Marketing the Product and Selling the Program: UNICOR Since 1980

Since 1980, the Federal Bureau of Prisons has undergone startling changes. The inmate population has gone up drastically. The composition of the inmate population has changed as well, with larger numbers of violent offenders, drug offenders, and alien detainees. And the Bureau has moved away from the Medical Model to adopt a more balanced philosophy of corrections. The need to help the Bureau cope with all the changes has underscored the value of industrial programs as an inmate management tool. Yet just as UNICOR's contributions to Bureau stability were becoming more vital, UNICOR's very mission of providing work for inmates came under unusually harsh scrutiny. Thus, UNICOR not only had to improve its marketing efforts to ensure sufficient sales to keep increasing numbers of inmates employed, it also had to work tirelessly to explain UNICOR's vital public safety function to lawmakers and citizens.

The Bureau officially de-emphasized the Medical Model in 1975. Critics of the Medical Model had contended that it did not have as favorable an effect on recidivism as James Bennett and others had believed, that it encouraged inmates to try to give the false impression that they were rehabilitated and suitable for early release, and that it was unrealistic to expect prisons to do a better job of socializing and educating people than institutions in the free community. Above all was the view that the Medical Model was a form of coercion and that genuine changes in human behavior could not be coerced. Norman Carlson, who presided over the shift away from the Medical Model as BOP Director from 1970 to 1987, explained that "there are limitations to what Government can do to intervene in people's lives when there is no desire to change."

In place of the Medical Model, the Bureau adopted the Balanced Model of corrections. Rehabilitation was not abandoned as a goal of incarceration, but it was balanced against other correctional goals such as punishment, deterrence, and incapacitation. While rehabilitation ceased to be the primary objective, rehabilitation programs were still offered for inmates who wished to take advantage of them.

UNICOR continued to play an important role in Federal prisons under the new philosophy. Its work programs, of course, would always be an indispensable component of inmate management. The work and education programs that UNICOR provided remained the backbone of the rehabilitative opportunities that were part of the Balanced Model.

Modernization in UNICOR factories - while somewhat limited by the need to employ as many inmates as possible - kept the corporation competitive during the 1980's and 1990's. It also made possible good vocational training experiences for inmates. UNICOR overhauled its textile line in the 1980's and enhanced its metal and wood furniture, lines and its electronic product lines. It developed new lines in stainless steel products, thermoplastics, printed circuits, modular furniture, ergonomic chairs, Kevlar-reinforced products (such as military helmets), and optics, and it introduced state-of-the-art production techniques (including the use of modern printing equipment for the automated production of Government forms). The new and enhanced products helped UNICOR respond to customer demands and expand employment. Moreover, the adoption of more modern techniques and equipment permitted UNICOR to upgrade its on-the-job training, thereby better preparing inmates for post-release employment.

On-the-job training had always been an essential component of the occupational training that was available to inmates. Consequently, occupational training at any particular institution was often limited primarily to the industrial operation that happened to exist there. In the 1 980's UNICOR moved to broaden its vocational training base. For a few years in the 1970's, responsibility for administering education programs had been shifted away from UNICOR. But by 1981, recognizing the close relationship between academic education and occupational training, the Bureau returned educational programs to UNICOR. UNICOR immediately embarked upon "Project One Million" and "Project Three Million," which, together, provided four million dollars of start-up money for modern occupational training programs throughout the Bureau. These would give inmates more diverse training opportunities, would meet outside standards for vocational programs, and would not be tied to existing UNICOR industrial programs at a particular institution.

Meanwhile, the commitment to academic training was redoubled. In 1982, the Bureau decided that inmates must demonstrate a 6th grade literacy level before they could advance beyond entry level pay status. In 1986, the literacy standard was increased to 8th grade level, and in 1991 a high school diploma or GED certificate became the requirement. To promote academic achievement still further, education departments at each institution established incentive programs to motivate students and recognize their accomplishments, and a new position of Associate Warden for Industries and Education was established at many larger institutions to improve coordination between industrial work assignments, vocational training, and academic education.

The move to enhance UNICOR's educational programs coincided with a sharp increase in the number of Federal inmates. Between 1930, when the BOP was established, and 1979, the number of Federal inmates remained fairly constant, ranging from 17,000 to 24,000. After 1980, the population began to climb dramatically: from 24,000 in 1980, to 50,000 in 1987, to nearly 95,000 by 1994. Increased prosecution for drug-related crimes, longer sentences, the abolition of parole, and an increasing responsibility for housing aliens awaiting deportation accounted for much of that increase.

A critical need existed for constructive activities as a safety valve to relieve institutional tensions at a time when more and more inmates were crowding into the system. Accordingly, UNICOR embarked upon spirited marketing and customer service campaigns in order to increase the demand for UNICOR products.

To compete effectively in a shrinking Government marketplace, UNICOR regularly shows its products and services in trade shows around the Nation.

UNICOR conducted market research; increased its participation in trade shows around the country; opened marketing centers, field office display areas, and a product showroom at BOP headquarters; and set up product distribution centers to respond more quickly to customer needs. Stressing "total customer satisfaction" as a goal, UNICOR established a customer service program, expanded its quality enhancement program, and provided extensive training on quality improvement to hundreds of line staff and managers. Although its' marketing activities were modest in comparison to those of private industries, UNICOR felt they were essential for retaining its customer base in a time of increasing competition. Fortunately, these customer satisfaction initiatives and limited marketing campaigns were effective in generating enough sales to support adequate work opportunities for Federal inmates.

Meanwhile, UNICOR streamlined its administrative operations by reorganizing product divisions, implementing strategic planning principles, introducing an automated management control system to reduce costs and facilitate product delivery, and adopting a factory activation program that coordinated construction design with product planning. It also renovated and expanded many of its existing factories during the 1980's and 1990's to make them more efficient.

In short, UNICOR endeavored to follow the modern marketing and management principles in the 1980's and 1990's that had proven successful for private sector enterprises. According to long-time Board member William E. Morgan, the adoption of modern business methods rejected the influence of astute business executives who served on the Board at that time, such as John Marshall Briley (former Vice President and General Counsel of Owens-Corning Fiberglass), Donald A. Schwartz (President of Medallic Art Company), and Mark D'Arcangelo (Vice President for Marketing and Sales, General Electric Company). Because of these measures, UNICOR was able to increase production annually by 4 percent between l987 and l990, even though Federal procurement in UNICOR's product lines decreased by 40 percent during the same period.

At the same time, it was also able to respond more effectively than ever before to customer demands. One example was its role as a supplier to the military during the 1990-91 Persian Gulf conflict. UNICOR provided Kevlar helmets, camouflage battle uniforms, lighting systems, sandbags, blankets, and night vision eyewear for the military to use during Operation Desert Shield and Operation Desert Storm. It even manufactured cables for chemical gas detection devices and for the Patriot missile systems that played a key role in defending Allied troops during the Persian Gulf War. Brigadier General John Cusick, commanding officer of the Defense Personnel Support Center, praised UNICOR for the "superb support [it] Provided to America's Fighting Forces" and for helping ensure that "we received the supplies the troops needed to win the war."

UNICOR's successes, however, generated controversies like those it had previously encountered. Still worried by a recession that occurred in the late 1980's, some elements of private business and organized labor began to voice a very old concern: that prison industrial programs posed a threat to free enterprise and to the jobs of the non-offending population. Bills were introduced in Congress that would have severely hampered UNICOR's ability to add or expand product lines. UNICOR and the Bureau faced the same challenge that Sanford Bates and James Bennett had faced more than half-century earlier: to justify prison industrial programs and prove that they could be operated in such as way as to avoid harming the private sector.

UNICOR manufactured a wide range of items to supply the U.S. military during the Persian Gulf War.

UNICOR's critics focused particular attention on "mandatory sourcing" - the statutory requirement that Federal agencies purchase from UNICOR if it could provide the desired products on time and at competitive prices. UNICOR responded that it was empowered to waive mandatory sourcing to permit Federal agencies to buy competing products from the private sector and pointed out that in 1989 alone it granted $78.9 million in waivers. It also explained that mandatory sourcing was necessary to offset some of its competitive disadvantages (such as labor intensive production, mandatory diversification of product lines, an untrained, undereducated labor pool, the extra security costs and production delays associated with operating factories within prisons, and, of course, its restriction to a single customer). Finally, UNICOR reasserted that it was a stimulus to the private sector in many ways: purchasing products from private sector suppliers, doing business with private sector sub-contractors, and being a major employer of non-inmate staff members in the communities where it operated factories.

To provide an objective assessment of the controversy, Congress mandated in 1990 that an independent market study of UNICOR be undertaken. The nationally respected Deloitte and Touche accounting firm conducted the study. One of the principal findings of the study, completed in August 1991, was that UNICOR's impact on the private sector was negligible.

Deloitte and Touche found that UNICOR's sales amounted to only 2 percent of the Federal market for the types of products and services that it provided. The study confirmed that UNICOR's operations were concentrated in labor-intensive industries, and noted that the output and efficiency of UNICOR's inmate employees was only one-quarter of workers in the private sector. Deloitte and Touche also noted that the mandatory source advantage was offset by the corporation's built-in competitive disadvantages, such as increased overhead costs due to product diversification. While Deloitte and Touche noted that UNICOR's customer service and delivery ratings were below average in some of its product lines in comparison with other suppliers, it also found that UNICOR received high ratings from customers for its custom-made products (such as electronics assemblies for military equipment).

In addition, the study determined that UNICOR's prices were comparable to those of private sector vendors. While the Deloitte and Touche study addressed UNICOR's impact on the private sector, another study conducted about the same time demonstrated that UNICOR was successfully carrying out its mission in another way by playing a very favorable role in preparing inmates for release. The Post-Release Employment Project (PREP) was a 7-year study conducted by the Bureau's Office of Research and Evaluation that compared postrelease activities of a group of inmates who had participated in UNICOR programs with those of another group of inmates who had not. One of the most important recidivism studies in decades, the PREP study showed that inmates who were involved in UNICOR's industrial or educational programs were less likely to engage in misconduct while incarcerated than inmates who were not involved in those programs. It also showed that those inmates were more likely to find and keep full-time, better-paying jobs than those who were not involved in UNICOR programs. Of greatest significance, perhaps, was the fact that participants in UNICOR work and education programs were less likely to commit crimes after release and less likely to return to prison. The PREP study, therefore, seemed to reveal a link between UNICOR programs and lower recidivism rates.

A principal focus of the Deloitte and Touche study was to identify options for creating additional inmate jobs without relying exclusively on expansion in traditional products. The report recommended three strategies: that private sector businesses be required to subcontract with FPI to use inmate labor on Government contract work; that FPI be authorized to work with private sector partners, using inmate labor to produce goods that would otherwise be manufactured or assembled by offshore labor sources, and sell them on the open market; and that FPI's mandatory source be expanded to include services, as well as goods.

Following release of the study, the Brookings Institution agreed to host a Federal Prison Industries Summit to bring together representatives from business, labor, the criminal justice system, and the Congress to engage in a high-level, broad-based discussion of the study and of FPI's future growth requirements. The Summit, which occurred in June 1992, spawned a series of workgroups and subcommittees that attempted to develop more detailed growth strategies. These initial deliberations culminated in a second Summit in July 1993. A final Summit proceedings report, which provided a comprehensive analysis of each growth strategy, including dissenting opinions, was transmitted to Congress in October of that year. The Summit report indicated that there were a variety of growth strategies available, ranging from expansion in traditional industries to manufacture of products for sale to charitable and relief organizations. It concluded, however, that no combination of growth opportunities could generate a sufficient number of inmate jobs without generating opposition from some quarter.

As a follow-up to the Summits, a Growth Strategies Implementation Committee was established, with representatives from private industry, organized labor, the Small Business Administration, and FPI suppliers. The Committee, which has met regularly since early 1994, has been successful in maintaining an open, honest dialogue on key issues.

Another follow-up to the Summit report was the National Prison Industries Task Force, which met in 1994 to discuss growth strategy options. It was co-chaired by former Chief Justice Warren Burger and former Federal Judge, FBI Director, and CIA Director William Webster.

Continuing on these initiatives, FPI has made a concerted effort over the past several years to reach out to labor, industry, and related parties to maintain a constructive dialogue. Relationships have improved, and progress continues to be made toward a peaceful coexistence among parties with divergent interests.