U.S.C. § 15-1<i) (Supp. V 1999).

FEDERAL COMMUNICATIONS LAW JOURNAL

416

C.

IVol. S4

Kickback. Competition

In this scenario. presented in Figure 4. the state continues to require a
commission. but it allows competition to be introduced. The company's
costs fall to $0.20." and the threat of competition forces the telephone
company to accept a lower level of profits. Therefore. the company's gross
revenues are $0.35. TIle state eams SO.015 in tax revenue and a
commission of $0.175. Accordingly. total state revenue is SO,19. The
commission is passed on to the consumer. Therefore. the individual pays
$0.525 for a phone call.
Figure 4. Diagram of compelilion wi/h kickback

... $0. 175 kickback

Slole

4"'1-:---::----~ so. 175 kiekbock

$0.15 pro'"
$0.20 coot

Comp~

$0.525

Indi.iduol

,

SO.15 Plofil
SO.20cool

,:-

Company

$0.525

Indi.iduol

In the present-day situation (the scenario presented in Section V1.A.
with a kickback and nO competition). the cost of the call is $0.75. Recall
that in the first alternative (presented in Section VI. B. with no kickback and
competition). the cost of the call is $0.35. In the second alternative.
presented in Figure 4. the cost is $0.525. From a consumer welfare
perspective. this alternative is clearly preferable to the first. but the second
maximizes consumer welfare better than the first and current-day
arrangement.
As the consumer would save $0.225 in this option over the current
situation. he would be willing to pay up to $0.225 for this alternative. The
state would require $0.085 to offset the loss in kickback and taxes. The
company would require SO.IO to offset the loss in profit.
SO.225 > $0.10 + $0.085.
Note that here. too. there is room for a bargain; the consumer could
pay the state and the telephone company these amounts. and social welfan:
would be improved by $0.04. Therefore. this arrangement also enhances

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87. The costs fall for the reasons discussed in the previous scenario. See supra Pan
VI.B.

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TELEPHONE SERVICES TO PRlSONS

417

consumer welfare and social welfare.

D.

Slale-OWned Enterpn'se

This alternative. represented by Figure 5. depicts a situation in which
the Statc would assumc the role of the private company and prO\'ide the
services directly to the individual.
Figure S. Diagram of state-owned enterprise
No revenue

State

Compat1jl

$0.35 cost
$0.35

Individual

As the state would be responsible for the operation of the phone
system. the system itself would presumably be less efficient than a similar
system operated by a private firm. Consequently. the state operales at a
higher cost level. $0.35. than does the private company. The consumer
would only pay $0.35 for a phone call. however. This scenario would also
bring about an improvement in consumer welfare from the present-day
situation.
In order to adopt such an arrangement. the state would require the
consumer to pay an additional $0.275 to compensate the state for the loss
of kickback and taxes. and the company would require the consumer to pay
$0.25 to replace the forgone profits. The consumer would be willing to pay
up to $0.40. but no more than thaI.
$0.40 < $0.275 + SO.25.
Therefore. there is no room for a bargain here. Consequently. while
this arrangement would not enhance social welfare. il would enhance
consumer welfare.

E.

Comparison of Approaches

How the four aforementioned approaches compare 10 one anolher iJ
presented in TabJe 4.

FEDERAL COMMUNICATIONS LA W JOURNAL

418

(Vol. 54

f:l'.
If

Table 4. Comparison a/approaches

I

I
,

"
,:
I',I

Present
Contracts

No
Kickback.
Competition

Kickback.
Competition

Slaleowned
enlerorise

Company

$0.25

$0.15

$0.15

SO

State

$0.275

$0.015

$0.19

SO

Individual'

-$0.75

-SO.35

-$0.525

-$0.35

Net Social
GainILoss

-SO.23

-$0.185

-so. 185

-$0.35

Of the available options presented. either "competith'e" regime is
more efficient than the present structure. from a Kauldor-Hicks standpoint.
This is so because both competitive regimes minimize the net social loss
bener than the present regime does. A lesser amount of social loss is really
a social gain.
As between the two competitive regimes. the second scenario (no
kickback. competition) is clearly superior from a consumer welfare point of
view. The first alternative would bring about a 50% reduction in the cost of
the call to the consumer. whereas the second alternative would bring about
a 30% reduction.
However. both actors involved in making the structural decision-the
state and the company-prefer the present structure to any other. Table 4
illustrates why. Note that if the state maintains the status quo. the state will
receive $0.275 in revenue. If the state moves to the first alternative. which
would be bener for the consumer. then the state will derive OIlir 5% of the
revenue it formerly derived." By moving to the second s~enario. the
company will realize 60% of its former profit leve!.'· Neither the state nor
the company has a financial incentive to make this change. no maner how
inefficient or harmful to consumers the present structure may be.
If it is theoretically possible for consumers to purchase a moi-e
competiti~e regime. then why do they not do so? There are a number of
poSSible reasons. First. the consumers are probably unorganized. and an.y
purchasing decision would require a great deal of cooperation. Second.

\

i

i
t

i

.,

.,

'I

"II

88. 50.015 J 50.275 • SO.05.
89. SO.t5 J 50.25 = SO.60.

i'

t·

..
,

i

I

'.,

Number 3]

TELEPHONE SERVICES TO PRISONS

419

there is a cost to organizing. Third. there are transaction costs of
negotiating .a deal. It is possible that these costs are so high that they
preclude a deal from being reached: Founh. it is possible that the
consumers lack infonnation: they may not know of the possibility of
reaching a bargain. how to organize. or who to contact to set up the
transaction.

VII. CONCLUSION
The present state of affairs is inefficient. It came about because the state
and the company entered into a third-party beneficiary contract. and in so
doing. both actors focused only on their own welfare and neglected the socalled "beneficiary" of the contract. Ultimately, the problem with the present
situation is that this behavior is entirely rational for both the states and the
telephone companies. ThaI is, it is reasonable to expect the states and the
companies to place their own welfare before thaI of other panies. Economics
presumes thaI actors will generally act to maximize their own welfare. and
this is exactly what the stales and the companies have done. In this panicular
context. however. the conduct of the states has created inefficiencies. which.
by definition. are wasteful and socially harmful. If the goal of law is to
minimize inefficiencies. then new regulation is appropriate.
The letter and the spirit of the Telecommunications Act of 1996 gives
the FCC the power to regulate these contracts. The FCC should exercise this
power by preempting and regulating those contracts that grant a monopoly or
require that a commission be paid to the state.

ATTACHMENT A
EXHIBIT 5
:-

~

I
-

----,-

.-~--------

Exhibil

J.\

COltcclional FacililY InlOllllaiion
~------------------------~-----------.-------.----.----.-------.------.
Cor r ecftonat
F aClhty Name

Aldelson
Comple. ,Allenwood
,ADenwood
!Allenwood

seculltv
lev"

Facd,tv

Siale

PopulatIon

Monlot
l ycom'"g
Un,on

WV

787

PA
PA

1664
1280

MSCI

Union

PA

~~~i;

. Iii: M~

!~~~:rtti

-'

IUSP

Un,on
Boyd
Fulton
:Ba.hop
'JeHelSon
Rale'gh
iHowald
,San Be,nad,no
Blooklyn
:8,al05
,'Dlllham
DII,ham
Ta"ant
Cook
Sum leI
Isumiel
!Alleghany
iFauf,etd
Alameda
::;1. Lou~s.
Okaloosa
eiPaso
canadian
jeHeiSon
Hampton

I

PA
KY

GA
IX
IX

WV
IX

:CA
!NY
IX

'NC
INC
IX
IL
FL
FL
MD

ci

IC~.

'MN
FL
ii<

OK

~~~... !~i;:~~!on

1,108

1030
1202
2777
1186
1223
1432
1025
508
947
786
1410
764
594
606
1600
iS2S
1242
i034
1200
502

liiii

;jlo

sc

1322
991
1264

ICO

I!~ ~~

,~i?

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Fieemon.

!

iW

m:

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I

I Numllelol

Correcllonal
.
HOUlS,
r ae...~Iy I ype ,Opelal,ng
I
I

Phones

Local lines

Long Distance

lines

International Lines

i

I

FPC
r PC
lSCI

:ADenwood
HSCI
;Ashland
:FCI
'AHanla
:USP
IBaslloP
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FCI
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,Beckley
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'BOlon
IFPC
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IMDC
Bryan
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FCI
Comp/e. Butner
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lOW
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Chicago
Met
Lsel
ComPie. cCiieman
Coieman
MSCI
Cumberland
Fci
,Danbury
Fel
IDublin
'FCI
'Duluih'
FPC
Eghn"FPC
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Ei R~no .----. Fcl
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FCi" .

IFlorence

Cnrrf!cllonat

6
30
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3
20
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•
Page. 1

•
•

Exhibil J.,
Correctional F"cilily Inlormation

! 'Coffechonal

Correcr'ooal
F acihty Name

County

,

5101.

,
I

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:Bond
San Juan
'Wayne
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Fel
Moe

j Guavnabo
'Jesup
ILa Tuna

FCI
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: USP
jFMC
r CI
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"lofe"O
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'Monchesl",

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UnIOn
IFey.n • .

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Camb.ia
Los Angeles

'FCI
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F CI
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Mallanna

Marion
McKean

MemphiS
Moami
Fci
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r CI
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FPC
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FPC
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Oakdale ...
. Fci
Oakdale . - FOc

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Roch...ter

-

FMC'

I

;/l
IGA
TX

KS
IPA

KY
CA
CA
PA

cA

FL

;372
..
668

McKean

PA

'!-_ . .

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1N

bacie

FL
F i.

Mi
r NAL'
WV

Ci.rk'· .. ' - NV .
New YOlk - NY'
AII.;n·· -.
LA'Allen - . -. LA"
Okiahoma- OK Orange
NY'
Adams
Wi
Talewell
ILE$cambia'"
fl'"
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--_

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"Ai'
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..
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Olmsted
MN

I

.".

lis
Acco
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lis

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!iio'1049
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1186
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;309
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..

Exhibit J·l
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i\

,
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rSchuylkoll
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•
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PA

b....

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Vomh.

0 -

NC
OR
MO
AL
IFL
CA
IN

UveOaii

TX
TX

t"edega
Leon
lo. _Angeles

,,'Bowie
0

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v.nilion
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. _ .. ._-, .

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..

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-

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897
719
1381
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1932
1028
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988
891
.. -1608
1620
i438
roij

- -340
516

14

-----

97579

I
COliectlonai

,

Fac~

Type

Operating Hours

Number or
Phones

Local Lines

long Dislance
lines

tnternallonal lines

i

!

NiA
NiA

COLLECT
COLLEct

oiDii·;;359
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----- --7
-- ---_._._- --422

•
Page 3

ATTACHMENT A
EXHIBIT 6
.'

'.

Page I
Communications Daily, April 28,2003

Copyright 2003 Warren Publishing. Inc.
Communications Daily
April 28, 2003, Monday
SECTION: TODA Y'S NEWS
LENGTH: 1051 words
HEADLINE: STATE REGULATORS COURTED BY ILECs AND IXCs ON UNE-P ROLE
BODY:
BOSTON -- ILECs and IXCs on both sides of the UNE-P debate pitched their respective views
to state legislatures Fri. at the National Conference of State Legislatures (NCSL) Spring Conference
here. A panel Fri. summarized the new role of state PUCs in using "impairment" criteria from the
FCC at the local level in determining whether to keep UNE-P. The predictable messages from
AT&T and MCI to keep the UNE-P liberal and by Verizon "to consider local investment" and
eliminate the UNE-P were somewhat misdirected in a room filled with state lawmakers, few of
whom were likely to have telecom as their top priority.
Final language on the Triennial Review is expected from the FCC next month. Much
speculation remains on its details as the order by a closely divided Commission was based on
several last-min. compromises. The FCC representative on the panel, senior counsel Cathy
Carpino, who is involved with writing the broadband section of the draft, limited her discussion to
publicly known information from the original Feb. Commission news release. She did say with
spme pride that the impairment tests the FCC would send to state regulators were "by far the most
comprehensive and rigorous" that the Commission had devised.
"State PUCs inherit a very large role in UNE-P cases," AT&T senior counsel Richard Rubin
said. He saw little debate with UNEs intended for large businesses that used high- capacity loops -OS-I and above. Under the new rules the FCC presumptively will conclude there's no impairment
to competitors, meaning ILECs won't be required to unbundled those elements. he said. A state
PUC will have 90 days to make a contrary finding. "The big fight will be for the UNE- P for the
mass market," Rubin said. The Commission will presumptively find CLECs are impaired if they're
unable use a UNE-P to serve mass-market locations such as residential and small business
customers. PUCs will have 9 months to determine whether market facts in their jurisdiction don't
support that presumption using impairment criteria the FCC will identify, he said: "We don't know
what this criteria is. Hopefully, it wi11leave room for PUCs to exercise their judgment" and rely on
their local experience.
"", Finding impairment for the mass market should be "a no-brainer" to state regulators, Rubin
said. Unlike ILECs, competitive carriers always must incur significant extra costs to extend their
~~stomer loops to their own switches, he said, al!uding to a complex diagram that showed digital
ctoss-connects, optical switches, DS-3 transport and other equipment a CLEC needed to colocate if
the UNE-P weren't available. "These are things the incumbent doesn't have to do," he said: "The
ability of competitors of provide a service without the UNE-P is extremely impaired."

Asking state regulators to make "pro-investment" policy, Verizon Ass!. Vp-Internet Link
Hoewing offered the familiar argument that the UNE-P regime served as a disincentive to ILEC
investment in new networks that it knew it must share with competitors. "The more that is shared in
the network -- at below cost -- the less incentive competitors have to invest," he said. Recounting
the decline of telecom in the last 3 years, Hoewing warned that "the economy may not recover
without telecom, which represents 4% of GDP." His warning was an argument designed to play in
Mass., a state that recently has lost 160,000 jobs, primarily in telecom and Internet firms. "PUCs
can make a major dent in getting investments started in your state," he said.
Less convincing were Hoewing's arguments that without the UNE-P CLECs still had access to
Bell networks through resale or colocation, adding that he had seen telephone switches on E-bay for
"$100,000 or so." "CLECs can buy equipment," he said. Rubin retorted that "on resale, the RBOC
earns the entire profit it would have received if the line were sold to a customer under the peculiar
structure of the Telecom Act." Colocation also isn't inexpensive, he said -- AT&T has spent up to
$10 billion "and has only part of the network necessary to compete on a facility basis." Facilityl:iased competition to ILEC voice does exist, Hoewing countered, pointing out that Verizon was
losing business to wireless services, voice-over-cable and even e-mail on the Internet -- all
facilities-based competitors.
Odd man out on the panel was Rick Cimerman, senior dir.- state telecom policy ofNCTA,
which represents cable operators. He said the broadband portion of the FCC's Triennial Review
would "be most important in the long run." The UNE-P is tied to competitive voice, a service that
remains "a cash cow but with declining revenues." In the future, "voice will be an adjunct to other
services" such as cable modem or DSL broadband "and will be thrown in for free," Cimerman said.
The "general framework where new fiber investments will have different regulatory treatment" than
existing networks "is a sensible decision," he said.
The FCC order will give ILECs significant UNE rdief for broadband service capabilities and
"the FCC got it wrong on broadband issues," MCI Vp-Public Policy Joan Campion said. Aside
fil'm a 3-year phase-out of copper line-sharing, she said access to hybrid fiber/copper loops would
b~ limited, which "limits competitors' ability to provide broadband services" such as DSL.
and Rubin agreed that the FCC decision would have a significant effect on broadband
Campion
,
competition "eventually." IfVerizon can supply DSL, but AT&T and MCI can't economically, they
effectively are locked out of the local voice market, Campion said: "DSL must be part of the
bundle."
.~

Campion worried that a duopoly for broadband -- DSL provided by only the ILECs vs. cable
modem service -- would be the result of the new FCC rules. Cimerman disagreed, saying an FCC
inquiry opened last week on providing broadband services over power lines, a service that FCC
Chmn. Powell has called a potential 3rd network into the home. "If anyone has more money than
the phone company, it is the electric utilities," he said. Cimerman also cited the expanding market
for Wi-Fi hot spots, "and with [News Corp. CEO Rupert] Murdoch buying DirecTV, satellite
broadband should be making a comeback." -- John Spofford
LOAD-DATE: April 26, 2003
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· Heavy-duty 32" armored handset is hearing aid compatible (HAC).
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The armored courtesy phone is easy to install and simple to maintain.
Applications
House phone
Employee phone
Description Speed dial phone
Inmate phone
Courtesy phone
Security phone
Emergency phone
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Free call phone
• Heavy-duty armored handset is hearing aid compatible (HAC) and has
an anti-static receiver.
• Can be used as a stand alone single line phone or on a PBX as an
extension phone.
• Calling card service compatible
Features· Works with most auto-dialers and call controllers
• Tamper resistant locking system
• Re-enforced window for customized instructions cards
• Built in volume control button

Same footprint as a bell s

installation on a backplate.

Weight 15 Lbs
Warranty 1 Year (See M.ore Information on Warranty Policy)
Dimensions S"L x 7.5"W 21"H

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101712003

ATTACHMENT A
EXHIBIT 8

REPORT OF THE

STATE CORPORATION COMMISSION'S
DIVISION OF COMMUNICATIONS

•

ON RATES CHARGED TO RECIPIENTS
OF INMATE LONG DISTANCE CALLS

TO S. VANCE WILKINS, JR.
SPEAKER OF THE HOUSE OF DELEGATES

COMMONWEALTH OF VIRGINIA
RICHMOND

2000

;.

EXECUTIVE SUMMARY
•
During the 2000 Session of the General Assembly the House Committee on Rules
considered House Joint Resolution ("HJR") 262, whkh requested the State Corporation
Commission ("SCC') to study the rates charged to recipients of long distance calls placed
by inmates held in state prisons, and loeal and regional jails. While HJR 262 was not
reported, the House Committee on Rules determined that the issues raised in the
resolution were important and should be reviewed by the Sec.

By letter, S. Vance Wilkins, Jr .. Speaker of the House of Delegates, requested that the
sec's Division of Communications undertake a study of inmate calling. The Speaker
provided a copy of HJR 262 as a guidance document. HJR 262 requested that the SCC I)
.1

examine the current charges for inmate calls and 2) make recommendations on any
alternatives for the provision of telephone service to inmates.

The Staff of the Division of Communications contacted or met with representatives of the
state inmate telephone system, various local/regional inmate telephone systems. state and
federal entities charged with oversight of inmate facilities, an association of inmate
cal\ing service providers, and inmate families. In addition, we received approximately 30
letters from inmates and their families. Information was gathered regarding the specific
rates and surcharges of different companies, alternatives that have been implemented by
other inmate facilities, and specific problems encountered with the current state system.

The study discusses collect calls, associated surcharges, and options available to the
recipients of mmate collect calls.

The current Virginia DeparTment of Corrections

contract with MCI WORLDCOM Network Services is discussed along with a
comparison of the state rates and various rates for local and regional inmate telephone
providers. Attachment 3 to the study provides a detailed comparison of the rates and
surcharges for intrastate (intraLAT A and interLA T A) and interstate inmate and nonrestricted automated collect calls.

As requested, the study sets forth modifications that could be implemented to revise the
current inmate telephone system along with providing alternatives for the current state
and local/regional systems. Of those, we believe there are two which hold the most
promise for allowing reductions to calling rates. First, the Legislature should consider
requiring' the reduction or elimination of the commissions that VDOC or other inmate
facilities may collect from the inmate telephone system provider. Any reduction from the
current commission level should be passed through to users by reducing the current
applicable intrastate and interstate charges or surcharges. Second. we suggest that VDOC
and DIT undertake a study to evaluate the feasibility and cost of implementing a debit
inmate telephone system in state facilities. This should include feasibility of whether
local and regional facilities could be included in such a system.

While providing modifications and recommendations. we believe it is impor1anl that
before any modification or alternative is adopted, the resulting rates/surcharges, potential

ii

.....

_-_ __
...

.,_ ..

_._------------

impact on irunate families. and the security and safety for the individual facility and th~
general public should be considered.

•

.'

iii

Report of the State Corporation Commission's
Division of Communications
On Rates Charged To Recipients Of
Inmate Long Distance Calls

•

l.

INTRODUCTION
During the 2000 Session of the General Assembly the House Committee on Rules
considered House Joint Resolution ("HJR") 262. introduced by Delegate James F.
Almand, which requested the State Corporation Commission ("SCC") to study the rates
charged to recipients of long distance calls placed by inmates held in state prisons. and
local and regional jails. While HJR 262 was not reported because of an effort to reduce
the number of legislative study resolutions. the House Committee on Rules determined
that the issues raised in the resolution were important and should be reviewed by the
SCC.

By letter dated March 10, 2000, S. Vance Wilkins. Jr.. Speaker of the House of
Delegates, requested that the

sees

Division of Communications undertake a study of

inmate calling. The Speaker provided a copy of HJR 262 (Attachment 4) as a guidance
document, and requested that the Division's findings and recommendations be reported
by December I, 2000. HJR 262 requested that the SCC I) examine the current charges
for inmate calls and 2) make recommendations on any alternatives for the provision of
telephone service to inmates.

In gathering information for the study. the Division of Communications met with or
contacted various individuals or groups, including the following:

i

• Inmate Calling Service Providers Coalition.
• Citizens United for Rehabilitation of Errants - Virginia
("CURE - Virginia").
• Virginia Depanment of Corrections ("VDOC).
• Federal Bureau of Prisons ("Federal BOP").
• California Depanment of Corrections ("CA DOC").'
• Colorado Depanment of Corrections ("CO DOC").
• Tennessee Depanment of Corrections.
• Pay Tel Communications.
• Evercom Systems. Inc .. dtb/it Correctional Billing Services.
• ASC Telecom. Inc. 2. and
• MCI WORLDCOM Net\vork Services ("MCI WORLDCOM"),

•

On April 19,2000, the SCC received a letter from Delegate James F. Almand requesting
information on t\vo issues, one relating to the study and one relating to docketed inmate
complaint cases pending before the SCC! Delegate Almand asked how the public could
panicipate in the current study and the pending complaint cases. A response letter was
forwarded to Delegate Almand on May 17. 2000.

The response included. as an

attachment, a form letter from the Staff. which informed individuals of the study and
invited comments.

The Staff received approximately 30 letters from inmates and family members.
letter/petition was signed by 53 inmates.

One

The major issues expressed in these letters
i

I CA DOC representatives made an on site visit to the officC'~ of the Federal BureOlU of Prisons in

Washington D.C. Attachment I includes their analysis of the Federal BOPs inmate telephone sysl(:'m and
its applicability to the California corrections system.
Pay Te! Communications. Evercom Systems. Inc .. dib·;] Corr~ctional Billing Services. and ASr Telecom.
Inc .. provide local and regional inmate calling services. in Virginia.

:!

3

Mel WORLDCOM currently holds the \'DOC contra!.:t to provide inmate tclephonc service to state

correctional facilities.
4

Robert E. Lee Jones. Jr. v. Mel WORlDCOM Network Services or Virginia. Inc .. Mel WORLDCOM

Communications or Virginia. Inc. (collectively "MCI WORLDCOM"l. Case No. PUC990157 and Jeffrey

D. Barnes v. MCI WORLDCOM, Case No. PUC990246

2

~

were: I) that the calls are too expensive: 2) there are problems with the inmate telephone

•

system (blocks being placed on phones; numbers not working; cut offs before time limit
reached); and 3) the amount of commission paid and that the commission is not used for
the inmates' benefit. These issues echo the statement made to the Staff during its August
28,2000. meeting with CURE - Virginia.

The

1996 Appropriation Act directed the Joint Legislative Audit and Review

Commission ("JLARC") to examine various issues related to the VDOC's inmate
telephone system.

The JLARC study was presented to the Governor and General

Assembly in January 1997. The study made eleven recommendations (Attachment 2).
They addressed issues such as comparable rates and surcharges for inmate calls compared
to similar non-inmate calls, extension of the time limit on inmate calls, commissions paid
to the state and its use to benefit inmates, panicipation by the Depanment of Information

Technology ("D1T') in the inmate telephone system. provision of inmate calling
statements to inmates. independent audits of timing and billing of calls. consideration of
call recipients input during contract negotiations. and advanced notice of any
rate/surcharge increases. While some of the recommendations have been acted upon (e.g.
audits and comparable rates and surcharges for inmate calls v. similar non-inmate calls),
I

others have not been adopted and remain outstanding. 5

>
The SCC has adopted rules governing the regulation of interexchange carriers ("IXCs")
and payphone providers.' In its Rules Governing the Certification of Interexchange

~ The Division of Communications believes thai some of the outstanding fe-commendations made in Ihe

JLARC study continue to be viable today.

3

Carriers~ ("IXC Rules') (20 VAC 5·400·60). the SCC allows facilities-based lXCs to

request authority to set rates based upon competitive factors. pursuant to Va. Code

*56-

48 I. I. This section states that the sec. after making a detennination that the ser.ices
will be provided on a competitive basis, may grant the lXt authority to set its rates based
on those competitive factors. This means that an IXC may price its sen'ices on

3

market

driven basis without reference to cost or rate base regulation. As of this date. no carrier
has been denied such pricing authority .

. Additionally, many of the providers of local and/or regional facilities' inmate calling
systems are non-facilities based ("resellers") Ixe providers 7 • At present. the see does
not regulate the provision of long distance services by resellers.

The see has adopted Regulations for Pay Telephone Se/'vice alld Illstrumellts ("Pay
Telephone Rules") (20 VAe 5-400-90) pursuant to Va. eode §§ 56-50S. 15 and 5650S.16. 8 These rules established certain requirements that payphone providers hhd to
meet including access to other carriers and price limits. The Pay Telephone Rules also
address the potential application of the rules to pay telephone instruments found ill
confinement institutions. The sce exempted confinement service providers from these
rules. but retained its authority to revisit this exemption should circumstances change.

• Cas. No. PUC840017, Order issued June 29.1984.
, Rescllers of IXC services have no facilities of their own. They pUTch:.sc services from facililies-based
[xes and repackage and/or reprice the services and sellihem under their name.

• Case No. PUC930013, Order issued November 24.1993.

4

•

II.
EXAMINAnON AND COMPARISON OF THF. CURRENT RATES
AND CHARGES FOR INMATE TELEPHONE CALLS

•

Calls from Virginia inmate facilities. whether state. local, or regional. are made on a
collect basis. A collect call. whether handled on a fully automated basis or with the use
of a live operator. is one type of operator assisted service where the individual originating
the call is not the person paying for it Collect calls from inmate facilities.

3S

\\'ith any

collect call. are paid for by the recipient and not by the inmate. Additionally. as \\'ith all
collect calls, the call is not connected until the receiving party takes some aOim1Utive
action. This affirmative action indicates the called party's agreement to accept and pay
for the collect call. Most, if not all, inmate telephone systems include a brand before the
collect call is accepted which informs the called party that the collect call is from a
correctional facility and the ,lame of the caller.

Some, if not all. inmate telephone

systems give the called party the ability to request the maximum cost of that call. refuse
to accept the call, and to restrict additional calls from that inmate to the called party's
number.

In addition to the per-minute rate for long distance calls or the flat rate for local calls
there is an associated surcharge for handling a collect call. A collect call can be either a
local or interexcha~ge call. An interexchange call can be further defined as an intrastate
(interLA T A or intraLA T A) call. interstate call, or international call. While the

see has

jurisdiction only over local and intrastate calls. this study compares both intrastate and
interstate rates and charges for inmate collect calls with the applicable rates and charges
for non-inmate collect calls.

5

,

.'

VDOC currently has a contract with MCI WORLDCOM to provide the inmate tel.:phone
system to all state facilities.

•

As the comparisons below and information found in

Attachment 3 show. the rates charged for inmate collect calls" are comparable to tho~e
charged to MCI WORLDCOM's other customers and to those charged by other c3rriers.
MCI WORLDCOM is currently charging persons accepting collect calls from state
facilities a $1.55 station to station surcharge for intraLATA calls and a S2.25 station to
station surcharge for an intrastate interLA TA call.

The per minute intraLA TA usage

rates vary from a low of $.048 to S.40 per minute depending on the associated territory of
the incumbent local telephone company ("ILEC"). and are distance and time of day
sensitive. The per minute rates (and surcharge) for an intraLATA state inmate collect
call currently match the collect call rates of the ILEe. The intrastate interLA T A usage'
rate ranges between $.15 and $.37 per minute dependent on distance and time of day.

As a comparison (MCI WORLDCOM's tariff has various classifications of operator
assisted calls) other intrastate station to station collect calls (but not using an MCI
WORLDCOM provided access number) are rated at a $2.15 surcharge with usage rates
ranging between $.15 and $.37 per minute. A collect call using an MCI WORLDCOM
provided access number (e.g. 1-800-COLLECT) has a per call surcharge of $1.97 with
i

usage rates between $.1499 and $.3699 depending on the time of day and distance.

Inmate collect calls are generally handled on a fully automated basis. The state inmate
telephone system includes security features such as a per call time limit. an approved
"only" call list, and the recording of calls. While such security features are standard in
the state prison system, many of the lo~al or regional facilities may not have all the same
security features .
• MCI WORLDCOM's MCI Maximllm Security Collect calls rates

6

.......

_....._......_ - - - - - - - - - - - - - - - - -

While MCI WORLDCOM currently has the contract to provide inmate calling services 10
state facilities. other providers. including AT&T. provide inmate calling services 10 local
and regional facilities throughout the Commonwealth.

The following charts show a

comparison of charges for selected col1ect calls for both inmate and non-inmates.

Intrastate intra LA T A collect call
Duration:
15 minutes
Time of Day: Day
Distance:
110 miles
Rate
MCI WORLDCOM inmate

Surcharge

Total charge

$ 3.29

1.55

4.84

MCI WORLCOM automated

5.25

2.15

7.40

AT&T inmate

9.00

3.95

12.95

AT&T automated

9.00

4.99

13.99

Evercom inmate·

2.70-7.50

1.55 - 3.00

ASC inmate

3.29

1.55

4.84

Pay Tel inmate

5.16

1.55

6.71

Verizon Virginia automated

3.29

1.55

4.84

7

5.05 - 10.50

•

Intrastate interLAT A collect call
Duration:
15 minutes
Time of Day: Evening
Distance:
253 miles

•
Surcharee

Rate

Total charge

$ 4.35

2.25

6.60

MCl WORLCOM automated

.4.35

2.15

6.50

AT&T inmate

10.35

3.95

14.30

AT&T automated

13.35

4.99

18.34

MCI WORLDCOM inmate

Evercom inmate"
Pay Tel inmate

*

3.88 - 7.50

1.80 - 3.00

5.25

3.00

5.68 - 10.50
8.35

Evercom serves 20 local/regional facilities in Virginia, and uses various rate schedules. The rates in
the charts represent the low and high charge based on the various rate schedules.

Interstate collect call
Duration:
15 minutes
Time of Day: Evening
Distance:
2150 miles
Rate
MCl WORLDCOM inmate

Surcharge

Total charge

$ 6.75

2.45

9.20

MCl WORLCOM automated

13.35

4.99

18.34

AT&T inmate

10.35

3.95

14.30

AT&T automated

13.35

4.99

18.34

Evercom inmate

10.35

3.95

14.30

Pay Tel inmate

9.75

3.00

12.75

8

~

m.
OPTIONS AND AL TERNA TlVES TO THE CURRENT INMATE
COLLECT CALL SYSTEM
This section of the study discusses various options and alternatives to the current collect
call system used by the state prisons and various local and regional facilities.

The

Division of Communications believes that the following issues should be considered
before adopting any alternative to the current inmate collect call system.

•

The resulting rates and surcharges for the inmate calls;

•

The potential impact on inmate families; and

•

The maximum security and safety for the individual facility and the general
pUblic.

Since the Division of Communications has no expertise in prison security and safety. this
study does not address such areas.

POSSIBLE MODIFICATIONS/REVISIONS TO THE CURRENT COLLECT
ONLY INMATE CALLING SYSTEM

Commissions - Require VDOC, local facilities, and regional facilities to cap. reduce. or
eliminate the commissions paid to the faciiities. 1O This should be passed through (dollar
for dollar) to reduce the surcharge andlor rates for inmate calls.

If local or regional

facilities use the commission as revenue for operating the facility or inmates services. it
may be appropriate to establish a maximum level and require any resulting reduction in

'" Commissions or lease payments/fees are generally based on the revenue; generated by the inmate calls.

9

•

the commission to be passed through (dollar for dollar) to the collect call surcharge

•

andior rates.

We reviewed eleven contracts of one localiregional inmate telephone service provider in
Virginia. The commission or lease payment paid to the county. cit)' or facility ranged
from 20% to 40%, with there only being one contract at 40%. While the contracts. for
the most part, did not contain rates/surcharges, one contract (40% commission)
specifically stated that an operator assisted surcharge of $2.75 was to be charged
(interLATA intrastate and interstate calls) plus the AT&T tariffed per minute rates. Most
of the contracts reviewed included a statement to the effect that the provider agreed to
charge operator assisted rates that were equal to or less than the tariffed rates regulated by
the SCC or the Federal Communications Commission.

The current contract between MCI WORlDCOM and VDOC includes a commission
based on the revenues generated from the phones used by the inmates.

The Cllrrent

commission is 40% and is paid into the Commonwealth's General Fund.

During the

study some parties voiced concern over the amount of the commission and its role in
determining the winner of the state inmate telephone contract. In particular, there was a
fear that there would be an incentive in the RFP process to award the contract to the
vendor bidding the 'highest commission. In the Staffs meeting with VDOC. we were

)

advised that in the review and awarding of the state contract the commission proposed by
the bidders played a minor role in determining the outcome of the process. The payment
of a commission between payphone prOviders and payphone location providers is a
common and 'accepted practice around the country.

10

--_._------------------------

Time limits - Consider lengthening the time limit on calls (e.g. from 15

minut~s to ~u

•
minutes or more for state prisons).

This time extension could reduce or remO\'e the

inmate's need for multiple or back-to-back calls to the same individual. Additionally. the
overall per minute cost of the call would be reduced since the surcharge would be spread
over additional minutes of use.

Example:

A current 15 minute interLA T A evening rated call of 100

miles has a total cost of $6.30 (includes surcharge and per minute rate).
This equals $0.42 per minute. That same call lasting 20 minutes would
cost $ 7.65. This is a little over $0.38 per minute, a per minute reduction
of almost 10% or slightly less than $0.04 per minute.

Today an inmate at a state facility wanting to talk to the same recipient
for 20 minutes would be required to make two calls. Using the same 100
mile example above, these two calls would have a total cost of $9.90
(including the per minute rate and two separate surcharges). This equals
$0.495 per minute. If the current inmate time limit were extended to 20
minutes, the per minute reduction in this instance would be almost 23%
or slightly more than SO.lI per minute.

Call restrictions - Revise the current system to restrict an inmate from repeatedly calling
the same number (either a waiting period between calls. a limited number of calls per
inmate per day, or a limited number of calls per inmate to a giv~1l Ilumb~r). While this

II

may not be a popular option for the inmates or families. it could result in lower telephone

•

bills and lessen the financial burden on some families.

Revise the current system to allow call recipients to request an automatic block on calls
from an inmate facility when a certain dollar amount tor number of calls) is reached per
month.

Surcharges - Consider limits on applying surcharges to one per day per inmate. or one
per day per inmate for each different number called.

Inmate education - Provide an educational packet to new inmates and each person on
the "approved" call list. The packet should include information on the cost of calls.
components making up the total cost of a call tsurcharge and per minute rates).
suggestions to maximize talk time

(inmat~slfamily

have notes of topicslissues to be

discussed during call to maximize talk time. take advantage of full 15 minutes). variation
in rates between day; evening. and nightiweekend calling periods. responsibility of the
calling party and the called party.

Regulatory - Request that the State Corporation Commission exert authority over rates
and charges for restricted access payphones provided to confinement facilities.

The

current state contract requires the contracted carrier to charge rates that do not exceed
those of the "dominant" carriers.

If the SCC Pay Telephone Rules were expanded to

include inmate telephones. II the rates currently charged by MCI WORLDCOM would
fall well below the maximum allowable charges. Therefore. if current regulation were

II

There would cenainly be security concerns if all the Pay Telephone Rules were 3pplicd to inmate calling

«.g. acc<ss to 800 calling).

12

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,.oa____"'~.~---------------------------

-,.,.._-

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expanded to cover inmate calls for state facilities, it would not result in a reduction.
Further, if the SCC were to exercise rate authority and require reductions, this could
result in a situation where no carriers would be interested in providing the service.

ALTERNATIVES TO THE CURRENT COLLECT CALL INMATE SYSTEM

Establish a debit or debit/collect inmate telephone system. Require VDOC and the
Department of Information Technology COlT') to undertake a study similar to that
performed by the California DOC I : to implement a debit inmate telephone system ("debit
system") similar to that system used by the Federal BOP. A debit system may prove to
be cost effective and achieve cost savings in large prison facilities where the duration of
confinement and volume of calls would be great.

The federal debit system allows

inmates to place direct dialed calls without a surcharge. Under this program the inmate
budgets available funds between commissary needs and the need for contact via
telephone with family and friends. Inmates may earn money for calls as well as family
and friends having the option to deposit funds directly into an inmate's account. This
places more financial responsibility on the inmate and. therefore, can lessen the burden
on families. In addition, from a billing perspective since the calls are prepaid there is
certainty of payment and virtually no uncollectables or bad debt.
The Staff of the Division of Communications met with Mr. Mike Atwood and Mr. David
Woody of the Federal Bureau of Prisons in Washington, D.C. on September 26, 2000.
We were given an overview of the federal inmate telephone systemll ("federal system")

12 A copy of the CA DOC study is included as Attachment I.
11

Estimated number of inmates in the federal system is 125,000.

13

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and background on the ten-year development and refinement process to get the system to
its current state of operation. The federal system consists of two types of calls. direct
dialed debit and coJlect caJls.

The current federal system uses no tax dollars and is financially self-sufficient. I' \Vhile
the federal system has various contracts with vendors (DynCorp, Value Added
Communications), many functions of the system. such as the management of inmate
accounlS, are handled by federal employees. 15
Inmates have the ability to make direct dialed calls with the cost of such calls being
debited directly from their telephone account. Currently. direct dialed calls are rated at
$.04 per minute for local calls and $. I 5 per minute for long distance calls. There is no
surcharge. 16 Approximately ninety-two percent (92%) of inmate calls are direct dialed.
Since the cost of the call is subtracted directly from the inmates' account, the'
responsibility of paying for the call has been shifted from the recipient. as with collect
calls, to the inmates. Inmates are paid an hourly wage for assigned work; these funds are
deposited directly into the inmate's account. 17 Additionally. families and friends may

14 The federal system uses an inmate trust fund for revenues from the commissary and inmate telephone
system. All expenses and salaries associated with the inmale telephone sysll!m arc paid from this fund.

I~ The federal employees working with the inmatc calli"£. telephone system are paid from revenues from
that system.
16 While there is no surcharge on the direct dialed debit calls. there is a mark-up on the cost of the call.
This revenue is paid 10 the inmate trust account. II was also discussed thill the current per-minute rate for
toll calls was based on a certain level of call volume. Based on a rcduction in thc o\'crOlIl call volume at
federal facilities, the Federal BOP anticipates a ratc increase will be necded in the near future.

17 The inmate has one main commissary account with the ability to transfer funds from that account into
their telephone account.

14

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make contributions to the inmate's account.

While there are no monthly statements

•

provided to the inmates on their calling on an ongoing basis. an inmate can request
certain information, such as the balance of their telephone account. Federal inmates also
have the ability to place collect calls (limited to 120 minutes per month). 18

Interstate

collect calls are rated at $.40 per minute with a $2.45 surcharge. Each inmate has an
approved call list of 30 numbers with all calls limited to 15 minutes in duration. 1°

The federal system has a multitude of optional security, monitoring, regulating. and
reporting functions that can be used on a facility by facility basis or even by banks of
phones within a facility. The prisons have the ability to restrict all calls by an inmate.
limit the number of calls an irunate can make in a day and set a minimum time limit
between calls. Under normal circumstances there is no limit on the number of calls an
inmate can make in a day but there is a waiting period between calls.

The states of Colorado and Tennessee have implemented inmate debit telephone systems
in state facilities. While there was very limited information available on the Tennessee
system, the Colorado system took six months to implement and has been in operation for
nine years. 20 Today, 57% of all inmate calls in Colorado are placed using the debit
system. Colorado uses a total of 8\1, employees to operate the state inmate telephone
system for 15,000 inmates. Unlike the federal inmate system that does not provide any

>

type of statement to the irunate, the Colorado system provides monthly statements of all

1¥

The system receives a commission 0(60% on all collect calls.

19

Covers both .direct dialed caBs and collect calls.

,. Colorado has contracts with Value Added Communications ("VAC"'l and MCI. like the federal IOmate
telephone system, Colorado uses a trust and is financially self~sumcicnt.

15

_..... _._------

... _ - - - - - - - - - - - - - -

direct dialed calls. Local calls are S1.25. with intrastate calls being mileage sensitive
with a $1.25 surcharge. The CO DOC is in the process of negotiating for a flat intrastate
rate that will be effective 24 hours a day. seven days a week."1

The only problem "oiced

by Colorado was the limited number of vendors in the irunate debit industry.::

While VDOC has voiced concerns over the management of a debit irunate calling system.

we believe the operation could be handled by DIT as previously recommended in the
JLARC study.

Local or regional facilities should consider use of prepaid cards. While local and
regional facilities would not necessarily have the duration of inmate stays. volume of
calls, budget, or staff required to make a Federal BOP type system work. there may be
other prepaid alternatives. As most local or regional facilities do not require the number
of security features (example, approved calling list) required at long term facilities. a
simplified prepaid system could be an option.

Prepaid calling") cards offered by the

current irunate phone service provider could be sold by the facility personnel or through
vending machines. These cards could be purchased by the inmate during the booking
process (when the irunate still may have access to money and/or credit cards). through a
commissary. or by family and/or friends and given to the inmate during visitation. This
alternative would still allow the local or regional facilities to be paid commissions on

21 They suggest~d that the flat rate per minute rate would be in the range

or S.19· .20 with the cOllfinm:d

surcharge ofS I.~~.
22 Per Colorado only two vendors offer debit inmate calling, VAC and Global Tel Link.
1)

As a security and safety measure the prepaid cards could be paper instead of the standard plastic:.

16

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dollar amount/number of cards sold.

As with the debit system discussed above. the

provider is certain of payment and there are virtually no uncolleclables or bad debt.

Alternatives which do not appear to have the ability to provide the continued
maximum securi!)' and safe!)' for the individual facill!)' and the general public.
There are a number of other potential alternatives to the current inmate telephone system.
Commercial collect (800·COLLECT, 800·CALL ATT, etc.), prepaid calling cards
(prepaid calling cards purchased convenience/discount stores etc.). ability to direct dial
calls, the use of personal 800 numbers. and multiple carriers competing within an inmate
facility are some alternative services which are available to the general public. While on
the surface many of these services may be seen as an option for inmate calling at state.
local, or regional facilities. they appear to present increased financial risk and potential
security problems for the facilities. All, at first glance. may seem to have the ad"antage
or potential for lower cost, more choice. andlor control for the called parties, However.
none of these options. as currently available. possesses the ability to provide continued
security and safety for the facilities or the general pUblic. Additionally. some of these
options would fully circumvent all security measures such as approved calling lists.
branding, tracking and screening of calls. and call limitations.

Furthermore. many of

these options, if implemented. could result in increased fraud and harassment. as well as
increased uncollectables and collection expenses.

17

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IV.
RECOMMENDATIONS

•

This study evaluated numerous modifications and alternatives to the current collect call
inmate system.

Of those. we believe there are two which hold the most promise for

allowing reductions to calling rates. First. the Legislature should consider requiring the
reduction or elimination of the commissions that VOOC or other inmate facilities may
collect from the inmate telephone system provider. Any reduction from the current
commission level should be passed through to users by reducing the current applicable
intrastate and interstate charges or surcharges. Second, we suggest that VOOC and OIT
undertake a study to evaluate the feasibility and cost of implementing a debit inmate
telephone system in state facilities. This should include feasibility of whether local and
regional facilities could be included in such a system.

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18

ANALYSIS OF THE FEDERAL BUREAU OF PRISONS INMATE TELPEHO!'iE
SYSTEM AND APPLICABILITY TO THE CALIFORNIA DEPARTMEl'IT OF
'CORRECTIONS

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EXECUTIVE SUMMARY
All California State Prisons have pay telephones that inmates. in certain privilege groups. can use
to call family and friends. This Inmate Security Telephone System allows collect calls only. It
is installed and operated by private vendors under a contract administered by the California
Department of General Services (DGS). In response to complaints from inmate families about
the rising cost of the collect calls, the Governor's Office asked the DGS and the Califomia
Department of Corrections (CDC) to examine alternative ways for reducing the cost of the
inmate collect calls. One of the alternatives examined is conversion to a system similar to the
Federal Bureau of Prisons (BOP) Irunate Telephone PIN/Debit System, which provides both
direct dial and collect calls at a lower cost. The CDC conducted a review of this federal system
to determine the potential cost benefit and feasibility of transitioning to a similar system in
Calffornia prisons. The following. is a summary of the findings.
For comparison, the BOP has 96 prisons. 31,335 employees, and approximately
124,380 inmates. CalifoT)lia has 33 prisons and 38 camps, 45.976 employees, and approximately
160,000 inmates. The BOP extends telephone privileges to all irunates with very few exceptions.
and has a telephone-to-inmate ratio of I :26, with a monthly average of 242 called minutes per
inmate. The CDC has privilege groups with only one group paving unlimited telephone calls
during nonworking hours. The number of inmates in this privilege group is roughly equivalent
to the entire BOP inmate population. The CDC's ratio of telephones to inmates is approximately
1:70, with a monthly average of 76 call minutes per inmate.
The BOP has transitioned from a collect call system similar to California's system to one that
provides both direct dial and collect calls. In the federal system. the costs of direct dial calls are
debited "real time" from the inmate's trust fund account. To ensure accuracy, the BOP issues a
Personal Identification Number (PIN) to each inmate which ties directly to their trust fund
account. Currently, about 93 percent of the calls that inmates make are direct dial and 7 percent
are collect. Indigent inmates can only make collect calls. The federal system has all the security
features California currently has; i.e., branding. recording. real time monitoring. etc., as well as
additional desirable features such as third party call detection, frequently dialed number report".
approximately 25 investigative reports, etc. It has taken the BOP approximately five years \0
transition to this system.
"

The key to the success of the federal system is that it is fully integrated into a standardized
automated trust fund accounting and inventory system. California does not have a similarly
automated system and could not implement a PIN IDe bit system without it. The basic task of
developing the required connectivity alone will be very lengthy because California prisons are
not on a network. Also, because of the importance of maintaining a high degree of reliability,
functionality, and public and staff safety, CDC would have to fully assess security issues, costs,
staffing, impact on current prison operations, as well as the impact to inmates before developing
a similar system.

-----------

---------------

EXECUTIVE SUMMARY (COJ\"T)
The cost of both the direct dial and the'collect calls are significantly cheaper than the currerit cost
of California collect caIls. The BOP's average 15 minute. long distance. direct dial call costs
$2.25 and a local direct dial caIl costs $.60. Through the current State of California Pay
Telephone Contracts. the average inmate family's cost for a 15 minute. intra-state. inmate collect
call is $7.50 (including surcharge). and a local collect call average is S4.90 (including surcharge).
All of the federal government's direct dial calls are routed over the Federal Telecommunications
System (FTS), which is similar to the State of California's telephone services provided tllrough
the California Integrated Information Network (ClIN). The inmate telephone system is one of the
largest users of the FTS; with inclusion of the inmate telephone calls. the cost of all calls
processed over the FTS has decreased dramatically. It is unknown at this time. if California
could route all inmate calls over the ClIN andior experience a similar side benefit of a reduction
in the cost of all CIIN calls.
The federal PIN/Debit system requires more staff than a collect call system primarily because
more administrative processes and oversight are required: i.e. managing calling list changes. PIN
applications. etc. The federal system has approximately ten staff responsible for the bureauwide
administrative functions and 1.5 staff responsible for the overall local administrative functions in
each prison for a total of 154 staff. The CDC estimates that operating a similar system in
California prisons would required ten staff for the Depanmentwide administrative functions. and
2.5 staff for the overaIl ongoing local administrative functions in each prison for a total of
92.5 staff. In addition, CDC would require approximately 12 staff for the planning and
development of the system prior to implementation.
The federal system generates enough revenue to pay for the annllal 526.8 million cost of the
system and realizes an annual net revenue of S26 million. The BOP experienced an increase in
direct dial calls when the costs of calls were reduced after implementing the PIN;debit system.
The CDC estimates that a similar system in California prisons would cost approximately
$ I 0.8 million annually and generate approximately S I 0.5 million in annual lIet revenue.
Planning 'and development costs are estimated at S I million annually. It is conceivable that
California may experience the same increase in calls with direct dialing capabilities that the BOP
experienced which could increase the net revenue.
CONCLUSION
The Federal BOP Inmate Telephone PINlDebit is an efficient. fully automated. security;'
conscious system that has reduced the cost of inmate calls dramatically. However. it has taken
the Federal BOP approximately five years to fully transition this system to all prisons.
The system CO/lid provide benefits to Califortlia. bllt IIOt immediately. Additional study would
be needed to develop a comprehensive needs assessment and implementation plan. With the
exception of the high cost of collect caIls. the current CDC system provides the necessary service
to the inmates and their families and is operating well in the pri<on<. It is recommended that the
State consider other options for lowering the cost of calls that could be implemented sooner.
However, the state should continue to examine the PIN/Debit system as a prison management,
security. and investigative tool, and as a long-term solution to the high cost of collect calls.

2

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ANALYSIS OF THE FEDERAL BUREAU OF PRlSOI'\S II'\MA TE TELPEHONE SYSTEM
AND APPLICABILITY TO THE CALIFORNIA DEPARTMEIH OF CORRECTIONS

INTRODUCTION:
All California State Prisons have pay telephones th~t inmates. in cenain privilege groups. can use to call
family and friends. This hunate Security Telephone System allows collect calls only. It is installed and
operated by private vendors under a contract administered by the California Department of General
Services (DGS). In response to complaints from irunate families about the rising cost of the collect calls.
the Governor's Office asked the DGS and the California Department of Corrections (CDC) to examine
alternative ways for reducing the cost of the inmate collect calls. One of the alternatives examined is
conversion to a system similar to the Federal Bureau of Prisons (BOP) Inmate Telephone PIN/Debit
System. which provides both direct dial and collect calls at a lower cost.
DESCRJPTION OF THE FEDERAL BUREAU OF PRJSONS PINIDEBIT SYSTEM
The BOP began the process of installing a Federal hunate Telephone PlNlDebit System (ITS) ten years
ago. The original ITS was primarily a debit system. with very limited collect calling capability~ In 1995.
under a court mandate of Washington "s. Reno et al. the BOP made the ITS a dual system which
offered both debit and collect calling capabilities. The BOP is currently replacing the original ITS with
an ITS·II system which has both capabilities. As of this report. the BOP estimates that all federal
prisons will have the ITS·II within the next three months. The ITS·II system provides inmates with
outbound telephone services and provides the BOP with the means to ensure the proper and lawful use
of this system by inmates. The following is a list of the systems' compOnents.
•

Centralized database. network based management system that provides support. network startup.
maintenance~ monitoring, and operations.

•
•
•

•

The ITS-II is the database setup for all trust fund debits which includes the commissary and the ITS.
There is one standardized database system for all BOP facilities. which is configured independently.at each prison.
The BOP utilizes a Wide Area Network (WAN) to provide connectivity among the ITS-II systems.
at the prisons and to support capability for systemwide administrative operations and functions (See .
Attaclunent A for schematic).
The federal system's telecommunications' capabilities provide outbound direct dial and collect
calling services to inmales and administrative/security capabililies to BOP personnel.

•

DESCRIPTION OF THE FEDERAL BUREAU OF PRISONS PINIDEBIT SYSTEM (CO"lTI
•

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•
•

•
•
•
•

All inmate long distance direct dial calls within the United States and Pueno Rico are routed O\'er
the Federal Telecommunications System [FTS) circuits provided by the BOP. These costs are
borne by the revenue from the federal system.
Collect calling services are fully automated and do not involve the use of a "live" operJtor at any
stage of a collect call.
Administrative, system suppon. and training capabilities are located in the BOP Central Office in
Washington. D.C., and in Aurora, Colorado.
The Central Operation Facility (COF) is located at the contractor's site in Texas and an alternative
COF is located in Virginia (similar to our having an Emergency Operations Center [EOC] and 3Il
alternative EOC for the telephone system).
The original ITS equipment was purchased by the BOP with existing commissary funds.
The ITS-II system is vendor-owned which includes all equipment, installation. and maintenance
costs.
85 percent of the inmate calls are interstate; 15 percent are local and international.
The BOP's current overall ratio of inmate telephones to inmates is 1:26.

•

HOW DOES THE PIN WORK AND WHAT IS ITS PURPOSE?
The Personal Identification Nwnber (PIN) is a randomly selected, nine-digit number. by the
ITS-IT system that is unique to each inmate. The PIN is tied directly to an inmate's individual truSt.
account and their preapproved telephone numbers list. The PIN is the only identifier through which an
inmate can access their ITS-II account.
•

Prison staff input inmate profile information into the ITS-IT system on all new federal inmates
creating a separate and individual inmate trust account.
• The inmate receives a random, nine-digit PIN nwnber that stays \\'ith them throughout their
incarceration. The inmate submits a list of up to 30 telephone nwnbers for approval.
• The PIN identifies if an inmate possesses an active ITS-II account.
• The PIN allows for customized applications for individual inmates (e.g .. allows for only one specific
telephone to be used limits the nwnber of times an inmate can call. etc.).
• Identifies the inmate when security staff are generating repons on potential abuse or illegal activity
over the inmate telephone system.
,
• The inmate receives training at orientation on how to use the PIN and debit system.
• When an inmate is transferred to another prison. the PIN and telephone list becomes a pan of the
file transferred.
• The inmate's PIN nwnber can be used at all prisons where the inmate is housed. This allows the
inmate to place collect calls irrunediately upon anival at the new prison.
• The inmate's account remains the responsibility of L"e prison where the inmate canle from Wltil the
staff at the new prison changes the inmate's prison assignment.
• No financial transaction is conducted on the inmate's account except by the prison where the inmate
aCcoWlt is designated.
['217/00

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HOW DOES THE PIN WORK AND WHAT IS ITS PURPOSE" (CON'T)
The trust fund teclmician. at the prison where the inmate resides. has the responsibility for changing
and/or deactivating the inmate's account (e.g. work group changes. suspension put on tdephone
access, inmate release from prison. updating inmate's calling parameters. changes to approved
calling list. etc.).
The inmate's PIN number is not reissued for ten years. If an inmate is reincarcer.lted within ten
years, they will utilize t.'le same PIN number.
There are no documented security issues regarding the use of the PIN as a "commodity" among
inmates since the implementation of the PINlDebit system,

•

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•

HOW DOES THE DEBIT WORK AND WHAT IS ITS PURPOSE?
When an inmate places a long distance direct dial call, the system is capable of debiting their ITS-II
account automatically and in real time as the call is taking place. The system also allows the inmate to
transfer funds from their commissary account to their ITS-ll account for long distance direct dial calls
via the telephone.
•
•
•
•
•

•
•
•
•
•
I

I

I

The inmate is required to input a PIN and a valid telephone number for a call to be processed.
The inmate can place only one call to one telephone number after entry of their PIN number.
The system uses the PIN to determine whether the inmate possesses an active ITS-II sccmm!.
If there is no account, the system generates an error message to the inmate and aborts the call.
If the inmate has an active account, the system performs all required administrative checks
necessary to process the call (e.g., PIN and called number correlate. inmate has sufficient funds to
complete at least a two minute call, etc.).
If any administrative checks fail, the call is denied and a descriptive message is given to the inmate
indicating why the call was denied.
Neither the inmate nor the called party can speak to, or hear the other party. until after the
prerecorded "branding" is completed and the call has been accepted.
Call charges for inmates do not begin until the called party has accepted the call.
At no time does the system allow a negative balance in the inmate's ITS-II accmmt.
The call record detail is updated, along with the balance, on a real time basis and is available for
reviewing by security staff immediately after the call is completed.
.'
Prior to the system terminating a call due to expiration of time limits or exhaustion of funds. the
inmate will be informed at 60 and 30 seconds prior to the impending expiration.
Call charges stop when either the calling or called party hangs up.
If an inmate hangs up or otherwise terminates the call setup prior to called parties' acceptance, no
deductions will be made against the ironate's account.

12.'7100

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ACCOUNTING DATABASE
The Federal Prison Point of Sale (FPPOS) System is the accounting and inventory soft\\'are package
used to maintain inmates' commissary accounts, commissary inventory, and includes all irunate trust fimd
debits (commissary and ITS). The FPPOS commissary accounts are the source of.timdJ for inmate
accounts in the ITS-II system.
•

Inmates can purchase commissary items that are approved by the warden at each prison. The
requested items are sold to the inmates and the fimds are immediately deducted from the inmate's
commissary account.
• The FPPOS system and ITS-II must interact to exchange accurate credit/debit infonnation bet\\'een
systems.
• The FPPOS is a standardized system and is operated on an independent Local Area
Network (LAN) at each prison.
• !be BOP Central Office in Washington. D.C.. is capable of accessing all FPPOS LANs at each
prison through the ITS-II WAN.
• The system can provide inmates with their ITS-II and commissary account balance infonnation.
along with the capability of transferring fimds from their commissary accounts to their ITS-II
accounts in whole dollar amounts via the telephone.
• Each prison has its own FPPOS database. which is backed up daily.
• When the inmate's call is completed. the call record data is replicated at both the Central Operation
Facility (COF) and the alternative COF located in Texas and Virginia.
• The ITS-II system archives all inmate data at both COfs.
• The BOP keeps all inmate data for ten years. which includes the call record. PIN and accounting
information.
• The system has several categories for management of the inmate ITS-II accO\U\\:
o The Irunate Account Infonnation.
• Irunate's registered number. name. prison. living unit. language, telephone restnctlons,
telephone list, number of times an inmate is allowed to transfer fimds between accounts per
day or week, etc.
o Financial Transaction Infonnation
• ITS-II maintains a detailed audit record of every fmancial transaction made to an inmate'sl
account and at which prison the transaction occurred.
• lbroughout the duration of a call. the ITS-II tracks time and status infonnation regarding the ~
call.
• All irtformation related to an inmates financial transactions is immediately and automatically
updated so that at all times the integrity of the account balance can be verified against the
fmancial transactions detail audit record for that account.
o Telephone Call Record Infonnation
• All calls generate a call record that can be accessible and available for reporting, analysis. or
reviewing immediately upon termination of the caU.
• Call records are stored on the servers' hard drive for 12 months at the prison and archived
at the COFs for ten years.
1217/00

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STAFFING, OPERATING COSTS AND REVENUE
The Trust Fund Branch is a component of the BOP's Central Office located in Washington. D.C. The
Trust Fund Branch has approximately 30 employees including the Inmate Telephone Section and
provides management and services to the BOP consistent with maintaining stability and financial integrity
of the trust fund and irunate deposit fund. This branch oversees the operation of th~ BOP's
commissary, ITS. warehouse, laundry. and clothing issue operations for approximately 124.538 irunates
and prisons.
The operating costs are based on line. trunk, and WAN costs. Revenue is based upon the volume of
caIls made by the inmates.
•

The Inmate Telephone Section is responsible for the Bureauwide and on-site implementation of the
ITS-II including development of policy and procedures. oversight of daily operations, compile data
on inmate use of the system, reconcile fmancial activities. training. and continuing technical support..
Staff resources are as follows:
o One Communications Supervisor
o One Trust Fund Supervisor
o Four Communications Technicians
o Four Trust Fund Analysts
• Trust fund technicians at the prisons are responsible jor creating. changing, and deactivating inmate
accounts; updating irunate calling parameters; generating and analyzing call records. training the
irunates on how to use the ITS; and other necessary local administrative functions. Changes to an
irunate's calling list are submitted from the inmate via his counselor. The counselor venfies the
information and submits the signed. authorized change to trust fund technicians.
Staff resources are as follows:
o One half of a Trust Fund Supervisor per prison.
o One Trust Fund Technician per 2.000 inmates at each prison.
o Total cost of Inmate Telephone Section staff. induding Central Office and prison staff. is
approximately $7.5 million armually.
• The BOP runs their long distance calls over the FrS with inmate telephones being the largest IISCU
These costs are borne by revenue from the federal system deposited into the inmate trust fund.
• Operating costs, whi,h include, FrS per minute cost. line. trunk and WAN costs are approximately ,I
$19.3 million.
• Federal system is self-supporting.
o Total staff and operating expenses were $26.8 million.
o Per BOP,Iast year's net profit from the federal system \\'as approximately $26 million.

12.7'00

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RATE STRUCTURE METHODOLOGY
Rate structure for the PINlDebit system is based on a direct dial methodology.
85 percent of inmate direct dial calls are interstate (state-to-state) and 15 percent are local and
international.
o
The BOP realized an increase in the inmate's telephone usage with direct dial in comparison of their
previous collect call system.
o The minority of inmates make the majority of calls.
o All inmates are limited to 120 minutes per month for collect calls and have unlimited minutes for
direct dial calls.
• Inmate direct dial charges are separated into three categories and rates: long distance at
15 cents per minute; local at 4 cenlS per minute: and international whi~h charges vary 1T0m countryto-country.
o
Average number of direct dial minutes, per inmate. per month is approximately 242 minutes.
o
Approximately 7 percent of all calls are collect.
o
The inmate's cost for a collect caU includes a $2.45 surcharge with a $.40 a minute rate. based on
the residential rate as of February 1998.
o

TRAINING
The BOP Central Office staff provided training during the installation of the I':-S-II. The contractor did
not train the inmates or custody staff.
o Original training for the inmates on the ITS-II PINlDebit system is performed during orientation at
the prisons. as well as, on an ongoing basis.
o The trust fund technician(s) at each prison make themselves available during the inmate's mealtimes
to answer questions from inmates regarding the system and how it operates.
• During installation, the BOP Trust Fund Branch. Inmate Telephone Section. provides one Trust
Fund Analyst and one Communications Technician to perform training at each prison.
o Future training will become part of the curriculum of the BOP training facility In
Aurora, Colorado.
SYSTEM CHANGE OUT
The BOP is currently in transJlIOn of changing out the original ITS to the ITS-II system:
A change out project typically takes six to nine months.
o
•
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Schedule of installation was developed utilizing Microsoft Project.
The BOP sends a standard memorandum from the director to wardens of the prisons installing the
ITS-II system, describing the inmate's concernS and benefits of the program.
One communications technician from central office performs site surveys at each prison.

12:'7iOO

6

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•

Six weeks prior to installation staff at the prison begin "keying" inmate-related infonnation into a
data input device supplied by the contractor.
SYSTEM CHANGE OUT (CON'T)

•
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•
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Flyers are posted to notify staff and inmates of upcoming upgrade from ITS to ITS-II.
Headquaners' Communications Technician and Trust Fund Analyst d~velop indh'idual installation
checklists.
Actual installation of ITS-II system takes approximately one week.
Most difficult issues during implementation includes:
• Informing the inmates of the change.
• Training inmates and staff.
• Talking to the inmates regarding their concerns.
• Prepare prison for installation of system.
• Service to Site installation from local exchange carriers.

SECURITY
The process to enact the safety and security features of the BOP PIN/Debit system starts when the
inmate enters into a prison and receives a PIN munber. There are three areas of security concern
regarding the ITS-II system: User Security Level. Integrity and Security of the Inmate Trust Fund. and
Security Regarding Inmate Calls.
User Security Level
• The system provides secure. multilevel database access conrrol configurations with defmable user
levels.
• The BOP Cenrral Office personnel have the highest access level as wdl as define the lower levels of
access (screen view capability. menu functions. data input capability. query capability. etc.).
Consistency of access is maintained at all prisons.
• The BOP creates the trust fund supervisor user access level at all prisons.
• The rrust fund supervisor creales users for all other access levels al that prison and has conrrol over
all users and passwords within the assigned prison.
Integrity and Security of the Inmate Trust Fund
• The system can generate reports that assist in the overall accountability of the financial transactions ~
and statements generated by the inmates (Telephone Account Slatement Report. Transferred
Telephone Accounts Report, Reconciliation Report. etc.).
Security Regarding Inmate Calls
• The system can generate numerous reports using a multitude of different parameters to allow for
more enhanced intelligence gathering. increase security. and conceivably reduce tlJe amount of drugs
going into prison and lower violence. A few of the reports are: Frequently Dialed Number Report.
Telephone Number Called By More Than One Inmate Report. Alert Notification Report. Exrra
Dialed Digit Report. etc.
7

•

-•
•

All calls are "branded."
All calls have an intenninent random overlay during the com·ersJtion. identiJYing that the call is fTom
an inmate at a prison and is being recorded.
SECURlTY (CON'T)
Numbers can be blocked for all inmates at a prison. Telephone nwnbers may be block~d C\'~n if
identified on the inmate's approved lis!.
All calls are recorded and subject to "real time" monitoring.
Ability to enable/disable telephones on an individual, cellblock, or prison basis.
Ability to customize applications fToril inmate to inmate (allow only one specific telephone to be
used; limit the nwnber of times an inmate can caU, etc.).
Ability to limit date, time, and duration of caU.
Ability to monitor each telephone caU or multiple telephone calls simultaneously. Ability to identify
who was called. who made the call, what time call was placed. and what telephone was used.
Ability to monitor fTom different locations simultaneously such as the local housing lmit. In\,estigation
Security Unit, Central Office. etc.
.

•
•
•
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•
•
•

RECAP OF FUNCTIONING SYSTEM
•
•
•
•
•
•
•
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The BOP has a standardized database system for all BOP facilities. Each system is configured
independently.
The BOP utilizes a WAN to provide connectivity among the ITS·II systems at the prisons and to
support capability for systemwide administrative operations and functions.
New inmates receive their random PIN number when they enter the BOP system and it stays with
them throughout their incarceration
The ITS·II system debits the inmate's accOlU1t automatically and in "real time" as the call is taking
place.
The FPPOS accounting database includes all trust fund debits (cornnlissary and the ITS).
Inmates can access their account via their PIN to transfer funds or verify their account balances
using the inmate telephones.
The system provides the ability to have continuous, ongoing. daily changes to the activity of inmates'
calling list. calling parameters, etc.
t
The BOP estimates completion of all change outs within three months.
The federal system is self supporting with an armual staff and operating costs of $26 million.
>
Last year the federal system generated $26.8 million in net revenue.

APPLICABILITY OF FEDERAL PINIDEBIT SYSTEM TO CALIFORNIA DEPARTMENT
OF CORRECTIONS

Description of California Department of Corrections' Inmate Security Telephone SYstem

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•

The current California Inmate Security Telephone System (lSTS) is a collect call only system th.1t is
outsourced via a DGS administered Master Contracts to two vendors. The ISTS ensures all c~lI" ar~
"brnnded" as to their origin when initiated and at random intetTals during the com·ersation. Inmate L'alb
are recorded and are limited in duration to a maximum of 15 minutes
Description of California Depanment of Corrections , Inmate Security Telephone Svstem ICon'q

•

per call. Inmate calls are automatically terminated and are subject to "real time" monitoring.
If calls are deemed inappropriate, they can be disconnected by the Officer monitoring th~ call.
Currently, CDC is utilizing specialized security telephone equipment in the management
inmate
telephone calls. The equipment is provided and maintained by the vendors at no cost to the State.

or

As previously discussed, the federal system uses a PIN/Debit system with direct dial charges
immediately debited from an inmate's trust fund account. The discussion below identifies potemial
issues in the applicability of this system to CDC. A complete needs assessment is required for
aclUjl.l resource identification.
MAJOR ISSUES
IJ
IJ
IJ
IJ
IJ

IJ
IJ

IJ

Lack of Database System
Staffmg and Cost To State
Inmate Trust Fund Account VS. PINlDebit System
Implementation
New Request For Proposal (RFP) with PINlDebit Direct Dial and Collect Calling
Training
Category and Population of Inmates
Policy

LACK OF A DATABASE SYSTEM
Currently, there is no centralized andlor local database system in place at Headquarters or in the prisons
to implement a PINlDebit system. Based on the federal system. CDC would be required to utilize a
standardized accounting/inventory database to implement a PIN/Debit system.
Applicability: To apply the federal PlNlDebit system to CDC, a standardized Trust Fund.
AccountinglInventory System must be developed to ensure "real time" debits of all inmate trust lund
activity.
•
•

Feasibility Study Report (FSR) must be developed.
A local and centralized accounting and inventory database system must be developed and include all
trust fund debits (restitution. canteen. federal and state filing fees. medical
copayments. child support orders. any special canteen purchases. etc.). Manual and automat~d
debit system in place at the same time would create the possibility of an inmate overspending in one
account.

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•
•
•

All prisons must have an operational LAN.
A WAN would be required for connectivity to the LANs as required by the federal ITS-II system.
Must determine location of database backup storage facilities (Galt_ Teal Data Center. wnoor"s
site, etc.).

STAFFING AND OPERATIONAL COSTS TO THE STATE AND POTENTIAL RE\'E:\U
Currently, there is no designated staff to develop. implement_ and provide ongoing suppon to a
PINlDebit system.
Applicability: Staff is required for implementing the PIN Debit system and to administer the
an ongoing basis in all prisons and in Headquaners.
•
•

•

•

•

•

syst~1l1

on

ModifY current office structure to include technical. accounting. operations and infonnatioll systems
staff to plan, develop, install. train. and troubleshoot the PIN/Debit system.
Headquaners would require approximately 12 staff to perform needs assessment: assess security
issues and impact on prison operations; and plan and develop a complete. fully automated inmate
telephone PINlDebit system_
Based on the federal ratio of one prison staff to every 2.000 inmates. a total of 80 staff would be
required to administer the PINlDebit system in 33 prisons. (Current inmate population is
approximately 160,000 divide by 2.000 = 80.)
Each prison would have approximately two stair (80 divided by 33 = 2.5). Stall- \\'oulo be
responsible for creating, changing. and deactivating inmate accounts: updating inmate Gilling
parameters; genemte and analyze call records: training the inmates on use of the system: and other
necessary local administrative functions on a day-to-day basis.
Using the BOP's Central Office stafTmg as a baseline. the number of Headquaners' statr required
for oversight of daily opemtions. compile data on inmate use of the system. reconcile timmcial
activities, training, and continuing technical suppon is approximately ten.
There is a potential impact to the Correctional Counselors I workload. although impact is unknown
at this time. The impact would be identified during the system development phase.

Estimate Cost and Revenue to State:

.

Estimated Planning and Dev,!lopn""'t Cost is BeMet''' 5500,000 a"d 51 Mil/i/JI, (,II/til
completion o(RFP)
>
o Information Systems Division (lSD) (approx. 7 staffx S60.000·) = 5420.000
o Telecommunications and Accounting (approx. 5 stalT x 560.000) = 5300.000
o System development and needs assessment may r~quire a consultant. Estimat~ cost is
$100,000 - $250,000.
• . The PIN/Debit System requires higher lc\'eI of anal~'lu:al ahi1it~· (:'~~\'ciatC (j~wernnlcnlal 'ProJ;ram Analy . a and

.-\SStll,,"lillC'

Informal ion System Analyst) than turrent CDC Trust Fund S~'slem ulill"-m~ an Accounting Clerk II.

Estimate Implementation, Ongoillg Support a"d Operational Co.vt is betlVeell $9 Mi/lim, and
$11 Mil/ion annuallv (sta((required once RFP is completed)
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o Headquaners and prison stafT (approx. 90 staff x $60.000) = S5.4 million (may also require
management structure to suppon additional statr.
Estimate could reach
$6 million).
o Operating costs include approximately 3·TI lines and trunks per prison. WAN costs. etc .. are
estimated at $4 million to $5 million annually.
STAFFING AND OPERATIONAL COSTS TO THE STATE AND POTEl'.'TIAL REHNt:E
(CON'T)
Estimated Potentia/ Net Revenlle is Approximate/I" S10,5 Million annllal/I'*
o Based on the BOP federal system methodology and costs applied to CDC's inmate telephone
usage, the State's revenues and costs are estimated as follows:
$21,354,862 Estimated Gross Revenue Annually
10.839.210 Less Estimated Annual StafT and Operation Costs
$10,515.652 Estimated Annual Net Re\'enue
• . See Anachmenl B ror detailed an.lysil

CURRENT lNMATE TRUST FUND VS. PINIDEBIT SYSTEM
The current inmate trust fund is an antiquated. locally automated system with manual processes for the
movement of inmates. Each prison has its own stand-alone Distributed Data Processing Systems
(OOPS) which include the Inmate Trust Accounting System. Trust account stafTmanually input all of the
inmate's debits and credits. There is no centralized database. \Vhen an inmate transfers from one
prison to another, the process of transferring their account is done manually.
•
•

•
•
•
•

Trust account positions equate to inmate popUlation lratio is one trust account person per
640 inmates).
As of November 1999. the cost to administer irunate trust funds for 150.314 inmates was
approximately $7,812,541 annually. This cost includes trust accounting personnel at prisons.
Headquaners, and ISO stafTmg, plus the checks and receipts of trust office supplies.
Currently, it takes two to three days per week. three weeks per month to process the canteen
workload (this does not include returning inmates).
Other workload involves manually debiting restitution. federal and state filing fees. medical'
copayments. child suppon orders. and any special canteen purchases (televisions. radios. etc.). '
Currently, there is a backlog of enhancement requests to the current database systems.
>
Additional areas that are currently being hampered and are considered low priority are postage
charges, deadlines for holds are not being met. etc.

Applicability: In order to implement the PINlDebit system for prepaid inmate telephone calls. the
current Inmate Trust Accounting System must be replaced with a fully automated accounting and
inventory system tllllt includes aU inmate trust fund activity. The system must be standardized and
connected to the current OOPS system.

12i7l00

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IMPLEMENTATION
Because of the imponance of the PIN:Debit system. a high degree of reliability and availability of
selVices to the inmates is required. The BOP has been transitioning this system into all federal
prisons since 1995 and will be completed within three months.

IMPLEMENTATION (CON'T)
ApplicabiUty: The timeframe to implement a PINiDebit System statewide is unknown at this time.
• A needs assessment must be performed on all aspects of the PIN/Debit system for prisons. camps.
Law Enforcement Investigation Unit. Headquaners. Accounting. etc.
• Identification of an accounting and inventory database system configuration, for both local and
central operations.
• The FSR approval is required.
• A RFP must be developed.
• Establish a core group of staff to implement a PIN/Debit system (plan. develop, install. train. and
troubleshoot). The core group must include technical. accounting. operations. and information
systems staff personnel.
• Development of a project plan with timeframes and schedules.
NEW RFP WlTH PINiDEBIT DIRECT DIAL AND COLLECT CALL CAPABILITIES
The current statewide inmate pay telephone RFP has been cancelled and a new RFP must be
developed for the inmate telephone system.
ApplicabiUty: A new RFP must be developed to include a PIN/Debit system with dual direct dial and
collect' calling capabilities.
•
•
•
•
•

A bidding methodology must be developed (CDC could possibly utilize the federal RFP
methodology, with modifications, to meet its specific needs and requirements).
t.
A FSR must be approved.
The RFP would request that the vendor purchase. maintain. and install the PIN/Debit system ~
equipment.
Utilization of the California Integrated Information Network as the long distance carrier for inmates
calling within California should be investigated.
A RFP of this magnitude would take a minimum of I ~ to 18 months to develop and bid.

TRAINING
Training of the PINiDebit system for the implementation team, custody staff, and inmates would be a
monumental undertaking requiring critical coordination with all prisons and Headquaners' stafT.
1217:00

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AppUcability: The list of personnel that require training:
• Implementation team for the PIN/Debit system.
• Ongoing administrators of the PIN/Debit system located at H~adquaners.
• Inmates cWTently incarcerated in prisons. camps. and reception cent"rs.
• Inmates new to the CDC system.
TRAINING (CON'T)
•
•
•
•
•
•

Custody staff at 13 reception centers, 33 prisons, and 38 camps.
Telecommunications staff at each prison.
Investigations Security Unit at each prison.
Law Enforcement Investigation Unit in Headquarters.
Trust fund staff at each prison and in Headquarters.
Correctional Counselors I at each prison.

CATEGORY OF INMATE AND POPULATION
The BOP and CDC differ in the management of inmates in regard to their telephone call usage.
The federal BOP system:
• Extends telephone privileges to all inmates with very few exceptions.
• Does not have any limitation on the number of times an inmate can make a long distance. direct dial
caU.

•
•

The BOP prison population is approximately 124.380; CDC is approximately 160.000.
The BOP has approximately 96 facilities, making the average inmate population per prison
approximately 1,243; CDC has 33 prisons with an average inmate population per
prison 4,879.
• The ratio of telephones to inmates is approximately I :26; CDC's ratio is 1:70.
• . The BOP average called minutes per inmate per month is 242: CDC's average called minutes per
inmate per month is 76.
t

Applicability: The category of inmates that are incarcerated in CDC prisons could potentially have an
impact on the PINlDebit system revenue.
•

.'

•

•

The CDC has approximately 29 percent indigent inmates that do not have any money in their
account. Where the 29 percent of indigent inmates are depictcd in the categories below is
unknown.
Inmates are classified in privilege group categories ranging ITom A-D and U that specify when an
inmate is allowed a telephone call.
Group A - Approximately 123,630 inmates; unlimited telephone calls during
nonwork hours
IJ

Group B - Approximately 5.472 inmates: one call per month . u,~d Ii'r
half-time workers
Group C - Approximately 813 inmates: emergency only basis - used tix inmates wh"
re fuse to work
Group D - Approximately 4.527 inmates: emergency only hasis .- Administration
Segregation or Security Housing Unit inmates
Group U - Approximately 19.943 inmates: reception center - emergen~y .:alls l'l1ly

•

CATEGORY OF INMATE AND POPULATION (CON'n
•
•

Average inmate population per prison is 4.879.
The current ratio of telephones to inmates is 1:70.

POLICY ISSUE
Potential change in policy must be reviewed to address the restitution regulations. whereu$ the families
could deposit funds into a telephone account without restitution being deducted.
•

Currently. 40 percent of all inmates owe court-ordered restitution.
Penal Code
Section 2085.5 requires that 22 percent be deducted from any deposits made to an inmate trust
fund account to cover restinttion and associated administrative fees. Inmate families ha,-c e~pressed
concerns with the potential of restitution deductions iffunds were deposited into an inmate's-account
for telephone calls.

CONCLUSION
The Federal BOP Inmate Telephone PJN!Debit System is an etlicient. fully automated. security
conscious system that has reduced the cost of inmate calls dramatically. However. it has t"ken the
federal BOP approximately five years to fully transition this system to all prisons.
The system cOllld prOl'ide benefits to California, bill 1I0t jmmelliate/}·. Additional study would
be needed to develop a comprehensive needs assessment and implementation plan. With the exception.
of the high cost of collect calls. the current CDC system provides the necessary service to the inmates
and their families and is operating well in the prisons. lt is recommended that the State consider other
options for lowering the cost of calls that could be implemented sooner. Howe\'er. the State should"
continue to examine the PlN!Debit system as a prison management. security and investigative tool. and
as a long-tenn solution to the high cost of collect calls.

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ATTACHMENT A
EXHIBIT 9

ORlODfAL

OOCKET ALE COPl' ORIGINAL
Before the

FEDERAL COMMUNICATIONS COMMISSION
Washington, D,C, 20554

In the Matter of
Implementation of the Pay Telephone
Reclassification and Compensation
Provisions of the Telecommunications

_A_ct_O_fl_99_6_ _ _ _ _ _ _

}
)
}
)
)

Docket No. 96-128

)

i

RECEIVED
MAY 24 2002

COMMENTS
OF THE INMATE CALLING
SERVICE PROVIDERS COALmON

Albert H. Kramer
Robert F. Aldrich
DICKSTEIN SHAPIRO MORIN

&OSHINSKY
2101 L St., NW.
Washington, D.C. 20037

..

(202) 785-9700
Al10rneys for the Inmate Calling Senice
Providers Coalition
No. 01 Collies rec'd

May 24, 2002

UstABCOe

____

O-J..)

minimum compensation for inmate s~lVice providers for inmate local collect calls. The
Commission invited the submission of additional cost data:
We seek additional data, to the extent such data can be developed,
that might overcome the problems we identiDed. In panicular, we
seek cost and revenue data rdated to local collect calls made from
confinement facilities, separate from data related to other services
offered by payphone providers. We also seek support and justification
for any costs related to inmate calling selVices (such as depreciation,
overhead, or return on investment) that ICS providers assert differ
from the costs incurred with respect to ordinary payphonc:s.

NPRM,,?4.
The Coalition has submitted additional data, described below, which confirms the
need for the Commission to prescribe a minimum compensation rate for local collect calls.
Such compensation would enable service providers to recover their costs of serving
"marginal" confinement facilities (i.e., facilities where no commissions are paid) in those
states where they currently are required to charge rates below such costS. As previously
discussed by the Commission, such a rate prescription is necessary to ensure widespread
deployment of inmate telephone systems and fair compensation for inmate payphone
service.

Without rate relief, inmate service to small county jails in many states is in

jeopardy, and inmate service providers are able to serve other confinement facilities only by
charging increased rates for long distance service.

A.

The additional cost infonnation submitted by the Coalition
demonstrates that a minimum rate of $2.44 per local call is
necessary for res providers to recover the costs of a marginal
inmate phone location.

In response to the NPRMs invitation, the Coalition requested its consultant, Don
Wood, to prepare a study of inmate service providers' costs attributable to local collect

calls. This cost study determines the cost of inmate local collect calls with substantially

3

greater precision than the information previously submitted by the Coalition in this

•

proceeding, and addresses the defects perceived by the Commission in the information
previously submitted. NPRlJ, 1\36· 38: In addition, the study rigorously adheres to the
cost· based compensation methodology followed by the Commission in the Third Pa;·phone
Order.' A description of the study and its results is attached to these comments.

See

Attachment 1.
To address the issue of separating revenue and cost for local collect calls from other
services (Id., 137), the Wood study identifies service-specific costs and attributes to local
collect calls only the service-specific: costs that arc specific to local collect calls. Nonservice-specific: costs arc identified and allocated in accordance with the methodology
approved in the Third Payphone Order.

2

To address the Commission's other concerns (NPRM, 138) the Wood study avoids
treating commissions as costs, has fully documented its determinations of all costs, and has
applied the same 11.25% rate of return used in the Third Payphone Order. The
Commission also questioned why inmate service costs were different from public payphone
costs. NPRM, 138. While there arc differences between the costs developed in this study
with the public payphone costs determined by the Commission in the Third PayphofJt
Order, such differences arc to be expected. As the NPRM recognizes, there arc numerous
respects in which inmate service facilities and operations differ from non-inmate payphone
services. !d.,19. Therefore, while the same methodology has been followed in both cases,
the cost inputs are different and therefore the results are different. Indeed, it would be
surprising, and perhaps a basis for questioning the study, if the costs of the disparate service
operations and equipment configurations involved in inmate and non-inmate service had
been found to be the same.
,-

In order to ensure appropriate evaluation of such cost data, the Commission must
reassess cenain rulings in the Remand Order. As explained in the Coalition's petition fOli
reconsideration of the Remand Order (see Public Notice, RJ:pon No. 2553, released"
May 15, 2002) the Commission should reconsider and rule that: (1) in the inmate service
context, Section 276(b)(1)(A) of the Communications Act, 47 U.S.c. §276(b)(I)(A),
inmate service providers must be fairly compensated by end users for the full cost of the
service they actually provide (not an artificially segregated portion of the service); and (2)
compensation for local collect calls rcquires adjustment if a state rate ceiling prevents
inmate service providers from recovering the direct cost of such calls plus a proportionate
allocation of fixed or common costs attributable to such calls pursuant to the cost-based
compensation methodology followed in the Third Payphone Order. Implementation of the
Pay Telephone Reclassification and Compensation Provisions oft!)e Telecommunications Act of

4

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.ATTACHMENT 1
Inmate Phone
weal Call Cost Study

..

Inmate Phone
Local Call Cost Study
May 24,2002

Prepared By:

DonJ. Wood

Cynthia M. Wilsky
Gregory H. Kraigher
Wood & Wood Consulting. Inc.
4625 Alexander Drive
Suite 125
Alpharetta. Georgia 30022

Inmate Phone

Local Call Cost Study
recent Requests for Proposals ("RFPs") indicates that facility operators are
requiring increased monitoring capllbilities and other related features. The
equipment acquisition costs used in the study reflect the minimum requirements
set forth in these RFPs. This ensures that costs are forward-looking.
0.3.3

Depreciation

The useful life of an investment is directly impacted by two constraints. First, the
investment can be consumed or rendered unusable by wear and tear. This
constraint is typically the limiting factor in the useful life of a durable asset in a
stable industry. Second, the useful life of an investment can be limited because
of technological changes that render the asset obsolete.23 This constraint is
typically the ·limiting factor in the useful life of a technology-based asset (such as
computers), or assets utilized in an industry characterized by rapid change in the
functionality required by customers.
Vendor bids and invoices indicate that the primary investment for an IPSP
consists of the computer processing equipment that provides the functionality
demanded by the operators of confinement facilities and regulators. In contrast.
the basic phone units represent a minor portion of the investment for a given
location.
The automated call processing equipmenr· has proven to be subject to technical
obsolescence as the demands of confinement facility operators and regulators
change. Because of these changes, IPSPs are usually required to recover their
investment over the term of the contract with the confinement facility operator.
These contracts range in length from three to five years. As a conservative
assumption, a useful life of five years has been used in the study for this
equipment. The IRS (publication number 946) also supports the use of a five
year depreciable life for computer equipment.
0.3.4

Return on Investment

Return on Investment should be representative of a normal economic profit on
the capital investments made in order to provide the service. When this return on
investment is included in the cost calculation,25 a rate set equal to the calculated
cost would permit the provider to receive a fair return on investment.

" An asset can become obsolete either because it is incapable of performing a newly demanded
function, or because it no longer represents an efficient method of providillg required functionality.
,. This equipment is comparable to a personal computer.
" The Commission has historically required this treatment of retum on investment in cost studies
conducted by the LEes. and adopted this approach when calculating costs to support its rale for
dial-around compensaUon.

•

,
,

'.-

l: '

". ,_-I ~

~

,

WOfkp_. O.U I

Wo.rkpa)'o{'ts U.s.ll

;:

Inmate phones· County J"j, Facilities

lo<;'" Can eo.t Study
Loc.tion C

Variables

lJoI

3b

4

Source I EKPIaMUon
See AnalYSis SecI!on 0.3.1 (Tab 0). Documentation i. avallable.

local ServiCeCha'ges • Flat monthly lee

1

2
3a

1nIlIII

~

local Service CIwges - monfNy line charge

1

Local SeMce Charges • UIIIIfI* -

~
'r

mactoine

~

o!

S

.ve. . length

0.025 See Analysi. Secfion 0.2.2 (Tab 0). Documentation ill

UnbiUab/e cals • not eCll8j)led; ~

loeaI SeMce Charges • UIIIIfI* - cost per miIute

a._.

7.51 See Analysis SeCtion 0.2.1 (Tab O~ OOCUmenll\lon Is available.

01 cal

S

TOIllI Numt>er of can. (tOGaI & Int_e)

5

29.23 See Analysi. Section 0.3.1 (Tab 0). Documenlation i. available.

0.0160

See Analysis Section 0.2.1 (Tab D). Documenlation i••,,'able

1.417 See Ana/r.ilI Section 0.2.1 (Tab 0). eoc..nenlation is ...

_e.

AYerage Number 01 call. per month • All Types
(axcluding unb/llable • not _ccepted)
Unbil/able call. - returned by LECs

236 lo Sll" 713moolhs

PBAIDAK Cals
Billable c"IIs
lIofUneo

Ln6+lo19
232lnGa·6b·6c
2 location Specific Dale
195

9

SeN"'" Sl"'cific Ave,,,!!" Number 01 Calls per
month (_ing UI1billable • not 8C(lOpled)
UnbiIIsbIe cal •• returned by LECs
PBAIDAK Call.
Service Sl"'cffic Billable Calla
Billing & COIIecfion Fees

$

0.104 See AnaJysho Secfion 0.3.$ (Tab OJ. OOcumenIation is available.

10

VolIrII\lon per call

$

0.056 See AnalY$i$ SeCtion 0.3. T (Tab 0). Oocumenlation is .vailab/e.

6

a

b

e
d

7

8

a

b
C

d

19

See Analysis s.c:tion D.Z. ! (Tab OJ. DocumenllJljon is ",_Ie.

4 loll +In 18

lo 8+ lo 19
191 In 8a. Sb·lk;

<Lell bIat1I<'

11
12
13
14
15
16
17
16

4 lo6+lo 18

Cost of Equipment

S

Oepioei.tion period (f of months,

SG&A ToIlIJ(month~ cost)
Relum IptOIit) %

S

Commiuion%
UneoilectilllOS %
Unbillable % • returned by LECs
Post Billing Adjuotment % IPSA) • Denied All

7.375.50 Location Specific IlaIa
60.00 Calculated PtnuarII to melhodology sel fO<1h in Third RlO.
107.6t ea _ _ information pnwided by IPSP\!.

11.25% WooIoIheeI Ro!. Ln 11. Col. C
0%
23.10% Calculated _
"tormation provided by IPSPs.
1.9%·calculaled from infOlmation provided by ,PSI's.
0.2% ~ted _
1101._ provided by IPSP...

~(DAK)
~

InpuI C

~4JII;I

•

.:29 PM

,,I.".,r,""-

i'Noi"PilP;:rs D _~ ttl

p'

;Workpspers 0.5.;9

Inmate phone•• County Jail FaciliUes

Local Cal' Cost Study

.'

Location G

Varjables

UDB
1

local Service Charges - Flat monthly fee

2

j

Local SetVice Charges· monthly line charge

3a

'E

3b
4

5
6

7
8

9

10
11
12
13
14
15
16
17
18
19

¥

~

..
i

Local service Charges - Usage - .verage length
oIcaU
Unb"able calls - not accepted; answering
mactoine
Local SetVice Charges - Usage - cosl per minule

See Analysis Section 0.3.1 (Tab 0). Documentation is available.

$

b

AoJerage Number of CaNs per month - All Types
(exclUding unbillable - nol accepled)
Unbillable calls - returned by LECs

c

PBAlDAK Calls

d

8~lable

0.025 See Analysis Sedion 0.2.2 (Tab D). Documentation is available.

S

0.0163 See Analysis Section 0.2.1 (Tab D). Documentation is available.

4,262 See Analysis Seclion 0.2.1 (Tab D). Documentation is available.
355 Ln 5 I Ln 713 months

7 Ln6'Ln IS·
1 Ln 6' Ln 19
347

Calli

101 Lines
a

29.23 See Analvsis Sedion D.3.1 (Tab D). Documentation is available.

6.22 See Analysis section 0.2.1 (Tab D). Documenl",ion Is .vaiable.

Toial Number 01 Calls (Local & Inlerstale)

a

Source I Explanatioo

inIWI

In Sa - 6b - 6c

4 Location Specific Data

b

Service SpeCific Average Number of Calls per
monU1 (excluding unbillable • not accepted)
Unbillable calls - returned by LEC.

C

PBAlDAK Calls

d

SeN"" Specific Bilable Calls

287 See Analysis Section 0.2.1 (Tab D). Documentation i. ava~able.
5 Ln 8

'In 18

1 Ln 8 • Ln 19
261 Ln Sa- 8b - 6c

Binin(; & Conedion Fees

S

0.104 See Analysis Section 0.3.8 (Tab D). DoaJmentation is avaiable.

ValiCation per call

$

0.056 See Analysis Section 0.3.7 (Tab 0). DocunenlltiOll is a.dable.

<left blank>
$

Cost 01 Equipment
Depreciation period (' 01 months)
SG&A Total (monthly cost)

60.00 Calculaled Punsuanl to methodology set fOrlh in Third R&D.

$

Relum (profil) %

5,050.25 Location Specific Dala
107.61 Calculated from inlormation provided by IPSP •.
11.25% Worksheet ROI, Ln II,

Commission %

Cot. G

0%

Uncolledibles %

23.10% Calculaled from in,onnalion provided by IPSPs.

Un billable %. returned by LEes

t.9% Calculaled from inlormalion provided by IPSPs.

Post Bijling Adjustment % (PSA) - Denied All
Knowledge (OAK)

0.2% Calculated from information provided by IPSPa.

~

InJlUlO

SI24102 4:29PM

•

'I'

Wln-~raper" D ~

·,J.,::f~f)",i;~~.!} i ) i

\V,,,,~papcrs 0.5.21

2!

Inmate phones. C(Ounty Jail Facilities
Local Call Cost Study
Location H

\/aMbles

Lim:
1
2
3a

3b

Locol Service Charge. - Flal monlhly fee

i

~
~

~

4

..5

5
6

a

7
8

9

10
11
12
13
14
15
16

Local Setvice Charges - monWy ~ne charge

$

See Analysis Section 0.3.1 (Tab D). DoCumentation is available.
32.13 See Analysis Sedion 0.3.1 (Tab D). Documentation is avadable.

Local Service Charges • ~ • average lenglh
of col

7.71 See Analysis Sedion 0.2.1 (Tab D). Documentation is ovallable.

Unbillal>le caDs - no! accepIed: answering
madine
Local Service Charges. Usage • cosl per minuIe

0_025 See Analysis Section 0.2.2 (Tab D). Documentation is available.
$

b

c
d

Billable CalIS

0.0160 See Analysis Section 0.21 (Tab D). Documentation is available.

4.222 See Analysi. Sedion 0.2.1 (Tab D). Documentation Is available
469 Ln 51 Ln 7 I 3 I11Of1ths

Total Number of Calls (Local & Inlerslale)
Average Number of CaRs per month - An Type.
(excluding unbilable • nol accepted)
Unbillable calls· returned by LECs

9 Ln6·Ln18
1 Ln 6· Ln 19

PBAIOAK CaRs

459 Ln6a·6b.6c

• 01 lines

a

Source I Explanaljoo

Jnmd

3 Locotion Specific Dala

b

Service Specific Average Number of CaUs per
monlh (excluding unbinable - nol accepted)
Unbillable caUs • retumed by LECs

c

PBAIOAK Calb

d

Service Speafic Billable Call.

418

See Analysis Section 0.2.1 (Tab D). Documentalion is av.ilable.

8 Ln8·Ln18
1 Ln 8· Ln 19
409 LnSa·8b-8c

B~fing & Colledion Fees
Validation per caR

$

0.104 See Analysi. Sedion 0.3.8 (Tab D). Documentation is available.

$

0.056 See Analyois Section 0.3.7 (Tab D). Documentation is available.

<left blank>
$

Cosl of Equipment

5,418.33 Location SpecifIC Data
60.00 Calculated Plnuanl to melhodology sel forth in

Depreciation period (II 01 months)

s

SGM Total (monlhly cost)

Thi'" R&O.

101.61 Calculated from information p r _ by IPSPs.

11.25'10 WortcsheelROI. Ln 11, Cot. H

Return (profit) '10

Commission %

0'10

17
18

Uncolledibles '10

19

Posl BiUing Adjustment % (PSA) - Denied All

23.10% Calculated from information provided by IPSPs.

Unbillable '10 - returned by LECs

1.9'10 Calculated from infonnalion provided by IPSP•.
0.2'10 Calculaled from infonnation provided by IPSPs.

Knowledge (OAK)

....

--

',pull!

,n4102 4,29 PM

,

...

I
I

I

, ,_0 .- ..

,~

. Inmate phone•• County Jail Facilities
Local Call Cost Study
LoCation N

SQurce

variables

See Analysis Sechon 0.3.1 (Tab D). Documentation is availabte.

local Service Charges - Flal monthly fee

2

38
3b
4

5
6

i

~

9
10
11
12
13
14
15
16
17

18
19

S

~

~

•

machine

I-

Local Service Charges· Usage • cost per _

0.025 See Analysis Section 0.2.2 (Tab D). Documentation is available.

Unbillable coils· not .""""Ied; answering

S

Tolal Number 01 Calls (Local & InleBlal8)

a
b
C

PBAIDAK Calls

0.0160 See Analysis Section 0.2.1 (Tab D). Documenl.tion is available.

872 Se8 Analysis Section 0.2.1 (Tab D). Documentation is available.

mon'" -

Aver-g. Number 01 Calls per
All Types
(excluding unbillable • nol accepled)
Unbillable coil•• relurned by LECs

26.01 See Analysis Section D.3.t (Tab D). Documenlalion is available.

7.68 See Analysis Section 0.2.1 (Tab D). Documentation is avaHable.

Local Service Charges • Usage· 8Vel'8ge lenglh

01 call

291Ln 51Ln 7/3months

5 lnS·lnl8
1 Ln S·ln 19

d

Bilab'e Calls

284 Ln6a-6b-6c

a

• 01 lines
Service Specific Average Number of Calls pel

254 See Analysis Section 0.2.1 (Tab D). Documenlation is available.

b

monlh (excluding unb'llable - nol accepted)
Unbillable call•• ,efumed by LECs

e

PBAIOAK Calls

d

Service Specific Billable Calls

7
8

Local Service Charges· monlhly ina charge

(Explanaljoo

1 Localion SpecifIC Dela

5 In 8 ·Ln 18
1 In 8 ·In 19

248 In 8a· 8b· 8c

Bil.ng & Colection Fees

$

0.104 See Analy.is Section 0.3.8 (Tab 0). Oocurnenlalion i. available.

Validation per caU

S

0.058 See Analyl. Section 0.3.7 (Tab 0). DoaJmeniation is availlble.

<laft blank>
Cost 01 Equipmenl

$

Depredation period (' 01 months)

SG&A TOial (mon"'ly cost)
(prof~) %

$

Relum

Commission %

13,689.00 Location Spacific Dala
60.00 Calculated Pursuanllo methodology setlorth In ThinI R&O.
107.51 Calculated from infonnalion provided by IPSPs.
11.25% Worlcsheet RO!, Ln II, Col. N
0%

Uncotlectible. %

23 10% Calculated lrom inlormalion provided by IPSPs.

Unbilable % • returned by LECs

1.9% Calculated lrom inlormalion provided by IPSPs.

Post Billing Adjuslment % (PIIA) • Denied All
Knowledge (OAK)

0.2% Calculaled from Inlonnalion provided by IPS PI.

~

5124102 4:29 PM

•

I

I

i

. J Workpapefli D.S JS
:,

'

Inmate pho..es • County Jail Facilities
Local Cau Cost Study
LocatiOn 0

variables
Local Service Charges - Flat monthly fee
local Service Charges • monthly Nne c:harve

1

2

Local Senric:e Charges - Usage ••..age IengIh
of call
Unbillable
no! 8CCepIed; answering
machine
Local Service Chllges - Usage • cost per minute

3a

4

7
8

9
10

$

can. -

3b

5
6

Sgurce I Exp1anatjon

0.025 See Anatysis Section 0.2.2 (Tab D). Documentation Is ava_.

S

Total Number of Calls (Local & Interstate)

b

A_age Number of Catls per month - AI Types
(e_dueling unb_ - not accepted)
Unbillable calls - AIIumed by LECS

C

PBAIDAK Calls

d

Bitlable Calls

a

See Analysis Section 0.3.1 (Tab D). Documontation is avaitable.
See Analy.is Section 0.3.1 (Tab D). Documentalion is available.
8.04 See Analysis Section 0.2.1 (Tab D). Documentation is available.

28.53

0.0159 See Analysis Section 0.2.1 (Tab D). Oocumanlation is available.
2,420

See Analysis Section 0.2.1 (Tab DJ. Oocumantation is available.

269 lo 5/ lo T /3 months
5 lnS'lnla
I loS"Ln 19
263 Ln6a-6b-6c

• of Lines

3 Location Specilie Data

a

SeMce Specific Average Number of Calls per

b

month (e_dueling unbillable - not accepted)
Unbillable calls - returned by LEC.

c

PBAIDAK Calls

d

SelVK:e Specilie Billable Calls

232

See Analysis Section D.2.1 (Tab D). Documentation is available.

4 LnS"LnI8

Ln

e "Ln 19

228 Ln ea -8b - 8e

BHling & Collection Fees

S
S

Validation per calt

0.104
0.058

See Analysis Section 0.3.8 (Tab D). Documentation is avaUable,
See Analysis Sec:tion D.3.7 (Tab D). Documentation ilavailable.

<Left blank>

11

S

12
13
14
15
16
17
18

Unbiltable % - returned by LEC.

1.9% Calculated from information provided by tPSPs.

19

Post Billing Adjustment % (PSA) - Denied AI

0.2% Catculated from Information PIOVidecf by IPSPs.

Cost of Equipment
Depreciation period (I of months)

60.00 CalCulated

SG&A Tolal (monthly COllI)
Retum (profit) %
Commission

5,961.00 Location Spedfic Daia

$

11.25%

%

Pursuant to methadotogy set forth in Thin! R&O.

107.61 Calculated from information PIOVidecf by IPSPs.

Wortcsheet RO!, Ln 11, Cot. 0

0%

Une»lIecli)/es %

23.10% Calculated from information provided by IPSPs.

tcn.1edge (OAK)

-.

Japu.O

S124102 4,29 PM

•

'!" i. !"" _. 1_1

~

-,.

Inmate phones - County Jail Facilltles
Local Call Cost Study
Locatlon P

SQurce I Explanation

Variables

2
3a

·

::

~

4

,•
..•

local SeIYiCe Charges - Usage • average length
oleall
Unbillable caUl - not accepted; _119
machine
Locat SeIYiC8 Charges - Usage - 0011 per minute

5
6

a

3b

7
8

9

10
11
12
13
14

15
16
17
18
19

i

~

See AnalysIS Section 0.3.1 (Tab D). Documentat,on is available.

Local Service Charges - Flat monthly fee
Locat Service Charges - monthly line charge

$

7.51 See Analysis Section 0.2.1 (Tab D). IJoaJmentation Is available.
0.025 See Analysis Section 0.2.2 (Tab 0). Documentation is available.

$

Total Number 01 Calls (Local & Inle..lale)

b

Average Nlmber of cans per month· An Types
(exduding unbillable - not ac:cepled)
Unbil.ble calls· returned by LEC.

c

PBAIDAK Calls

d

Bmable Calls

0.0160 See Analysis Section 0.2.1 (Tab D). Documentation is avait.ble.
1,812 see Analysis Section 0.2.1 (Tab 0). Documentation is available.

302 In 5 I Ln 71 3 month.
6 lnS·Ln 18
1 In 6· Ln 19

295 In S.· 6b. 6c

t of Line.

a

32.36 Se. Analysis Section 0.3.1 nab D). Documenlalion Is available.

2 localion Speofic Data

b

Service SpecifIC Average Number 01 Calls per
month (excluding unb~lable - nol acoopted)
Unbilable calls· returned by LEC.

C

PBAIDAK Calls

d

SelYiCe SpeCific Billable

245 See Analysis Section 0,2.1 (Tab 0) IJoaJmentation is available,
5 Ln 8· Ln 18
Ln 8· Ln 19

c.n.

240 Ln Sa· 8b- Be

B~ling &. CoIiecUon Fees
Validation per caR
<left blank>

$
$

Cost of Equipmenl

$

Depreciabon period (S of ....,...,.)
SG&A T olal (monthly ODSt)
Return (profit) %
Commission %
Uncollectible. %

0,104 See Analysis Seclion 0.3.8 (Tab D). IJoaJmentation is avliable.
0,056 See Analysis SecIion 0.3.7 (Tab 0). Dcocumenbslion Is available,
7,375.50 Location Specific Data
60.00 Calculatad Pursuanllo methodology set forth in Third R&O.

$

107.61 Calculated from information pnwidad by IPSPs.
11.25% Worksheet ROI. Ln 11. Col. P
0%
23.10% Calculated from infonnation provided by IPSPs,

Unbillable % - returned by LEC.

1.9% Calculalad from in/ormation provided by IPSPs.

Post BiDing AdJuslment % (PBA) - Denied All
KIINedge ([w()

0.2% Calculated from information provided by tPSPs.

Y24102 4;29 PM

•

.

'<,;-

. wo/-kp.pers IJ 5.39
'"i

:'.'

;l'iImi~ phones" County Jail Faciliti ••
Local Can Coat Study
Location Q
",

Source { Exp!analioO

\/ariablas

1
2
3a

3b
4

5
6

local Service Charges - Flat monthly fee

i

,

'ii

;
~
'5

~

a
b
C

d
7
8

a
b

c
d
9

10
11
12

13
14
15
16
17
18
19

local Service Charges " monthly line charge

$

Local Service ChorgH - Usage"_1ong1h
ofeall
~ COllis - no(~; an..mg

See Analysis Section 0.3.1 (Tob 0). DocumenlaUon is available.
29.18 See Analysis Section 0.3.1 (Tab 0). Documentation is available.
7.44 See Analysis Section 0.2.1 (Tab 0). Documenlalion is available.
0.025 See Analysis Section 0.2.2 (Tab 0) Documenlation is available.

machine

S

local Service Charges - Uuge - ....1 per minute

2.162 See Analysis Section 0.2.1 (Tab OJ. Documenlation Is avai_.
360 In S/ln 7 I 3 months

Total Number 01 Calls (local & Inl...tate)
Average Number of Cell. per month - AI Types
(exduding unbil..,.. - nOlaccepted)
Unbil_ can. - returned by lECs
PIWlW<Cails

10 ln S "In 18
2 lnS"ln 19

3048 In 6a - 6b - 6c
2 Localion Specific Data

BiltZto Cab
• of lines
Service Specific Average Number of Calls per
month (exduding unbKlab1e - nol accepted)
Unlllltabto call. - ",tumed by lECs
PIIAIOAK Calls
Service Specific Billable

294 See ~ SectIon 0.2.1 (Tab 0). Documenlation is available.

9 In 8"ln 18
1 In 8 "In 19
2MlnBa-8b-Bc

cans

~ Coltedion Fees
V'
n per can
I

S
$

0.098 See Analysis Section 0.3.8 (Tab 0). OoaJmenlalion is available.

0.058 See Analysis Section 0.3.7 (Tob 0). Documentation Is available.

clell blank>

Cosl of Equipmenl
Depreciation period (. of months)

S

SG&A T_I (monthly coet)

$

ReIum (profit) '"

Commission '"
Uncollectibfel'"
UnbiA_ % " ",Iumed by LEe.
Post B~ing Adju.tment " (PBA) - Denied All
Ko .... ledge (OAK)

•

0.0160 See Analysis Section 0.2.1 (Tab OJ. Documenlation is available.

8.189.50 location Specific Data
60.00 Cslculaled Pursuant 10 methodology set forth in Thin! R&~.
107.61 Calcullied from Information provided by IPSPs.
11.25% _ _ ROt.ln II, Col. Q
0%
19.60% Calculaled from information provided by IPSP•.
2.9% Catculated fram inlormation provided by IPSP•.
0.5% CIIcuIaIed flam infolTnation provided by IPSP•.

Input Q

~124102

4:29 PM

-,

ATTACHMENT A
<

r..

~.

S

E

,

-

.

.

EXHIBIT 10

~x

PARTE OR LATE FILED

ORlGfNAL

D.ICKSTEI>: SHAPIRO MORI>: C-OSHI>:SKY I.LP
2101 L Sma Nll'. Wns/Ji".l1lOn. DC 20037-152(i
Tel (202) 785-9700. Fax (202) 887·01\89

ORIGINAL

' . . ·rim- i DirtU Di"J:

(:;o~)

R18·2100

loJ5i 0023

May 9, 2000
Ms. Mag.lie Roman Salas
Secretary
Federal Communications Commission
445 12'h St., SW
Washington, D.C. 20554

Re:

NOTICE OF EX PARTE
PRESENTATION

CC Docket No. 96·]28 (remand of inmate serylce

ISSIlCO I

Dcar Ms. Salas:
On May 8, 2000, Robert Aldrich of this law firm and Vince: Townsend of Pay·
Tel Communications, Inc., representing the Inmate Calling Service Providers Coalition,
met with Jordan Goldstein, Advisor to Commissioner Ness.
We discussed the proceeding regarding inmate calling services on remand from
the United States Court of Appeals lor the D.C. Circuit. In particular, we discussed (I) the
need for the Federal Communications Commission to provide, pursuant to 47 U.S.C. §
276, fair compensation for inmate service providers for local collect calls where state ratc:
ceilings preclude recovery of the cost of the calls; and (2) the need for the Federal
Communications Commission to make dear that "inmate telephone service," for purposes
of the Section 276 ban on Bell company discriminations and subsidies, as well as the
compensation provision, includes not only the equipment but also the collect calling service
provided for the use of inmates.
Regarding the compensation issue, the following points were discussed, and are
reflected in the attached material that was handed out at the meeting.

•

•

Those commenting parties that claim to be able to make a
profit in inmate services do not offer service to city and
county jails (where local calls are most prevalent) in the
states with the lowest rate ceilings;
Gateway, which claimed to have been able to ~earn a fair
profit" under current regulations, had an $11.4 million loss
(under its new owner T·Netix) in 1999;
117; A1',nHt tJflht ,",,,,"itn, • ]oJut' To,." Nrr TD,.,I. /0036
Td (11) R3J-J400' FlU OJ2)997·9880
Imp://IFrJrtr.IfJMUO,"

114,084,'1; -1 JWOI LDOC

;,

rec·d.il1J_
--.-- -.. -_ .. -No. of Copies
Lisf ABCDE

INDEPENDENT INMATE PHONE SERVICE PROVIDERS
(as of May, 2000)

Previous Providers

Status

AmeriTel Pay Phones. Inc.
Blair Communications
Coin lelephone
Consolidated Communications
Correctional Communications Corp
DGI Communications
Executone Corrections Division
Harris Corp
InVision Telecom. Inc.
Kantel
KR&K
London Communications, Inc.
M.O.G. Communications, Inc.
,.,,,,.,,,.. North American Communications
North American Intelecom
OPUS
PayCom
Payphone Systems
Paytel of America
Peoples
Quest Telecommunications
Robert Cefil & Associates
Saratoga Telephone
Talton Communications
Tatake
Tel America

.,

..
.

Current Coalition providers

Sold
Evercom
Global Telink
Sold
McLeod USA
Sold
Sold
Pay Tel Communications. Inc.
Sold
Public Communications Services
Out of business
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Went under
Sold
Halted installations/for sale
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold
Sold

'j',

..•.

- .. _._. --_ _ ....
...

__

........._--_ .. _ - - - -

ATTACHMENT A
EXHIBIT 11

September 13, 1999

P.lul C. "l·~.Il'~t
45i·5:9':!

(~I.:!)

rbt'~"I:I:',i! rJtt'll'lb. )R-~-c'HT1

Magalie Roman Salas
Secretary
Federal Communications Commission
445 12" Street, S.W.
Washington, DC 20554

Re:

Evercom Systems. Inc. - Revised FCC Tariff No. 1

Dear Ms. Salas:
In accordance with Sections 61.21 and 61.23 of the Commission's Rules, enclosed i. a diskette
containing re\'ised FCC Tariff No.1 of Evercom Systems, Inc. Similar diskettes are simultaneously
being prO\·ided to the Chief, Tariff Reyiew Branch and the Commission's commercial contractor. in
accordance with Section 61.21 of the Commission's Rules. The requisite £:iling fee of 5630.00 and an
accompanying FCC Fonn 159 are being flied in accordance with Section 61.21 (n) of the
Commission's Rules on this date.
Should there be any questions on this matter, please contact the undersigned counsel.
Sincerely yours,

Paul C. Besozzi
PCB/lyt
Enclosure
cc: Mike Smith

Tariff :C: Nc. 1

EVERCOM SYSTEMS, INC.

Original

T~cle

?3ge

INTERSTATE SWITCHED TELECOMMUNICATIONS SERVICE

REGULATIONS AND SCHEDULES OF CHARGES
APPLICABLE TO SERVICES FURNISHED
BY
EVERCOM SYSTEMS, INC.

This tariff includes the rates, charges, terms and
condi tions of service for the provision of interstate
telecommunications services provided by EVERCOM SYSTEMS,
INC. ("Company") between points within the United States.
This tariff cancels and replaces in its entirety Tariff
FCC No. 1 previously issued by Saratoga Telephone Company
effective November 17, 1998.

ISSUED:
BY:

September 13, 1999

EFFECTIVE:

September 14, 1999

Mike Smith, Manager of Regulatory Affairs
8201 Tristar Drive
Irving, Texas 75063

Tarif: :":.: ~:~. :.
Original 2age 29

EVERCOM SYSTEMS, INC.

SECTION 3 - SERVICE DESCRIPTION AND RATES,

(CONT'D.)

•
3.4

Debit Services,
3.4.1

(cont'd.)

Debit Services Rates

Rates listed below are applicable to the Company's
Debit Card Service and Inmate-only Debit Account
Service.
For billing purposes, call timing is
rounded up to the next full minute increment after
a minimum initial period of one (1) minute. No
time of day, holiday or volume discounts apply.
The Per Minute rates listed below are inclusive of
all applicable taxes.
PER MINUTE USAGE CHARGE:
3.4.2

$0.65

Debit Services Sponsor Program

A Sponsor Program is offered to organizations or
the Company commercial entities for distribution
of Company's Debit Cards to their members or
patrons. The marketing vehicle and expiration
period is selected by the Sponsor upon joint
agreement between the Carrier and the Sponsor.
The Sponsor is responsible for name, service mark
or other image on the card.
The carrier reserves
the right to approve or reject any image and to
specify the customer information language and use
of the Carrier's trade mark, trade name, service
mark or other image on the card. The Sponsor may
distribute the Carrier's debit card accounts at
reduced rates or free of charge to end users for
promotional purposes. At the option of the
Sponsor, these cards may not be renewed.
Debit
Cards and/or Accounts issued through a Sponsor
Program may not be used in conjunction with Debit
Account services provided to inmates of
confinement institutions.

ISSUED:

BY:

September 13, 1999

EFFECTIVE:

September 14, 1999

Mike Smith, Manager of Regulatory Affairs
8201 Tristar Drive
Irving, Texas 75063

EVERCOM SYSTEMS, INC.
Origina~

SECTION 3 - SERVICE DESCRIPTION AND RATES,
3.5

=a~e

30

(CONT'D.)

•

Operator Service
Operator service consists of the provision of automated
operator assistance in completing and arranging billing for
calls, and the transmission of such operator-assisted calls
through the resale of transmission services of other
carriers. The service is provided by means of a
microprocessor located inside a pay telephone, which uses
recorded or simulated voice prompts to guide the Customer
through the process of completing a collect, credit card, or
third number billed call. The microprocessor responds to
the Customer's voice or input of information by
automatically processing and transmitting the information as
necessary to establish a valid billing procedure for the
call and to complete the call.
PER MINUTE RATES
DAY

EVENING

NIGHT/WKND

$0.59

$0.59

$0.59

Service charge $3.95 per call.

.'

ISSUED:

BY:

September 13, 1999

EFFECTIVE:

September 14, 1999

Mike Smith, Manager of Regulatory Affairs
8201 Tristar Drive
Irving, Texas 75063

-

-.--.-.~------------

ATTACHMENT A
EXHIBIT 12

DICKSTElt;

SHAPIRO

MORIS

ORIGINAL

c>

OSHI:-:S'"

I.I.P

2101 L Street l\'W. n;uhlntTtoll, DC :'O().r:··J~';2{1
Ttl 12021785·9700· Fa." (202) 887·0~89
l\',jr.·,.'J D;'rt:t 1):'.lJ.

:'-pril 6, 2000

Ms. Magalic Roman Salas
Secretary
Federal Communications Commission
445 12'h 51., SW
Washington, D.C. 20554
Re:

CC Docket No. 96-1

:~

•

;=o~; ,~~S·.21I}fl

ORIGINAL

/01580013

EX PARTE OR LATE FILED

Ii
NOTICE OF EX PARTE
EC'=I'I.lED
PRESENTATION
--..,. APR ~ 6 2000

~Qle,,--~
~

....

Dear Ms. Salas:
On April 5, 2000, Robert Aldrich and JacobFarber of this law firm, and Vince
Townsend of the Inmate Calling Sen'ice Providers Coalition, met with Lynne Milne,
Calvin Howell, Jon Stover, AI Barna, and Adam Candeub of the Competitive Pricing
Division.
We discussed the proceeding regarding inmate calling services on remand from
the United States Court of Appeals for the D.C. Circuit. In particular, we discussed the
need for the Federal Communications Commission to act to ensure that inmate calling
service providers arc fairly compensated for local inmate collect calls. The attached
materials, which show a correction to a cost analysis previously submitted by the Coalition,
were distributed.
Sincerely yours,

_

.~~./~~.
/acOb S. Farber
Enclosures
ce:
Lynne Milne
Jon Stover
Cal\'in Howell
AI Barna
Adam Candeub

No. 01 Copies rec'd
U&tABCDE

0

n,

J 177 Avt,,", ofrhr Amrriclls· 4Jst Floor. Nt. To,.i, NtlP Tori 10036-2714
1Il3717 d; _32DOI !.DOC
Ttl (211) 835·1400. FlU (212) 997·9880
hnp://JPlPTf'.ti.nNo. UM

...

_---._---------------

Coinvs22.xlS

3129100

INMATE SERVICE FEE - 12 Minute Local Call
COST ANALYSIS
Inmate

P.yPh .....

• LRUI Celli'! cln

VARIABLES

Local Servlc. Charge.
Flex-ANI Charge
Number or cans
Billing & Collection Fe. .
Malntenlnce
Equipment Depreciation

Overhe.d To""
Retum ~prof1t)
Commls.ion %
Unblllabl.. %
Uncollectible. %
Tox

2

LD:£i11 CellI'! Call

S

52.53

S

$

1.08

$

.39

• S

•

S
S
S
S

0.18
18.90
12.73
19.62
15.31
30%
0%
2%

S
S
S
$
S

Servlc. Charges
8IUlng & CoJl.ctJon Fee..
VllidlUon
Maintenance & Repairs
Equipment OepntclatJon

tr . - ..

3O'/'
5%
14%

(2) Inma,.

(1) PlY Phone
LR,.I ~QIIKI can
t~ocal

64.05
1.08
26e
0.18
24.12
29.48
59.96
22.10

Cost Differential

ICgI2· CRI n

L.!XII Call1:cl Call
S
S
S
S
S
S
S

0.243
0.180
0.170
0.090
0.110
0.22'
0.082

S
S
S

$

0.057
0.047
0.081
0.179
0.048

0.121

Overhead

S
S
S

Rolum (profitl

$

0.122
0.180
0.113
0.043
0.029
0.045
0.035

Total Costs

S

0.567

S

1.099

S

0.532

Unblllabl ..lUncoliecUbl.s @ 11%

S
S

0.254
0.025

S
$

0.647
0410

S
S

0.393
0.384

TOTAL

S

0."1 S

2.155

$

1.30'

Commte.lon

ft 30Y.

• S
S

• S

$
$

S

FOOTNOTES:
1, Except where Indicated, average figu"" for payphone •• rvicn are taken from the FCC'. Third Report
.nd Orde" and aV4nge figurn for Inmlte servlee ..... taken from prior Coalition fllings
~) Local •• rvlce chlrgft for payphone I.rvic" Includ. u.ag. charsJ •••• estimated by the
RBOC/GTEfSNET Coalition. Local.ervlc. charge. for Inmate . . rYlc'a are •• tlmat.ct blled on anllyals
of ILEe tarilfa In the 13 ."'tet wi the lowe.t local colloclclli ..,...
3) Eltlm.1t boled on review 01 LEC and ciearinghoul. Ita
4) Plyphone ..tum. calcul.ted at 11% and Inma'" retu"," 0115%
5) Comrnlllion % lor Plyphone servlc.. It ..Iumed 10 be equal 10 commission '4 lor Inmale servltes
6) Unblllible.lor plyphone •• rvlc•• Ire estimated 10 be n.gllglble. EIUm,led unblllibl.. for Inmlte
aervlce. have Jncre•••d from 3% 10 !% amce prevloua CommJJJJon flJJng.
7) Uncollectible. 'or payphone services I , . bned 00 eaOmate provided by c.leartnghou ••
8) Flex ANI IHt a .. Inelud.d In Locil Servlt. Charge per-all calculadonl
I) VaUd.tlon .. tlmat.. blaed on e.tlmated call completion ratio. for payphone a.Nlces and Inmate
aervlen

WlTHCOMMVT

Pagel

ATTACHMENT A
EXHIBIT 13

__

____ ..._..........r_

~~

__ ..

--~

.111'~"""-

_ 'I...__.....""'.' .

".~iol,.·'!'" ... "~,.-,;"')..'.......: .......... ··.,.. . . ~ .•

.

BEFOR~· THE·

DOCKET FILE COP

J ORIGINAL

.

REOe;VED

FEDERAL COMMUNIC TIONS COMMISSION
WASHINGTO ,DC 20554

•

'JUl • 1 199&
)

In the Matter of
Implementation of the Pay
Telephone Reclassification and
.Compensation Provisions of the
Telecommunications Act of 1996

)
)
)

ffilERAI. c;)i,ll\IUr:;c~nOij8 COMMISSIO~
om~ OF SECRETARY

CC Docket No. 96-128

)
)

)
)
)

----------------------~)

COMMENTS OF INMATE CALLING S~RVICES PROVIDERS COALITION

Albert fl. Kramer
Robert t. Aldrich
Jacob S; Farber
DICKST\EIN SHAPIRO MORIN &
OSHIN~KY L.L.P.
2101 iL Street, N.W.
Wastlington, D.C. 20037-1526
(202) 785-9700
July 1, 1996

.'

Attorpeys for Inmate Calling Services
Proviiders Coalition

~Io. of Copies rec'd- ~

lIslA!3 C0 E

Ii

--------

_

FEDERAL COMMUNICATIONS COMMISSION
Comments of Inmate Calling Services
CC Docket No. 96-12
. Providers Coalition
Filed July 1, 1996

BEFORE THE
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, DC 20554

)
)
)

In the Matter of

)

Implementation of the Pay
Telephone Reclassification and
Compensation Provisions of the
Telecommunications Act of 1996

CC Docket No. 96-128

)
)
)
)
)

--------------------------)
COMMENTS OF INMATE CAI.LING SF,lRVICES PROVlD-.ERS COALlTlQN

The Inmate Calling Services Providers Coalition (the "Coalition") hereby
submits its comments in response to the Commission's Notice of Proposed Rulemaking,
FCC 96-254 (June 6, 1996) ("Notice") in the above-captioned proceeding.
The Coalition is an ad hoc coalition of companies that provide highly
. specialized telephone equipment and services to inmates in confinement facilities. The
Coalition's members' range in size from the nation's largest independent pro\;dcr of

,.

inmate calling services to small companies sen;ng only a handful of confinement
facilities. They share in common the desire to offer the highest possible level of service

The Coalition's members include AmeriTel Pay Phones, Inc., Communications
Central Inc., Correctional Communications Cqrporation, Inc., InVision Telecom, Inc.,
M.O.G. Communications, Inc., Pay Tel Communications, Tataka and TELEQUIP Labs,
Inc.

"151,001; 552104

1

.......

_-

~-------------------

FEDERAL COMMUNICATIONS COMMISSIO~

CC Docket ~o. 96-12
Filed July 1. 1996

Comments of Inmate Calling Services
Providers Coalition

:

'"

Another basic requirement for inm<!'te calling systems is the ability to limit call
duration and/or to limit calling to a particular time of day, which often varies from
inmate to inmate. This senres to provide confinement facilities ,\ith control over inOla!!:'
phone usage while allo",ing more inmates greater access to the phones available to
them. Additionally, restrictions may be placed on the number of calls an inmate is
permitted to make over a given period.
The ability to restrict inmate calling by called number is another specialized
requirement of inmate calling systems. Confmement facilities often require that ICSPs
block an inmate's ability to make calls to certain designated numbers, such as to judges
or witnesses.

Additionally, confinement facilities may require the ability to restrict

inmate calling only to certain pre-designated numbers, such as family members or the
inmate's attorney. These requirements prevent or reduce harassment, fraudulent calling,
and the use of the inmate calling system to engage in other criminal activity.
At the request of the confinement facility, many ICSPs have put into place
additional
called number screening mechanisms that permit free calling to certain
,
piedesignated numbers. These numbers typically include the public defenders' office,
biill bondsmen, and commissary services."
Some confinement facilities also request that ICSPs block calls at.tempted by
0;

~.'

__

.. particular inmates or calls attempted from certalil inmate phones. This requirement

~

.. ~,

---------------14

In addition to the costs involved in maintaining the hardware and software to

provide this service, the ICSP also bears the costs of transmission, which can amount to
$.25 or more for a IO-minute call.
8
11151.008: 152104

....

-~.--.---------------------