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May 8, 2008 -- Federal Times (US)

Federal Prison Industries Program Expects To Lose Millions In Sales

By Elise Castelli

Return to Drug War News: Don't Miss Archive

The federal program that sells office furniture and other products made from prison labor expects to lose millions of dollars in sales because of a new law, officials told a House committee Tuesday.

Federal Prison Industries (FPI), known by the brand name Unicor, has long been a mandatory source for federal purchases, but the 2008 Defense Authorization Act requires the Defense Department to put out for bid orders it previously would have placed with FPI.

In areas where Defense buys more than 5 percent of goods or services from FPI, it now must compare what FPI sells to what the private sector sells. If FPI doesn't offer the best quality, price and delivery time, Defense is required to open the purchase to a competition between FPI and the private sector.

As a result of these competition rules, FPI could lose at least $144 million in sales and 3,250 inmate jobs, Harley Lappin, director of the Bureau of Prisons, told the House Judiciary Committee on May 6. FPI took in about $850 million in 2007 and employed 23,000 inmates.

FPI is self-funding and without enough revenue, inmates will not have jobs to keep them busy, Lappin said.

The American Federation of Government Employees, which represents Bureau of Prisons corrections officers, estimates the situation will be much worse. FPI will lose $240 million in revenue and 6,500 prisoner jobs as a result of the competition requirement, said AFGE President John Gage.

Any loss of inmate jobs increases the idleness of the prison population, Gage said. "The increase in FPI prison inmate idleness and the associated increased risk of inmate assaults on federal correctional officers and staff would necessarily require a substantial increase in BoP [budget and staff]," Gage said.

About 1,300 more corrections officers at the cost of $100 million would be needed if 6,500 FPI inmate jobs were lost due to slumping sales, he said.

Industry has long criticized mandatory purchasing from FPI, saying the monopoly takes scarce manufacturing jobs away from law-abiding citizens. Industry backed a 2002 law that requires agencies to conduct market research to determine if Unicor products are the best value in areas where Unicor held more than 20 percent of the federal market.

As a result of these rules, FPI has seen a dramatic decline in sales, Lappin said. FPI furniture sales have felt the competition the hardest, declining 40 percent since 2002, Lappin said. Unicor makes furniture, textiles, fencing and other industrial products. It also offers food services, data entry services, electronics recycling services and printing services.

Members of the committee expressed support for the program and dismay that mandatory sourcing was limited in the Defense bill without consulting the committee.

"If we didn't have this program, we'd be falling all over ourselves to create it," said Rep. Dan Lungren, R-Calif.

While the number of inmate workers has dropped slightly since 2000, FPI has been able to avoid a dramatic decline by creating shifts to allow for part-time work, said Paul Laird, FPI's chief operating officer. While not ideal, the part-time work keeps inmates busy, trains them for the outside world and holds them to the behavior and education standards required to take part in the program, Laird said.

FPI could survive competition if it is given new authorities to manufacture products that are now imported, said Laird. This would minimize FPI's effect on U.S. jobs while creating jobs in the community to supply FPI with raw materials, Laird said.
But Congress would also have to protect what is left of FPI's preferred-source status until those new areas are established, Lappin said. It won't be easy because FPI doesn't extensively advertise or market its lines of business, he said.

"We can't afford to lose mandatory sourcing," he said.

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