Lawmakers and private businessmen are stepping up their opposition to a prison labor-based government-owned corporation they say unfairly takes business and jobs away from the private sector.
Federal Prison Industries, also known by its trade name UNICOR, is a government-controlled company that uses prison labor to supply goods and services to federal government agencies.
The legislation that created Federal Prison Industries in 1934 gives it the authority to act as the sole supplier of its products to federal bureaucracies. Government agencies must seek a waiver from Federal Prison Industries to buy comparable products from private businesses.
This mandatory preference for Federal Prison Industries’ merchandise has caused frustration and anger among business owners, workers and taxpayers.
“As a result of FPI’s unfair monopolistic practices, we have seen sales from these governmental agencies go from $100,000 a month to less than $5,000 a month,” Billy Carroll of C&C Office Supply in Biloxi, Miss., wrote in a letter to the House Small Business Committee.
Federal Prison Industries insists benefits to inmates and society far outweigh the disadvantages to private businesses.
“If FPI did not exist, naturally some private sector companies would receive more federal government business – but at what cost? The issues surrounding FPI’s program are far more complex and extensive than sorting out who deserves the bigger slice of government sales,” Jan Hynson, Federal Prison Industries ombudsman, said in a statement.
U.S. Rep. Pete Hoekstra, R-Mich., says FPI recently manipulated a new policy intended to reform its practices to unfairly secure a $6 million Federal Aviation Administration contract.
Earlier this year, the Federal Prison Industries Board of Directors adopted a policy that authorized federal agencies to solicit bids from private firms if they could offer comparable products at prices Federal Prison Industries could not match.
Under the new policy, however, the federal agency is required to submit to Federal Prison Industries the “winning” private-sector offer, allowing it to determine whether FPI’s products meet the agency’s needs and allowing FPI to match the price.
To make this determination, Federal Prison Industries is given access to the entire offer of the private firm, which frequently includes substantial development and design work.
“Would anyone expect that FPI could not match the best price that the private sector has to offer when FPI does not incur the design and bid costs that all the bidders face equally in open competition?” Hoekstra asked.
Federal Prison Industries took the Federal Aviation Administration contract away from Steelcase, a west Michigan office furniture manufacturer that had submitted the “winning” bid.
“If we took our bid and shared it with another private company like Herman Miller, that would be collusion,” Steelcase spokeswoman Jeanine Hill told the Grand Rapids Press.
The FAA sought a waiver, but was turned down by Federal Prison Industries, Steelcase sales manager Rick Yeates told the paper. “Essentially, [FPI] replicated our bid and denied the waiver,” he said.
Businesses also claim FPI products are more costly, arrive later and are of inferior quality than privately manufactured goods.
“There are numerous horror stories we hear from our customers who deal with UNICOR. The most recent one being that a customer had to wait five months to get their furniture. When the furniture finally arrived, it wasn’t even what they had ordered. This is something that would have been averted had they been able to use our company or another dealer,” Carroll said.
In its 2002 annual report, FPI claims it benefits private-sector business by purchasing raw materials, supplies, equipment and services from non-government sources.
It also states that prisoners working in Federal Prison Industries benefit from the opportunity to learn marketable skills and gain valuable work experience that enhances their ability to reintegrate into society. The program teaches them the value of work, responsibility and the need to respect and work with others, FPI claims.
“While it is well and good for industry to think of FPI’s impact on the bottom line, the societal benefits, safe prison management and reduced recidivism rates that are the direct result of FPI’s program must not be ignored,” Hynson said.
Some lawmakers still believe that Federal Prison Industries’ business practices are unjust.
“Self-serving bureaucrats at FPI have turned this broad ‘reform’ into another insult to the hard-working and law-abiding people of West Michigan and local firms that cannot even bid on contracts funded by their tax dollars,” Hoekstra said.
“There is something wrong with this picture when the administration decides that creating jobs in federal prisons is more important than keeping employers employing people in the private sector.”