The Honorable Charles E. Grassley Ranking ... - DocumentCloud
DEPARTMENT OF THE TREASURY WASH INGTON, D .C . 20020
December 4, 2014
The Honorable Charles E. Grassley Ranking Member Committee on the Judiciary United States Senate Washington, DC 20510 Dear Senator Grassley: Thank you for your letter concerning the federal inmate trust fund program known as the Trust Fund Accounting and Commissary System (TRUFACS). Treasury takes its role as a steward of taxpayer dollars very seriously, including with respect to the TRUFACS program. Treasury initiated TRUFACS at the request of the Bureau of Prisons (BOP) in 2000. The program was developed to create a cashless prison environment to improve safety for both inmates and BOP prison staff. The program allows BOP to electronically manage i1m1ate trust fund monies from the time imnates enter the federal prison system until their release. The program maintains a universal account for each inmate, maintains accounting for prison commissary sales and inventories, and produces all necessary financial and fund balance reports. The program also supports Treasury's goal of eliminating paper and cash-based financial transactions and replacing them with more efficient and less costly electronic transactions. Since Congress passed the National Bank Act in 1864, Treasury has had the authority to designate national banks as depositaries and employ them as financial agents of the government. Pursuant to this authority, Treasury designated Bank of America as its agent to operate the TRUFACS program. The designation of a financial agent is not subject to government contracting rules in the Federal Acquisition Regulation, but Treasury's financial agents owe a fiduciary duty of loyalty and fair dealing to the United States and must act in the government's best interests in all matters cotmected with their agency relationship. Inherent in this duty and action is the absence of fraud and conflicts of interest. Treasury maintains a robust system of financial agent management and oversight to see that financial agents provide services effectively and in a cost-efficient manner. Treasury carefully reviews each monthly invoice from its agents and confirms that all required services have been performed before approving payment. Treasury has worked closely with BOP and Bank of America since 2000 to enhance the program and promptly address any issues that arise.
As often is the case with contracts, the Financial Agency Agreement (FAA) has over time been adjusted to respond to changes in the underlying needs of the TRUFACS program. In particular, as BOP has requested enhancements to the program, Treasury has amended the FAA to include these new requirements. As requested in your letter, we have attached a breakdown of the arumal payments by Treasury to Bank of America by fiscal year and an itemized list of amendments to the original FAA with Bank of America. Your letter also raised concerns relating to costs for the federal prison system and the efficiency of BOP operations. BOP is in the best position to respond to questions of this nature. However, as you note in your letter, since the program's inception in 2000, Treasury's payments to Bank of America for the FAA have totaled $76,332,948.51 , which is approximately $5 million per year, all of which has been reimbursed by BOP. Based on your letter's estimate that BOP supervises approximately 214,000 inmates, TRUFACS costs approximately $24 per irunate per year, or $2 per inmate per month. Treasury is committed to managing the govenunent's finances in a fiscally responsible mmmer and to providing financial services and support to agencies as they fulfill their mission for the American people. If you have additional concerns, please contact Sandra Salstrom at (202) 622-1900. Sincerely,
i:JL Randall DeValk Counselor to the Secretary Enclosures
- 2-
Enclosure 1 Payments by the Department of the Treasury to Bank of America for the TRUFACS inmate trust fund program, by fiscal year
FY 2000- $1,990,012.93 FY 2001 - $4,574,594.35 FY 2002-$4,008,319.02 FY2003- $4,334,101.19 FY 2004-$4,604,250.79 FY 2005- $4,521,189.08 FY 2006 - $4,270,585.46 FY 2007-$6,399,626.51 FY 2008- $5,609,299.16 FY 2009- $4,587,379.52 FY 2010- $4,853,255.61 FY 2011 - $5,764,053.97 FY 2012- $7,921,440.99 FY 2013- $7,701,560.75 FY 2014-$5,193,279.18 (through 7/30114) Total
$76,332,948.51
- 3-
Enclosure 2
Amendments to TRUFACS Financial Agency Agreement with Bank of America Amendment 1: Directs financial agent to perform teclmical evaluation of BOP Trust Fund systemwide area network, and funds such. Amendment 2: Directs financial agent to (1) provide additional time and materials relating to TRUFACS interfaces and reporting requirements; and (2) develop a stamps and coins inventory and debt tracking system. Funds such. Amendment 3: Directs financial agent to add system relating to i1m1ate phone call billings and accounting (INTRUDR), and funds such. Authorizes financial agent subcontractor. Extends term ofFAA to May 31, 2007 with 5 one-year renewal options thereafter. Amendment 4: Directs financial agent to utilize additional hardware in conjunction with nationwide rollout ofTRUFACS, and funds such. Amendment 5: Directs financial agent to add capability for imnates to receive funds electronically via Western Union. Directs that fees which Western Union would normally pay to another financial institution instead be credited against financial agent's TRUF ACS charges. Amendment 6: Directs financial agent to provide BOP with the Trust Fund Limited Imnate Correspondence System (TRULINCS) and funds such. Approves financial agent subcontractor to assist in implementation. Amendment 7: Directs financial agent to provide penetration test ofTRULINCS system and funds such. Amendment 8: Directs financial agent to discontinue maintenance fund previously used for small "ad-hoc" changes to TRUFACS. Amendment 9: Increases Not to Exceed (NTE) amount of financial agency agreement (FAA) in order to fulfill BOP requests for support. Amendment 10: Increases NTE amount ofFAA in order to fulfill BOP requests for support. Amendment 11: Modifies funding for INTRUDR. Amendment 12: Increases NTE amount ofFAA in order to fulfill BOP requests for support. Amendment 13: Increases NTE amount ofFAA in order to fulfill BOP requests for support. Amendment 14: Increases NTE amount of FAA in order to fulfill BOP requests for support. Amendment 15: Resets and defines TRUFACS fee structure, clarifies change request process, extends FAA for one year to May 31,2012. -4-
Amendment 16: Amends Amendment 5 by directing financial agent to add capability for inmate funds to be transmitted electronically via all certified money transmitters, rather than only Western Union. Clarifies that fees which money transmitters would normally pay to another financial institution would be instead paid to BOP. Amendment 17: Implements Amendment 15 by ( 1) limiting rate and hour price adjustments to Bureau of Labor Statistics (BLS) Cost Index; and (2) limiting monthly application management fee price adjustments in accordance with BOP change requests. Amendment 18: Extends FAA for one year, until May 31,2013. Amendment 19: Implements Amendment 15 by (1) limiting rate and hour price adjustments to BLS Cost Index; and (2) limiting monthly application management fee price adjustments in accordance with BOP change requests. Amendment 20: Extends FAA for one year, until May 31,2014. Amendment 21: Implements Amendment 15 by ( 1) limiting rate and hour price adjustments to BLS Cost Index; and (2) limiting monthly application management fee price adjustments in accordance with BOP change requests. Amendment 22: Extends FAA for one year, until May 31, 2015 .
-5-
December 4, 2014
The Honorable Charles E. Grassley Ranking Member Committee on the Judiciary United States Senate Washington, DC 20510 Dear Senator Grassley: Thank you for your letter concerning the federal inmate trust fund program known as the Trust Fund Accounting and Commissary System (TRUFACS). Treasury takes its role as a steward of taxpayer dollars very seriously, including with respect to the TRUFACS program. Treasury initiated TRUFACS at the request of the Bureau of Prisons (BOP) in 2000. The program was developed to create a cashless prison environment to improve safety for both inmates and BOP prison staff. The program allows BOP to electronically manage i1m1ate trust fund monies from the time imnates enter the federal prison system until their release. The program maintains a universal account for each inmate, maintains accounting for prison commissary sales and inventories, and produces all necessary financial and fund balance reports. The program also supports Treasury's goal of eliminating paper and cash-based financial transactions and replacing them with more efficient and less costly electronic transactions. Since Congress passed the National Bank Act in 1864, Treasury has had the authority to designate national banks as depositaries and employ them as financial agents of the government. Pursuant to this authority, Treasury designated Bank of America as its agent to operate the TRUFACS program. The designation of a financial agent is not subject to government contracting rules in the Federal Acquisition Regulation, but Treasury's financial agents owe a fiduciary duty of loyalty and fair dealing to the United States and must act in the government's best interests in all matters cotmected with their agency relationship. Inherent in this duty and action is the absence of fraud and conflicts of interest. Treasury maintains a robust system of financial agent management and oversight to see that financial agents provide services effectively and in a cost-efficient manner. Treasury carefully reviews each monthly invoice from its agents and confirms that all required services have been performed before approving payment. Treasury has worked closely with BOP and Bank of America since 2000 to enhance the program and promptly address any issues that arise.
As often is the case with contracts, the Financial Agency Agreement (FAA) has over time been adjusted to respond to changes in the underlying needs of the TRUFACS program. In particular, as BOP has requested enhancements to the program, Treasury has amended the FAA to include these new requirements. As requested in your letter, we have attached a breakdown of the arumal payments by Treasury to Bank of America by fiscal year and an itemized list of amendments to the original FAA with Bank of America. Your letter also raised concerns relating to costs for the federal prison system and the efficiency of BOP operations. BOP is in the best position to respond to questions of this nature. However, as you note in your letter, since the program's inception in 2000, Treasury's payments to Bank of America for the FAA have totaled $76,332,948.51 , which is approximately $5 million per year, all of which has been reimbursed by BOP. Based on your letter's estimate that BOP supervises approximately 214,000 inmates, TRUFACS costs approximately $24 per irunate per year, or $2 per inmate per month. Treasury is committed to managing the govenunent's finances in a fiscally responsible mmmer and to providing financial services and support to agencies as they fulfill their mission for the American people. If you have additional concerns, please contact Sandra Salstrom at (202) 622-1900. Sincerely,
i:JL Randall DeValk Counselor to the Secretary Enclosures
- 2-
Enclosure 1 Payments by the Department of the Treasury to Bank of America for the TRUFACS inmate trust fund program, by fiscal year
FY 2000- $1,990,012.93 FY 2001 - $4,574,594.35 FY 2002-$4,008,319.02 FY2003- $4,334,101.19 FY 2004-$4,604,250.79 FY 2005- $4,521,189.08 FY 2006 - $4,270,585.46 FY 2007-$6,399,626.51 FY 2008- $5,609,299.16 FY 2009- $4,587,379.52 FY 2010- $4,853,255.61 FY 2011 - $5,764,053.97 FY 2012- $7,921,440.99 FY 2013- $7,701,560.75 FY 2014-$5,193,279.18 (through 7/30114) Total
$76,332,948.51
- 3-
Enclosure 2
Amendments to TRUFACS Financial Agency Agreement with Bank of America Amendment 1: Directs financial agent to perform teclmical evaluation of BOP Trust Fund systemwide area network, and funds such. Amendment 2: Directs financial agent to (1) provide additional time and materials relating to TRUFACS interfaces and reporting requirements; and (2) develop a stamps and coins inventory and debt tracking system. Funds such. Amendment 3: Directs financial agent to add system relating to i1m1ate phone call billings and accounting (INTRUDR), and funds such. Authorizes financial agent subcontractor. Extends term ofFAA to May 31, 2007 with 5 one-year renewal options thereafter. Amendment 4: Directs financial agent to utilize additional hardware in conjunction with nationwide rollout ofTRUFACS, and funds such. Amendment 5: Directs financial agent to add capability for imnates to receive funds electronically via Western Union. Directs that fees which Western Union would normally pay to another financial institution instead be credited against financial agent's TRUF ACS charges. Amendment 6: Directs financial agent to provide BOP with the Trust Fund Limited Imnate Correspondence System (TRULINCS) and funds such. Approves financial agent subcontractor to assist in implementation. Amendment 7: Directs financial agent to provide penetration test ofTRULINCS system and funds such. Amendment 8: Directs financial agent to discontinue maintenance fund previously used for small "ad-hoc" changes to TRUFACS. Amendment 9: Increases Not to Exceed (NTE) amount of financial agency agreement (FAA) in order to fulfill BOP requests for support. Amendment 10: Increases NTE amount ofFAA in order to fulfill BOP requests for support. Amendment 11: Modifies funding for INTRUDR. Amendment 12: Increases NTE amount ofFAA in order to fulfill BOP requests for support. Amendment 13: Increases NTE amount ofFAA in order to fulfill BOP requests for support. Amendment 14: Increases NTE amount of FAA in order to fulfill BOP requests for support. Amendment 15: Resets and defines TRUFACS fee structure, clarifies change request process, extends FAA for one year to May 31,2012. -4-
Amendment 16: Amends Amendment 5 by directing financial agent to add capability for inmate funds to be transmitted electronically via all certified money transmitters, rather than only Western Union. Clarifies that fees which money transmitters would normally pay to another financial institution would be instead paid to BOP. Amendment 17: Implements Amendment 15 by ( 1) limiting rate and hour price adjustments to Bureau of Labor Statistics (BLS) Cost Index; and (2) limiting monthly application management fee price adjustments in accordance with BOP change requests. Amendment 18: Extends FAA for one year, until May 31,2013. Amendment 19: Implements Amendment 15 by (1) limiting rate and hour price adjustments to BLS Cost Index; and (2) limiting monthly application management fee price adjustments in accordance with BOP change requests. Amendment 20: Extends FAA for one year, until May 31,2014. Amendment 21: Implements Amendment 15 by ( 1) limiting rate and hour price adjustments to BLS Cost Index; and (2) limiting monthly application management fee price adjustments in accordance with BOP change requests. Amendment 22: Extends FAA for one year, until May 31, 2015 .
-5-
