Customers and Private Sector FAQs

1. Who are FPI's Customers?

By statute, FPI is restricted to selling its products to the Federal Government. Its principal customer is the Department of Defense, from which FPI derives almost 60 percent of its sales. Other key customers include: General Services Administration, Bureau of Prisons, Social Security Administration, Department of Justice, Department of Homeland Security, and United States Postal Service.

2. What is UNICOR's market share?

For those Federal Supply Classification Codes (FSCs) in which FPI operates, FPI’s overall market share is only 2.5 percent. FPI’s share of the Federal Government purchases is only one fifth of one percent. FPI’s statute requires that it produce no more than a reasonable share of the overall market in any specific product. 

The Board of Directors is responsible for determining what share is “reasonable.” FPI’s specific market share in any given FSC code may vary, depending upon the particular product and size of the market. 

FPI provides products and services in over 80 different FSC codes, and its share in most FSC codes is less than five percent. In those same products, when looking at the total U.S. market, including the commercial sector, FPI’s market share in most cases is typically less than one percent. 

3. Does UNICOR adversely impact private sector jobs?

FPI’s Board of Directors takes seriously its statutory responsibilities, which includes minimizing of any undue impact on a given industry. In fact, prior to producing a new product or significantly expanding the production of an existing product, private industry is afforded an opportunity to present its concerns to FPI’s Board of Directors through an extensive process involving market analysis, public comment and public board hearing.

Prison industry programs stimulate local economies, resulting in the creation of civilian jobs. FPI relies heavily on the private sector, particularly small business, for supplies, raw materials, equipment and services to support its operations. During FY 2006, FPI made purchases from the private sector totaling over $552 million; more than half of which were from small businesses, including women and minority owned and disadvantaged businesses. 

For some companies, complementing their existing workforce with inmate workers has prevented them from either having to go out of business or sending work offshore. FPI has entered into numerous teaming agreements and partnerships with small businesses.

4. Do low inmate wages give FPI an unfair competitive advantage?

It is a common misconception that inmate wages and inmate labor costs are synonymous. Inmates are paid considerably less than minimum wage, but this is offset by the labor intensive use of a large number of inmates, additional costs for inmate training and staff supervision, as well as efficiency constraints associated with a prison work environment. These additional costs prevent FPI from having substantially lower costs or elevated earnings.