<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:22258.wais]
FEDERAL PRISON INDUSTRIES COMPETITION
IN CONTRACTING ACT OF 2005
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON CRIME, TERRORISM,
AND HOMELAND SECURITY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
ON
H.R. 2965
__________
JULY 1, 2005
__________
Serial No. 109-47
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah MAXINE WATERS, California
SPENCER BACHUS, Alabama MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida
MARK GREEN, Wisconsin ANTHONY D. WEINER, New York
RIC KELLER, Florida ADAM B. SCHIFF, California
DARRELL ISSA, California LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas
Philip G. Kiko, General Counsel-Chief of Staff
Perry H. Apelbaum, Minority Chief Counsel
------
Subcommittee on Crime, Terrorism, and Homeland Security
HOWARD COBLE, North Carolina, Chairman
DANIEL E. LUNGREN, California ROBERT C. SCOTT, Virginia
MARK GREEN, Wisconsin SHEILA JACKSON LEE, Texas
TOM FEENEY, Florida MAXINE WATERS, California
STEVE CHABOT, Ohio MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida WILLIAM D. DELAHUNT, Massachusetts
JEFF FLAKE, Arizona ANTHONY D. WEINER, New York
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
LOUIE GOHMERT, Texas
Jay Apperson, Chief Counsel
Elizabeth Sokul, Special Counsel for Intelligence
and Homeland Security
Michael Volkov, Deputy Chief Counsel
Jason Cervenak, Full Committee Counsel
Bobby Vassar, Minority Counsel
C O N T E N T S
----------
JULY 1, 2005
OPENING STATEMENT
Page
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Chairman, Subcommittee on Crime,
Terrorism, and Homeland Security............................... 1
The Honorable Robert C. Scott, a Representative in Congress from
the State of Virginia, and Ranking Member, Subcommittee on
Crime, Terrorism, and Homeland Security........................ 2
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Ranking Member, Committee on
the Judiciary.................................................. 5
WITNESSES
Mr. Phillip Glover, President of the Council of Prison Locals,
American Federation of Government Employees
Oral Testimony................................................. 8
Prepared Statement............................................. 10
Mr. Paul Miller, Director of Government Affairs, Independent
Office Products & Furniture Dealers Association
Oral Testimony................................................. 11
Prepared Statement............................................. 14
Mr. Reginald Wilkinson, Director, Ohio Department of
Rehabilitation and Correction
Oral Testimony................................................. 20
Prepared Statement............................................. 21
The Honorable Peter Hoekstra, a Representative in Congress from
the State of Michigan, and Chairman, Permanent Select Committee
on Intelligence
Oral Testimony................................................. 24
Prepared Statement............................................. 26
APPENDIX
Material Submitted for the Hearing Record
Statement submitted by the U.S. Chamber of Commmerce to the House
Judiciary Committee............................................ 47
Statement of Roger F. Cocivera, President and CEO, Textile Rental
Services Association of America................................ 51
Letter from Dan Danner, Executive Vice President, National
Federation of Independent Business (NFIB)...................... 56
Statement submitted by the National Federation of Independent
Business (NFIB)................................................ 57
Letter from Chris Jahn, President, Contract Services Association
(CSA) to the Honorable Howard Coble............................ 59
Letter from Chris Jahn, President, Contract Services Association
(CSA) to the Honorable Bobby Scott............................. 60
Statement submitted by the Contract Services Association (CSA)... 61
Statement submitted by the Coalition for Government Procurement.. 64
Statement by Remy International, Inc............................. 68
Statement submitted by Michael B. Styles, National President,
Federal Managers Association(FMA).............................. 71
Letter from Matthew T. Powers, General Manager, Prison Industry
Authority (PIA) to the Honorable Howard Coble.................. 74
Supplemental attachments submitted by Philip Glover, President of
Coucil of Prison Locals, American Federal of Government
Employees...................................................... 75
Supplemental attachments submitted by Paul A. Miller, Director of
Government Affairs, Independent Office Products & Furniture
Dealers Association............................................ 88
Statement submitted by Kevin M. Burke, President and CEO,
American Apparel and Footwear Association (AAFA)............... 97
Letter from Kevin M. Burke, President and CEO, American Apparel
and Footwear Association (AAFA) to the Honorable F. James
Sensenbrenner, Jr.............................................. 99
Letter submitted by various Dealers.............................. 100
Statement submitted by Management Association for Private
Photogrammetric Surveyors (MAPPS).............................. 112
Fact Sheet submitted by the Correctional Vendors Association,
``FPI Fact or Fiction?''....................................... 114
Summary Statement submitted by the National Citizens United for
Rehabilitation of Errants (CURE)............................... 115
FEDERAL PRISON INDUSTRIES COMPETITION IN CONTRACTING ACT OF 2005
----------
FRIDAY, JULY 1, 2005
House of Representatives,
Subcommittee on Crime, Terrorism,
and Homeland Security
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 9:30 a.m., in
Room 2141, Rayburn House Office Building, the Honorable Howard
Coble (Chair of the Subcommittee) presiding.
Mr. Coble. Good morning, ladies and gentlemen. Today, we
will examine the operation of the Federal Prison Industries,
popularly known as FPI and its impact on the private sector as
well as its benefits to combat inmate idleness and assist
inmate rehabilitation.
We expect to receive testimony regarding H.R. 2965, the
``Federal Prison Industries Competition in Contracting Act of
2005.'' I am proud to be a cosponsor of this legislation
because it will level the playing field in competition for
Federal agency contracts.
Now, ladies and gentlemen, I think the issue before us
today clearly portrays and corroborates the old adage that
reasonable men and women can differ, and this clearly
illustrates that in my opinion.
The Federal Bureau of Prisons is responsible for the
custody and care of more than 181,000 Federal offenders.
Approximately 85 percent of these inmates are confined in
Bureau-operated correctional facilities or detention centers.
Prisoners who are physically able to work must labor in some
capacity 5 days a week. FPI is a Government corporation that
operates the BOP's correctional program and employs inmates
from the Federal prison population to manufacture goods for and
provide services to Federal agencies.
About 20 percent of the inmates work in Federal Prison
Industries, FPI, factories. They generally work in factory
operations such as metals, furnitures, electronics, textiles,
and graphic arts. FPI work assignments pay from 23 cents to
$1.15 per hour.
Federal agencies are required by law under 18 USC, section
4124, to purchase FPI products if a product is available that
meets the agency's requirements and does not exceed current
market prices. This provision in the law is deemed ``mandatory
source preference''. Because of this law, Prison Industries
enjoys a mandatory market for its goods, a facility in which to
run them, and what amounts to captive labor to manufacture
them.
In the last two Congresses, this Committee brought up
legislation to reform FPI. The legislation passed this
Committee twice. The text of H.R. 2965, as introduced, is
substantially identical to that legislation, including
improvements that we, as a Committee, agreed to include.
H.R. 2965 amends title 18 to require FPI to compete for
contracts with private sector firms and provides a 5-year
period during which FPI adjusts to obtaining inmate work
opportunities through other than its mandatory source status.
Additionally, the legislation provides for inmate access to
remedial and vocational opportunities and other rehabilitative
opportunities to better prepare inmates for a successful return
to society, including authorizing alternative inmate work
opportunities in support of nonprofit organizations and other
public service programs.
This legislation does not eliminate FPI. It simply requires
FPI to deliberately begin to compete in the same way that other
businesses do. FPI however still has the advantage over some
businesses because they don't have the same overhead costs as
the average business, such as paying Union wages, paying for
health insurance, and for providing retirement benefits.
FPI is a large and growing Government owned corporation. In
1998, FPI had total sales in excess of 534 million and employed
20,200 inmates. In 2004, employed 19,337 inmates with a total
sales of 802 million--in excess of 802 million and a profit of
120.4 million dollars.
This legislation will fundamentally alter FPI's
relationship with its Government customers. They will no longer
be held captive by mandatory source requirements. All Federal
Government agencies would have the ability under this
legislation to utilize taxpayer dollars in the most efficient
manner possible. I believe it is worthwhile legislation. And I
look forward to hearing from our witnesses.
And I am now pleased to recognize the distinguished
gentleman from Virginia, the Ranking Member. Mr. Scott, may
think--he hasn't accused me of this yet--but he may think I am
trying to put FPI out of business, which I am not trying to do.
Now I will admit, folks, I have been subjectively involved
because I represent a district that is heavily involved with
furniture and textiles. So having said that, Mr. Scott, glad to
hear from you.
Mr. Scott. Mr. Chairman, I have never questioned your
motives. I just question the impact of the legislation.
I want to thank you for holding the hearing on H.R. 2965,
the ``Federal Prison Industries Competition in Contracting Act
of 2005.'' I am especially appreciative of your willingness to
do so despite the fact that the House is actually in recess for
the July district work period.
The Federal Prison Industries, or FPI, provides prisoner
made products and services to Federal agencies. In its first
year of operation, the percent of agency procurement from FPI
represented about one quarter of 1 percent of total Federal
agency procurement, a negligible and even a more negligible
total of the total industries.
The percentage is the same today. FPI can only sell its
products and services to Federal agencies. The program was
established in the 1930's in the midst of the Great Depression
as a way to teach prisoners real work habits and skills so that
when they are released from prison, they will be able to find
and hold jobs to support themselves and their families and be
less likely to commit more crimes.
It is clear that the program works to do just that. Follow-
up studies covering as much as 16 years of data have shown that
inmates who participate in prison industries are 14 percent
more likely to be employed and 24 percent less likely to commit
crimes than prisoners who do not participate in the program.
While this certainly benefits offenders and families, that is
not the main point from a public policy perspective.
The real benefit to all of us is that as a direct result of
this program, there are many fewer victims of crimes. Now we
have spent billions of dollars to build Federal prisons and
spend 4 billion a year for prisoner upkeep. With FPI, there
will be fewer inmates in the future. Now FPI pays for itself
100 percent and reduces crime. All able-bodied inmates in the
Federal system are required by law to do some work. Few
offenders in a prison have marketable skills and the vast
majority do not even have credible work habits, such as showing
up for work on time and working cooperatively and productively
with others. Such habits are required to maintain an FPI job.
These are the same habits required to be productive, desirable
workers anywhere, and that is why the FPI experience has been
found to be--those with FPI experience have been found to be
more employable than those that don't.
And in the past few years, we have eliminated parole, we
have eliminated good conduct credits, Pell grants, and other
incentives for prisoners to improve themselves. In the Federal
prison system now, we have very few incentives for self
development. One shining example is FPI.
Non-FPI inmates work on jobs that pay about 12 cents to 13
cents an hour--excuse me, 12 cents to 30 cents per hour, while
FPI jobs pay about a dollar and a quarter an hour. Now to hold
down an FPI job, an inmate must have completed high school or
be making steady progress toward obtaining a GED and maintain a
record of good behavior. This is true not only for those on an
FPI job, but for those on the waiting list as well as those
seeking to establish eligibility to be placed on the waiting
list. And that is why FPI is a great managerial tool to help
ensure that prisons operate safely for prison employees as well
as inmates.
I have never met a prison administrator who does not
support the program. In recent years, appropriations and FPI
board restriction have caused elimination of thousands of
inmate jobs at a time when the Federal inmate population has
increased by more than 23,000 inmates. In 2000, for example,
the FPI jobs represented 25 percent of prison jobs. Now that
figure is down to 19 percent.
Fortunately for the program, the Iraqi war has caused a
surge in certain products and services that FPI provides to the
military. Hopefully, this level of purchase will be only
temporary. And certainly, it has not helped to keep pace with
the rising inmate population.
Now, H.R. 2956 would greatly depress the ability of FPI to
provide much inmate jobs and greatly erode its percentage of
inmate jobs requiring the prison system to further divide the
limited work and pay that is already divvying
up between too many inmates.
The bill amends the current requirement in the law for
agencies to purchase goods from FPI, establishes a competitive
bid process for FPI for agency purchases of goods and services,
unless the Attorney General and the director of the Bureau of
Prisons and the FPI program and the warden at a particular
institution where the goods and services are produced certify
that they cannot safely run the prison with that the particular
contract award. And they must report the situation to Congress
30 days before obtaining the contract to provide the goods and
services. Now let's be serious. We cannot expect any of these
officials to publicly admit such a level of incompetence for a
single purchase contract.
The bill also provides for a temporary preferential
purchase program that allows agencies to purchase goods and
services for FPI, quote, only if the contracting officer for
the procurement activity determines that they will meet all
prequalification and other requirements. Unlike the Attorney
General, who has to show specific findings by his subordinates,
one purchasing agent can decide.
The bill also authorizes the production of goods and
services for charitable organizations through which taxpayers
would pay inmates and allows FPI to sell products and services
to agencies on a noncompetitive basis, if they are currently
only provided offshore.
However, there is no basis for concluding that any of these
authorities will replace the impact of the loss of the current
statutory mandatory source that we have now, and there is no
indication that it will actually appropriate the money for
these purchases to be made. As I indicated, FPI pays for
itself.
Now, critics say that FPI has resulted in thousands of jobs
lost for law abiding citizens. Now, the furniture and apparel
industries are two industries in which FPI has traditionally
done most of its work. And Mr. Chairman, you indicated that you
represent one of those areas.
But when asked, representatives of these industries concede
that FPI sales represent an insignificant or negligible portion
of their industries. If such industries are having problems, it
is not due to FPI. In textiles, for example, we are told that
600,000 jobs were lost over the last 10 years.
There are approximately 7,000 prisoners working in textiles
in FPI, and each one divides up a job, so you certainly can't
blame a few thousand prisoners for the loss of 600,000 jobs.
The office furniture industry is apparently quite robust. I
would like unanimous consent to introduce an article that shows
one of the industries showing how good things have been
recently.
Mr. Coble. Without objection it will be submitted as part
of the record.
[The information referred to follows in the Appendix]
Mr. Scott. And I am first to concede that there are
problems with FPI that could be fixed. And I think a lot has
been done through the activities of this Congress to make
things better. But unfortunately, we have also made things
worse, because as a direct result of some of our actions,
thousands of jobs have been lost, and that is thousands of
prisoners that will commit crimes in the future that will be
incarcerated at our expense in the future because we wouldn't
provide them the jobs that they need to prevent those
activities.
Now, we need a comprehensive study to show how we can, if
we are going to replace the mandatory source, we need a
comprehensive study to show how he can we can better address
our responsibilities and concerns. I don't believe, however,
that we should continue to reduce the number of jobs as this
bill will do without replacing them with some other program.
So, Mr. Chairman, I look forward to the testimony of our
witnesses and to working with you in such a way that we can
provide inmates jobs, and do something about the impact that
this bill would have.
Mr. Coble. I thank you, Mr. Scott. We also have with us
today the distinguished gentlemen from Michigan, the Ranking
Member of the full House Judiciary Committee, Mr. Conyers.
Mr. Conyers. Thank you, Chairman Coble and Ranking Member
Scott.
There are lots of reasons why this is an important hearing.
And, I begin by welcoming all of these witnesses that are
experts, we look forward to their testimony. And, we are glad
that Chairman Hoekstra is able to join us today, as well.
First of all, just stepping back from the immediate issue,
we have got a problem with the prison systems in America to
begin with. And it is very important that we realize that. We
have a lot of work to do.
The second thing I want to get out is that I am working on
more reentry programs back in Michigan. It is incredible. The
tragic fact in our economy, of course, is that people coming
back into the citizenry can't get jobs. Some by law, can't
become a barber and many other things. It is a sad tale. And,
of course, there are many people that haven't been to prison
that don't have jobs, as well. So, I am looking at this on a
little bit larger scale.
And we have some very exciting organizations that are
working night and day, around the clock, trying to deal with
how we welcome people back. The idea for some of us on
Judiciary is that a person who has paid his dues, come out, and
then can't vote is another slap in the face. It means, yes, you
served your time. Yes, you have done probation or parole. But
in some places in this country, we are not going to let you
vote. Fortunately, that is not the case in Michigan. But it is
that stamp you have been in, and you are going to pay for this,
some way for the rest of your life.
And so now we get to the question of how we retrain people
to enter the system.
And I am very eager to hear this discussion from the four
gentlemen that are with us, because they bring a particular
background and skill in this that is very important.
Now, and I noticed there are people here in the Judiciary
Committee, Charlie Sullivan of CURE, who has been working for
at least two decades on this question, and there are others of
you here who put in lots of good hard work. So, I think we have
got the ability and the experience here to work out and fashion
something that is mutually agreeable.
You know, I have noticed, and I have listened to the
Chairman and the Ranking Member of the Subcommittee, I don't
find much to disagree with either of them about. Nothing leaps
up at me that I would want to lecture them about.
But, of which we have, you know, a great predisposition,
but mandatory source, are we going to phase it out and require
competition?
Where do we go from here? And I was hoping that somebody
might lift up this section 10 of the bill which I thought would
get me a little, a few accolades about how a reentry
demonstration project, a vocational and educational training
program and providing the necessary Federal Prison Industries
with the financial resources to do even more and better things.
So it seems to me, in conclusion, Mr. Chairman, that we are
really roughly all on the same page. I mean, there is nobody
here that wants to blow away the training program for--and
Scott is giving me that look--which, I mean really, and if
there is, we will find out about it at this hearing.
But it seems to me we all come here concerned about how we
deal with this problem. And it is in that spirit that I come
here on a day that we are in recess. And I stayed because this
is so important. I mean, we have the largest prison population
on earth. To me that is a very disgraceful statistic, since we
are the most--the wealthiest country on earth at the same time.
And it seems like all of these considerations should be taken
into consideration as we listen to our witnesses. And I thank
the Chairman.
Mr. Coble. I thank you, Mr. Conyers. Gentlemen, it is the
practice of this Subcommittee to swear in all witnesses
appearing before it so if you would please stand and raise your
right hands.
Mr. Scott. Mr. Chairman we are not going to swear in a
colleague, are we?
Mr. Coble. Well, okay, Mr. Conyers says, Mr. Hoekstra you
may be seated, Mr. Hoekstra.
[Witnesses sworn.]
Mr. Coble. Let the record show that the witnesses have been
affirmed. Please be seated. And gentlemen, I hate that the
implication is that you all are not to be trusted and Mr.
Hoekstra is. And that is not the message at all, I assure you.
Mr. Conyers. Mr. Chairman, let the record show that
Congressman Chairman Hoekstra was willing to take the oath.
Mr. Coble. Well said, Mr. Conyers. Well, as has already
been said we are blessed with a very fine panel this morning.
First witness is Mr. Phil Glover, the President of the Council
of Prison Locals for the American Federation of Government
Employees. Mr. Glover was first hired as a correctional officer
in September 1990 in Loretta, Pennsylvania, and was promoted as
senior officer specialist in 2002.
Mr. Glover served as president of Local Union 3951, and as
regional vice-president of the Council of Prison Locals from
1994 to 1997. He was elected council president in 1997 and
currently serves in that capacity.
In addition to his service as a correctional officer, Mr.
Glover also served in our military in the 82nd airborne
division, 505th parachute infantry regiment as a military
intelligence analyst, and the 18th Airborne Corps 118 MP
Company Airborne as a military policeman.
And Mr. Glover, I assumed you spent some time in Fort
Bragg, did you not?
Mr. Glover. Seven years.
Mr. Coble. Which is not my district, but my State. Good to
have you with us, Mr. Glover.
Mr. Glover. Thank you.
Mr. Coble. Second witness today is Mr. Paul Miller. Mr.
Miller served as director of Government affairs for the Office
Furniture Dealers Alliance, which is a National Trade
Association serving small family-owned and operated office
furniture dealers.
He has served in that capacity for over 5 years. He also
has served as administrator of the business labor competition
and contracting coalition for the last 2 years. Mr. Miller was
graduated from the University of Wisconsin, Whitewater, with a
degree in political science.
Now, a very fine colleague from the Buckeye State, Mr.
Chabot, has asked permission to introduce our third witness.
Mr. Chabot.
Mr. Chabot. I thank the Chairman for yielding and I have
the distinct honor of introducing a good fellow buckeye, Dr.
Reginald Wilkinson, who is with us this morning. Dr. Wilkinson
has been employed with the State of Ohio Department of
Rehabilitation and Corrections since September 1973. He has
served in a variety of positions, including superintendent of
the Corrections Training Academy, warden of the Dayton
Correctional Institution, and Deputy Director of Prisons, south
region.
Former governor, now senator, George Voinovich appointed
Dr. Wilkinson director in February 1991 and Governor Bob Taft
reappointed him director in January 1999.
Director Wilkinson's academic background includes a
bachelor's degree in political science and a master's degree in
higher education administration, both from the Ohio State
University. He was also awarded a doctor of education degree
from the University of Cincinnati, in my district, and from
where my daughter just graduated a couple of weeks ago.
Dr. Wilkinson is president and executive director of the
International Association of Reentry. He is also a past
President of both the Association of State Correctional
Administrators and the American Correctional Association. He is
vice chair for North America of the International Corrections
and Prisons Association. Dr. Wilkinson is additionally director
of the ICPA Center for Exchanging Correctional Best Practices.
Dr. Wilkinson has authored numerous journal articles on a
variety of correctional topics. He is editor of two books,
``Correctional Best Practices, Directors Perspective,'' and
``Best Reentry Practices, Directors Perspectives.'' As ACA
President, he commissioned the publication of ''Best Practices
Excellence in Corrections.'' Dr. Wilkinson has written chapters
in a number of books, a few of which include Ohio Crime, Ohio
Justice, Prison and Jail Administration, Practice and Theory,
Frontiers of Justice Volume II, and a full spectrum of essays
on Staff Diversity in Corrections. Director Wilkinson has,
moreover, received many awards from a variety of organizations.
A few of the associations he has received honors from include
the National Governors Association, the American Correctional
Association, the Association of State Correctional
Administrators, the International Community Corrections
Association, the National Association of Blacks in Criminal
Justice, the Volunteers of America, the Ohio Community
Corrections Organization, and the Ohio Correctional and Court
Services Association.
He has also been appointed for a 3-year term to the
National Institute of Corrections Advisory Board by U.S.
Attorney General John Ashcroft. And we welcome you here this
morning, Dr. Wilkinson.
Mr. Coble. Good to have you, Dr. Wilkinson.
Mr. Miller, I don't think I welcomed you as I did Mr.
Glover. It is good to have you with us today.
Our final witness today is the Honorable Pete Hoekstra,
known to all of us, a Member of the House of Representatives.
He represents the second district of Michigan, Representative
Hoekstra was originally sworn into Congress in 1993. In August
2004, Pete was named as Chairman of the House Permanent Select
Committee on Intelligence. Representative Hoekstra also served
as Chairman of the House Committee of Education and the Work
Force Subcommittee on Oversight and Investigations in the
104th, 105th, and 106th session of Congress. He is a graduate
of a Holland Christian school, holds a bachelor's degree in
political science from Hope College in Holland, Michigan, and
holds a bachelor's of business administration from the
University of Michigan.
Prior to his election in Congress, Pete served for 15 years
at Zeeland, Michigan-based office furniture manufacturers,
Herman Miller, Inc., where he held the title of vice-president
for marketing.
Gentlemen, it is good to have each of you with us. As Mr.
Conyers and Mr. Scott have indicated to you previously, this is
our first day of the July work period. And I don't want to
compromise any of your testimony with my schedule. But your old
Chairman has got to be at the airport at 12 o'clock. So if you
all could keep that in mind, I would be deeply appreciative.
Gentlemen, as we have previously told you, we operate under
the 5-minute rule. And when you see that panel red light up
appear into your eye, that does not mean that Mr. Scott and I
will come to haul you off to the hoosegow, but it does indicate
to you that your 5 minutes have elapsed. So if you could wrap
it up about that time, we would be appreciative. And we apply
the 5-minute rule to ourselves as well. So if you could keep
that in mind in responding to our questions.
As has been pointed out, this is an important hearing. It
is good to have all of you with us. Mr. Glover, why don't you
kick us off?
TESTIMONY OF PHILLIP GLOVER, PRESIDENT OF THE COUNCIL OF PRISON
LOCALS, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
Mr. Glover. Chairman Coble, Ranking Member Scott, Members
of the Subcommittee, my name is Phil Glover, and I'm president
of the Council of Prison Locals, American Federation of
Government Employees. As the elected representative for over
28,000 bargaining unit employees in the Federal Bureau of
Prisons, I want to thank you for the opportunity to express our
views to the Subcommittee on the proposed bill today.
I am not here speaking for the Administration, nor am I
speaking for BOP. I am speaking here as a line staff member
representing the employees who work inside the 105 facilities
nationwide.
This bill passed convincingly last Congress, but that
doesn't mean the correctional professionals agree with its
content. Over the last 4 years, we have had our staffing at
each individual institution cut by 15 to 20 percent. Over the
last 3 fiscal years, the inmate population has grown by 29,000
net new inmates. Overcrowding is at an all-time high of 41
percent. This fiscal year, it was proposed to eliminate the
construction of two new facilities. Four Federal prison camps
are now being closed in North Carolina, Florida, and Nevada,
which currently work for the military. A tax on staff have
increased. The director stated to the Appropriations Committee
last year that BOP had a 28 percent increase in assaults over
the last 3 years. The union believes it was higher increasing
to 34 percent with an increase of 63 percent with weapons.
There are attachments to my statement.
Morale in the Federal system is as low as I have seen it in
years. People are expected to perform the duties of two, three,
sometimes four other staff because of shortages. We are asked
to handle violent inmates and terrorists and are investigated
by an Inspector General who seems gleeful at attacking us. We
are vacating correctional posts left and right to save money.
BOP is planning on contracting out our security at outside
hospitals and for the contracting out of normal Federal prison
operations. While the inmate population is increased by 29,000
new inmates, inmate employment in FPI has actually decreased by
3,000 jobs in the same period.
Now, some point out that FPI made more money this year. We
have. We have because of contracts with DOD for war fighting
items in electronics and textiles. Other than that, our funds
are dropping. Our inmate employment is down. When the war ends,
and it will, we will lose large portions of the program. In
2001, there were 22,560 inmates working, or 25 percent of the
inmate population. Now since the DOD general treasury changes
and changes by our own board of directors, we are providing
employment to 19,337 inmates, or only 18 percent of our
population.
While the bill discusses vocational training and
educational programming, all of this has been cut over the last
4 years. We have less teachers, less vocational staff,
instructors, and, frankly less security. Over the last 3 fiscal
years, the Administration and the Congress have cut our
building and facilities budget by $255 million, from 325
million in 2004 to 70 million in 2006.
Many of these funds were used to upgrade facilities using
inmate work crews. Now they sit idle. After this bill passed
last year, to my knowledge, no one went to the Appropriations
Committee and asked for additional funding for money for these
programs.
We would love to build items for the underprivileged;
however, we have to pay the staff and for the materials to do
so. And of the competition, the furniture industry, which is
one of the main elements of all this, they have increased
profits without these changes to FPI by large margins. It has
also been reported that Steelcase doubled its use of suppliers
in lower-cost countries last year. See attached articles in my
testimony. It seems to me a win-win would be to partner with
FPI and the items sent out of the country could be brought back
to us. We could partner with these companies and help each
other. Inmates could learn their business under
apprenticeships, and then perhaps get hired in these production
facilities here in the United States. We could do that with any
business that is struggling against the pressure of outsourcing
or outsourcing overseas. This may decrease their shipping
costs. It would increase inmate employment and help prison
workers.
It is unfortunate we can't seem to get to that point. We
believe any part of the bill must include repatriation of
services and products into the entire market. If we give up
mandatory source, which legislatively we have, you should allow
us to bring back production from overseas. We have no problems
with oversight of this. A certification from the Department of
Commerce, Labor, or whoever you would like, such as a board of
labor, business and prisons could verify this and establish
parameters.
Members of the Committee, I want to thank you for inviting
me today. And I would be more than happy to answer any
questions.
[The prepared statement of Mr. Glover follows:]
Prepared Statement of Phil Glover
Chairman Coble, Ranking member Scott, and members of the
subcommittee, my name is Phil Glover and I am President of the Council
of Prison Locals, American Federation of Government Employees. As the
elected representative for over 28,000 bargaining unit employees in the
Federal Bureau of Prisons (BOP), I want to thank you for the
opportunity to express our views to the subcommittee on the proposed
bill in front of us today, HR2965.
I first want to clarify, that I am not here speaking for the
administration or the BOP. I am speaking as a line staff member,
representing line employees who work inside the walls and fences of 105
federal facilities in many of your districts.
As we all know, this bill passed convincingly last Congress. That
doesn't mean correctional professionals agree with its content, its
conclusions, nor its effect. Let's review what is happening in
corrections and FPI in the federal system briefly.
Over the last four years we have had our staffing at each
individual institution cut by as much as 15 to 20 percent as compared
to the staffing percentages of the late 1990's. A chart is provided in
my statement for the record to verify this (attachment 1).
Over the last three fiscal years the inmate population has grown by
29,000 new inmates. Overcrowding is at an all time high of 41 percent.
This fiscal year, it was proposed to eliminate the construction of two
new facilities. We are taking United States Penitentiary Leavenworth
and United States Penitentiary Atlanta offline as High Security Prisons
and demoting them to Medium facilities. We didn't receive the funds to
keep them updated and operational as United States Penitentiarys. We
are cutting four federal prison camps, three of which do work for the
military on bases in North Carolina, Florida and Nevada.
Attacks on staff have increased, the Director stated to the
appropriations committee last year that BOP had a 28 percent increase
in assaults over the last three years. The union believes it was higher
increasing 34 percent, with an increase of 63 percent with weapons.
Again, a chart is provided from BOP's own statistics.
Moral in the federal system is as low as I have seen it in years.
People are expected to perform the duties of two, three, sometimes four
other staff because of shortages. We are asked to handle violent
inmates and terrorists, and are investigated by an Inspector General
who seems gleeful at attacking us. We are vacating correctional posts,
left and right, to save money. Overtime funding has been cut
dramatically and BOP is planning on contracting out our security at
outside hospitals. Our last staff member murdered has not received
justice because of eight years of delay to a trial of the inmate. Our
assault rates have climbed. The congress has allowed privatization of
prisons to creep into the system.
People in FPI have been reorganized over and over, had to retire
early, had to leave their FPI positions returning to custody work in
the senior days of their careers. It is a lot to handle.
And now comes again, this piece of legislation. As you all are
aware, mandatory source as it's called has been eliminated in
appropriations bills for DOD and general government for the last three
fiscal years. While the inmate population has increased by 29,000 new
inmates, inmate employment in FPI has actually decreased by 3,000 jobs
in the same period. Now, some point out that FPI has made more money
this year. We have. We have because of our contracts with DOD for war
fighting items. When the war ends, and it will, we will lose larger
portions of the program. Keep in mind, that in 2001 there were 22,560
inmates working or 25 percent of the inmate population. Now, since the
DOD, general treasury changes, and changes by our own Board of
Directors, we are providing employment to 19,337 inmates or only 18
percent of our population.
While this bill talks about vocational training and education
programs the funding for all of this has been cut. We have less
teachers, less vocational instructors and less security. Over the last
three fiscal years, the Administration and the Congress has cut our
Building and Facilities budget by 255 million dollars from 325 million
in 2004, to 70 million in 2006. Many of these funds were used to
upgrade facilities using inmate work crews, now they sit idle. We have
been placed in the category of ``a domestic program'' and so, when you
do an across the board cut in an Omnibus bill we get hit again. We are
security for this nation and have been for over 70 years. We have kept
the felon of this country locked up, we deserve better.
After this bill passed last year, no one went to the appropriations
committee and asked for additional money for these new programs. We
would love to build items for the underprivileged, however, we have to
pay the staff and purchase the materials. There is no money in the
budget for this when we can't even hire correctional officers for
security. We would love to work for non-profits, again this isn't
practical, because of limited funds and non-profit's limited budgets.
And what of the ``competition,'' the furniture industry, who is one
of the main elements of all this. They have increased profits without
these changes to FPI by large margins. It has also been reported that
Steelcase doubled its use of suppliers in lower-cost countries last
year. (see attached article).
It seems to me a ``win, win'' would be to partner with FPI and the
items sent out of the country could be brought back to us. We could
partner with these companies and help each other. Inmates could learn
their business under apprenticeships and then perhaps could get hired
in their production facilities here in the United States. We could do
that with any business that is struggling against the pressure to
outsource overseas. Textiles could provide us lists of product that is
produced only overseas and we could bring back that work. This may
decrease their shipping costs, it would increase inmate employment,
helping prison workers, increase domestic raw materials purchases and
other important economic interests. Wages could be raised for the
inmates so they could pay fines off earlier, assist their families, pay
taxes and other parts of their debt to society. It is unfortunate, that
we can't seem to get to this point.
We believe any part of this bill must include repatriation of
services and products into the entire market. We should give up
mandatory source (which legislatively we have) and you should allow us
to bring back production from overseas. We have no problems with
oversight of this. A certification from Department of Commerce,
Department of Labor or whoever would do this type of certification
would be welcome. Or a board established of labor, business, and
prisons who could verify this and establish parameters on what to bring
back. We think that is the way to go.
Members of the committee, I want to thank you for inviting me
today. I hope I have given you some idea of the issues facing
corrections in the federal system and our extreme challenges. I would
be more than happy to answer any questions at this time.
Mr. Coble. Thank you, Mr. Glover.
Mr. Miller.
TESTIMONY OF PAUL MILLER, DIRECTOR OF GOVERNMENT AFFAIRS,
INDEPENDENT OFFICE PRODUCTS & FURNITURE DEALERS ASSOCIATION
Mr. Miller. Mr. Chairman, Ranking Member, and Members of
the Subcommittee, I appreciate the opportunity to testify at
today's Subcommittee hearing to discuss H.R. 2965, the
``Federal Prison Industries Competition in Contracting Act of
2005.'' My name is Paul Miller, and as you mentioned, I serve
as the director of Government Affairs for the Office Furniture
Dealers Association. Let me start by saying emphatically that
the coalition established 9 years ago representing business and
labor supports the original mission of the Federal Prison
Industries Program, which was to provide inmates with real job
skills they can use upon release back into their communities.
What we don't support is a program that has gone beyond
this mission and is more about generating profits at the
expense of business, labor, and, most importantly, the inmates
this program was supposed to help. Our coalition is often
criticized for trying to put FPI out of business. This is just
another scare tactic used by FPI and its trading partners to
dissuade further action on this important legislation.
It is also said that H.R. 2965 is intended to be harmful to
small businesses, prison guards, and inmates. That's pure
rhetoric. The goal of this legislation is just the opposite.
I expect we will hear today from opponents that these are
our intended goals.
Mr. Chairman, I can assure this Subcommittee that this is
furthest from the truth. Our coalition is made up of mostly
small businesses. Our coalition supports the prison guards
charged with overseeing these inmates in these facilities. I
would not, nor would any member of our coalition, support
legislation that puts prison guards in harm's way. Our
coalition supports rehabilitation of inmates. All this is proof
in a legislation Representative Hoekstra has once again
introduced. With his leadership, this bill has come a long way
from where it was some 12 years ago.
H.R. 2965 looks to help inmates. It also looks to level the
playing field for business and labor against the unfair
advantage FPI has had for far too long. What is lost in this
whole debate is that changes needed in this program are out-of-
date in today's society. Those charged with creating FPI didn't
intend it to become a huge profit center at the expense of
business, labor and inmates. Its mission was to provide
rehabilitation to inmates at a time in this country when
economic conditions were bleak. Today, some 61 years later,
this program does not meet today's needs or demands.
H.R. 2965 corrects this problem by changing FPI to fit
today's society and its needs. If opponents to H.R. 2965 really
look closely as what this legislation does, they should support
it. The only reason not to support this legislation is to
support the status quo of a Government monopoly that has for
years gone unchecked.
I expect today we will also hear about FPI's need to hold
on to mandatory source. We will hear how they have lost
revenues. We will hear how they have lost jobs. We will also
hear how FPI has cut programs to help level the playing field
for business and labor.
I guess whether you believe this or not will be in how you
interpret FPI's definition of lost revenue, lost jobs, and
cutting programs. Based on their most recent annual report, I'm
not sure how FPI can make those assertions. The numbers just
don't support the facts. With FPI's current operations, I would
like to know exactly how FPI is able to lay off inmates with
this kind of growth. I would also like to know how FPI believes
it is being harmed by H.R. 2965. As I look at the numbers, I
would say FPI owes Congress a thank you for passing the current
reforms. It sure seems like they have benefited from them.
We hear every year how, from FPI passing any legislation,
will have a negative impact on their ability to survive and
train inmates. Again, I think the annual report proves
otherwise. If FPI is laying off inmates today, then the
questions have to be why and how? Why are inmates being laid
off at a time when FPI's products appear to be in higher
demand? Is it that FPI is laying off inmates, or is it simply
that FPI is shifting inmates to business segments that are in
greater demand than others? Again, it is all on how you define
those terms. How can a company like FPI lay off inmates when
production appears to have increased? The companies we all
represent would like to know the secret of their success.
I think one could come to the conclusion that FPI is
defining the term ``laid off'' to mean any inmate moved from
one business sector to another, or it could be that FPI is, in
fact, working with more outside companies to provide the
products to the customer with little or no inmate work being
done, and thus actually laying inmates off. Either way, there
is a problem.
I'm sure the question will come today why we believe
further reform is still needed. Well, the answer is simple.
When you have a Government corporation going out to Government
customers still today telling them that the old provisions
allowing for competition have expired and contracting officers
must once again buy from FPI, there needs to be a more
permanent solution. H.R. 2965 is that solution. And if there is
even one case of pass-throughs or drive-by manufacturing, then
there is a problem, and H.R. 2965 is the answer.
As I said earlier, H.R. 2965 is not a tool to put FPI out
of business as claimed by our opponents. This legislation has
come a long way from its original version some 12-plus years
ago. Numerous provisions have been added to this legislation to
deal with such concerns as marketable skills, educational and
vocational opportunities, and charitable provisions allowing
FPI to team with organizations like Habitat For Humanity to
build homes which should prove that we support FPI survival and
its original mission. We strongly believe that these provisions
will better help inmates once they are released from prison
find real long-term opportunities while protecting prison
guards and small businesses.
Practices like drive by manufacturing do not provide any of
this type of training for inmates or protection for prison
guards. H.R. 2965 does. What these types of provisos do produce
is large profits.
Let me conclude by sharing with you some comments made by
the General Services Administration during a hearing on this
very issue before the United States Senate last year. The GSA
witness was asked by Senator Craig Thomas whether FPI could
sustain itself without mandatory source. The witness' response
was that it could. GSA told the story of their having mandatory
source years ago. Congress eliminated GSA's mandatory source,
and they are thriving. The reason GSA told the Committee is
they have created a different business model built on
competition. The witness went on to add that GSA learned how to
compete in an open market. FPI can too. Thank you for the
opportunity today. And I will cut my time short and answer any
questions.
Mr. Coble. Thank you, Mr. Miller.
[The prepared statement of Mr. Miller follows:]
Prepared Statement of Paul A. Miller
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Mr. Coble. Dr. Wilkinson, you're sort of on the spot. Mr.
Glover beat the red light. Mr. Miller permitted the red light
to beat him. So we will be watching the buckeye. Good to have
you with us, Dr. Wilkinson.
TESTIMONY OF REGINALD WILKINSON, DIRECTOR, OHIO DEPARTMENT OF
REHABILITATION AND CORRECTION
Mr. Wilkinson. Thank you, Mr. Chairman.
Mr. Chairman, Members of the House Subcommittee, I
appreciate the opportunity to provide testimony to you today
regarding the impact of resolution 2965 on Federal, State and
local correctional industries. I would especially like to thank
Congressman Chabot and Congressman Scott for inviting me to
speak on behalf of correctional industries and for their
ongoing support for the development of quality industry
programs in our Nation's prisons and jails. I am now in my 32nd
year as a correctional administrator, all in Ohio. A more
detailed biography is included in my written testimony.
I would like to provide you with a general overview of the
importance of prison industries in Federal and State
correctional institutions, as well as a thumbnail sketch of
Ohio's approach to prisoner employment before delving into
further areas impacted by 2965.
Let me first address the issue of why I believe that it is
vital to have effective State and Federal prison industrial
programs. In my view, there are at least six primary rationals.
First, Federal and State industry jobs are a management tool to
keep prisoners busy. When prisoners are idle, tensions and
violence increase in correctional institutions. Prison industry
programs keep thousands of inmates productively involved in
day-to-day structured operations of our nations correctional
facilities, thereby increasing the safety of civilians, inmates
and the communities surrounding facilities as well as staff
persons.
Second, Federal and State correctional industries job
training programs reduces crime. Inmates who participate in
meaningful job training demonstrate a statistical reduction in
recidivism. A Washington State Institute for Public Policy
showed that for every dollar spent on correctional industry
programs, as much as $6.23 is saved in future criminal justice
costs. In Ohio, in 1995, a study conducted by our Department
showed that participation in prison industry jobs reduced the
rate of return for offenders by at least 20 percent.
Third, meaningful job training contributes to successful
reentry of offenders and increases their chances of finding and
keeping jobs after release. As one can imagine, former
prisoners attempting to find jobs are at a natural
disadvantage. At FPI, it is our mission to teach them skills so
that they can compete in the job market after they have served
their prison sentences.
Fourth, Federal and State prison industries contracts with
private sector businesses boost economic development and, in
particular, minority-owned small companies. And in an attempt
to expand prison industries and create more real world, high-
skilled jobs, prison industries have placed an emphasis in
recent years on partnering with the private sector. These
partnerships benefit from both Federal and State departments of
corrections and companies they contract with. In Ohio, we have
nine contracts with private sector entities that employ
approximately 500 inmates, including the furniture industry.
Fifth, prison industries offset the cost of incarceration.
Like FPI and most other state correctional industry programs,
OPI is a self-supporting entity that does not require financial
assistance from Ohio's general assembly general revenue fund.
According to an independent study commissioned by our agency,
again, our prison industries further defrayed taxpayer costs by
providing 15.9 million dollar annual benefit to Ohio and
creating 62 private sector spin-off jobs for a net gain to the
local economy.
At the end of fiscal year 2004, our industries employed
over 2100 inmates and generated sales of over 32 million
dollars.
Finally, Federal and State prison industries imbue inmates
with a work ethic and a sense of self responsibility. Many
inmates have never held a job for any length of time nor have
they learned to take instruction and feel the satisfaction of a
job well done.
Ohio's inmates employment and reentry programs are equally
as important. We work very hard to increase the employability
of inmates through initiatives such as our offender job linkage
program, where we work with local businesses to help employ
these persons following release. One of our important
employment initiatives in Ohio is our community service
program. We have expanded the number of inmates now as devoted
to this area of over 75,000 hours in 1991 to 6.9 million hours
in 2004.
Finally, it is important to note that offender employment
is just one component of a broad systems approach to managing
offenders returning to the community. In Ohio and many other
jurisdictions, innovative reentry initiatives such as the ones
that were mentioned earlier by the congressman from Michigan,
are underway that emphasize a continuum of services,
programming, support, and offender accountability.
Mr. Chairman, there is much more to say about this, but I
will reserve comments for questions.
Mr. Coble. Thank you, Dr. Wilkinson.
[The prepared statement of Mr. Wilkinson follows:]
Prepared Statement of Dr. Reginald A. Wilkinson
introduction
Chairman Coble and members of the House Judiciary Subcommittee on
Crime, Terrorism, and Homeland Security. I appreciate the opportunity
to provide testimony before you today regarding the impact of House
Resolution 2965 [HR 2965] on federal, state, and local correctional
industries. I would especially like to thank Congressmen Chabot and
Scott for inviting me to speak on behalf of correctional industries,
and for their on-going support for the development of quality industry
programs in our nation's prisons and jails.
I am now in my 32nd year as a correctional administrator--all in
Ohio. I have served as Director of the Ohio Department of
Rehabilitation and Correction for fourteen years. I am a past president
of both the American Correctional Association and the Association of
State Correctional Administrators: two of the nations leadings
corrections trade associations. I was appointed a member of the U.S.
Department of Justice, National Institute of Corrections Advisory Board
by former U.S. Attorney General John Ashcroft; its members elected me
chair of the Board. Moreover, I serve as president and executive
director of the newly formed International Association of Reentry.
I would like to provide the subcommittee with a general overview of
the importance of prison industries in federal and state correctional
facilities, as well as a thumbnail sketch of Ohio's approach to
prisoner employment, before delving further into the areas impacted by
HR 2965.
importance of prison industries
Let me first address the issue of why I believe that it is vital to
have effective state and federal prison industrial programs. In my
view, there are at least six primary rationales:
First: Federal and State industry jobs are a management tool to
keep prisoners busy. When prisoners are idle, tension and violence
increase in correctional facilities. Prison industry programs keep
thousands of inmates productively involved in the day-to-day,
structured operation of our nation's correctional facilities, thereby
increasing the safety of civilians, inmates, and the communities
surrounding the facilities. This theory is backed by research data.
Criminologist Bert Useem, Ph.D., noted in a 1999 multivariate analysis
of prison protests, disturbances and riots that ``the percentage of
inmates with paid employment was inversely related to the probability
of an inmate disturbance.'' Another criminologist, Beth M. Huebner,
stated in her 2003 multilevel analysis of administrative determinants
of inmate violence that ``prisoners involved in work programs were
significantly less likely to assault staff.''
Second: Federal and State prison industries' job training reduces
crime. Inmates who participate in meaningful job training demonstrate a
statistical reduction in recidivism. A Washington State Institute for
Public Policy study showed that for every $1 spent on prison industry
programs, as much as $6.23 is saved in future criminal justice costs
(arrest, conviction, incarceration, post release supervision and crime
victimization). In Ohio, a 1995 study conducted by the ODRC showed that
Ohio Penal Industries (OPI), our inmate industrial training program, is
having a similar positive impact. Participation in OPI jobs reduced the
return rate of offenders released from prison by 20 percent.
Participation in high-skilled OPI jobs resulted in a 50 percent
reduction in recidivism. Similarly, studies also show that Federal
Prison Industry (FPI) inmates are 24 percent less likely to recidivate
than those inmates in non-FPI jobs. These studies also indicated that
certain groups of prisoners benefited differently. For instance,
federal and state prison industry participation had the greatest
positive impact on African American males.
Third: Meaningful job training contributes to the successful
reentry of offenders and increases their chances of finding and keeping
jobs after release. As one can imagine, former prisoners attempting to
find jobs are at a natural disadvantage. Like FPI, it is our mission to
teach them skills so that they can compete in the job market after they
have served their prison sentences. Ohio's 105 vocational education
programs range from building maintenance to welding, from brick laying
to auto mechanics. Ohio's industries programs work with areas in our
Department, as well as with other state agencies to enhance the skill-
set obtained by offenders. Our most recent enterprise is the opening of
our Meat Processing Career Center. It is a multi-functional operation,
doing both processing and packaging, which has created 100 offender
jobs who will receive vocational training by The Ohio State University.
The certification these inmates obtain will assist them in securing
jobs in the meat processing industry upon release. Our farm operation
provides the animals processed at the plant and the finished products
are served in our institutions, driving down the cost to the taxpayers
of Ohio.
A solid base of educational, treatment programs, reentry
activities, and formalized linkages to the community combined with real
work experience and developing work ethic, buttress prison vocational
and industry programs. Similar to our experiences in Ohio, studies have
demonstrated that federal inmates who participate in FPI jobs are 14
percent more likely to be post release successful than those inmates in
non-FPI jobs.
Fourth: Federal and State prison industries contracts with private
sector businesses boost economic development and in particular minority
owned and small companies. In an attempt to expand prison industries
and create more real-world and high-skilled jobs, prison industries
have placed an emphasis in recent years on partnering with the private
sector. These partnerships benefit both federal and state Departments
of Correction and the companies they contract with. In Ohio, we
currently have 9 contracts with private sector entities that employ
approximately 500 inmates.
Before signing, contracts are reviewed by our Prison Labor Advisory
Council (PLAC), a six-member board that advises and assists the
Department in its responsibility to create meaningful work for inmates.
The Council is comprised of business and community leaders, who help
insure that proposed private sector contracts meet the Department's
objectives to have no adverse impact on Ohio's labor market. If
endorsed by the PLAC, companies agree to sign a statement that they
will not displace Ohio workers in utilizing inmate labor.
Additionally, many private sector businesses benefit from purchases
made by federal and state prison industries. In 2003, Federal Prison
Industries (FPI) purchased $502 million in goods, services, and raw
materials from the private sector--$1.5 billion from 1997 through
2001--a figure representing 74 percent of gross sale revenues. Nearly
two-thirds of these purchase contracts are with small businesses, many
of them female and minority-owned or disadvantaged. Estimates indicate
that roughly 5,000 jobs in the private sector are the result of goods
purchased by FPI.
Fifth: Prison industries offset the cost of incarceration. Like FPI
and most other state correctional industry programs, OPI is a self-
supporting entity that does not require financial assistance from
Ohio's General Revenue Fund. According to an independent study
commissioned by ODRC, OPI further defrays taxpayer costs by providing a
$15.9 million annual benefit to Ohio and creating 62 private sector
``spin-off'' jobs for a net gain to the local economy. Customer
surveys, moreover, consistently demonstrate that OPI is fulfilling its
mission to produce quality products.
At the end of fiscal year 2004, OPI employed over 2,100 inmates and
generated sales of over $32 million. These sales enable OPI to cover
expenses and operate self-sufficiently. OPI shops and services range
from the traditional production of license plates and janitorial
supplies, to high-tech services such as, asbestos abatement and
computer refurbishing. Some of our current contracts are saving Ohio
taxpayers millions of dollars by utilizing inmate workers to convert
information digitally and make it available to the general public using
Computer Aided Design (CAD) and Geographical Information Systems (GIS)
support services. These activities are also preparing inmates for high-
tech employment upon release.
Finally, federal and state prison industries imbue inmates with a
work ethic and a sense of self-responsibility. Many inmates have never
held a job for any length of time, nor have they learned to take
instruction, and feel the satisfaction of a job well done. In FPI,
Ohio, and other jurisdictions, prison industries work standards mirror
the normal work environment as closely as possible so that when
offenders are released to the community they are as ready as possible
to join the work world and make a productive contribution.
It is also important that former prisoners learn to accept the same
employment responsibilities that you and I do. They must support their
family, pay rent, and fulfill other obligations. In many cases, they
are required to pay restitution, child support, and other legal
judgments. I believe it is our duty to instill these traits.
ohio's inmate employment and reentry efforts
In Ohio, we've worked very hard to increase the employability of
ex-inmates through initiatives such as our Offender Job Linkage
Program, where we now invite local business leaders to interview
skilled inmates close to release at job fairs in our prisons. As a
prerequisite to participation in the job fairs, inmates must be within
90 days of release and are required to produce a current resume and
participate in classroom training to develop interview skills. To date,
close to 10,000 inmates and nearly 500 employers have participated in
over 300 job fairs across the state. Inmates participating in these job
fairs gain valuable interview experience, and many have been offered
employment following their release, or have been encouraged to report
after their release for additional interviewing and consideration.
Additionally, as a part of this initiative, we are utilizing innovative
teleconferencing technology that allows employers in Ohio's urban
centers to interview job-ready inmates in prisons via video linkages.
Since 1997, 162 monthly videoconference interviews have been conducted
with about 350 employers and 42 social service agencies. A total of
2,344 inmate interviews were conducted using this technology, with
approximately 38 percent receiving referrals for follow-up interviews.
One of our most important employment initiatives in Ohio is our
community service program. We have expanded the numbers of inmates and
hours devoted to this area from over 75,000 hours in 1991 to over 6.9
million hours in 2004. Our Department has provided Ohio communities
with over 35 million hours of volunteer inmate service since the
inception of the program. This initiative has provided much needed
assistance to Ohio's schools, government agencies, churches, and many
other deserving charitable and non-profit organizations. Just as
important, it has provided valuable job skills to offenders and has
allowed them to experience the positive rewards of contributing back to
society.
Finally, it is important to note that offender employment is just
one component of a broad systems approach to managing offenders
returning to the community following a period of incarceration. In
Ohio, and many other jurisdictions, innovative ``reentry initiatives''
are underway that emphasize a continuum of services, programming,
support, and offender accountability from the time of sentencing to
well beyond an offender's release to the community. I recently
testified before Congress in support of landmark legislation entitled
the Second Chance Act of 2005 (HR 1704) originally initiated by former
Congressman Rob Portman. Passage of this important initiative would
further enhance public safety, and ensure that many more offenders
return home as tax paying and productive citizens.
comments on house resolution 2965
I would now like to briefly address some specific points of
discussion regarding HR 2965. Ohio and other State Departments of
Correction are concerned with provisions contained in section 7 of the
bill amending 18 USC 1761 (a) at the state, and local levels to
prohibit the interstate sale of services furnished wholly or in part by
prisoners. We are also concerned with the provisions in section 7
amending 18 USC 1761 (c) that require the phase-out of existing state
and local inmate work programs providing services for the commercial
market and their future certification through the federal Bureau of
Justice Assistance. This language includes state programs in
prohibiting services such as packaging, telemarketing, and data entry.
These are the types of services that are being contracted offshore,
that states are trying to attract back and return to their prison
industries. Additionally, we believe that the language in section 3 of
the bill prohibiting access to geographic data would eliminate two of
our prison industry shops. These employ 72 inmates working on mapping
services, including tax-mapping services for counties; mine reclamation
mapping; gas/water well placement; bedrock geology and cadastral
imaging; as well as the mapping of utilities.
Furthermore, we are opposed to restrictions contained in the
legislation involving FPI. The restrictions on sale of inmate provided
services into interstate commerce and the phase-out of the mandatory
source preference could result in further loss of inmate jobs and
training opportunities, along with the loss of many civilian industry
jobs. Additionally, many private companies who supply raw materials and
partner with correctional industries would be placed at risk to lose
their jobs should HR 2965 pass in its current form. Finally, the states
would be in jeopardy of being sued by these companies due to the
abrogation of existing contracts, not to mention the related legal and
court fees.
21conclusion
As I have stated above, prison industries provide many positive
benefits to federal, state, and local correctional agencies by keeping
inmates meaningfully engaged and by providing them with marketable job
skills that may reduce the likelihood of future recidivism. They also
provide positive economic benefits to states by reducing reliance on
general revenue fund sources, creating demand for raw products and
supplies purchased from the private sector, and by increasing skilled
labor. Communities and families benefit by offenders being returned to
society with a greater likelihood for employment, a chance to become
productive, law-abiding, and drug free citizens.
Based on the concerns that I and other corrections professionals
have articulated with HR 2965, I would urge you to delay its passage
and work towards legislation that enhances rather than constrains
prison industries.
Mr. Chairman and Committee members, thank you for the opportunity
to offer my testimony. I would be pleased to address any questions that
you may have.
Mr. Coble. I believe you are clean-up, and we gave you a
pass on the oath, but you are not immune from the 5-minute
rule. Representative Hoekstra.
TESTIMONY OF THE HONORABLE PETER HOEKSTRA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN, AND CHAIRMAN, PERMANENT
SELECT COMMITTEE ON INTELLIGENCE
Mr. Hoekstra. Thank you, Mr. Chairman. It is good to be
here. It is good to be here with my friends from the Education
and Workforce Committee where we had a lot of good times
together. Mr. Scott, Mr. Conyers, it is good to see you. Mr.
Lungren and Mr. Chabot, I thank you for being here. Mr. Chabot,
I just remind you that the buckeye sitting next to me, his
roots are from the State of Michigan. He was born and raised in
Detroit. I don't know what went wrong in between there. But we
can maybe fix that.
Thank you for the opportunity. I just like to submit my
statement for the record. Let me make a couple of comments and
make sure that I stay within the record.
Mr. Glover, in terms of your statement, I think that we all
recognize the dangers and the challenges that the organization
that you represent, the guards, face each and every day. I
can't imagine a more difficult working environment than some of
the statistics that you've outlined. I am sure they are
accurate. We really need to be working on getting you the
resources that are necessary in the prisons.
Second, you know that we have been working almost a year to
craft a work-based inmate training program of the type that you
are suggesting. I want a proposal that is acceptable to all
elements of the family of labor, that has been the most
daunting challenge. I think we can reach an agreement with the
business community. We just need to make sure that we can reach
an agreement that is fair and is acceptable to the entire
family--labor family as well. And we are going to be working on
that.
Third, Mr. Frank of Massachusetts and I have a pact. Once
this bill is passed and becomes law, we will press equally as
hard to obtain the relatively modest funding necessary for
these enhanced inmate and educational training programs and the
alternative inmate work opportunities that are outlined in the
bill. We suspect that others will join us.
One of the unique things about this bill has been the broad
bipartisan support and the unique coalition that we have put
together. I can tell you that my colleagues, every time they
get a ``dear colleague'' from Barney Frank and Pete Hoekstra,
they kind of look at it, and they say, ``What in the world will
these two folks agree on?'' and they have been getting them now
for 9 years. And we have kept this coalition together. And I
think as we have worked to move this bill forward, we will also
work to make sure that we implement all the sections of the
bill, which includes the funding for the programs that this
bill authorizes.
You know, the solution to the staffing problem that you
outlined earlier is not to move the correctional officers to
the FPI payroll. We need to fund these directly and address
those issues directly.
Finally, on that, on one of your other points is, FPI
status of mandatory sourcing is still in place. The other
interesting thing is, I don't accept the premise that there is
no correlation between FPI sales and inmate employment. There
should be a more direct correlation. I think one of the most
interesting things is that in the period that has been cited,
2002 to 2004, we have seen significant employment, or excuse
me, significant increases in sales. FPI has been one of the
most successful corporations in America during that 3-year
span. Sales have increased by 18 percent, profits have
increased by over 70 percent, but yet, employment has
decreased. And six out of the eight segments of the businesses
that they are employed in have seen significant increases in
sales. But yet, employment has gone down. And I think we need
to take a close look at why, as the company is growing, why
their employment numbers are actually going down. That is not
how--or what we would expect to have seen.
Dr. Wilkinson, let me make some observations on some of
your statements. We agree, rehabilitation through work and
vocational training programs are absolutely essential. That is
why we put more of those things in place. To argue that FPI or
Government contracting is good for small minority businesses I
think is a false assumption.
These businesses can compete for Federal Government
contracts. Making FPI the gateway by which these entities get
access to the Federal Government isn't necessary. Now, there
was just a contract that was awarded, mandatory source, $198
million. Mandatory sourcing is alive and well, and 1 percent of
that business went to a vendor, a small company in my district.
The rest went to the prisons.
You know, in the real word, the company should have had the
opportunity to compete for this business rather than having FPI
as the gateway. You know, I am going to make my red light--beat
my red light. We have got a great--I am done.
I don't want to get the Chairman mad at me. I am done.
[The prepared statement of Mr. Hoekstra follows:]
Prepared Statement of the Honorable Pete Hoesktra, a Representative in
Congress from the State of Michigan, and Chairman, Permanent Select
Committee on Intelligence
Mr. Chairman (Mr. Coble), I appreciate the opportunity to appear
before the Subcommittee as its considers H.R. 2965, the Hoekstra-Frank-
Maloney-Sensenbrenner-Conyers-Coble Federal Prison Industries
Competition in Contracting Act of 2005. I expect that we will have a
spirited discussion of what some assert will be the adverse impacts,
when the bill is enacted. These opponents of FPI reform will seek to
use as ``evidence'' the a statement made in FPI's Annual Report
regarding reductions in inmate work opportunities during fiscal year
2002 through 2004. Hard numbers reflected in that report, and prior FPI
Annual Reports since the mid-1980s, would suggest that the assertions
about losses of inmate work opportunities are questionable, if not
contrived.
H.R. 2965 is substantively identical to H.R. 1829 in the 108th
Congress, which was ordered reported on the Committee on July 25, 2003,
on a strong bipartisan voice vote. Subsequently, the bill was passed by
the House on November 6, 2003, by a vote of 350-65.
H.R. 2965 again enjoys strong bipartisan support within the
Committee and within the Congress. I am again fortunate to have as lead
cosponsors, Rep. Barney Frank, Rep. Carolyn Maloney, Rep. Jim
Sensenbrenner, the Chairman of the full Committee, my colleague from
Michigan, Rep. John Conyers, the Committee's Ranking Democratic Member,
and you, Mr. Chairman (Mr. Coble). In all, the bill had 77 original
cosponsors. An addition, 15 cosponsors were added last night. Chairman
Sensenbrenner and Rep. Conyers have agreed to schedule H.R. 2965 for
markup shortly after the House returns for the Independence Day
District Work Period. Fifteen Member of the Committee are already
cosponsors of H.R. 2965. I expect that it will enjoy the same strong
bipartisan support that was enjoyed by H.R. 1829.
The background information you have furnished to the Members of the
Subcommittee provides an excellent summary of H.R. 2965. I will not
repeat it here.
I would emphasize that the bill before you reflects a broad array
of improvements that have been made over many, many years. Most of the
most important improvements were made during the 107th and 108th
Congress during the bill's consideration by this Committee. H.R. 2965
continues to reflect the important changes made by an extensive
Conyers-Frank Amendment, during the Committee consideration of H.R.
1577 in the 107th Congress. It ingrained in the bill provisions
designed to substantially increase the likelihood of Federal inmates
making a successful return to society. The core of the Conyers-Frank
Amendment was to increase inmate access to educational opportunities,
both remedial education and modern ``hands-on'' vocational training,
especially in skills in which there are jobs available in the economy
after release. Such educational programs have been shown to be more
effective than traditional inmate work programs in reducing recidivism.
The most recent analysis of the Post Release Employment Project (PREP)
data, a multi-year assessment undertaken by the Federal Bureau of
Prisons, shows that inmates participating in such educational programs
were 33 percent less likely to return to prison. In contrast, those who
participate in traditional prison industry programs are 24 percent less
likely to return to prison.
Other provisions of the bill come from other diverse sources. The
bill provides for deductions from inmate wages to be accumulated in an
account in the inmate's name. These funds can be used by the inmate to
stay in touch with their family during the term of incarceration. It
also will provide a so-called ``gate fund,'' resources to sustain the
inmate immediately upon release. The ``gate fund'' provision was
initially suggested by Pat Nolan, President of Justice Fellowship, the
public policy arm of Prison Fellowship. During the consideration of
H.R. 1829 on the House Floor, an amendment offered by Representative
Waters and Rep. Millender-McDonald that would increase the
effectiveness of the gate fund provision. It would require that inmates
within 24 months of release be paid a wage of $2.50 per hour for work
performed for FPI.
Opponents of FPI reform will also argue that it receives no
appropriated funds, that it is ``self-sustaining.'' It is accurate to
say that FPI does not receive any appropriated funds to sustain its
operations. Rather, its mandatory source status enable it to simply
take funds appropriated to its captive Federal agency customers for the
execution their missions, whether national defense, homeland security,
or administration of the Social Security System. In the noncompetitive
manner in which the program operates today, it more likely than not
that the captive Federal agencies are not getting the best product, in
the most timely fashion, at the best price. A steady stream of reports
from the GAO and various Inspectors general confirm this.
Those seeking to maintain FPI's mandatory source status will argue
that enactment of the legislation will cause mass inmate idleness,
endangering the safety of entire institutions, their guards and
inmates. This ``prison riot argument'' simply ignores the fact that the
vast majority of Federal inmates in Federal institutions have work
assignments helping to run and maintain the institution in which they
are incarcerated. They help prepare meals, run laundries, maintain
grounds, and help do electrical, plumbing, carpentry repairs and other
similar work. These assignments can provide many of the same
rehabilitative benefits as traditional prison industry work
assignments. Based on FPI employment figures for FY 2004, approximately
85 percent of Federal inmates have institutional work assignments. Only
approximately 15 percent of Federal inmates have FPI work assignments.
Only these inmates will be affected when H.R. 2965 is enacted, and, I
believe, that these inmates and the overall institution will be
affected for the better.
The ``prison riot argument'' also ignores the authorities granted
to the Attorney General by the bill. They simply declare that they
won't be used. Mr. Glover may have no faith in his management, I
believe that Attorney General Gonzales would not deliberately endanger
the safety of a Federal correctional institution just to prove a point.
Mr. Chairman, I expect many other issues may be raised by the
opponents. I look forward to responding.
Mr. Coble. I would not be angry with you, Pete. Thank you,
Mr. Hoekstra. And we have been joined by the distinguished
gentleman from California, Mr. Lungren. Prior to my time
starting, I want to take care of a couple of housekeeping
matters. Several organizations have asked for the opportunity
to submit statements for the record regarding this very
important issue. And without objection, the following
statements will be included in the record, American Apparel and
Footware Association, Contracts Services Association, United
States Chamber of Commerce, Citizens United For Rehabilitation
of Parents, National Federation of Independent Business,
Management Association of Photogrammetric Surveyors and
Mappers, and Correctional Vendors Association. Without
objection, those statements will be made part of the record.
[The information referred to follows in the Appendix]
Mr. Coble. And finally, I want the record to reflect that
my dealings with the Federal Bureau of Prisons from the
director on down, have been favorable. I am very high on BOP. I
think they do a good job. And I just wanted the record to
reflect that. Now you start my time.
Mr. Glover, in your testimony, you express concern, and Mr.
Hoekstra responded to that, but your staff members have become
increasingly prone to violent attacks by inmates.
Have you reviewed, Mr. Glover, the provisions included in
2965 that allows FPI to make sales on a noncompetitive basis if
the Attorney General makes findings regarding the deed for the
contract to maintain safety of the prison and the community as
well as the section of the bill which provides for vocational
training and work for nonprofits? What impact, if any, do you
believe these provisions would have?
Mr. Glover. Well, Mr. Chairman, the first issue, with the--
I did review all of the sections. And certainly we have we had
some other people review them as well from our national union.
The issue here is frankly money.
The way FPI works currently with their sales, they hire
their staff. Those are not S&E funded staff. So FPI runs their
entire program based on nonappropriated dollars.
Our vocational and educational staff have been cut since
2001, every fiscal year, our appropriations, while it appears
to go up, we have increased the number of facilities
nationwide. And so what has happened is at current facilities,
current prisons, you have actually had a decrease in staffing,
in all departments across the board, by 15 to 20 percent. And
so where we used to have six teachers before, we may only have
four. We might only have one voc. tech. teacher right now on
staff because that is the only appropriated money that that
warden has.
Mr. Glover. Now, regarding the fact that the Attorney
General could step in, I just have a real hard time believing--
and this is just me personally as a correctional worker from a
line staff member--I don't know a warden in the system that
would say he is going to lose control of the facility and tell
the boss that, tell the regional director and the director and
then the Attorney General that he is going to lose control of
that prison if he doesn't have a contract from some outside
supplier. I don't believe that's going to happen. They will do
anything they have to do, you know, reassign staff, move staff
around, they'll do whatever they have to do to keep the
facility safe, but as far as running clean, organized
correctional programming, we are running out of resources. I
mean, I'm just trying to be straight.
Mr. Coble. Mr. Miller, has any member of your association
experienced detrimental effects as a result of FPI programs? A.
And B, have you had any small businesses that have been forced
to go out of business as a direct consequence of competing with
FPI?
Mr. Miller. Let me answer the second question first. To our
knowledge, no, there has not been. We cannot point to a direct
relationship of any business going out of business because of
FPI. But we do see our industry--the economy has struggled the
last few years and our industry has struggled a great deal. We
lost 30,000 jobs, our companies were losing business. So we do
see a correlation that had they been able to compete with that
Government business they may have been able to do a little bit
better. They may not have had to lay employees off, or they may
not have had to close down for work periods at a time, weeks at
a time.
So we have been harmed, but I can't say that we've closed
our doors directly because of FPI. It doesn't help.
Mr. Coble. Thank you, sir.
Dr. Wilkinson, in your testimony you indicate the studies
have shown that prisoners involved in work programs were less
likely to cause disturbances or mischief or violence. Did the
study discuss whether it makes a difference if these programs
are for-profit programs or not-for-profit? And if a prisoner is
engaged in educational programs or jobs around the prison area,
does that also decrease the likelihood that they will likely
cause a disturbance?
Mr. Wilkinson. I don't know. Probably what causes most of
our concern regarding disturbances, the more sophisticated the
program, the less likely that person might be to engage him or
herself in adverse activities.
Prison Industries is a very sophisticated and much-coveted
program, and most prisoners who are involved in any Prison
Industries program aren't going to do very much to jeopardize
that. So you have a very high level, intelligent group of
prisoners who are banking on staying out of trouble and trying
to use those experiences as ones that they can market once they
get out of prison.
Mr. Coble. I thank you, Doctor. And I see the red light has
illuminated in my eye.
Pete, I will have a question for you because I believe time
will permit a second round and get me at the airport by 12
o'clock at the same time. So I now recognize Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
And for our colleague from Michigan, I'd like to remind him
that, although he has brought bipartisanship in support of the
legislation, there is equally broad bipartisan support in
opposition. Some of the letters in opposition come from as
diverse Members as those in support. It's one of the few areas
where partisan political affiliation doesn't predict support or
opposition to the legislation.
Mr. Hoekstra. If the gentleman will yield? I look forward
to the day when you and I will have the opportunity to work
together in a bipartisan way and people will say, ``What in the
world would Hoekstra and Scott have to be working on
together?''
Mr. Scott. We'll do the best we can.
Mr. Miller, the suggestion has been made that FPI is
causing problems with the furniture industry. How many
employees are in the furniture industry?
Mr. Miller. That number I don't have right now; I'd be
happy to get that to you. It depends on--I mean, our dealers
roughly range anywhere from 3 to 25 employees typically.
Mr. Scott. Well, I mean, you had about a couple thousand in
the Prison Industries program, and that would be totally
dwarfed by whatever is in the industry. And if you eliminated
those 7,000, it wouldn't be a blip to the industry. What are
the total sales in the furniture industry?
Mr. Miller. The sales have gone up, but you have to look at
it in its entirety. We have gone through a very tremendous
downturn in which we are now just starting to see some recovery
from that.
Mr. Scott. And the total sales in the FPI--if you stated
the total amount of sales in furniture and compared that to, if
you eliminated FPI, that number wouldn't change, would it?
Mr. Miller. No. But what it does is allow for us--the
opportunity to compete for Government contracts has kept some
of these folks in business and helped them continue to keep
growing, I guess, now. Without that opportunity, they're not
able to do that.
Mr. Scott. If you eliminated sales, which represent a
miniscule portion of 1 percent of the total sales in furniture,
it would not have any measurable impact on the furniture
industry, is that not true?
Mr. Miller. I would disagree with you.
Mr. Scott. Well, how much impact would it have if you
eliminated? What, it is less than one-quarter of 1 percent?
Mr. Miller. Any lost opportunity from a small business is
going to have a harmful impact, and for our dealers not to be
able to compete for those contracts or have a fair playing
field, it's going to hurt them.
Mr. Scott. Okay. So if you have a million people working in
the furniture industry and 5,000 prisoners lose their jobs, I
guess that would revive the entire furniture industry; isn't
that right?
Mr. Miller. No. But what it does--I mean, if we're looking
at, is FPI laying those employees off or those inmates off, or
are they just moving it from one product sector to another?
That's really not laying off, it's putting the resources where
the opportunity is at this time.
Mr. Scott. The point I'm making is that the FPI represents
such a minuscule portion of the furniture industry that it's
just disingenuous to suggest that whatever FPI does is going to
have any measurable effect on the industry.
Mr. Hoekstra. Excuse me, Mr. Scott.
Mr. Scott. Yes.
Mr. Hoekstra. Can I?
Mr. Scott. Yes.
Mr. Hoekstra. Thank you. It is not a miniscule part. The
furniture industry is about--probably somewhere in the
neighborhood of a 12 to $14 billion industry, depending on
exactly what year you're taking a look at. Office furniture in
FPI was a $250 million business within the last couple of
years. It was a fast growing industry. It was the fastest
growing office furniture company in America as the office
furniture industry was going through its tough times and was
probably one of the 10 largest--it would have cracked the top
10 in terms of its size in the office furniture industry. So
within the last couple of years----
Mr. Scott. Are you talking about a full percent?
Mr. Hoekstra. Two and a half percent, at a minimum.
So it would have been the faster growing office furniture
company in America and would have been one of the 10 largest
office furniture companies in America during that period of
time.
Mr. Scott. Are we talking about 1 percent, one and a half
percent?
Mr. Hoekstra. You're probably talking--it's probably at
least 2 percent, depending on exactly what year you're going
to. If you're going to--I think in 2004 it was about----
Mr. Scott. So if you eliminated Industries altogether in
that industry, you're talking 2 percent.
Mr. Hoekstra. Potentially, yes.
Mr. Scott. Okay. Thank you.
Mr. Chairman, if we're going to have a second round, I'll
just defer so the----
Mr. Coble. We will permit a second round.
In order of appearance, the distinguished gentleman from
Ohio.
Mr. Chabot. Thank you, Mr. Chairman.
Before I ask a couple of questions I just want to make a
brief statement. All of us have histories before we come here,
and prior to coming here I was a 10-year local elected
official. I was on city council and the county commission, and
in that capacity had the opportunity, at least at the local
level, to be quite involved with prisoner activities as far as
having them work around the community and other projects within
the prison. So it's something that I've been involved in at
some times and care a lot about.
And as some of the panel members know, I've been a long
time supporter of the Federal Prison Industries. And it's my
view that inmates who have shown a willingness to better
themselves, those who obtain, for example, a GED and maintain a
clean record of good behavior, should be given the opportunity
to better themselves.
FPI has for the most part been a quite effective
alternative to idleness and has been shown to reduce recidivism
rates, as inmates with job skills are more likely to find
gainful employment when their debt to society has been paid.
Opponents of the FPI argue that the program hurts businesses. I
disagree with that. According to the Congressional Budget
Office, the CBO, dismantling the FPI would cost taxpayers $50
million a year in added security for idle inmates. And last
year alone the FPI purchased over a half billion dollars in
goods, services and raw materials from the private sector, a
figure representing approximately 74 percent of its gross sales
revenue. Most of those dollars go to small businesses.
Before we talk about legislation that could effectively end
this important and worthwhile program, I think we should take a
step back. Mr. Scott and I are in the process of drafting
legislation that would establish a commission to study the FPI
industry issue, its impact on prisoners, and its impact on
small businesses in this country. I hope the Members of this
Committee would consider joining Mr. Scott and myself in taking
a closer look at this 69-year-old program before considering
legislation which could have such a, I believe, tremendously
adverse impact on the Federal Industries.
Let me just, in the time that I have, just ask a couple of
questions, and any of the panel members are welcome to answer.
And if I could keep your answers relatively brief.
First of all, I think one of the most important reasons for
this program is what Mr. Wilkinson said, and that's the
recidivism issue. If you have people that are behind bars, and,
ultimately, unless they're pretty--you know, they're serial
killers or murderers or somebody like that that aren't ever
going to get out, these folks are going to get out on the
streets, and I think studies have shown that you have a lesser
chance of people that have skills are going to commit crimes
once they get out. And I would invite any of the panel members
to just comment briefly on that issue if they'd like to.
Mr. Wilkinson, if you want to just start to that.
Mr. Wilkinson. Yeah. And your comments, Congressman, are
exactly correct. And it's not just the skills that are
important, what Industries does is teach a work ethic that
doesn't compare to any other program that we have in our
prisons. And we know that getting out--and we treat those
prisoners like real workers on the street. They have to be at
work at a certain time, they can earn benefits, they can do
different things that would resemble what a real live work
situation would be. And that's what we want because we know the
main thing that keeps the people out of prison, the number one
thing that keeps persons from coming back to prison is their
opportunity to find meaningful work, not just a job but
meaningful work. Industries helps facilitate that.
Mr. Chabot. Any other panel members? Okay. Let me just
shift over to another issue real quickly with the time I have
remaining, and that's relative to the security for the guards
themselves. Probably, Mr. Glover, you're in the best position
to comment on that.
Could you just--as a practical matter, what difference it
makes if the inmates have something to do to keep them from
being idle and getting into mischief?
Mr. Glover. The difference, Congressman, is what
historically we've had happen is inmates that work in
Industries are on a waiting list. If they get an incident
report inside the prison for any infraction, any infraction,
they drop to the bottom of the list on the waiting list to work
in Industries. And we have waiting lists. This isn't like a--
we're not forcing inmates into that system. We have waiting
lists of inmates who want to work in that system.
If an inmate is working in FPI and gets an incident report,
he is immediately removed from Federal Industries and placed
into a lower--frankly, a lower class of jobs, either cleaning
floors or something else throughout the prison, and then he has
to work his way back up into--he or she--has to work his way
back up into the Industries system.
It's a huge tool for us as far as maintaining order with a
large group of inmates.
Mr. Chabot. I see my time has expired, Mr. Chairman.
Mr. Coble. I thank the gentleman.
The distinguished gentleman from Michigan is recognized for
5 minutes.
Mr. Conyers. Thank you, Mr. Chairman.
The big problem that we're really grappling with is the
determination to eliminate mandatory source. Now, take this
issue: We eliminate mandatory source, jobs go down--80 percent
of the inmates don't get into this training system anyway--and
then crime goes up. And what the bill before us, that's meeting
so much opposition, does is try to ameliorate that.
But the problem, Chairman Hoekstra, is that, if we don't
get the appropriations coming in, the provision that I've added
to the bill, this bleak picture may come true. So what I want
to do is just have each of you just briefly comment on it so
that we can get some sense of direction from you about this
subject.
Phil.
Mr. Glover. Department of Defense, as you know, through the
last few appropriation years have cut mandatory source out of
the Department of Defense, their appropriation bills. And so we
have seen a loss of 3,000 inmate jobs. I don't know how you
correlate that. I'm not an expert on numbers and how people
crunch numbers. All I can say is that since we have these
revisions we have lost inmate jobs.
Now, if I could just briefly say this, we've had 13
factories either close or reorganize. Many of those in
furniture sales--which that should be very promising for----
Mr. Conyers. Phil, are you willing to risk eliminating
mandatory source?
Mr. Glover. I personally don't want to lose mandatory
source. I have seen what the Congress has done the last few
years, and I'm looking for a solution to help us keep as many
inmates employed as possible, and that seems to be the
partnering effort that oversees employment.
Mr. Conyers. Mr. Miller, you're for trying to eliminate
mandatory source with the guarantees that are in the bill, is
that right?
Mr. Miller. Correct.
Mr. Conyers. Okay. Dr. Wilkinson, how do you come out on
this?
Mr. Wilkinson. I am not a proponent of eliminating
mandatory source. You know, we need to keep it. In Ohio it's
called the State Use Law. There have been attempts in our
General Assembly to challenge it, and we've been able to keep
it.
Mr. Conyers. Chairman Hoekstra, how do we rationalize this?
This, to me, is the heart of the tension on both sides. Do you
think that we put together something that can get us through
these shoals, or when we come back here in a year, if this bill
goes into effect, we could be in big trouble because some of
these predictions might come true?
Mr. Hoekstra. Well, actually, I don't think that in a year
you would be in big trouble. The first thing we really need to
take a look at is FPI sales are increasing; I mean, in the last
2 years they've increased 18 percent, and their profits have
gone up 71 percent. I think they should be explaining to us why
prison employment is going down. I can't explain why prison
employment is going down as their sales are going up 18
percent. That would be very good performance for a company in
the private sector. And we know from what we're seeing in the
State of Michigan, we're not seeing those kinds of results and
that kind of performance in the private sector, that kind of
growth in either sales or jobs.
The second thing is it is a phaseout of mandatory sourcing.
It is not day one. It is, you know, through 2011. It is a
phaseout of mandatory sourcing.
And the third thing is, you know, again, with the work that
you and Congressman Frank have done, is we have put in a whole
range of other options, some of which are used in the State of
Ohio which are not-for-profit. There are other work
opportunities, there are other training opportunities. And
again, you know, as I said, Barney and I have committed to work
on this program together, and I think there are--this would
probably be a program that all of us here would be united on.
And if there was a change in the mandatory sourcing statuses,
we would have a bipartisan effort to put increased funding in
for vocational training. Because the other thing that we know,
the statistics will show you that the vocational training
programs are more effective in recidivism, reducing recidivism
than inmate work programs.
So the work that you have done with your colleagues and the
amendment that we've put in is putting money in focus and
effort on the things that are more effective than work training
programs through the vocational training. So the combination
of--their business is growing, we've put in the authorization
for these kinds of programs that will really be effective tools
to reduce recidivism, and it is a 5-6 year phaseout. It is not
a drop-dead date that says tomorrow you need to change the
scope of your business.
Mr. Coble. The gentleman's time has expired. Thank you, Mr.
Conyers. Thank you, Mr. Hoekstra.
The distinguished gentleman from California.
Mr. Lungren. Thank you very much, Mr. Chairman.
My years in Congress before, and now, and as Attorney
General, I have always gotten good report cards from the
various business groups that are allied in support of this bill
and seemingly in support of a major change in the FPI program.
And during that time I've been in public life, I've spent most
of my time trying to make laws tougher, put more people in
prison who need to go there. During my tenure as Attorney
General, we dropped the crime rate in California by about 35
percent, the homicide rate by 50 percent, and we put more
people in prison, a lot more in prison.
That's only one half of the equation. The other half of the
equation is how do we control it and what do we do? We have not
been able to attack the terrible problem of sexual assault and
rape in our prisons, we are woefully lacking in that, whether
it is the Federal or State prisons, and that's a huge mark
against our country in my judgment.
We don't do a very good job of rehabilitating our
prisoners. And this is like deja vu all over again. When I was
here 20 years ago there were attacks on this program. We were
told that this program was the death now of various parts of
our economy, and unless we got rid of the program those parts
of our economy were going to go down.
We talk about the cost. What is the cost of getting
somebody out who is not going to commit crime? I mean, what's
the cost of keeping somebody in prison when they're not on the
street and they're not committing crime? That's an economic
benefit to society.
We know that there are certain areas we can't allow
prisoners to work in, certain services. You don't want to call
up and have a prisoner doing a background check on your credit.
I mean, we laugh, but that was done, until we found out that
was a big mistake. So there are certain areas of the economy
that we can't have them doing.
They can learn to build things in the electronic area,
clothing and textiles, and furniture. And I would be loath to
look at a major restructuring unless we can prove that it will
not diminish the number of people we've got working. In fact, I
think we need to have more of them working.
So I just, you know, this is the tension we always have.
We've got a lot of people out there, when I ran for office, who
were willing to throw the book at anybody who commits a crime,
but they're not willing to put the money into the prison system
and they're not willing to put the money into taking care of
prisoners and they're not willing to protect prisoners against
rape. I don't believe, if I sent someone to prison when I was
Attorney General and because of the laws I passed here, that
person is sentenced to rape or sexual assault, yet we go
blindly out of our way to pretend that that doesn't exist. And
then we give lip service to the fact that we want to help them
on the way out to the door, and we don't do anything about it.
So while I have been very supportive of business interests
across the board, small business, all these sectors, I am one
that has to be put down as very skeptical of us making a very
major change like this.
Mr. Miller, with all due respect, you've got to come and
show me that this is really hurting the industry. I mean, to
come here and say, well, I can't show any loss of jobs anywhere
and I can't show any particular business going out of business
but we know it hurts us, frankly is insufficient to convince me
that we've got to do something. Now, if you've got some real
hard data to show how this program is really hurting your
industry in a substantial way, I'd like to hear it.
Mr. Miller. Congressman, we don't disagree with you that
there needs to be some work opportunities, and we're with you
on that. The problem that we have as an industry, and I think
as a coalition, is that when you have a system or a Government
corporation that in many cases isn't making furniture--nobody
has a problem if they want to make furniture, legitimately make
office furniture. No problem, it's a skill that they can
utilize. The problem we have is when you hire an outside
manufacturer to produce that product where you're going to ship
it directly to the buying agency with little or no inmate labor
whatsoever. Even one case of pass-through--or drive-by
manufacturing we refer to it as--is one case too many.
Mr. Lungren. Selling to whom?
Mr. Miller. To the Government.
Mr. Lungren. So we're talking about it's a Government
enterprise which is putting people in prison in order to
protect society not having an advantage to sell to Government,
where taxpayers would say, ``Hey, you're supporting one part of
our effort here that's costly to us and in part you're
partnering up on the other side.'' See, that's what I don't--I
understand that the Federal Government is the largest, I don't
know, one of the largest purchasers of goods and services in
America, and we're talking about relatively small percentage of
what the Federal Government buys going to Industries across the
board----
Mr. Miller. But why shouldn't every other manufacturer or
independent reseller have the same opportunity as Krueger
International or anybody else who is partnering with FPI to do
that? If there is no work, inmate labor, going into that
product whatsoever, how is that helping any inmates to get a
job once they're released from prison?
Mr. Lungren. There is no inmate----No inmate labor
whatsoever in the making of the product. How is that helping
the inmate once they're released back into the community?
Mr. Miller. That's a good question.
Mr. Coble. The gentleman's time has expired. We will have a
second round, and we will start it now.
Pete, I didn't get to examine you on my first round, so I
will do that now. And I don't mean for this to sound like a
rhetorical softball question, which Mr. Scott will probably
accuse me of doing, but I want to extend what Mr. Conyers was
talking about concerning mandatory source.
Do you believe, Mr. Hoekstra, that the elimination of
mandatory source will result in the elimination of FPI, or do
you believe that FPI will still be able to compete with private
sector business?
Mr. Hoekstra. Well, I think this is the real key here.
We've been accused of saying that we want to get rid of Federal
Industries. We do not want to get rid of Federal Industries. I
think this bill is structured in a way that constructively
reforms Federal Industries and it's why we've been able to put
together the coalition that we've been able to put together.
Federal Industries will argue day in and day out that they
can compete with the private sector, that they can provide a
quality product at a quality price at the delivery schedule
that the customer wants, and that they can compete with the
private sector. We're saying give them the opportunity.
We then go through, and we put in place a whole serious of
checks and balances to make sure that Federal Industries, if
they have trouble competing with the elimination of mandatory
sourcing, that there are things that will enable them to keep
people working, but more importantly, get them ready to make
the transition back to private life. You know, we give them the
opportunity for training programs, we give them the opportunity
to do work for the not-for-profit sector in new and unique
ways--again, new and unique to the Federal Government, but not
new and unique to State prisons. State prisons are doing this
and it's working very well where they are partnering with not-
for-profit organizations.
And Mr. Lungren, you talk about, give me the fact where we
have hurt an industry. Take a look at textiles and clothing.
Textiles and clothing are the largest supplier to the
Department of Defense from FPI. They are larger than the next
three companies combined. And if you go into--if you go into
Pennsylvania, I've gone to the factory where they have laid off
workers because they lost significant contracts to Federal
Industries. I'm sure that is exactly the case in Mr. Coble's
district, where you would go to textile plants that are either
shut down or they have large numbers of unused equipment.
The reason that the Chairman of the Full Committee is
passionate about this is--he calls me the Johnny come lately to
this issue because in the 1980's he had a small business that
went out of business because of losing their business to
Federal Industries.
People come on and join this coalition because they have a
genuine interest in rehabilitating prisoners, but also because
they've had job losses in their district.
Mr. Coble. Mr. Hoekstra, before my time expires I want to
visit Mr. Glover again.
Mr. Glover, in your statement you said you believe that any
part of this bill must include repatriation services and
products into the entire market. We should give up mandatory
source, you say. I think what you meant to say was ``if'' we
have to give up mandatory source, did you not?
Mr. Glover. Yes, sir.
Mr. Coble. Okay. I wanted to be sure about that.
And let me revisit with you, Mr. Glover, also something
that Mr. Hoekstra, I think, mentioned.
In your testimony you indicated that your staff had been
reduced, but yet conversely your earnings increased. Comment on
that for me.
Mr. Glover. Well, Mr. Chairman, certainly I'm not the head
of FPI. I'm a senior office specialist in the prison system, so
as far as how that happened, I don't know.
Mr. Coble. I think we can all benefit from learning how
that happened.
Mr. Glover. Frankly, probably a written question to the
agency would probably get you the response.
I do know this; I know that 35--that chart talks from
2002--my understanding is from 2001-4 we lost--we had a 35
percent drop in furniture sales. Last year, I think we sold
about $150 million in furniture, not $250. I mean, I'm not
trying to get into anything here with the Congressmen. I just
want to be--I'm trying to be as accurate as possible.
You know, the assertions keep coming, Mr. Chairman. The
Sixth Circuit Court of Appeals--this went to the Sixth Circuit
Court of Appeals, if we were abusing our mandatory sourcing
privileges, if we were not following the law. And in my
statement there is an attachment five, and it has an article in
there about the Sixth Circuit Court of Appeals decision. And we
keep getting assertions, and this went to court, so they've had
their chance to air their differences on the statute, and
frankly the court upheld FPI's position, not the other
position.
Mr. Coble. I thank you, Mr. Glover. My time has expired.
The gentleman from Virginia.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Glover, a suggestion was made that some of the work is
being done outside the prison and sold. Was that ever done and
is it going on now?
Mr. Glover. Mr. Scott, the pass-through issue has come up
year after year. President Bush appointed a brand new board of
directors in 2001. He got rid of all the rest, all the other
ones, the old ones, and he appointed a brand new panel. That
panel is chaired by Mr. Ken Rocks out of FOP. They have passed
resolutions since 2002, I believe, the first year they were
officially on board, that there are to be no pass-throughs of
any items.
Mr. Scott. So to the extent that it ever happened before,
it's not happening now.
Mr. Glover. It certainly hasn't happened since the new
board has taken over. And everybody here has had a chance to go
to that board and air their differences with FPI because
they've held open hearings.
Mr. Scott. Okay. Now, one of the problems we have in this
legislation is it's a two-step process. One, you get rid of
mandatory source, and two, we hope for some appropriations to
replace the jobs. And this bill would be a little different if
the mandatory source were eliminated as the replacements came
on. I don't think anybody is kind of stuck on mandatory source,
but mandatory source works. And if you're going to get rid of
it, you've got to replace it with something. And one suggestion
has been vocational education.
Mr. Glover, on vocational--well, maybe Mr. Wilkinson. On
vocational education, as I understand it, that's just for the
last couple of years that you're in prison. How long--if
someone is in for a long time, how long can you do vocational
education?
Mr. Wilkinson. Most vocational education programs--they're
called career tech programs today--are probably no longer than
a 6-month activity because you earn a certification, you go
like you're going to a junior college or a tech school. You get
a certification in a particular area and then you're done. And
what we'd like to do is to take these people who have gotten
these skills in career tech and put them in correctional
industries so that they can use the skills while they're still
in prison.
So although we love and want more vocational programs, they
are not the same as Industries.
Mr. Scott. Thank you.
And, Mr. Glover, Mr. Miller suggested that the bill does
not hurt FPI or correctional workers. Do you want to respond to
that?
Mr. Glover. Well, I can only say that over the years we've
invited anybody that has spoken against FPI to tour our
facilities and look at FPI, look at the program, look at what
it does for inmates. I have yet to see anyone from that
particular coalition, and, certainly, Mr. Miller, I believe,
was invited at one time or another to come and take a look, or
if he wants to come and take a look he can certainly do that
and look at how the program is run and why we run it the way we
do.
I believe wholesale changes to the program are going to do
what the DoD provision did with the appropriations, which is
it's going to drive a market change. The reason mandatory
source has been effective is because it gives us steady work.
We have steady employment for the inmates. We know how many
contracts we have, we know how much work we have and how to
schedule it. If you are all the time competing up and down, up
and down for contracts, I understand their frustration with the
program, however, prison is based on steadiness and not a lot
of changes. When you have a lot of changes in prison, you have
problems. It's how it works. Inmates are not good at change.
Staff, frankly, aren't that good at change either, but inmates
are not good at change. And so when you are laying them off,
sending them back to housing units because you don't have any
contracts, then the next week you have a contract that you have
to get out in 2 weeks, so you work three shifts, then you
cancel the three shifts and lay them off again, it is a
constant problem in the system.
Mr. Scott. Thank you.
Mr. Miller. Congressman, if I could just add one thing? I
have been invited to their facility, and I have done so. So----
Mr. Scott. Thank you.
Mr. Wilkinson, in your written testimony you had comments
about the--specifically about the legislation. Do you want to
make those comments now?
Mr. Wilkinson. About this legislation?
Mr. Scott. Yes.
Mr. Wilkinson. Well, first of all, before I say that let me
acknowledge the proposal that Congressman Chabot and the
Ranking Member are discussing about the Commission to look at
exactly what the real situation might be. We know that our
Industries has a positive impact on industry in general; it
does not take away from what's going on in the community. There
is research that shows that when we purchase goods and
services, when we partner with corporations, that it has a
major, major impact on the economy. So what we're doing is
adding to it. And when you add to that, bringing back--and I
know this is FPI's goal--businesses that are offshore back into
the prison that nobody else is going to probably do, then it's
going to aid security, it's going to reduce that person's
recidivism, it's going to minimize the victimization in the
community and just have an overall positive impact. So I think
we've got to be real careful about some of the rhetoric that we
are now hearing.
Mr. Coble. I thank the gentleman.
The distinguished gentleman from Ohio.
Mr. Chabot. I thank the Chairman.
And we've covered an awful lot, so there's only a couple of
things that I wanted to focus a little bit of attention on at
this point.
Mr. Miller, you made this point about the pass-throughs,
and I would agree, if that's been happening, you know, that
shouldn't have happened. And that's one of the reasons that Mr.
Scott and my suggestion about studying this, and if there are
things that need to be changed as opposed to doing something
which could gut the whole program, I think should have some
serious consideration.
But back to the pass-through issue, Mr. Glover mentioned
they have a new board back in 2001; they've changed that so
it's not happening anymore. Do you--is that correct?
Mr. Miller. I mean, you look at the numbers---
Mr. Chabot. Because you had mentioned that that's your--you
said you agree this is something we ought to do. You don't have
any objection to it but pass-through is bad, and now they said
they don't do it.
Mr. Miller. Two points though. One is, you look at the
annual report numbers, and I question as to how that could not
be happening. With the numbers and the increases in sales and
revenues and those type of things and the decreases in the
workforce, how do you accomplish that? I guess that's one
question. The second question is----
Mr. Chabot. But you have no facts to indicate that that is
what it is----
Mr. Miller. That's correct, because the only thing I have
access to is the annual report.
Mr. Chabot. So you don't have any evidence that this is
continuing to go on then at this point?
Mr. Miller. No. But I don't have any evidence to say
otherwise either.
Mr. Chabot. Let me ask another question here. It's my
understanding that the Bureau of Prison inmates are currently
engaged in a number of other type community service projects;
for example, like nonprofit, Toys for Tots, that they make this
out of scrap wood, that they--even some that have the ability
to do transcribing into braille for the blind, they do mowing
of grass on military facilities and those types of things, they
even cleared trails in some of the national forests. Are there
any--Mr. Glover, I don't know if you wanted to comment on any
of those activities that are carried out.
Mr. Glover. We certainly have those programs, Congressman.
A very small number of inmates, you're talking minimum custody
to low-end custody, which they would have to be required--they
would have to be able to have a gate pass to go out of the
secure facility. So it's a fairly low number that works on the
outside community projects and the national parks. We have some
that work with the VAs, one of the VA hospitals, cleaning up
areas and stuff like that.
The Toys for Tots program is handled out of Oregon, I
believe, in our Sheridan facility, and there is probably maybe
20 to 30 inmates that actually do that work and build Toys for
Tots program out of scrap pieces of material. That was an
offshoot of an idea that one of the wardens out there had, and
he kind of--it's not really a Prison Industries project, it's
more of a community service project that one of the wardens
came up with at the time.
Mr. Chabot. I know we were always very careful--I mentioned
that I had been involved in this type of activity previously as
a local elected official. We were always very careful about
those that went out to the community, that they were your very
low-risk individuals. I assume that's the same with us at the
Federal level.
Mr. Glover. Let's face it, Congressman, if we let an inmate
out to work somewhere and something bad happens, we're going to
get some serious egg on our faces and that's not something we
want.
Mr. Chabot. Thank you.
And finally, Mr. Wilkinson, let me ask you, relative to the
issue of recidivism, as I mentioned before, can you give some
typical examples as far as jobs that people have gone into
after they've gotten out and been through your program? Do you
have any types of examples that you can give us and----
Mr. Wilkinson. Sure. For example, we have computer-aided
drawing. And this is a very sophisticated operation, business.
Every one of those persons who do that work have gotten a job,
every one of them. Our Industries do asbestos abatement. These
are some highly skilled, highly trained persons, they all get
jobs. So it depends on the nature and the sophistication and
the technology that's involved with the job, is directly
correlated with their ability to find work.
A common job that might be in Prison Industries is making
license plates, where there is no real industry for that on the
street, but we do that. But what we teach in those instances
are the work ethic that is extremely important, and sometimes
the presses that they use can be used for other things.
You know, one of--the conversation came up about why can
you have--make more money and have fewer inmates? Well, one of
the reasons is technology. You know, the same equipment that
we're using now is not the equipment that we used 30 years ago
to make license plates. So we need fewer prisoners to do it.
There are industries, such as the ones that make validation
stickers in our prison, that are less costly and we need fewer
inmates to do it, and we make thousands of them. So the
industry has changed as well.
Mr. Chabot. Thank you. I see that my time has once again
expired. Mr. Chairman, thank you for holding this hearing. I
think it has been very helpful.
Mr. Coble. Thank you, Mr. Chabot.
The distinguished gentleman from Michigan, Mr. Conyers.
Mr. Conyers. I want to go on the Chabot-Scott search for
truth in this matter. And I only wish we could hear from
Jocelyn McCurdy at ACLU and Charlie Sullivan for CURE and some
of the other people who spend huge amounts of time here.
The question--two questions. What more can we add to this
bill to make everybody sleep more comfortably in their beds at
night about the reduction of employment opportunity that might
come if we eliminate mandatory source? And the issue that hangs
over this whole Committee is whether mandatory source is, in
fact, unfair competition. And I'd like to, once again, go down
very quickly. Forgive me if I interrupt you if you spend too
much time at the mic.
Phil.
Mr. Glover. Well, first I'd like to say that we're not a
business. Industries keeps being referred to as a business.
We're a prison program developed in the 1930's to put inmates
to work, and at that time because wardens were using inmates
out in the public as frankly, slave labor. I mean, let's face
it, that's what was going on. They were shelling off labor from
the prisons out into communities, and so this program was
built.
I guess what I would have to say is this, that there should
be--if this is the bill I have to operate under--which I'm more
opposed to mandatory--to losing it than getting rid of it. I
would say that, let us start to expand in the repatriation for
a couple of years because I think that Congressman Hoekstra is
right, the Chairman is right, you're not going to see an effect
in this for a year. A year is not going to give an effect. Give
us repatriation for a couple of years. Stay our mandatory
source, status quo it so that we see if we can start bringing
work back and start to develop factory work that way.
Mr. Conyers. That's a good idea.
Mr. Glover. And then----
Mr. Conyers. Okay. Let me skip to Dr. Wilkinson for a
minute here.
Mr. Wilkinson. I'm not sure, Congressman, that there is a
substitute for mandatory source, and I have been pretty
vehement about that in my jurisdiction. What we don't want in
prison is to have an industry that is doing well and then all
of a sudden that industry and that shop carrying out that
industry goes idle for 6 months because they don't have any
work because they may have been outbid by a sister State agency
or a sister Federal agency. So I am not a proponent of saying
that there is an alternative to mandatory source or in our case
State use.
Mr. Conyers. Is there anything we can add to the bill that
would beef it up if it comes to that, Doctor?
Mr. Wilkinson. Congressman, I think--yes. And one of the
things that I would like to see is more voluntary participation
by businesses that are unaffiliated with prisons. Now we have
made a big effort to work with Continental Office Supplies, for
example, and we are working in partnership with them. We've
worked in partnership with Thomas Ruff. So I think that to
develop these collaboratives, these relationships, these
partnerships with organizations that would be willing to help
teach the industry, to develop partnerships with the trade
industries I think can be a big help.
Mr. Conyers. Thank you.
Chairman Hoekstra.
Mr. Hoekstra. Thank you. Knowing the folks at Continental
Office Supply, I can tell you they've been big supporters of
reforming Federal Industries.
But, you know, we can do the study, all right, but we ought
to do it in the context of making it part of this bill. We have
two and a half pages of studies that have been completed since
the 1980's on Federal Industries, and we can do it.
We have been taking a look at what we can do with
repatriation, and maybe we need to revisit that. But I think we
need to move forward. You have to take a look at the impact
that this has on the other part of society as well. You know,
you and I are from a State that is getting hammered right now,
both from the east side and on the west side. You know,
mandatory source was great for Federal Industries during the
1990's and 2001 and 2002, but you know what? I think it was
wrong that Federal Industries was the fastest and probably the
only growing office furniture company in America during that
time. As the industry was going through significant lay-offs,
Federal Industries was growing by double digits each and every
year.
Mr. Conyers. Thanks, Pete.
Mr. Coble. I thank the gentleman.
The distinguished gentleman from California, Mr. Lungren.
Mr. Lungren. Mr. Glover, do you have any statistics on what
the prison population has increased by during this period of
time we've just been talking about? I'm not talking about your
program, but the prison population.
Mr. Glover. No, no. I represent--just to be clear, I
represent all of the prison workers in the Federal system, not
just Industries. I am here speaking about it----
Mr. Lungren. What I'm trying to say is, if we're concerned
that the program has increased----
Mr. Glover. It's because of the inmate population.
Mr. Lungren. Has the inmate population increased?
Mr. Glover. Over the last 20 years the inmate population is
up 650,000 percent--I mean, 650 percent. We have only increased
staffing 250 percent. That was in the Federal Times
approximately 6 months ago.
Mr. Lungren. You're talking about the Federal system.
Mrs. Glover. The Federal prison system has increased
inmates 650 percent since 1980.
Mr. Lungren. Well, since we've got the Comprehensive Crime
Control I passed in 1984, that might be one of the reasons for
it. And I'm proud of that, and I happen to think it's something
that has helped bring the crime rate down, but it also means we
ought to expand programs of opportunity for prisoners, it seems
to me.
Chairman Hoekstra, the pass-through, I think we can all
agree that ought to be eliminated. Do you have evidence that it
hasn't been eliminated; and what do we need to do if it hasn't
been?
Mr. Hoekstra. We have worked very, very hard with the
board, that when we tried to identify cases where pass-through
may have occurred or products where it may have occurred,
brought them to the attention. And I can't tell you whether
they're going on right now or not. I know that Ken Rocks has
been committed to eliminating pass-through. He recognizes that
that is wrong, that Federal Industries should not just have a
catalogue, sell their stuff and----
Mr. Lungren. We can all agree on that.
Mr. Hoekstra. And I think the board has been trying to
implement that.
Mr. Lungren. Was there a serious problem at one time?
Mr. Hoekstra. At one time it was a concern, yes. I can't
tell you the dollars that would have been involved.
Mr. Lungren. So as I take it, pass-through is not your big
problem with the program, it's the mandatory source.
Mr. Hoekstra. It's not the pass-through, it's the mandatory
source. And we are not in favor of eliminating and reducing--I
mean, I hope that the way this bill goes through, and again,
because the folks that are involved with this are expecting
that the opportunities will--and the effective opportunities
for prison workers will increase with a revised Federal
Industries, not decrease. Federal Industries says they can't
compete, we open up not-for-profit, new opportunities there, we
open up the vocational and remedial education. That becomes the
expanded and effective new model for Federal Industries.
Mr. Lungren. Okay. Let me ask you a question, though. Do
you disagree with Dr. Wilkinson that vocational education is
substantively different than Industries in that it's a short
term in order to be certified and it wouldn't allow long-term
participation by those who are in prison?
Mr. Hoekstra. Yes. We would not see somebody involved in
vocational education for 5 years, that is correct.
Mr. Lungren. So it's not a one-for-one substitute?
Mr. Hoekstra. It is not a one-for-one substitute, that is
correct.
Mr. Lungren. If, in fact, it proves out that Industries
can't compete without mandatory source, would it be your
position that we ought to eliminate the program because of its
deleterious effects on sectors in the economy, including
furniture manufacturing?
Mr. Hoekstra. You know, if the State--if they came back and
said that they could not compete, or the facts bore out that
they could not compete, we would have to take a look at exactly
how we would restructure work opportunities for prisoners. I
mean, FPI right now says that they can't compete. They say that
they do compete, and they compete effectively each and every
day. And, you know, the head of the Bureau of Prisons has
indicated that they favor less reliance in moving away from
mandatory sourcing, but they say they can't compete.
Mr. Lungren. Mr. Glover, number one, do you think your
program can compete without mandatory source? And secondly, I
want to ask this, one of the conundrums we have in dealing with
prisons is the reality of prison gangs. And as I studied prison
gangs and youth gangs, their attraction is twofold. One is
protection racket. You don't join them, you're going to get
harmed. The second is a lot of these people come from
backgrounds where they never had authority figures, they never
had anyone that gave them anything, there was nothing in their
life which gave them an identification outside of themselves,
and gangs do that unfortunately.
What is the mechanism that you see--if there is any
mechanism--of a Prison Industry to create something outside the
gang environment? I'm not saying it is the solution, but does
it give an alternative lifestyle, if you will, alternative
hopes and aspirations in time?
Mr. Glover. I believe that the Industries program, as it's
currently built in our system, what it does is it
individualizes the inmate. He goes through a screening process,
he actually goes through a job interview to get into
Industries. The gang parameters don't really fit in there. In
order to get hired in the FPI, they certainly look at who the
inmates are running with in the system. You don't see, like, 10
people in one gang applying for an FPI job, it doesn't seem to
work that way. There may be statistics that say different, but
I haven't seen it work that way.
What we see is that this program is a long-term program. If
you have someone that's serving at USP Leavenworth, for
instance, and they're in for 45 years or 50 years, you know,
you can educate them, you can vo-tech them, but to keep them
productive and occupied on a daily basis and feel like they
have a little bit of worth, this program seems to do that.
That's where, at least as a correctional officer, that's
where I come from on this program, is that it gives the inmate
a sense of worth every day he goes down and does something
productive.
A couple years ago there was a proposal to put together an
engine, let it come through a factory line, come back around,
break it apart and make it again. You would only get inmates to
do that for so long. They're not going to go that direction.
As far as alternatives, like I said, if we could see this
held off and repatriation looked at as an alternative, but it
would have to open up--I mean, the Federal market is shrinking
anyway for us. Now, I realize these statistics. You know, yeah,
we've made more money, and we've said when you have to make
more Kevlar helmets--you know, we have one factory that does
that, we don't have 10. And we don't move factories around that
often, moving inmate production lines around, we don't do that.
We don't move inmates around to work in different factories so
that we can have different product lines. I mean, you have what
you have in whatever prison you're in, because if he's a USP
inmate, a high security inmate, you don't move him to a low
because he used to make one thing and we're making it over here
now. We don't move that inmate. So you have to retrain the
entire workforce at the low level facility, or vice versa. It's
just not that simple.
Mr. Coble. My airport is calling. I don't want to cut you
off.
I want to, first of all, thank the four Members for
having--yes, Mr. Scott.
Mr. Scott. Can I make a short statement? Because we were
talking about the mandatory source, and the problem that we've
got is that the bill will eliminate mandatory source and
replace it with a hope and a promise that we will get
appropriations to replace it, and that's not a realistic hope,
as the gentleman from California has indicated. Sometimes we
just don't appropriate money for some of these prisoner
programs. And nobody is, like I said, married to mandatory
source, but, if you're going to get rid of it, jobs are going
to go down, crime is going to go up. That's not a good result.
And so what we need to do, Mr. Chairman, is make sure that
before we do anything that we protect the number of jobs that
we have, and with the increased prison population even have
more jobs because this program has been proven to be not only
good for prisoners, but good for the taxpayer in reducing
recidivism and good for the law-abiding public because you have
fewer people out there committing additional crimes. We've done
a lot in this Committee trying to reduce crime, and this is one
that actually works. Mandatory source works. Now you replace it
with something else, it might work, it might not, but we ought
to have some confidence that what we do will in fact work
before we get rid of something that works.
Mr. Coble. Well, I think it's been a productive hearing. I
want to thank the four Members who delayed their departure on
the first day of the district work period. I want to thank the
four distinguished witnesses, and for that matter those in the
audience who stayed with us the entire hearing.
In order to ensure a full record of adequate consideration
of this important issue--and it is, indeed, an important
issue--the record will remain open for additional submissions
for a 7-day period. Any written question that a Member wants to
submit should be submitted within that 7-day framework.
This concludes the legislative hearing on H.R. 2965, the
``Federal Industries Competition and Contracting Act of 2005.''
Thank you for your cooperation. Without objection, the
Subcommittee standing adjourned.
[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Statement submitted by the U.S. Chamber of Commmerce to the House
Judiciary Committee
The U.S. Chamber of Commerce appreciates the opportunity to submit
this statement for the record on Federal Prison Industry Contracting
Reform and to demonstrate our support for H.R. 2965. The U.S. Chamber
is the world's largest federation of business organizations,
representing more than three million businesses and professional
organizations of every size, sector, and region of the country. Over
ninety-six percent of our members are small businesses with fewer than
100 employees. We commend the Subcommittee for their interest in
holding this legislative hearing on H.R. 2965, a bill that seeks to
infuse competition in the federal procurement process with regard to
purchases from Federal Prison Industries (FPI), while providing work,
training and rehabilitation opportunities for prisoners in a manner
that does not penalize small businesses and their law abiding
employees. We would especially like to thank Representatives Hoekstra,
Frank, Maloney, Sensenbrenner, Conyers and Coble, and so many others,
for their leadership and dedication to reforming the unfair competitive
practices of FPI.
FPI in the Free Market
Our free market system is essential to achieving and maintaining a
vibrant and productive economy and is a necessary foundation of
political and social freedom. The United States government is
responsible for enforcing laws that promote competition in the
marketplace and ensure a level playing field among competitors to
benefit American consumers. Monopolies do not belong in a free market
economy. When you remove competition from the equation you are left
with higher prices, lower quality of service, and lower productivity as
a result of lower efficiency. Non-market practices also stifle
innovation and reduce the availability of goods and services.
This is exactly the situation with respect to FPI sales in the
federal market. The federal government-the consumer in this case-is
paying above market prices for lower quality goods and in doing so, is
squandering American taxpayer dollars while completely ignoring the
very rules it enforces in the commercial market. The federal
procurement process should be aimed to deliver on a timely basis the
best value product or service to federal agencies while promoting
competition and reliance on the private sector for commercial items.
Reform of FPI is aligned with the goals of ensuring fair and full
competition to ensure the best value for the American taxpayer while
removing barriers that prevent businesses, particularly small
businesses, from obtaining government contracts.
The Need for Reform
In 1934, President Roosevelt established FPI as a government-owned
corporation. FPI was given special ``mandatory source'' status in the
government procurement process, forcing government agencies in need of
a product to purchase that product from FPI. No consideration can be
given to a private sector competitor unless that agency asks FPI for an
exception from its own monopoly. It is ironic that there are laws
prohibiting the U.S. from importing goods that are made by prisoners in
other countries, yet we have laws that require our own federal
government to buy goods and services from prisoners in this country.
Each year, FPI expands to produce even more goods and services.
FPI's sales growth, all through non-competitive contracts, has been
formidable: $802.7 million in 2004, up from $666.8 million in 2003,
$546 million in 2000, $339 million in FY 1990, up from $117 million in
1980, and $29 million in 1960. Today, FPI produces over 300 products
and services making it the 49th largest Government contractor. This
makes FPI a formidable competitor even for a large private sector
enterprise, much less a small business. Evidence indicates that FPI
will continue its expansionist behavior, by exploiting its mandatory
source status and increasingly encroaching on private sector industries
in order to be a profitable enterprise, forcing businesses to halt
production lines, lay off employees and even close their doors for
good.
Ensuring a level playing field for the private sector in the
federal procurement process by ending FPI's unfair advantage is a major
priority for the Chamber. The Chamber has a long-standing policy that
the government should not perform the production of goods and services
for itself or others if acceptable privately owned and operated
services are or can be made available for such purposes. The private
sector should be allowed to compete fairly with FPI for federal
contracts-plain and simple-by eliminating the requirement that
government agencies purchase products and services from FPI.
Reform of FPI starts with the realization that FPI has exceeded its
statutory authority. They are free to set any price they want within
the range of market prices with no incentive to charge the lowest
price. Until the recent enactment of reform measures, FPI, rather than
federal agencies, determined whether FPI's products and services and
delivery schedule met the agency's needs. While these reform measures
have provided some relief, permanent comprehensive reform is needed to
reign in this organization. By granting FPI a monopoly, issues of
price, quality and efficiency fall by the wayside at the expense of
U.S. taxpayers. Contrary to FPI's assertions, the General Accounting
Office (GAO) reported in 1998 that FPI cannot back up its frequent
claims about being a quality supplier to Federal agencies, furnishing
quality products at low prices to meet their needs. Once FPI
commandeers a product, it erodes, displaces, or eliminates private
sector competition, thus opening the door for it to raise its prices.
Recent aggressive expansion by FPI into the services arena has
caused great concern in the business community. Even though FPI's
authorizing statute does not specifically mention services, FPI has
interpreted that it is a ``preferential source'' for services and used
this to enter into sole source contracts with Federal agencies for
services. They are quickly expanding their services portfolio, which
includes printing, environmental testing, recycling, mapping and
imaging, distribution and mailing, laundry services, data conversion,
and call center and help desk support.
This expansion is alarming not only because it adversely impacts
the private sector but also because it is wholly inappropriate to allow
inmates access to classified or infrastructure information used in
mapping projects or the personal or financial information of private
citizens used in call center operations. We should be extremely
cautious with the information we arm our federal inmates with in
preparation for life beyond bars.
FPI's desire to expand into the commercial marketplace is an
alarming development that is seen as a call to arms by industry. The
Chamber opposes FPI's move into the commercial marketplace for four
reasons. First, the decision to expand into the commercial marketplace
is in conflict with the clear language of FPI's enabling legislation
and beyond the discretion of the Board. Second, it is a reversal of
more than sixty years of public policy. Third, FPI has claimed this
authority for itself without any specific legislative authority from
Congress. Finally, the creation of a state run enterprise, competing
with its own citizens, is a policy so at odds with the role of
government in a free society that it is a decision best left to
Congress.
Title 18 U.S.C. section 4122(a) specifically states:
Federal Prison Industries shall determine in what manner and to
what extent industrial operations shall be carried on in
Federal penal and correctional institutions for the production
of commodities for consumption in such institutions or for sale
to the departments or agencies of the United States, but not
for sale to the public in competition with private enterprise.
Now, however, despite this seemingly clear prohibition on entering
the commercial market found in the statute, recent evidence shows that
FPI has engaged in expansionist practices. Sixty-five years of public
policy should not be overturned, especially without public debate. The
United States should not be selling commercial services in competition
with law-abiding taxpaying businesses, using prison labor that is paid
no more than $1.25 an hour. FPI's expansion in the commercial market is
a dramatic shift in policy, and in conflict with the clear language of
18 U.S. C. 4122(a). We urge that no proposal to inject Federal inmate
provided services in the commercial marketplace be entertained by
Congress.
While we are empathetic to FPI's goal to employ federal inmates to
reduce recidivism by providing vocational and remedial opportunities
while incarcerated, it should not be done at the expense of law-
abiding, taxpaying businesses. It is unfortunate that in today's
society we are faced with an increasing inmate population. However, we
believe other sources of work opportunities for inmates should be
explored that do not infringe upon the private sector's opportunities
to compete for government contracts, threaten the general safety of our
citizens, and provide for expansion in the commercial market.
Legislative Solutions
Legislative reform addressing these concerns is way overdue and
more oversight by the FPI Board and Congress is needed now. Language
enacted in the FY02 and FY03 Defense Authorization bills, the FY04
Consolidated Appropriations Act, and the FY05 Omnibus Appropriations
Act provided partial interim relief from FPI's monopoly by allowing
federal agencies to decide how to best meet their procurement needs by
examining existing marketplace opportunities and purchasing products on
a competitive basis. In the 108th Congress, the House overwhelmingly
passed the Hoekstra-Frank-Collins-Maloney-Sensenbrenner-Conyers-Coble
Federal Prison Industries Competition in Contracting Act of 2003, H.R.
1829, a comprehensive reform bill that eliminates FPI's preferential
status, by a 350-65 margin. A companion Senate bill, S. 346, was
reported from the Senate Committee on Governmental Affairs in 2004.
For many years, the Chamber has been a leader in the broad-based
Competition in Contracting Act Coalition, comprised of the business,
labor and federal manager communities that advocate comprehensive,
fundamental reform of FPI. The Chamber and the Coalition strongly
support H.R. 2965. This bipartisan legislation would impose overdue and
much-needed restraints on the unfair competitive practices of FPI that
inflict damage on law-abiding businesses and the workers they employ,
while blatantly wasting taxpayer dollars.
H.R. 2965 provides for fundamental reform while maintaining a
process in which FPI can still sell to federal agencies but on a
competitive, rather than a preferential sole-source basis. It requires
federal agencies to use competitive procedures for the purchase of
products. H.R. 2965 would require FPI to be a more responsible supplier
to Federal agencies and the taxpayer, and would allow the private
sector to compete fairly with FPI for federal contracts by eliminating
the requirement that government agencies purchase products from FPI.
Agency contract officers, not FPI, would determine if FPI's offered
product best meets buying agencies' needs in terms of quality and time
of delivery. Most importantly, H.R. 2965 provides new authorities for
FPI that do not infringe on the private sector and its law abiding
employees.
Even with reform, FPI would still have an enormous competitive
advantage over the private sector. FPI pays its inmates $.23-$1.15 per
hour and is not required to provide any employee benefits like Social
Security, unemployment compensation or insurance. In addition, as a
Government-owned corporation, FPI is exempt from Federal and state
income taxes, gross receipts taxes, excise tax and state and local
sales taxes on purchases. FPI does not have to pay for utilities or
equipment and has a special statutory line-of-credit from the U.S.
Treasury for $20 million at 0% interest. FPI is also exempt from
standards, inspections or fines by various Federal, state or local
enforcement agencies, such as OSHA, that regulate all private sector
suppliers to the Federal Government.
H.R. 2965 includes language that would prohibit inmates from having
access to classified data, critical infrastructure data, and personal
or financial data under any Federal contracts. The American people
would be outraged to know that prisoners can be given access to their
credit card numbers, addresses, and value of their homes, as well as
location information on our underground gas pipelines and other
critical infrastructure that, if in the wrong hands, threatens our
security. Simply yet adequately stated, sensitive information of this
nature should not be in the hands of convicted criminals.
H.R. 2965 also protects Federal prime contractors and
subcontractors at any tier from being forced to use products or
services furnished by FPI. FPI would no longer be able to force
contractors to use FPI as a mandatory source for products or to be
specified as a mandatory source on contracts. We have seen this new,
expansive authority, which was not enacted by Congress through
legislation, but claimed by FPI through interpretation, used, for
example, to force architects and engineers to include FPI products in
their design specifications, even if those products are not the most
efficient, cost effective or appropriate solution.
To assure the safety of the prison guards and the inmates
themselves, H.R. 2965 would allow the Attorney General to award a
contract to Federal Prison Industries if he/she believes that the loss
of such prison work would endanger the safe and effective
administration of a prison facility. While this is a valid concern, it
is important to note only a small percentage-roughly 17%-of inmates
actually work in the FPI program. The remaining able bodied inmates are
engaged in various tasks relating to the operation and maintenance of
the correctional facility. These tasks reduce the operating costs of
the facility and keep inmates occupied in daily work activities.
Many concessions have been made on behalf of FPI reform supporters
over the years and H.R. 2965 provides additional safeguards in addition
to a level playing field on which FPI and the private sector can
compete. FPI asserts that comprehensive reform will cause inmate
employment to decline, factories to be shut down, and sales to
decrease. We argue that for decades businesses have suffered from
declining employment rates and decreases in sales, and have been forced
to shut down factories and production lines because of FPI's unfair
competitive advantage and practices. Therefore, the time is now for
balanced comprehensive reform.
Conclusion
The U.S. Chamber and the business community appreciate the
Subcommittee's examination of FPI's impact on the private sector and
urge quick consideration of H.R. 2965 by the full committee. Businesses
rely on an efficient, fair competitive process to provide the federal
government with goods and services to maintain and grow their
businesses.
Thank you for the opportunity to submit this statement for the
record.
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Statement of Roger F. Cocivera, President and CEO, Textile Rental
Services Association of America
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Letter from Dan Danner, Executive Vice President, National Federation
of Independent Business (NFIB)
Dear Chairman Sensenbrenner,
On behalf of the 600,000 members of the National Federation of
Independent Business (NFIB), I write to express our strong support for
H.R. 2965, the Hoekstra-Frank-Maloney-Sensenbrenner-Conyers-Coble
``Federal Prison Industries Competition in Contracting Act of 2005''
and urge swift passage through your committee.
Eighty-nine percent of NFIB members believe that prison inmates
should not receive preference for federal contracts. NFIB's members
have long fought against unfair government competition with the private
sector. Federal Prison Industries (FPI) has become one of the most
egregious examples of unfair government competition. FPI, also known by
its trade name UNICOR, is a government-owned corporation operated by
the Federal Bureau of Prisons.
H.R. 2965 would provide for fundamental change of FPI by making it
less predatory to small business and a more responsible supplier to
federal agencies and taxpayers. The bill would require FPI to compete
with the private sector for federal government contracts and require
FPI to perform its contract obligations in a timely manner, the same as
all other government contractors. Also, the bill would require FPI
products to meet the same design and performance specifications as well
as similar workplace health and safety standards that are applied to
private sector suppliers.
A ``soft landing'' provision in the bill would allow FPI to adapt
to the competitive marketplace, and many of the concerns expressed by
groups representing prison guards and prison life advocates have been
addressed. With these protections and other much-needed reforms, H.R.
2965 enjoys a broad base of support from Members on both sides of the
aisle. A similar bill, H.R. 1829, passed the House in the 108th
Congress by a roll call vote of 350-65.
I want to commend you for your leadership on this issue. I trust
that your colleagues will follow your lead by voting in favor of this
common sense reform of FPI and by voting against any extraneous or
weakening amendments. NFIB looks forward to working with you to pass
this much-needed legislation.
Sincerely,
Dan Danner
Executive Vice President
Public Policy and Political
----------
Statement submitted by the National Federation of Independent Business
(NFIB)
The National Federation of Independent Business (NFIB) is the
nation's largest small business advocacy organization, representing
more than 600,000 small-business owners in all 50 states and the
District of Columbia. We are pleased to present our perspective on how
current practices of the Federal Prison Industries (FPI) adversely
impact small businesses and to express our support for the Hoekstra-
Frank-Maloney-Sensenbrenner-Conyers-Coble Federal Prison Industries
Competition in Contracting Act of 2005, H.R. 2965.
We applaud the work of Chairman Sensenbrenner and Mr. Hoekstra on
this very important issue for small business. We also applaud the
passage of the FY05 omnibus spending bill, which allowed small business
to compete for federal contracts by ending FPI's mandatory source
status. However many small businesses across the nation still cannot
compete fairly against the Federal Prison Industries for federal
contracts. H.R. 2965 is a comprehensive reform bill that will
fundamentally change the unfair contracting practices of FPI and
protect small-business contractors and taxpayers alike.
FPI has numerous advantages over small business in competing for
government contracts. Inmate workers are paid hourly rates of $1.23 per
hour or less, rather than market-driven wages. FPI's facilities are
built as part of a prison and has access to production equipment from
other government agencies, at no cost. Congress even gave it direct
access to the Treasury with authority to borrow up to $20 million, at
rates far below what would be available to the largest commercial
enterprise.
These advantages are illustrated by the amount of business FPI
conducts with the government. FPI operates a centrally managed chain of
over 102 prison factories and ranks 49th among the top 100 contractors
with the federal government. Over 300 products and services are
produced by federal prisoners, totaling over $800 million in sales to
the federal government in 2004. FPI's sales growth through mandatory
source status is staggering: $546 million in 2000, $339 million in FY
1990, $117 million in 1980, and $29 million in 1960.
Since the 1980s, NFIB has worked actively to allow small businesses
to compete fairly with FPI - we're not asking for special treatment,
we're just asking to be allowed to compete for government contracts.
NFIB members feel very strongly about this--eighty-nine percent do not
believe that prisons should receive preference for federal contracts.
One member from Ohio, Bobbie Gentile, has had several problems
trying to deal with FPI. Bobbie is president and owner of Q-Mark, Inc.,
a small woman-owned business in Dayton, Ohio. Q-Mark is a
manufacturers' representative firm that represents fifteen
manufacturing firms. Of these fifteen firms, twelve are small
businesses, and four of the twelve are electronic connector
manufacturers.
In testimony before the House Small Business Committee on June 6,
2001, she stated:
``The situation with FPI is becoming worse as time progresses.
FPI has the right to demand that the government set aside any
connector series FPI chooses. They now successfully dominate
the circular connector market. I brought with me today examples
of quotes that I sent to the government. In all cases, my price
was lower than the price offered by FPI. FPI received the
awards. Once again the government had no option but to award to
them. I find their pricing an example of price gouging when
their labor rate is so low.''
NFIB supports H.R. 2965, Federal Prison Industries Competition in
Contracting Act of 2005 because it seeks to reform FPI to make it more
accountable to the public and less predatory to small business. While
the FY05 omnibus-spending bill did end FPI's mandatory source status,
this bill is needed for further reform of the FPI.
H.R. 2965 requires FPI to compete for government contracts with the
private sector to provide services and products, eliminating mandatory
contracting with the federal government. It enhances public
participation in the process by which the FPI Board of Directors
(Board) considers a proposed expansion of products and extends this
process to services. It also clearly defines the standards under which
the Board can authorize these expansions.
H.R. 2965 also protects prison employees and better prepares
inmates for life after incarceration. Under the bill, FPI is provided
with a five-year phase-out schedule of the mandatory sourcing with the
federal government. This 'soft landing' gives FPI a transition period
to adjust to private sector competition. The bill also improves
vocational and educational programs to teach inmates skills that are
needed for outside employment as well as provide for employment
assistance programs to help inmates find jobs upon release.
Thank you for holding this hearing and for allowing NFIB to submit
testimony for the record. NFIB looks forward to working with you to
pass H.R. 2965 to further efforts that lessen the harmful impact of FPI
on small business and economic growth.
----------
Letter from Chris Jahn, President, Contract Services Association (CSA)
to the Honorable Howard Coble
July 1, 2005
The Honorable Howard Coble
Chairman
Subcommittee on Judiciary; Crime, Terrorism and Homeland Security
207 Cannon House Office Building
Washington, D.C. 20510
Dear Mr. Chairman:
On behalf of the Contract Services Association (CSA), I urge you to
support the Federal Prison Industries reform bill sponsored by
Representatives Peter Hoekstra (R-MI) and Barney Frank (D-MA), which
would establish long overdue and much needed restraints to reign in the
unfair competitive advantage enjoyed by the Federal Prison Industries
(FPI). This bill not only has strong bi-partisan support in the
Congress, it has generated broad support from the business community
and labor unions.
CSA is the nation's oldest and largest association of service
contractors representing over 200 companies that provide a wide array
of services to Federal, state, and local governments. CSA members
perform over $40 billion in Government contracts and employ nearly
500,000 workers, with two-thirds of CSA companies using private sector
union labor. CSA members represent the diversity of the government
services industry and include small businesses, 8(a)-certified
companies, small disadvantaged businesses, women-owned, HubZone, Native
American owned firms and global multi-billion dollar corporations.
Unfair competition from FPI increasingly is important to CSA members
because FPI sees services as ripe for aggressive expansion, both within
the Government contracting and the commercial markets.
As a mandatory source of supply, the FPI has a virtual lock on the
Federal market in several broad classes of products, and its growth
comes at the expense of employers in every corner of the country and
their hardworking, law-abiding employees. Furthermore, the FPI need not
comply with the laws and regulations imposed on the private sector such
as those governing minimum wage rates, retirement and other fringe
benefits, insurance costs and compliance with OSHA regulations.
Increasingly, employers and workers are losing their livelihood as FPI
looks for new areas in which to expand.
The Hoekstra-Frank bill offers a rational approach, allowing the
private sector to compete fairly with FPI for all Federal contracts by
eliminating the mandatory source requirement that FPI currently enjoys.
It also will provide additional opportunities for vocational and
remedial education opportunities to better prepare inmates for a
successful return to society.
In conclusion, I again urge you to support H.R. 2965. CSA believes
that both industry and the Government benefit from fair competition
based on the price and quality of the product in question. Thank you
for your consideration.
Sincerely,
Chris Jahn
President
__________
Letter from Chris Jahn, President, Contract Services Association (CSA)
to the Honorable Bobby Scott
July 1, 2005
The Honorable Bobby Scott
Ranking Member
Subcommittee on Judiciary; Crime, Terrorism and Homeland Security
207 Cannon House Office Building
Washington, D.C. 20510
Dear Representative Scott:
On behalf of the Contract Services Association (CSA), I urge you to
support the Federal Prison Industries reform bill sponsored by
Representatives Peter Hoekstra (R-MI) and Barney Frank (D-MA), which
would establish long overdue and much needed restraints to reign in the
unfair competitive advantage enjoyed by the Federal Prison Industries
(FPI). This bill not only has strong bi-partisan support in the
Congress, it has generated broad support from the business community
and labor unions.
CSA is the nation's oldest and largest association of service
contractors representing over 200 companies that provide a wide array
of services to Federal, state, and local governments. CSA members
perform over $40 billion in Government contracts and employ nearly
500,000 workers, with two-thirds of CSA companies using private sector
union labor. CSA members represent the diversity of the government
services industry and include small businesses, 8(a)-certified
companies, small disadvantaged businesses, women-owned, HubZone, Native
American owned firms and global multi-billion dollar corporations.
Unfair competition from FPI increasingly is important to CSA members
because FPI sees services as ripe for aggressive expansion, both within
the Government contracting and the commercial markets.
As a mandatory source of supply, the FPI has a virtual lock on the
Federal market in several broad classes of products, and its growth
comes at the expense of employers in every corner of the country and
their hardworking, law-abiding employees. Furthermore, the FPI need not
comply with the laws and regulations imposed on the private sector such
as those governing minimum wage rates, retirement and other fringe
benefits, insurance costs and compliance with OSHA regulations.
Increasingly, employers and workers are losing their livelihood as FPI
looks for new areas in which to expand.
The Hoekstra-Frank bill offers a rational approach, allowing the
private sector to compete fairly with FPI for all Federal contracts by
eliminating the mandatory source requirement that FPI currently enjoys.
It also will provide additional opportunities for vocational and
remedial education opportunities to better prepare inmates for a
successful return to society.
In conclusion, I again urge you to support H.R. 2965. CSA believes
that both industry and the Government benefit from fair competition
based on the price and quality of the product in question. Thank you
for your consideration.
Sincerely,
Chris Jahn
President
----------
Statement submitted by the Contract Services Association (CSA)
Mr. Chairman and Members of the Committee, the Contract Services
Association (CSA) requests that this statement be included in the
official record for your July 1, 2005, hearing on the ``Federal Prison
Industries Competition in Contracting Act of 2005'' (H.R. 2965).
CSA is the nation's oldest and largest association of service
contractors representing over 200 companies that provide a wide array
of services to Federal, state, and local governments. CSA members
perform over $40 billion in Government contracts and employ nearly
500,000 workers, with two-thirds of CSA companies using private sector
union labor. CSA members represent the diversity of the government
services industry and include small businesses, 8(a)-certified
companies, small disadvantaged businesses, women-owned, HubZone, Native
American owned firms and global multi-billion dollar corporations.
CSA would like to register its longstanding concerns over the
operations of the Federal Prison Industries (FPI) and its impact on the
services industry, in both the Federal government and commercial
markets. As a result, we have worked closely with private sector labor
unions, the U.S. Chamber of Commerce and other associations and
individual companies to develop an equitable resolution to the problems
that FPI poses for our Nation's small businesses. While the goals of
FPI are laudable - to employ prisoners - the manner in which it has
aggressively pushed itself into the Federal marketplace - and many
legitimate businesses out of that same market - is not. Such tactics
harm law abiding citizens, while not necessarily improving employment
prospects for prisoners attempting to re-enter society.
Background
The history of FPI is well known--created in 1934 to employ Federal
prisoners to manufacture products exclusively for all Federal agencies.
But over the years, as a mandatory source of supply, FPI has had a
virtual lock on several aspects of the Federal market - putting the
rights of felon's above the need for the Government to get the best
value for its procurement needs, and above the rights of law abiding
businesses, and their employees, to bid on Government procurements.
How does this mandatory source status work? Current law and
regulation obligates a Federal agency to look first to FPI to fulfill
its requirements for a product - and to negotiate a contract with FPI
on a sole source basis. The final determination of the price to be paid
for its products is left to FPI - not to the Federal manager. The only
way around buying from the prisons is for an agency to request a waiver
from FPI itself, which controls both the waiver and appeals process.
This ties the hands of Federal managers on FPI designated items. The
mandatory source is also contrary to the bi-partisan efforts of the
past decade to encourage greater commercial practices in how the
Federal government conducts its business. These reform initiatives
(e.g., the 1994 Federal Acquisition Streamlining Act, the 1996 Clinger-
Cohen Act and the FAR Part 15 rewrite) require Federal agencies to
conduct market research, have informal discussions with industry and
take similar steps to assist agencies in identifying their needs.
Acquisition reform, with its emphasis on best value, also has led to
more performance based contracting, the issuance of more refined
statements of work, a reduction in procurement lead times, and an
improvement in quality control.
Of course, FPI claims it can provide products of equal or better
quality than the private sector, make deliveries as promptly as the
private sector, and sell some products at a lower price than the
private sector thereby saving taxpayer dollars. But these statements
are not accurate. That is why FPI fights so hard to keep its ``super
preference'' that allows it to force out the private sector and prevent
companies from competing for contracts.
Indeed, contrary to FPI's assertions, General Accountability Office
(GAO) reports stated that Federal Prison Industries cannot back-up its
frequent claims about being a quality supplier to Federal agencies,
furnishing products that meet their needs in terms of quality, price,
and timeliness of delivery. Once FPI commandeers a product, it erodes,
displaces, or eliminates private sector competition, thus opening the
door for it to raise its future prices.
Further, FPI has several additional unfair advantages over the
private sector. It need not comply with the laws and regulations
imposed on the private sector such as those governing minimum wage
rates, retirement and other fringe benefits, insurance costs, and
compliance with OSHA requirements. And, according to the General
Accountability Office, the cost of prison labor ranges from $0.25 to
$1.23 per hour.
Unfair Expansion into Services Contracting
So far, these comments have focused on FPI's mandatory source in
the manufacturing arena. So why should Contract Services Association
(CSA) and its members care about FPI's impact in the manufacturing
world? CSA has entered the debate because FPI sees services as ripe for
aggressive expansion. While the authorizing statute is silent with
respect to services, FPI already is involved in numerous service-
related activities including laundry services, mailing and distribution
services, data services, and telephone support services.
While the mandatory source requirement does not strictly apply to
services, FPI has implied that it is a ``preferential source'' for
services and used this to enter into sole source contracts with Federal
agencies for services. Unfortunately, the approval process and the
requirement for an adverse market impact study that affords some
coverage for private sector manufacturers are not applied to services.
Furthermore, FPI does NOT have to pay any competitive wages to
prisoners. As noted earlier, this ensures they have an advantage over
service companies that must comply with the Service Contract Act and
other labor laws and regulations.
Recent Legislative Actions
Congress has recognized these concerns, and has taken action.
Section 811 of the Fiscal Year 2002 Defense Authorization Act requires
the Department of Defense (DOD) to conduct market research before
purchasing products which are listed in the catalog for the Federal
Prison Industries (FPI), to determine whether the FPI product is
comparable in price, quality and time of delivery to products available
in the private sector. If the FPI product is not comparable, DOD must
use competitive procedures to acquire the product - and NO waiver (from
FPI) is required should DOD determine FPI is not comparable. The
determination of comparability is ``a unilateral decision made solely
at the discretion of the department or agency'' (e.g., the Department,
Service or defense agency). Furthermore, the comparability
determination is based on whether FPI can provide the product on the
basis of price, quality AND time of delivery. Additional clarifying
language (section 810) was included in the conference report for the
Fiscal Year 2003 Defense Authorization Act. An interim rule to
implement this provision was published in the Defense Federal
Acquisition Regulation Supplement (DFARS) on April 26, 2002.
For DOD, Section 811 ensures that contracting offices have the
freedom to explore the market for products to see if FPI's pricing is
reasonable, and compares in terms of cost and quality to the private
sector, or other agency providers. Thus, Section 811applies the
acquisition reform initiatives (including market research) to FPI - and
by doing so FPI and the Department of Defense will benefit. In the
Fiscal Year 2005 Consolidated Appropriations Act (P.L. 108-447),
Section 367 extended this authority permanent government-wide. In April
2005, the FAR Council issued a proposed rule to implement this statue.
Vocational Training
Certainly, CSA does recognize that FPI must balance two
legitimate needs currently defined in the law:
1) The need to provide work opportunities to help combat
idleness and recurrence of law-breaking through the TRAINING of
prisoners for gainful employment so they may become productive
members of society upon their release from prison; and
2) The need to minimize the effect of the FPI's work program
on the private sector and its non-inmate employees.
However, these goals are not being met. A number of individuals
have testified at various hearings that FPI's current operations fail
at inmate rehabilitation while hurting businesses and non-inmate
workers. The inmate workers of FPI are not receiving the vocational
training that will prepare them for viable jobs upon release. Much of
the Government contract work that FPI obtains often is not actually
performed by the prisoners, but rather outside the prison, and simply
stamped with the FPI label; or the prisoners are only minimally
involved in the product. For example, screwing legs onto already-made
tables (manufactured outside the prison) is not a life-sustaining
skill. Furthermore, the equipment used by the prisoners often is out-
dated, and not used in any modern facility in which they may hope to
work upon release.
CSA believes that vocational skills training is extremely important
to a prisoner's future once he/she has returned to the ``real world.''
Yet such training does not appear to exist. That is why CSA and its
members continue to support this common-sense proposal sponsored by
Representative Peter Hoekstra (R-MI). Among its many provisions,
training and education are primary components of that bill.
In 2004, the House of Representatives overwhelmingly passed the
Hoekstra FPI reform bill, the ``Federal Prison Industries Competition
in Contracting Act'' (H.R. 1829), which also would eliminate the
mandatory source requirement for the FPI, forcing it to follow the same
competitive procedures that are required of all Federal government
contractors. In addition, the bill calls for deductions to be made from
wages earned by the prisoners to cover such purposes as payment of
fines, restitution of victims, support for an inmate's family, and for
a fund that will facilitate the inmate's assimilation into society.
While this measure did not receive final congressional action in the
last Congress, we are hopeful final passage will occur this year.
Conclusion
If FPI is to become a vehicle for reducing idleness and preparing
inmates for the private sector, it should prepare those inmates for the
reality of the competitive pressures faced by real life employers and
employees, and the need to respond to, rather than dictate, customer
needs.
As the association that represents the broadest sector of service
companies, CSA believes that both industry and the Government benefit
from fair competition based on the price and quality of the produce or
service in question. CSA looks forward to working with you to promote
that goal.
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Statement submitted by the Coalition for Government Procurement
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__________
Statement by Remy International, Inc.
We appreciate the opportunity to submit a written statement for the
record regarding Remy International's correctional industries program
as it pertains to House Bill 2965, Federal Prison Industries
Competition in Contracting Act of 2005.
Remy International, Inc. (formerly ``Delco Remy International'') is
one of the leading manufacturers and refurbishers of automotive
components in the world. Integrating correctional industries along with
a variety of lean industrial engineering initiatives has enabled Remy
to survive in a highly competitive global marketplace-a marketplace
that has not only slashed Remy's sales prices but has resulted in the
insolvency of many of Remy's competitors during the past decade.
Remy respectfully submits that Section 7 of H.R. 2965 (Federal
Prison Industries Competition in Contracting Act of 2005) pertaining to
the prohibition of service agreements should be deleted. If service
agreements were prohibited, Remy - which currently has two such
agreements in Virginia - would be forced to pay offenders the higher of
minimum wage or the prevailing wage for the area in which such jobs are
located. This is tantamount to compelling Remy to move these operations
abroad. In today's global economy, there simply is no way in which Remy
can competitively price its products without the use of low-cost labor.
Many major companies are in the process of moving a portion of their
operations abroad; some have moved their entire operations to foreign
countries.
Correctional Industries Preserves Civilian Jobs
We live and work in a different world now, and it has forced us to
look to countries with lower labor costs, as we are continually
pressured by our customer base to reduce costs in the products that we
produce and refurbish. Through the use of correctional services, Remy
has been able to preserve 600 civilian jobs in Virginia. (A former Remy
subsidiary, Williams Technologies preserved 500 civilian jobs in South
Carolina by entering into a Services Agreement with the State of South
Carolina) With a total of nearly 3,000 civilian employees in the United
States, Remy continues to maintain a strong presence in this country;
correctional industries is one of many initiatives exercised to
maintain this presence and to ensure the company survives intense
competition from abroad.
As presently composed, H.R. 2965 will result in the loss of 600
civilian jobs in Virginia. This is because the operations that employ
these workers are dependent upon the refurbishment of automotive
components produced in the correctional facilities that would be closed
through the passage of this Bill. If these correctional facility
operations were to be closed, this work would NOT be placed in the
United States. Rather, it would be relocated to existing factories in
Xiamen, China and San Luis Potosi, Mexico.
We respectfully urge you to consider deleting Section 7 of H.R.
2965 to preserve not only the 360 offender jobs in Virginia but also
the 600 civilian jobs that are supported by our correctional industries
operations.
Remy is committed to employing American workers. Using service
agreements with correctional institutions helps ensure that Remy can
keep both civilian and inmate jobs here in the United States, and
provides significant work experience to participating inmates that
helps reduce recidivism once they are released from confinement.
Remy's Virginia Correctional Industries Program
Remy's agreement with the Virginia Department of Corrections and
Federal Prison Industries has provided 360 jobs for inmates in Virginia
(230 offenders with the state and 130 offenders with Federal Prison
Industries). The Commonwealth of Virginia receives $1,732,224 annually
in Remy payments, and Federal Prison Industries receives $2,471,0040
annually.
Since opening a factory in Leiber Correctional Facility in South
Carolina, Remy has opened refurbishment factories in a state
correctional facility in Culpeper, Virginia and a federal correctional
facility in Petersburg, Virginia. The Petersburg and Culpeper
operations are worthy substitutes for our traditional production model
of having low-variety, high-volume production capacity in low-labor-
cost countries while maintaining high-variety, low volume production in
the United States. Again, these operations were initiated with the
understanding that civilian workers would not be displaced by such
operations. For the Culpeper operation, Remy pays $3.47 per offender
hour to Virginia, and Virginia pays either 65 cents or $1.25 (depending
on length of service) per hour to the offender workers. For the
Petersburg operation, Remy pays $3.60 per offender hour to Federal
Prison Industries and Federal Prison Industries pays either 65 cents or
$1.25 (depending on length of service) per hour to the offender
workers. (The difference between what we pay and amount the offenders
receive is used to help fund a program for victim restitution as well
as help pay the cost of operating the correctional institution).
Why A Subminimum Wage?
The services agreement with the Commonwealth of Virginia ensures
that we can keep both civilian and offender jobs within the United
States. Because of challenges unique to operating a factory in
correctional facility (versus a civilian factory), Remy utilizes more
offenders for jobs in the correctional facility operations than it
would ordinarily require in its civilian factories and, therefore, to
ensure financial viability of the program, the offenders are paid a
sub-minimum wage. It is not uncommon to have ``lockdowns'' within the
entire correctional facility, causing us to lose productivity for
several days at a time. If there is a heavy fog, offenders are not
released from their dormitories to work. Offenders are frequently
transferred from our correctional facility to other correctional
facilities with little or no notice, causing a disruption to our
operations. Many of the offenders suffer medical problems that require
special accommodation through frequent medical treatment. Moving
product in and out of the correctional facility is a very time-
consuming procedure with costly delays. Contractors charge us a premium
to service our equipment and machinery because of delays to enter and
exit the factory within the walls of the correctional institution. With
the significant inefficiencies inherent in a correctional industries
environment, it is most difficult for a ``for-profit'' company to
develop a business case for operating a factory within a correctional
facility. A sub-minimum wage, as afforded by service agreements,
enables correctional industries to be competitive with foreign labor
and, as such, Remy has repatriated work from China and Malaysia to the
United States.
If service agreements were to be prohibited, we would be required
to close both correctional facility operations in Virginia, and these
jobs would be relocated to existing operations in San Luis Potosi,
Mexico and/or Xiamen, China, resulting in the loss of 330 offender jobs
in Virginia.
In addition, through our service agreements with the Virginia
Department of Corrections and Federal Prison Industries, we currently
pay $1,732,224 annually to the Commonwealth of Virginia and $2,471,040
to Federal Prison Industries for offender workers. These revenues would
disappear if service agreements were to be prohibited.
Why Remy's Correctional Institutional Programs Work
1. Service agreements with correctional facilities add jobs
for American civilian citizens, and prevent the relocation of
these jobs to other countries.
As described above, our correctional facility operations actually
add jobs, rather than displace American workers. Our contracts with the
Commonwealth of Virginia and Federal Prison Industries state that
civilian workers shall not be displaced by the activities we place in
the correctional facility operations. In addition, when we service
products in correctional facilities we tend to source a majority of our
component parts from U.S.-based vendors. Since beginning our
correctional industries programs, we have added 65 civilian jobs in
Virginia. .
Moreover, the location of these jobs in the United States helps
ensure that related parts and support services foster activity in both
the local and national economy. The competitive realities of today's
automotive parts manufacturing and refurbishment world is that this is
work that would otherwise be performed, as much of it currently is, in
Mexico and Asia. Like our competitors, much of our refurbishment of
parts is done so abroad. And when these products are serviced in Mexico
and China, a majority of the component parts and materials used in the
servicing process are procured from vendors in these countries.
Therefore, servicing our products in U.S. correctional facilities is
much better for the U.S. economy and the U.S. job market than servicing
them in Mexico or China. If H.R. 2965 becomes law without deletion of
Section 7, it will most certainly result in the loss of U.S. jobs.
2. Since any of Remy's competitors can enter into service
agreements with correctional facilities, these agreements are
well within the realm of fair competition.
U.S. companies, including our competitors, are flocking to develop
operations in Mexico and Asia. Some of them also have operations in
correctional facilities. Both small and large businesses can
participate in correctional industries with service agreements and, in
fact, most companies that have operations within correctional
facilities are small businesses.
In Virginia, there are over 30,000 offenders incarcerated at any
one time and there are over 2,000,000 people incarcerated nationwide.
Remy employs a total of 230 offenders in its state correctional
operations and 130 offenders in its federal correctional operation,
leaving hundreds of thousands of offenders seeking gainful work. Any of
our competitors who are not currently using offender labor have the
same opportunity to use it as we do. (Recently, one competitor ceased
using correctional industries labor because they secured lower costs by
relocating to Mexico.)
3. Remy's program of employing offenders provides them with
valuable work experience and reduces recidivism.
Since 94% of all those incarcerated will eventually be released
into society, work experience assists our correctional institutions in
preparing offenders for a stable transition into society. According to
some studies, work experience can reduce recidivism by up to 60% (Pride
Enterprises of Florida). Most offenders learn what it means to ``get up
each morning and go to a job'' for the first time in their lives. This
would not be possible if service agreements were to be prohibited.
It is important to note that all of the workers in our correctional
facility operations are working because they desire to work. No one is
required to work for us and any offender may resign at any time without
providing notice to us. Offenders consider Remy jobs very desirable
because they provide:
* real-life work experience (the first ``real'' job for many
offenders)
* hand-tool skills amenable to various trade jobs
* compensation that is significantly more than traditional
correctional work programs such as floor sweeping, food
preparation, and litter collection.
In fact, some offenders have come to work for Remy following their
release from incarceration.
Remy provides a safe working environment for all of its offenders,
as our correctional industry factories must adhere to the same high
standards for safety and cleanliness as our civilian factories.
Offenders receive the same mandatory safety education and training
programs that are provided to our civilian employees. The environmental
regulations in our correctional facility operations are just as strict
as in our civilian operations. (Our operation in the Federal
institution in Petersburg was delayed by more than six months in
obtaining all of the necessary operating permits from the Virginia
Department of Environmental Quality.) Moreover, because Remy's staff
within the correctional facility must work in an OSHA-compliant
environment, the correctional facility factories adhere to OSHA rules
and regulations.
We are very proud of our correctional industry programs and we
strongly encourage those who are interested to tour these operations.
Although Remy is a US-owned company with a 110-year history, there are
no government mandates requiring our continued existence. Surviving in
the new global economy has been a struggle despite our significant
capital investments to procure state-of-the-art equipment and
machinery, as well as having introduced the most modern lean
refurbishment techniques to all of our factories. These items, in-and-
of themselves, have not been sufficient to be competitive. Our
continued survival has required us to develop production capacity
abroad. Correctional industries have enabled us to slow down, and we
hope halt long-term, the exodus of many jobs leaving U.S. soil for
Mexico and Asia.
----------
Statement submitted by Michael B. Styles, National President, Federal
Managers Association(FMA)
Chairman Howard Coble, Ranking Member Bobby Scott and distinguished
members of the Subcommittee:
My name is Michael B. Styles and I am the National President of the
Federal Managers Association (FMA). On behalf of the nearly 200,000
executives, managers, and supervisors in the Federal Government whose
interests are represented by FMA, I would like to thank you for
allowing us to submit our views regarding the Federal Prison Industries
(FPI) reform measure, H.R. 2965, before your subcommittee.
Established in 1913, FMA is the largest and oldest Association of
managers and supervisors in the Federal Government. FMA has
representation in nearly 30 different Federal departments and agencies.
We are a non-profit advocacy organization dedicated to promoting
excellence in government. As those who are responsible for the daily
management and supervision of government programs and personnel, our
members are keenly aware of the important role they play in ensuring
efficient and effective service to the American people.
FEDERAL MANAGERS CARE ABOUT HOW TAXPAYER DOLLARS ARE SPENT
The main message that FMA wants to convey to you and Members of the
Subcommittee is that Federal managers and supervisors - and the civil
servants we lead - try extremely hard to be good stewards of the tax
dollars entrusted to us. We dedicate ourselves daily to delivering to
the American people the most value for their hard-earned dollars.
Routinely, we are called upon to do it ``better,'' ``faster,'' and
``cheaper.'' ``Doing more with less'' is the norm, not the exception.
In our view, the FPI mandatory-source requirement ties the hands of
Federal managers when it comes to making smart purchasing decisions.
While combating inmate idleness and providing 21 percent of the inmate
work opportunities for Federal prisoners are important public policy
objectives, the cost of the FPI program should not be transferable to
the increasingly tight budgets of other agencies with their own
missions in service to the American people.
That is why FMA supports passage of H.R. 2965, which would
eliminate this mandatory-source requirement burdening Federal agencies.
No doubt that you will hear from the FPI staff about how many
waivers FPI grants, permitting Federal agency managers to make
purchases from the private sector. The statistics may sound impressive,
but I would ask you to consider some fundamental questions about the
waiver process and how it works.
To begin, why should Federal managers be required to seek FPI's
permission before being able to spend the money of American taxpayers
in the best possible manner? Under the waiver process, FPI - rather
than the buying agency - determines whether FPI's offered product,
delivery schedule, and reasonableness of FPI's offered price meet the
needs of the agency. Waivers are not granted on the basis of price
unless FPI's offered price exceeds the statutory standard of ``current
market price.'' Current market price is not the same thing as a ``fair
market price'' and is substantially different from the ``best value''
standard that applies to competitive procurements. Rather, the buying
agency can be required to pay FPI's offered price provided that FPI's
offered price does not exceed the highest price offered to the
government for a comparable product. Therefore, no actual sales need to
be made for the standard to be met.
A 1998 General Accounting Office study (GAO/GGD-98-151) of 20 FPI
products found that ``FPI generally did not offer Federal agencies the
lowest prices for products that they purchased. Therefore, if it were
not for FPI's mandatory source status, customer agencies might have
decided to purchase comparable products at less cost.'' This assessment
is consistent with the anecdotal experiences of our members.
FMA members are also concerned that it frequently takes longer to
receive products from FPI than from other commercial vendors. Another
GAO report (GAO/GGD-98-118) regarding the timeliness of FPI deliveries
showed similar results. In more than 50 percent of the cases reviewed
the actual delivery date was later than the buying agency had
originally requested. Again, this is congruent with the experiences of
our members.
Small businesses in the private sector, on the other hand, strive
hard to keep costs low, quality good, and delivery services efficient.
Otherwise, they would find themselves out of business. Consumers
benefit from their efforts. These benefits do not exist when a business
holds its customers hostage, as is the case with FPI and Federal
agencies.
Aside from the questionable policy of placing the burden on a
Federal manager to have to request and justify a waiver request, the
waiver process itself raises substantial issues. The initial
consideration of the request is undertaken by the FPI sales division,
which will take the contract if the waiver is not granted. More
recently, FPI has begun to utilize contract sales representatives, paid
on a commission basis, to augment its own marketing staff. Thus, it
seems reasonable to FMA to presume that neither FPI's own marketing
force nor its contract sales force have much incentive to initially
grant a waiver.
A Federal manager willing to invest yet more time and effort can
take an appeal of a waiver denial to FPI's Ombudsman, a member of FPI's
senior management team. Federal managers feel that the decision to
grant a waiver - either initially or on appeal - is a unilateral
decision made by FPI without the benefit of any standards upon which to
independently assess FPI's actions.
Like the underlying mandatory-source status it is designed to
buttress, FPI's waiver process presents the Federal manager with a
``stacked deck'' that may not be worth pursuing, unless accepting FPI's
product or delivery schedule would substantially impede the attainment
of the buying agency's mission, or FPI's price constitutes an egregious
waste of the buying agency's limited operating budget.
Some have sought to cast the ongoing debate regarding FPI reform as
a simple economic clash over government business between FPI and the
business community. I am here to tell you that the current system also
places an unacceptable burden on Federal managers in terms of both
mission accomplishment and the quality of work life. If FPI were to
deliver a quality product, on time, and at a reasonable price, then FPI
will be able to compete, Federal agencies would give the American
taxpayer more ``bang for their buck,'' and inmates would be given an
opportunity to truly learn the skills they will need in the outside job
market.
If FPI's product does not represent the ``best value'' for the tax
dollars expended, FPI's captive Federal agency customers are then being
forced to use their scarce resources to subsidize FPI's program to
create inmate work opportunities. In turn, Federal workers are being
forced to make do with products of lesser quality and suffer the
consequences of delayed deliveries - consequences that can adversely
affect their ability to perform their jobs as well as the quality of
their services.
SCARCE RESOURCES GREATLY HEIGHTENS COST CONSCIOUSNESS
As taxpayers first and civil servants second FMA members want to
see their tax dollars used in the most productive manner possible. A
factor in our heightened concern about making the best use of scarce
agency resources is the mandated increase in public-private competition
for Federal functions.
Federal functions performed by civil servants are being subjected
to unprecedented competition with the private sector. As part of the
President's Management Agenda and in subsequent memoranda from the
Office of Management and Budget, Federal agencies have been called on
to increase public-private competitions as well as provide more in-
depth justification of what constitutes an ``inherently governmental''
position in adhering to revision to OMB Circular A-76.
The Bush administration has called for up to 850,000 Federal jobs
to be put up for competition in the coming years, yet Federal prisoners
do not have to compete - they are guaranteed a job. Hardworking Federal
employees not only have to worry about their job being put up for
public-private competition, but the same government that is mandating
the competition is placing Federal workers at a disadvantage by not
allowing them to purchase needed goods at a reasonable price.
In this time of increased scrutiny on the use of taxpayer dollars
by the government, it is necessary to remove the mandatory-source
status held by FPI so that Federal agencies are able to purchase the
products they need at the best value possible.
LIFTING MANDATORY SOURCE WOULD ENABLE AGENCIES TO GET BETTER DEALS
The Federal Government spends more than $235 billion a year on
goods and services. Between $110 and $120 billion of this amount is
spent on contracting-out for services. The remainder is spent on
products. Current law requires us to purchase over half a billion
dollars' worth of supplies from FPI. The almost $700 million in annual
sales for FPI in this context is significant.
Section 811 of the fiscal 2002 National Defense Authorization Act
removed FPI's mandatory-source status for the Department of Defense
(DOD). The provision allows the Secretary of Defense to conduct market
research before being forced to purchase inmate-manufactured goods from
FPI. If prisoner-manufactured products are not comparable to private-
sector products in price, quality, and time of delivery, DOD
contracting officers can purchase with taxpayer dollars the best and
most cost-efficient goods from other private vendors rather than be
forced to buy from FPI.
As part of the fiscal 2003 National Defense Authorization Act,
Congress passed language (Sec. 819) which strengthened the enforcement
of the provision passed in the FY02 Defense Authorization bill. Section
819 will:
* make explicit that DOD contracting officers are empowered
to determine if a product offered by FPI is ``comparable to
products available from the private sector that best meet the
Department's needs in terms of price, quality, and time of
delivery'';
* provide DOD contracting officers the full range of ``market
research'' tools to make the required comparability
determination;
* make explicit that the full range of competitive
procurement techniques are available to a DOD contracting
officer, including making a purchase through a GSA Multiple
Award Schedule contract;
* prevent FPI from referring to the FPI Arbitration Review
Panel, established by Section 4124(b) of FPI's 1934 authorizing
statute, allowing an FPI challenge of a DOD contracting
officer's determination regarding the comparability of a
product offered by FPI; and,
* empower DOD contracting officers to ensure that FPI
``performs its contractual obligations to the same extent as
any other contractor for the Department of Defense.''
Last year, Congress approved a provision in the Consolidated
Appropriations bill for fiscal year 2005 (H.R. 4818), which ended FPI's
mandatory-sourcing status for all non-DOD agencies. This is another
step in the right direction. The House has also passed similar
authorizing legislation in the form of H.R. 1829 on November 6, 2005,
but the measure stalled in the Senate. We must see a final end through
the codification of this issue into law. As has been done with DOD,
H.R. 2965 is the final step in releasing the rest of the Federal
government from the captivity of mandatory-sourcing through FPI.
CONCLUSION
In closing, Mr. Chairman, Federal managers and supervisors are
currently receiving two conflicting messages from Washington, DC. On
the one hand, we are being asked to ``do more with less.'' From
Congress, we frequently hear that the bureaucracy should act more like
the private sector. In contrast, the law requires us to purchase over
half a billion dollars' worth of supplies from a non-competitive source
that frequently charges more than other commercial vendors.
We are simply asking that the FPI Board of Directors and the FPI
management staff allow us to be better stewards of the taxpayers' hard-
earned dollar by untying our hands when it comes to making smart
purchasing decisions for the Federal government.
Thank you again for providing FMA an opportunity to present our
views and we look forward to working with you on this important issue.
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Letter from Matthew T. Powers, General Manager, Prison Industry
Authority (PIA) to the Honorable Howard Coble
July 8, 2005
The Honorable Howard Coble, Chair
Subcommittee on Crime, Terrorism, and Homeland Security
207 Cannon House Office Building
Washington, D. C. 20515
Dear Mr. Coble:
I am writing you today to oppose H.R. 2965, the Federal Prison
Industries Competition in Contracting Act of 2005, due to the
detrimental impact of this proposal on correctional industries
throughout the nation. I would urge you to delay its passage and work
towards legislation that enhances rather than constrains prison
industries. Prison industries programs provide inmates with productive
employment and teach marketable skills, which can be used to transition
to meaningful jobs upon parole.
Prison industries are an investment in public safety because
employed inmates and parolees mean safer prisons and safer communities.
These programs provide inmates with productive marketable skills that
can assist them in obtaining meaningful jobs upon parole. Additionally,
prison industries help to reduce idleness, thereby decreasing violence
and tension in correctional institutions.
Thank you for your assistance in assuring the success of
correctional programs. Please contact me at (916) 358-2699, if I can
provide you or your staff with additional information.
Sincerely,
Original signed by
MATTHEW T. POWERS
General Manager
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Supplemental attachments submitted by Philip Glover, President of
Coucil of Prison Locals, American Federal of Government Employees
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Supplemental attachments submitted by Paul A. Miller, Director of
Government Affairs, Independent Office Products & Furniture Dealers
Association
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Statement submitted by Kevin M. Burke, President and CEO, American
Apparel and Footwear Association (AAFA)
Chairman Coble, Ranking Member Robert C. Scott, and members of the
Subcommittee:
The American Apparel & Footwear Association (AAFA) is pleased to
submit the following statement in strong support of H.R. 2965, the
Federal Prison Industries (FPI) Competition in Contracting of 2005.
AAFA is the national trade association representing over 700 apparel,
footwear and other sewn products companies, and their suppliers. These
companies represent approximately 80% of U.S. wholesale apparel sales
and over 100 of these companies supply specialized sewn goods and
products to the military. These companies depend on a fair process to
compete for the limited number of contracts from the U.S. military. FPI
has long been a major producer of military uniforms, further depleting
the contracts available to sustain the warm industrial base of apparel
and footwear manufacturers. Comprehensive reform of FPI will benefit
AAFA members by opening up more of these contracts for fair
competition. AAFA members thank you for having this hearing and for
your support for this legislation.
I would also like to thank the sponsors of H.R. 2965,
Representatives Peter Hoekstra (MI), Barney Frank (MA), Carolyn Maloney
(NY), John Conyers (MI), Chairman Jim Sensenbrenner (WI) and former
Representative Mac Collins (GA) for their leadership on FPI reform and
continued support. The business community owes this team a debt of
gratitude for the years of work on this issue and the ongoing
commitment to more comprehensive FPI reform.
H.R. 2965 is almost identical to H.R. 1829, which passed
overwhelming in the House during the 108th Congress by a vote of 350-
65. This legislation will require FPI to compete for federal contracts
and allow agencies to make a qualified determination on whether or not
FPI provides the best value. It deserves immediate consideration and
enactment.
In order to minimize any adverse impact of this reform on the
prison community, H.R. 2965 has a five-year phase-in period. Safeguard
provisions to protect prison guards, their jobs and the prisons are
also included. Additionally, this legislation provides for additional
educational and vocational opportunities for inmates to further their
development in preparation for their productive contributions to
society upon release. This legislation is balanced and will benefit the
U.S. government, private industry as well as FPI. All benefit when the
market principles of competition are unimpeded.
FPI will likely always retain advantages over private industry,
which unlike FPI, is regulated by the Department of Labor, Internal
Revenue Service and the Environmental Protection Agency. From a cost
perspective, businesses are burdened with meeting minimum wage
requirements (compared to pennies on the hour for FPI), providing
health benefits, contributing to social security and the most basic
costs of plant and equipment. FPI enjoys an tremendous edge and it is
clear that a mandatory source is not essential for FPI to compete with
the private industry.
H.R. 2965 is needed because recent reforms have had little effect
on FPI's reach. FPI continues to grow by leaps and bounds - increasing
sales in clothing and textiles from $158,399 million in FY 2003 to
$184,465 million in FY 2004 - and increasing total sales by $136
million in the same span. Further, FPI continues to finds ways to cut
private industry out of the competitive process. The Federal Prison
Industries is well known for their creative interpretations of the law
and only clarification and more comprehensive reform will counter such
interpretations. For example, earlier this year the Bureau of Prisons
issued a solicitation (No. CT1703-05) for the distribution of uniforms
rather than the production. It was stated in the solicitation that the
uniforms would be provided by FPI, though previously the BOP uniforms
were supplied by private industry. FAR regulation 8.607(a) restricts
agencies from requiring contractors to use FPI; however, because this
is not an actual contract but an ``arrangement'' that FPI has with BOP
their interpretation is that this does not violate FAR 8.6.
There are so many examples of FPI's ingenuity in maneuvering around
current reforms to the detriment of private industry. One of the best
is their supposed commitment to take not more than a 20% market share
of any particular product. Under current law, FPI must ``operate . . .
[so] that no single private industry shall be forced to bear an undue
burden of competition from the products of the prison workshops and to
reduce to a minimum competition with private industry or free labor.''
(18 US Code 4122) This has not kept FPI from taking more than 20% and
much more due once again to their creative interpretations. In this
instance, it is the definition of a ``specific product'' that has
enabled the manipulation of market share statistics. FPI has stated
that, ``a specific product . . . may include a number of different
items.'' Specifically, with regard to AAFA, this interpretation allowed
a significant expansion into work clothing. Several Federal Supply
Classification (``FSC'') codes were combined in order to create larger
product concentration under one category. This enabled FPI to mask the
actual percentage of the marketplace of a particular product produced
by FPI. In this example, ``work clothing'' included at least four
different FSC codes. FPI has stated that it is their intention to use
the product classifications used by the Defense Supply Center in
Philadelphia; however, we have yet to see any documentation.
In the past year, FPI has also increased their approved sales
ceiling and units on uniforms due respectively to the increased cost of
material for the army combat uniform and an exigency referencing the
crisis of war. AAFA has member companies that are struggling for enough
contract work to keep their employees on the payroll and yet FPI
continues to come up with ways to infringe upon arguably the last
significant source of demand for apparel manufacturing in the U.S. -
military contracts. ``The vast majority of FPI's clothing/textiles
sales were in support of the Department of Defense's war effort.''
(U.S. Department of Justice, Federal Prison Industries, Inc. FY 2004
Annual Report) These sales to the DoD by FPI are in direct competition
with AAFA members and a serious detriment to the industrial base as
military contracts continue to be a primary source of income for a
majority of the remaining domestic textile and apparel manufacturers.
These manufacturers have retained a presence in the United States due
primarily to the Berry Amendment, which requires the military to buy
their uniforms and sewn products from U.S. companies containing all
U.S. inputs. The current level of purchasing from the military has
increased due to the war effort, yet that is not enough to sustain the
industrial base of apparel and textile suppliers and especially not in
competition with FPI. AAFA members will be severely impacted when
spending for the war effort decreases and thus will the industrial
base. In support of these suppliers, FPI should pursue the government
contracts outside of the DoD in order to retain the market for the
domestic base of textile and apparel producers supplying the military.
This will not happen unless directed by Congress.
The ability of FPI to bid on solicitations for small business set-
asides is yet another reason for comprehensive reform. Currently, when
an FPI product is found to be non-comparable to a private sector
product, FPI is then able to bid on solicitations for those products
reserved for competition among small business. Surely this is an
unintended loophole that should be rectified by Congress in a more
comprehensive reform bill. Small businesses can not be expected to
compete with a company whose sales were approximately $803 million in
FY 2004.
In conclusion, AAFA supports the mandate of FPI to rehabilitate
inmates for their reintroduction into society as productive citizens.
However, we are confident that it was not the intent of Congress to
create a nongovernmental agency to stymie competition, private industry
development and take jobs away taxpaying citizens. H.R. 2965 provides
access to educational opportunities that will be even more beneficial
to inmates by training and preparing them for more viable vocational
opportunities in industries that are more likely to have available
jobs, rather than having them learn outdated textile manufacturing
processes in an industry that does not have the demand it once had in
the U.S. for jobs.
Thank you for the opportunity to submit this statement on behalf of
the American Apparel & Footwear Association and the companies we
represent and to share our point of view on FPI reform.
Kevin M. Burke
President & CEO
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Letter from Kevin M. Burke, President and CEO, American Apparel and
Footwear Association (AAFA) to the Honorable F. James Sensenbrenner,
Jr.
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Letter submitted by various Dealers
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Statement submitted by Management Association for Private
Photogrammetric Surveyors (MAPPS)
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Fact Sheet submitted by the Correctional Vendors Association, ``FPI
Fact or Fiction?''
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Summary Statement submitted by the National Citizens United for
Rehabilitation of Errants (CURE)
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