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Fed-owned prison labor company has unfair advantage, lawmakers say

Source: Washington Examiner


The two are trying to build support for legislation that would strip the company, known as both Federal Prison Industries Inc., and Unicor, of that advantage.

“Currently, Unicor automatically gets its choice of federal government contracts through a process known as ‘mandatory sourcing.’ This provision prevents private-sector businesses from even competing for a federal government contract. On top of this, Unicor also possesses special status to poach contracts specifically reserved for small businesses despite being a massive government-run entity that maintains a ‘workforce’ of over 12,000 prisoners,” Huizenga, R-Mich., and Maloney, D-N.Y., wrote in a joint “dear colleague” letter issued this week.

Created by Congress in 1934, Unicor is run by the Federal Bureau of Prisons and uses inmates to produce a variety of products, primarily clothing, electronics and office furniture. It operates 78 factories at 62 prison facilities. It is self-funding and not supported by tax dollars.

“The goal of FPI is to reduce undesirable inmate idleness by providing a full-time work program for inmate populations. Many of the inmates do not have marketable employment skills. FPI provides a program of constructive industrial work and services wherein job skills can be developed and work habits acquired,” according to a 2014 Justice Department inspector general’s report.

It is not a charity program, though. It is a business enterprise that reported sales of $533 million and earnings of $46 million in 2013, the inspector general’s report said.

Extremely low overhead helps. Federal law requires that able-bodied prisoners work. While the inmates are paid, the rate varies and reportedly sometimes falls below a dollar a hour. An FAQ on Unicor’s website states, “Inmates are paid considerably less than minimum wage.” Unicor justifies that by citing the extra supervision and security that the inmates require. A representative for Unicor could not be reached for comment.

The cost of managing prisoners is also the explanation behind mandatory sourcing. Ensuring that it has a steady supply of federal contracts is meant to offset the “competitive disadvantages” it faces.

Critics argue that Unicor doesn’t need that advantage anymore. “It started out as a good idea,” said John DeWitte, Huizenga’s chief of staff. “But like most bureaucracies they eventually grew beyond their mission.”

Huizenga became interested in the issue because several furniture companies are in his district and they have been frozen out of numerous federal contracts.

Maloney has been pushing the issue for more than a decade, saying that clothing manufacturers in her district were suffering. “For decades, the FPI brands have had an absolute monopoly as a supplier on things such as uniforms and gloves for the military … That near monopoly was based on wages, taxes and workplace regulations the private sector could not match,” she said when introducing the 2012 version of the reform. A spokeswoman for the lawmaker could not be reached for comment.

The lawmakers also doubt Unicor’s claims that it helps prisoners readjust. The legislation calls for a study on Unicor’s impact on recidivism.

Maloney and Huizenga are the legislation’s only sponsors. DeWitte says they are just beginning to drum up support. He points to a 2006 bill that would have strictly limited Unicor’s contracting advantage. It passed the House on a broadly bipartisan 362-57 vote before it died in the Senate.

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