Committee wants written guarantee on prison debt

By Cy Ryan

Monday, Oct. 22, 2012 | 11:32 p.m.

A legislative committee told a Las Vegas steel subcontractor it wants a written personal guarantee that he will repay the $414,900 debt he owes the state prison industrial program.

Committee member Mike Magnani said "this project has gotten out of hand," referring to the contract between the prison system and Randy Bulloch of Alpine Steel to use inmates and prison facilities.

Bulloch has made good on the $48,000 in back wages to inmates, and he outlined a three-point plan Monday to repay the prison for use of the facilities and staff time.

But Magnani complained there was nothing in writing. And he was backed by Assemblyman John Ellison, R-Elko, who said if Bulloch did not follow the repayment plan his contract should be suspended.

"The red flag is up," said Ellison. "If it drops, some action should be taken."

Bulloch apologized to the Committee on Industrial Programs for comments earlier this year that he had a contract for work on the Sky Vue Ferris wheel on the Las Vegas Strip. He called it "a miscommunication."

Bulloch said he had been told he was the low bidder and would get the contract on the project where his brother is the developer. But there was never any written contract, and he said there have been delays in the project.

Bulloch also said he is working with the IRS to "mediate" a $668,000 lien against him and Alpine Steel. He hopes to reduce it to $300,000 to $400,000 but admitted he does not have anything in writing.

The committee was advised by its legal counsel Nick Anthony that its powers were limited to reporting to the Interim Finance Committee and the full Legislature. But it could direct its chairman, Assemblyman James Ohrenschall, D-Las Vegas, to write a letter to the Department of Corrections that it wants to see some written guarantees.

Anthony said, however, that the letter would be a request to review the Alpine case and it would not carry any weight.

Bulloch said he has sent a letter to Brian Connett, deputy corrections director, that he would repay the $414,000 in eight months if he gets the Sky Vue contract.

If he doesn't get that contract, he outlined a plan to repay the prison within three years. If he doesn't get any more business he will suspend operations at the High Desert State Prison and make monthly payments.

The committee wants to see the letter and members still urged a written document pledging the repayment.

Former U.S. Sen. Richard Bryan, now a Las Vegas lawyer representing David Stevens of XL Steel Inc., told the committee he had no quarrel with the prison industrial program.

But he noted the law says these contracts to use prison inmates in industrial programs must have an "insignificant" impact on private industry. "These are not ordinary times," he said, noting the high unemployment in the construction business.

His client, Bryan said, lost 20 jobs to these prison contracts. And these prison contracts have 'an indirect subsidy" in paying only minimum wage. He said the prison system should reach out to the private sectors in these times to see how any contract will affect private industry.

Connett told the committee he had one or two meetings with XL Steel and offered that company the same contract as was awarded Alpine Steel. He said XL Steel was not interested in pursuing the prison business.