BOP Program Statement 3721.07 § 2

This program statement establishes the basic procedures concerning the establishment,

regulation, and operation of employee organizations and provides a uniform system whereby all

organizations of this type will operate within a similar framework of administrative and financial

management. These instructions apply to all employee organizations.

a. Files and Records. Business Administrators at facilities with employee organizations must

maintain a separate file for each organization. This file must contain a copy of the current

constitution and by-laws, financial statements for the last three calendar years, audits for the last

three years, requests for use of government facilities and other pertinent material such as the

space rental agreement for employee organizations, follow-ups on missing financial statements,

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etc. This file must also contain copies of any institution supplement and certification statements

on the status of the organizations by the Warden of the institution.

The financial records and supporting documents for all employee organizations which maintain

funds must be kept in accordance with generally accepted accounting principles. These

accounting principles must be consistently applied to all transactions. Each organization is

responsible for maintaining proper and accurate financial records.

b. Management Responsibilities. The Warden at each institution must ensure the employee

organizations adhere to the requirements of this program statement. These requirements

include submitting an annual certification, no later than May 30th, to the appropriate regional

director certifying each employee organization complies with this program statement. This

certification, at a minimum, must contain those items described in Section 3 below. It must also

contain any deviations or discrepancies from this program statement along with a corrective plan

of action.

Organizations may not engage in, or sponsor any function, activity, or project which may be in

conflict with this program statement, the ordinary standards of ethics and good conduct, or in any

way may result in embarrassment to the United States (U.S.), the Bureau, the institution, the

organization membership, or the community.

All employee activity in the operation of employee organizations, including fund-raising

activities, may conduct limited fund-raising activities on government property. All proceeds

must be used for the sole benefit and use of Bureau employees. See Program Statement Fund-Raising By Employees.

c. Legal Responsibilities.

 The organization, operation, and activities of employee organizations raise many

sensitive and often complex legal issues. For the protection of the employees involved, as

well as the Bureau, the following legal requirements must be met.

 Prior to entering into any written contract, (e.g., operation of vending machines,

purchase of real or personal property) the employee organization must have the

contract reviewed by a private attorney. This review is intended to ensure the contract

meets all applicable state and federal requirements, and members of the employee

organization are protected. Written proof of such legal review must be provided to

institution employees responsible for the administrative oversight of the organization.

 All contracts entered into by an employee organization must contain the following

disclaimer statement.

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“This contract is entered into by (Name of Organization). The Federal Bureau of Prisons and

the United States Government assume no responsibility, financial or otherwise, for the duties

and obligations contained in this contract.”

 Employee organizations are encouraged to consider the following legal issues carefully.

It is recommended a private attorney be consulted regarding these matters.

 Tax Requirements. As discussed in Section 7 below, employee organizations must

comply with applicable tax laws. For example, when employee organizations enter into

business arrangements (e.g., contracts which generate income, paying wages to

employees, purchase and sale of real and personal property), they may incur reporting

and other requirements under provisions of state and federal tax laws.

 Incorporation. Incorporation of an employee organization under state law may be

advantageous to members of the organization (e.g., decreased potential for personal

liability on contracts entered into by the organization). Incorporation may also place

certain legal requirements on the organization (i.e., taxes, bidding on contracts, etc.),

which may or may not be beneficial to the organization. The advantages and

disadvantages of this option should be addressed when consulting an attorney.

 Insurance. An insurance policy (e.g., liability, Directors and Officers Insurance

where the organization is incorporated) may offer additional protection to the employee

organization or to individual members of the organization. This option should be

considered especially where the organization owns valuable assets (e.g., real or personal

property).

 Litigation. All officers and members of employee organizations are acting as private

citizens when they participate in the business and activities of the organization. They are

not acting as official representatives of the United States and may not represent

themselves as such. Therefore, if they are sued because of these actions, they are not

entitled to representation by or indemnification from the United States.