Washington, Jun 28 -

The Small Business Subcommittee on Contracting and Workforce, under the direction of Chairman Mick Mulvaney (R-SC), today held a hearing examining the effects of current federal prison contracting on small business competition, and exploring the legislative solutions proposed in the Federal Prison Industries Competition in Contracting Act of 2011 (H.R. 3634). The hearing was titled Unlocking Opportunities, Recidivism versus Fair Competition in Federal Contracting.

“Using small businesses for federal contract work is a great way to create jobs and save the taxpayer money,” said Chairman Mulvaney.  “We already know that current law provides UNICOR with built-in advantages over small businesses in obtaining federal contracts, but we wanted to look into just how tilted the playing field really is. We need to find solutions to allow small firms to compete, and I’m convinced we can make sensible changes. I am particularly interested in the ideas outlined in H.R. 3634, and the new authorities we provided to UNICOR last year that will allow them to partner with the private sector to manufacture items that no longer have domestic producers.”

“Our bill puts the purchasing decision in the hands of the buying agencies. If FPI has the lowest price, the best value, or is determined to be the most qualified, it gets the contract. In other words, it requires agencies to research which products are available on the market, not just flip through the FPI catalog," said Rep. Bill Huizenga (R-MI), sponsor of H.R. 3634. “In our current economic climate, this is the prudent thing to do for taxpayers, and it just makes common sense.”

In the hearing, small business owners testified that they are unfairly disadvantaged by policies allowing UNICOR, also known as Federal Prison Industries, to compete for small business set-aside contracts. UNICOR cited reduced rates of recidivism for prisoners working on UNICOR contracts as a rationale for continuing current set-asides. The Subcommittee heard both viewpoints, and examined the legislative impact of the proposals in H.R. 3634.

 For related hearing documents, click here.                                                        

Notable Witness Quotes:

Rebecca Boenigk, CEO, Neutral Posture, Bryan, TX, on behalf of Women Impacting Public Policy, said, “Women owned businesses represent one of the fastest growing contributors to our national economy, with an impact of $1.2 trillion annually, a number that would be much larger without impediments like the competing Federal Prison Industries (FPI) system, also known as UNICOR.  I want to commend the Subcommittee for shining a light on this very serious, and often overlooked issue. It is imperative that there be reform in the FPI system; not only are we forced to compete with them for small business set asides but UNICOR basically has a monopoly on many contracts because they are automatically given top priority.”

John Palatiello, President of the Business Coalition for Fair Competition, Reston, VA, said, “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 BCFC. We endorse the policy that the government should not perform the production of goods and services for itself or others if acceptable privately owned and operated services, firms found in the Yellow Pages of the phone book, are or can be made available for such purposes – which we call the Yellow Pages test. The private sector should be allowed to compete fairly with FPI for federal contracts – plain and simple – by eliminating the mandatory source requirement that government agencies purchase products and services from FPI.”

Michael Mansh, President, Pennsylvania Apparel, LLC, said, “We believe that as industry we can compete against FPI if given the opportunity to do so. Despite the fact that starting wage for an inmate is 23 cents per hour, the industry is looking for equity in the form of opportunities for industry to win contracts, hire employees and keep the domestic manufacturing base of textiles and apparel strong and vibrant so that we are prepared when the next crisis arises. In 2002, I stated in my testimony, and I quote, ‘The time for FPI reform is now.’ In 2012, I submit that the time for FPI reform is long overdue.”

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