[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                 FEDERAL PRISON INDUSTRIES COMPETITION 
                       IN CONTRACTING ACT OF 2005

=======================================================================

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON CRIME, TERRORISM,
                         AND HOMELAND SECURITY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                                   ON

                               H.R. 2965

                               __________

                              JULY 1, 2005

                               __________

                           Serial No. 109-47

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov


                 U.S. GOVERNMENT PRINTING OFFICE

22-258                 WASHINGTON : 2005
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government 
Printing  Office Internet: bookstore.gpo.gov  Phone: toll free 
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001




                       COMMITTEE ON THE JUDICIARY

            F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois              JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
LAMAR SMITH, Texas                   RICK BOUCHER, Virginia
ELTON GALLEGLY, California           JERROLD NADLER, New York
BOB GOODLATTE, Virginia              ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
DANIEL E. LUNGREN, California        ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee        SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah                   MAXINE WATERS, California
SPENCER BACHUS, Alabama              MARTIN T. MEEHAN, Massachusetts
BOB INGLIS, South Carolina           WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana          ROBERT WEXLER, Florida
MARK GREEN, Wisconsin                ANTHONY D. WEINER, New York
RIC KELLER, Florida                  ADAM B. SCHIFF, California
DARRELL ISSA, California             LINDA T. SANCHEZ, California
JEFF FLAKE, Arizona                  CHRIS VAN HOLLEN, Maryland
MIKE PENCE, Indiana                  DEBBIE WASSERMAN SCHULTZ, Florida
J. RANDY FORBES, Virginia
STEVE KING, Iowa
TOM FEENEY, Florida
TRENT FRANKS, Arizona
LOUIE GOHMERT, Texas

             Philip G. Kiko, General Counsel-Chief of Staff
               Perry H. Apelbaum, Minority Chief Counsel
                                 ------                                

        Subcommittee on Crime, Terrorism, and Homeland Security

                 HOWARD COBLE, North Carolina, Chairman

DANIEL E. LUNGREN, California        ROBERT C. SCOTT, Virginia
MARK GREEN, Wisconsin                SHEILA JACKSON LEE, Texas
TOM FEENEY, Florida                  MAXINE WATERS, California
STEVE CHABOT, Ohio                   MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida                  WILLIAM D. DELAHUNT, Massachusetts
JEFF FLAKE, Arizona                  ANTHONY D. WEINER, New York
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
LOUIE GOHMERT, Texas

                      Jay Apperson, Chief Counsel

           Elizabeth Sokul, Special Counsel for Intelligence

                         and Homeland Security

                  Michael Volkov, Deputy Chief Counsel

                 Jason Cervenak, Full Committee Counsel

                     Bobby Vassar, Minority Counsel




                            C O N T E N T S

                              ----------                              

                              JULY 1, 2005

                           OPENING STATEMENT

                                                                   Page
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Chairman, Subcommittee on Crime, 
  Terrorism, and Homeland Security...............................     1
The Honorable Robert C. Scott, a Representative in Congress from 
  the State of Virginia, and Ranking Member, Subcommittee on 
  Crime, Terrorism, and Homeland Security........................     2
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     5

                               WITNESSES

Mr. Phillip Glover, President of the Council of Prison Locals, 
  American Federation of Government Employees
  Oral Testimony.................................................     8
  Prepared Statement.............................................    10
Mr. Paul Miller, Director of Government Affairs, Independent 
  Office Products & Furniture Dealers Association
  Oral Testimony.................................................    11
  Prepared Statement.............................................    14
Mr. Reginald Wilkinson, Director, Ohio Department of 
  Rehabilitation and Correction
  Oral Testimony.................................................    20
  Prepared Statement.............................................    21
The Honorable Peter Hoekstra, a Representative in Congress from 
  the State of Michigan, and Chairman, Permanent Select Committee 
  on Intelligence
  Oral Testimony.................................................    24
  Prepared Statement.............................................    26

                                APPENDIX
               Material Submitted for the Hearing Record

Statement submitted by the U.S. Chamber of Commmerce to the House 
  Judiciary Committee............................................    47
Statement of Roger F. Cocivera, President and CEO, Textile Rental 
  Services Association of America................................    51
Letter from Dan Danner, Executive Vice President, National 
  Federation of Independent Business (NFIB)......................    56
Statement submitted by the National Federation of Independent 
  Business (NFIB)................................................    57
Letter from Chris Jahn, President, Contract Services Association 
  (CSA) to the Honorable Howard Coble............................    59
Letter from Chris Jahn, President, Contract Services Association 
  (CSA) to the Honorable Bobby Scott.............................    60
Statement submitted by the Contract Services Association (CSA)...    61
Statement submitted by the Coalition for Government Procurement..    64
Statement by Remy International, Inc.............................    68
Statement submitted by Michael B. Styles, National President, 
  Federal Managers Association(FMA)..............................    71
Letter from Matthew T. Powers, General Manager, Prison Industry 
  Authority (PIA) to the Honorable Howard Coble..................    74
Supplemental attachments submitted by Philip Glover, President of 
  Coucil of Prison Locals, American Federal of Government 
  Employees......................................................    75
Supplemental attachments submitted by Paul A. Miller, Director of 
  Government Affairs, Independent Office Products & Furniture 
  Dealers Association............................................    88
Statement submitted by Kevin M. Burke, President and CEO, 
  American Apparel and Footwear Association (AAFA)...............    97
Letter from Kevin M. Burke, President and CEO, American Apparel 
  and Footwear Association (AAFA) to the Honorable F. James 
  Sensenbrenner, Jr..............................................    99
Letter submitted by various Dealers..............................   100
Statement submitted by Management Association for Private 
  Photogrammetric Surveyors (MAPPS)..............................   112
Fact Sheet submitted by the Correctional Vendors Association, 
  ``FPI Fact or Fiction?''.......................................   114
Summary Statement submitted by the National Citizens United for 
  Rehabilitation of Errants (CURE)...............................   115


    FEDERAL PRISON INDUSTRIES COMPETITION IN CONTRACTING ACT OF 2005

                              ----------                              


                          FRIDAY, JULY 1, 2005

                  House of Representatives,
                  Subcommittee on Crime, Terrorism,
                              and Homeland Security
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:30 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable Howard 
Coble (Chair of the Subcommittee) presiding.
    Mr. Coble. Good morning, ladies and gentlemen. Today, we 
will examine the operation of the Federal Prison Industries, 
popularly known as FPI and its impact on the private sector as 
well as its benefits to combat inmate idleness and assist 
inmate rehabilitation.
    We expect to receive testimony regarding H.R. 2965, the 
``Federal Prison Industries Competition in Contracting Act of 
2005.'' I am proud to be a cosponsor of this legislation 
because it will level the playing field in competition for 
Federal agency contracts.
    Now, ladies and gentlemen, I think the issue before us 
today clearly portrays and corroborates the old adage that 
reasonable men and women can differ, and this clearly 
illustrates that in my opinion.
    The Federal Bureau of Prisons is responsible for the 
custody and care of more than 181,000 Federal offenders. 
Approximately 85 percent of these inmates are confined in 
Bureau-operated correctional facilities or detention centers. 
Prisoners who are physically able to work must labor in some 
capacity 5 days a week. FPI is a Government corporation that 
operates the BOP's correctional program and employs inmates 
from the Federal prison population to manufacture goods for and 
provide services to Federal agencies.
    About 20 percent of the inmates work in Federal Prison 
Industries, FPI, factories. They generally work in factory 
operations such as metals, furnitures, electronics, textiles, 
and graphic arts. FPI work assignments pay from 23 cents to 
$1.15 per hour.
    Federal agencies are required by law under 18 USC, section 
4124, to purchase FPI products if a product is available that 
meets the agency's requirements and does not exceed current 
market prices. This provision in the law is deemed ``mandatory 
source preference''. Because of this law, Prison Industries 
enjoys a mandatory market for its goods, a facility in which to 
run them, and what amounts to captive labor to manufacture 
them.
    In the last two Congresses, this Committee brought up 
legislation to reform FPI. The legislation passed this 
Committee twice. The text of H.R. 2965, as introduced, is 
substantially identical to that legislation, including 
improvements that we, as a Committee, agreed to include.
    H.R. 2965 amends title 18 to require FPI to compete for 
contracts with private sector firms and provides a 5-year 
period during which FPI adjusts to obtaining inmate work 
opportunities through other than its mandatory source status.
    Additionally, the legislation provides for inmate access to 
remedial and vocational opportunities and other rehabilitative 
opportunities to better prepare inmates for a successful return 
to society, including authorizing alternative inmate work 
opportunities in support of nonprofit organizations and other 
public service programs.
    This legislation does not eliminate FPI. It simply requires 
FPI to deliberately begin to compete in the same way that other 
businesses do. FPI however still has the advantage over some 
businesses because they don't have the same overhead costs as 
the average business, such as paying Union wages, paying for 
health insurance, and for providing retirement benefits.
    FPI is a large and growing Government owned corporation. In 
1998, FPI had total sales in excess of 534 million and employed 
20,200 inmates. In 2004, employed 19,337 inmates with a total 
sales of 802 million--in excess of 802 million and a profit of 
120.4 million dollars.
    This legislation will fundamentally alter FPI's 
relationship with its Government customers. They will no longer 
be held captive by mandatory source requirements. All Federal 
Government agencies would have the ability under this 
legislation to utilize taxpayer dollars in the most efficient 
manner possible. I believe it is worthwhile legislation. And I 
look forward to hearing from our witnesses.
    And I am now pleased to recognize the distinguished 
gentleman from Virginia, the Ranking Member. Mr. Scott, may 
think--he hasn't accused me of this yet--but he may think I am 
trying to put FPI out of business, which I am not trying to do. 
Now I will admit, folks, I have been subjectively involved 
because I represent a district that is heavily involved with 
furniture and textiles. So having said that, Mr. Scott, glad to 
hear from you.
    Mr. Scott. Mr. Chairman, I have never questioned your 
motives. I just question the impact of the legislation.
    I want to thank you for holding the hearing on H.R. 2965, 
the ``Federal Prison Industries Competition in Contracting Act 
of 2005.'' I am especially appreciative of your willingness to 
do so despite the fact that the House is actually in recess for 
the July district work period.
    The Federal Prison Industries, or FPI, provides prisoner 
made products and services to Federal agencies. In its first 
year of operation, the percent of agency procurement from FPI 
represented about one quarter of 1 percent of total Federal 
agency procurement, a negligible and even a more negligible 
total of the total industries.
    The percentage is the same today. FPI can only sell its 
products and services to Federal agencies. The program was 
established in the 1930's in the midst of the Great Depression 
as a way to teach prisoners real work habits and skills so that 
when they are released from prison, they will be able to find 
and hold jobs to support themselves and their families and be 
less likely to commit more crimes.
    It is clear that the program works to do just that. Follow-
up studies covering as much as 16 years of data have shown that 
inmates who participate in prison industries are 14 percent 
more likely to be employed and 24 percent less likely to commit 
crimes than prisoners who do not participate in the program. 
While this certainly benefits offenders and families, that is 
not the main point from a public policy perspective.
    The real benefit to all of us is that as a direct result of 
this program, there are many fewer victims of crimes. Now we 
have spent billions of dollars to build Federal prisons and 
spend 4 billion a year for prisoner upkeep. With FPI, there 
will be fewer inmates in the future. Now FPI pays for itself 
100 percent and reduces crime. All able-bodied inmates in the 
Federal system are required by law to do some work. Few 
offenders in a prison have marketable skills and the vast 
majority do not even have credible work habits, such as showing 
up for work on time and working cooperatively and productively 
with others. Such habits are required to maintain an FPI job. 
These are the same habits required to be productive, desirable 
workers anywhere, and that is why the FPI experience has been 
found to be--those with FPI experience have been found to be 
more employable than those that don't.
    And in the past few years, we have eliminated parole, we 
have eliminated good conduct credits, Pell grants, and other 
incentives for prisoners to improve themselves. In the Federal 
prison system now, we have very few incentives for self 
development. One shining example is FPI.
    Non-FPI inmates work on jobs that pay about 12 cents to 13 
cents an hour--excuse me, 12 cents to 30 cents per hour, while 
FPI jobs pay about a dollar and a quarter an hour. Now to hold 
down an FPI job, an inmate must have completed high school or 
be making steady progress toward obtaining a GED and maintain a 
record of good behavior. This is true not only for those on an 
FPI job, but for those on the waiting list as well as those 
seeking to establish eligibility to be placed on the waiting 
list. And that is why FPI is a great managerial tool to help 
ensure that prisons operate safely for prison employees as well 
as inmates.
    I have never met a prison administrator who does not 
support the program. In recent years, appropriations and FPI 
board restriction have caused elimination of thousands of 
inmate jobs at a time when the Federal inmate population has 
increased by more than 23,000 inmates. In 2000, for example, 
the FPI jobs represented 25 percent of prison jobs. Now that 
figure is down to 19 percent.
    Fortunately for the program, the Iraqi war has caused a 
surge in certain products and services that FPI provides to the 
military. Hopefully, this level of purchase will be only 
temporary. And certainly, it has not helped to keep pace with 
the rising inmate population.
    Now, H.R. 2956 would greatly depress the ability of FPI to 
provide much inmate jobs and greatly erode its percentage of 
inmate jobs requiring the prison system to further divide the 
limited work and pay that is already divvying
    up between too many inmates.
    The bill amends the current requirement in the law for 
agencies to purchase goods from FPI, establishes a competitive 
bid process for FPI for agency purchases of goods and services, 
unless the Attorney General and the director of the Bureau of 
Prisons and the FPI program and the warden at a particular 
institution where the goods and services are produced certify 
that they cannot safely run the prison with that the particular 
contract award. And they must report the situation to Congress 
30 days before obtaining the contract to provide the goods and 
services. Now let's be serious. We cannot expect any of these 
officials to publicly admit such a level of incompetence for a 
single purchase contract.
    The bill also provides for a temporary preferential 
purchase program that allows agencies to purchase goods and 
services for FPI, quote, only if the contracting officer for 
the procurement activity determines that they will meet all 
prequalification and other requirements. Unlike the Attorney 
General, who has to show specific findings by his subordinates, 
one purchasing agent can decide.
    The bill also authorizes the production of goods and 
services for charitable organizations through which taxpayers 
would pay inmates and allows FPI to sell products and services 
to agencies on a noncompetitive basis, if they are currently 
only provided offshore.
    However, there is no basis for concluding that any of these 
authorities will replace the impact of the loss of the current 
statutory mandatory source that we have now, and there is no 
indication that it will actually appropriate the money for 
these purchases to be made. As I indicated, FPI pays for 
itself.
    Now, critics say that FPI has resulted in thousands of jobs 
lost for law abiding citizens. Now, the furniture and apparel 
industries are two industries in which FPI has traditionally 
done most of its work. And Mr. Chairman, you indicated that you 
represent one of those areas.
    But when asked, representatives of these industries concede 
that FPI sales represent an insignificant or negligible portion 
of their industries. If such industries are having problems, it 
is not due to FPI. In textiles, for example, we are told that 
600,000 jobs were lost over the last 10 years.
    There are approximately 7,000 prisoners working in textiles 
in FPI, and each one divides up a job, so you certainly can't 
blame a few thousand prisoners for the loss of 600,000 jobs.
    The office furniture industry is apparently quite robust. I 
would like unanimous consent to introduce an article that shows 
one of the industries showing how good things have been 
recently.
    Mr. Coble. Without objection it will be submitted as part 
of the record.
    [The information referred to follows in the Appendix]
    Mr. Scott. And I am first to concede that there are 
problems with FPI that could be fixed. And I think a lot has 
been done through the activities of this Congress to make 
things better. But unfortunately, we have also made things 
worse, because as a direct result of some of our actions, 
thousands of jobs have been lost, and that is thousands of 
prisoners that will commit crimes in the future that will be 
incarcerated at our expense in the future because we wouldn't 
provide them the jobs that they need to prevent those 
activities.
    Now, we need a comprehensive study to show how we can, if 
we are going to replace the mandatory source, we need a 
comprehensive study to show how he can we can better address 
our responsibilities and concerns. I don't believe, however, 
that we should continue to reduce the number of jobs as this 
bill will do without replacing them with some other program.
    So, Mr. Chairman, I look forward to the testimony of our 
witnesses and to working with you in such a way that we can 
provide inmates jobs, and do something about the impact that 
this bill would have.
    Mr. Coble. I thank you, Mr. Scott. We also have with us 
today the distinguished gentlemen from Michigan, the Ranking 
Member of the full House Judiciary Committee, Mr. Conyers.
    Mr. Conyers. Thank you, Chairman Coble and Ranking Member 
Scott.
    There are lots of reasons why this is an important hearing. 
And, I begin by welcoming all of these witnesses that are 
experts, we look forward to their testimony. And, we are glad 
that Chairman Hoekstra is able to join us today, as well.
    First of all, just stepping back from the immediate issue, 
we have got a problem with the prison systems in America to 
begin with. And it is very important that we realize that. We 
have a lot of work to do.
    The second thing I want to get out is that I am working on 
more reentry programs back in Michigan. It is incredible. The 
tragic fact in our economy, of course, is that people coming 
back into the citizenry can't get jobs. Some by law, can't 
become a barber and many other things. It is a sad tale. And, 
of course, there are many people that haven't been to prison 
that don't have jobs, as well. So, I am looking at this on a 
little bit larger scale.
    And we have some very exciting organizations that are 
working night and day, around the clock, trying to deal with 
how we welcome people back. The idea for some of us on 
Judiciary is that a person who has paid his dues, come out, and 
then can't vote is another slap in the face. It means, yes, you 
served your time. Yes, you have done probation or parole. But 
in some places in this country, we are not going to let you 
vote. Fortunately, that is not the case in Michigan. But it is 
that stamp you have been in, and you are going to pay for this, 
some way for the rest of your life.
    And so now we get to the question of how we retrain people 
to enter the system.
    And I am very eager to hear this discussion from the four 
gentlemen that are with us, because they bring a particular 
background and skill in this that is very important.
    Now, and I noticed there are people here in the Judiciary 
Committee, Charlie Sullivan of CURE, who has been working for 
at least two decades on this question, and there are others of 
you here who put in lots of good hard work. So, I think we have 
got the ability and the experience here to work out and fashion 
something that is mutually agreeable.
    You know, I have noticed, and I have listened to the 
Chairman and the Ranking Member of the Subcommittee, I don't 
find much to disagree with either of them about. Nothing leaps 
up at me that I would want to lecture them about.
    But, of which we have, you know, a great predisposition, 
but mandatory source, are we going to phase it out and require 
competition?
    Where do we go from here? And I was hoping that somebody 
might lift up this section 10 of the bill which I thought would 
get me a little, a few accolades about how a reentry 
demonstration project, a vocational and educational training 
program and providing the necessary Federal Prison Industries 
with the financial resources to do even more and better things.
    So it seems to me, in conclusion, Mr. Chairman, that we are 
really roughly all on the same page. I mean, there is nobody 
here that wants to blow away the training program for--and 
Scott is giving me that look--which, I mean really, and if 
there is, we will find out about it at this hearing.
    But it seems to me we all come here concerned about how we 
deal with this problem. And it is in that spirit that I come 
here on a day that we are in recess. And I stayed because this 
is so important. I mean, we have the largest prison population 
on earth. To me that is a very disgraceful statistic, since we 
are the most--the wealthiest country on earth at the same time. 
And it seems like all of these considerations should be taken 
into consideration as we listen to our witnesses. And I thank 
the Chairman.
    Mr. Coble. I thank you, Mr. Conyers. Gentlemen, it is the 
practice of this Subcommittee to swear in all witnesses 
appearing before it so if you would please stand and raise your 
right hands.
    Mr. Scott. Mr. Chairman we are not going to swear in a 
colleague, are we?
    Mr. Coble. Well, okay, Mr. Conyers says, Mr. Hoekstra you 
may be seated, Mr. Hoekstra.
    [Witnesses sworn.]
    Mr. Coble. Let the record show that the witnesses have been 
affirmed. Please be seated. And gentlemen, I hate that the 
implication is that you all are not to be trusted and Mr. 
Hoekstra is. And that is not the message at all, I assure you.
    Mr. Conyers. Mr. Chairman, let the record show that 
Congressman Chairman Hoekstra was willing to take the oath.
    Mr. Coble. Well said, Mr. Conyers. Well, as has already 
been said we are blessed with a very fine panel this morning. 
First witness is Mr. Phil Glover, the President of the Council 
of Prison Locals for the American Federation of Government 
Employees. Mr. Glover was first hired as a correctional officer 
in September 1990 in Loretta, Pennsylvania, and was promoted as 
senior officer specialist in 2002.
    Mr. Glover served as president of Local Union 3951, and as 
regional vice-president of the Council of Prison Locals from 
1994 to 1997. He was elected council president in 1997 and 
currently serves in that capacity.
    In addition to his service as a correctional officer, Mr. 
Glover also served in our military in the 82nd airborne 
division, 505th parachute infantry regiment as a military 
intelligence analyst, and the 18th Airborne Corps 118 MP 
Company Airborne as a military policeman.
    And Mr. Glover, I assumed you spent some time in Fort 
Bragg, did you not?
    Mr. Glover. Seven years.
    Mr. Coble. Which is not my district, but my State. Good to 
have you with us, Mr. Glover.
    Mr. Glover. Thank you.
    Mr. Coble. Second witness today is Mr. Paul Miller. Mr. 
Miller served as director of Government affairs for the Office 
Furniture Dealers Alliance, which is a National Trade 
Association serving small family-owned and operated office 
furniture dealers.
    He has served in that capacity for over 5 years. He also 
has served as administrator of the business labor competition 
and contracting coalition for the last 2 years. Mr. Miller was 
graduated from the University of Wisconsin, Whitewater, with a 
degree in political science.
    Now, a very fine colleague from the Buckeye State, Mr. 
Chabot, has asked permission to introduce our third witness. 
Mr. Chabot.
    Mr. Chabot. I thank the Chairman for yielding and I have 
the distinct honor of introducing a good fellow buckeye, Dr. 
Reginald Wilkinson, who is with us this morning. Dr. Wilkinson 
has been employed with the State of Ohio Department of 
Rehabilitation and Corrections since September 1973. He has 
served in a variety of positions, including superintendent of 
the Corrections Training Academy, warden of the Dayton 
Correctional Institution, and Deputy Director of Prisons, south 
region.
    Former governor, now senator, George Voinovich appointed 
Dr. Wilkinson director in February 1991 and Governor Bob Taft 
reappointed him director in January 1999.
    Director Wilkinson's academic background includes a 
bachelor's degree in political science and a master's degree in 
higher education administration, both from the Ohio State 
University. He was also awarded a doctor of education degree 
from the University of Cincinnati, in my district, and from 
where my daughter just graduated a couple of weeks ago.
    Dr. Wilkinson is president and executive director of the 
International Association of Reentry. He is also a past 
President of both the Association of State Correctional 
Administrators and the American Correctional Association. He is 
vice chair for North America of the International Corrections 
and Prisons Association. Dr. Wilkinson is additionally director 
of the ICPA Center for Exchanging Correctional Best Practices.
    Dr. Wilkinson has authored numerous journal articles on a 
variety of correctional topics. He is editor of two books, 
``Correctional Best Practices, Directors Perspective,'' and 
``Best Reentry Practices, Directors Perspectives.'' As ACA 
President, he commissioned the publication of ''Best Practices 
Excellence in Corrections.'' Dr. Wilkinson has written chapters 
in a number of books, a few of which include Ohio Crime, Ohio 
Justice, Prison and Jail Administration, Practice and Theory, 
Frontiers of Justice Volume II, and a full spectrum of essays 
on Staff Diversity in Corrections. Director Wilkinson has, 
moreover, received many awards from a variety of organizations. 
A few of the associations he has received honors from include 
the National Governors Association, the American Correctional 
Association, the Association of State Correctional 
Administrators, the International Community Corrections 
Association, the National Association of Blacks in Criminal 
Justice, the Volunteers of America, the Ohio Community 
Corrections Organization, and the Ohio Correctional and Court 
Services Association.
    He has also been appointed for a 3-year term to the 
National Institute of Corrections Advisory Board by U.S. 
Attorney General John Ashcroft. And we welcome you here this 
morning, Dr. Wilkinson.
    Mr. Coble. Good to have you, Dr. Wilkinson.
    Mr. Miller, I don't think I welcomed you as I did Mr. 
Glover. It is good to have you with us today.
    Our final witness today is the Honorable Pete Hoekstra, 
known to all of us, a Member of the House of Representatives. 
He represents the second district of Michigan, Representative 
Hoekstra was originally sworn into Congress in 1993. In August 
2004, Pete was named as Chairman of the House Permanent Select 
Committee on Intelligence. Representative Hoekstra also served 
as Chairman of the House Committee of Education and the Work 
Force Subcommittee on Oversight and Investigations in the 
104th, 105th, and 106th session of Congress. He is a graduate 
of a Holland Christian school, holds a bachelor's degree in 
political science from Hope College in Holland, Michigan, and 
holds a bachelor's of business administration from the 
University of Michigan.
    Prior to his election in Congress, Pete served for 15 years 
at Zeeland, Michigan-based office furniture manufacturers, 
Herman Miller, Inc., where he held the title of vice-president 
for marketing.
    Gentlemen, it is good to have each of you with us. As Mr. 
Conyers and Mr. Scott have indicated to you previously, this is 
our first day of the July work period. And I don't want to 
compromise any of your testimony with my schedule. But your old 
Chairman has got to be at the airport at 12 o'clock. So if you 
all could keep that in mind, I would be deeply appreciative.
    Gentlemen, as we have previously told you, we operate under 
the 5-minute rule. And when you see that panel red light up 
appear into your eye, that does not mean that Mr. Scott and I 
will come to haul you off to the hoosegow, but it does indicate 
to you that your 5 minutes have elapsed. So if you could wrap 
it up about that time, we would be appreciative. And we apply 
the 5-minute rule to ourselves as well. So if you could keep 
that in mind in responding to our questions.
    As has been pointed out, this is an important hearing. It 
is good to have all of you with us. Mr. Glover, why don't you 
kick us off?

TESTIMONY OF PHILLIP GLOVER, PRESIDENT OF THE COUNCIL OF PRISON 
      LOCALS, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

    Mr. Glover. Chairman Coble, Ranking Member Scott, Members 
of the Subcommittee, my name is Phil Glover, and I'm president 
of the Council of Prison Locals, American Federation of 
Government Employees. As the elected representative for over 
28,000 bargaining unit employees in the Federal Bureau of 
Prisons, I want to thank you for the opportunity to express our 
views to the Subcommittee on the proposed bill today.
    I am not here speaking for the Administration, nor am I 
speaking for BOP. I am speaking here as a line staff member 
representing the employees who work inside the 105 facilities 
nationwide.
    This bill passed convincingly last Congress, but that 
doesn't mean the correctional professionals agree with its 
content. Over the last 4 years, we have had our staffing at 
each individual institution cut by 15 to 20 percent. Over the 
last 3 fiscal years, the inmate population has grown by 29,000 
net new inmates. Overcrowding is at an all-time high of 41 
percent. This fiscal year, it was proposed to eliminate the 
construction of two new facilities. Four Federal prison camps 
are now being closed in North Carolina, Florida, and Nevada, 
which currently work for the military. A tax on staff have 
increased. The director stated to the Appropriations Committee 
last year that BOP had a 28 percent increase in assaults over 
the last 3 years. The union believes it was higher increasing 
to 34 percent with an increase of 63 percent with weapons. 
There are attachments to my statement.
    Morale in the Federal system is as low as I have seen it in 
years. People are expected to perform the duties of two, three, 
sometimes four other staff because of shortages. We are asked 
to handle violent inmates and terrorists and are investigated 
by an Inspector General who seems gleeful at attacking us. We 
are vacating correctional posts left and right to save money. 
BOP is planning on contracting out our security at outside 
hospitals and for the contracting out of normal Federal prison 
operations. While the inmate population is increased by 29,000 
new inmates, inmate employment in FPI has actually decreased by 
3,000 jobs in the same period.
    Now, some point out that FPI made more money this year. We 
have. We have because of contracts with DOD for war fighting 
items in electronics and textiles. Other than that, our funds 
are dropping. Our inmate employment is down. When the war ends, 
and it will, we will lose large portions of the program. In 
2001, there were 22,560 inmates working, or 25 percent of the 
inmate population. Now since the DOD general treasury changes 
and changes by our own board of directors, we are providing 
employment to 19,337 inmates, or only 18 percent of our 
population.
    While the bill discusses vocational training and 
educational programming, all of this has been cut over the last 
4 years. We have less teachers, less vocational staff, 
instructors, and, frankly less security. Over the last 3 fiscal 
years, the Administration and the Congress have cut our 
building and facilities budget by $255 million, from 325 
million in 2004 to 70 million in 2006.
    Many of these funds were used to upgrade facilities using 
inmate work crews. Now they sit idle. After this bill passed 
last year, to my knowledge, no one went to the Appropriations 
Committee and asked for additional funding for money for these 
programs.
    We would love to build items for the underprivileged; 
however, we have to pay the staff and for the materials to do 
so. And of the competition, the furniture industry, which is 
one of the main elements of all this, they have increased 
profits without these changes to FPI by large margins. It has 
also been reported that Steelcase doubled its use of suppliers 
in lower-cost countries last year. See attached articles in my 
testimony. It seems to me a win-win would be to partner with 
FPI and the items sent out of the country could be brought back 
to us. We could partner with these companies and help each 
other. Inmates could learn their business under 
apprenticeships, and then perhaps get hired in these production 
facilities here in the United States. We could do that with any 
business that is struggling against the pressure of outsourcing 
or outsourcing overseas. This may decrease their shipping 
costs. It would increase inmate employment and help prison 
workers.
    It is unfortunate we can't seem to get to that point. We 
believe any part of the bill must include repatriation of 
services and products into the entire market. If we give up 
mandatory source, which legislatively we have, you should allow 
us to bring back production from overseas. We have no problems 
with oversight of this. A certification from the Department of 
Commerce, Labor, or whoever you would like, such as a board of 
labor, business and prisons could verify this and establish 
parameters.
    Members of the Committee, I want to thank you for inviting 
me today. And I would be more than happy to answer any 
questions.
    [The prepared statement of Mr. Glover follows:]
                   Prepared Statement of Phil Glover
    Chairman Coble, Ranking member Scott, and members of the 
subcommittee, my name is Phil Glover and I am President of the Council 
of Prison Locals, American Federation of Government Employees. As the 
elected representative for over 28,000 bargaining unit employees in the 
Federal Bureau of Prisons (BOP), I want to thank you for the 
opportunity to express our views to the subcommittee on the proposed 
bill in front of us today, HR2965.
    I first want to clarify, that I am not here speaking for the 
administration or the BOP. I am speaking as a line staff member, 
representing line employees who work inside the walls and fences of 105 
federal facilities in many of your districts.
    As we all know, this bill passed convincingly last Congress. That 
doesn't mean correctional professionals agree with its content, its 
conclusions, nor its effect. Let's review what is happening in 
corrections and FPI in the federal system briefly.
    Over the last four years we have had our staffing at each 
individual institution cut by as much as 15 to 20 percent as compared 
to the staffing percentages of the late 1990's. A chart is provided in 
my statement for the record to verify this (attachment 1).
    Over the last three fiscal years the inmate population has grown by 
29,000 new inmates. Overcrowding is at an all time high of 41 percent. 
This fiscal year, it was proposed to eliminate the construction of two 
new facilities. We are taking United States Penitentiary Leavenworth 
and United States Penitentiary Atlanta offline as High Security Prisons 
and demoting them to Medium facilities. We didn't receive the funds to 
keep them updated and operational as United States Penitentiarys. We 
are cutting four federal prison camps, three of which do work for the 
military on bases in North Carolina, Florida and Nevada.
    Attacks on staff have increased, the Director stated to the 
appropriations committee last year that BOP had a 28 percent increase 
in assaults over the last three years. The union believes it was higher 
increasing 34 percent, with an increase of 63 percent with weapons. 
Again, a chart is provided from BOP's own statistics.
    Moral in the federal system is as low as I have seen it in years. 
People are expected to perform the duties of two, three, sometimes four 
other staff because of shortages. We are asked to handle violent 
inmates and terrorists, and are investigated by an Inspector General 
who seems gleeful at attacking us. We are vacating correctional posts, 
left and right, to save money. Overtime funding has been cut 
dramatically and BOP is planning on contracting out our security at 
outside hospitals. Our last staff member murdered has not received 
justice because of eight years of delay to a trial of the inmate. Our 
assault rates have climbed. The congress has allowed privatization of 
prisons to creep into the system.
    People in FPI have been reorganized over and over, had to retire 
early, had to leave their FPI positions returning to custody work in 
the senior days of their careers. It is a lot to handle.
    And now comes again, this piece of legislation. As you all are 
aware, mandatory source as it's called has been eliminated in 
appropriations bills for DOD and general government for the last three 
fiscal years. While the inmate population has increased by 29,000 new 
inmates, inmate employment in FPI has actually decreased by 3,000 jobs 
in the same period. Now, some point out that FPI has made more money 
this year. We have. We have because of our contracts with DOD for war 
fighting items. When the war ends, and it will, we will lose larger 
portions of the program. Keep in mind, that in 2001 there were 22,560 
inmates working or 25 percent of the inmate population. Now, since the 
DOD, general treasury changes, and changes by our own Board of 
Directors, we are providing employment to 19,337 inmates or only 18 
percent of our population.
    While this bill talks about vocational training and education 
programs the funding for all of this has been cut. We have less 
teachers, less vocational instructors and less security. Over the last 
three fiscal years, the Administration and the Congress has cut our 
Building and Facilities budget by 255 million dollars from 325 million 
in 2004, to 70 million in 2006. Many of these funds were used to 
upgrade facilities using inmate work crews, now they sit idle. We have 
been placed in the category of ``a domestic program'' and so, when you 
do an across the board cut in an Omnibus bill we get hit again. We are 
security for this nation and have been for over 70 years. We have kept 
the felon of this country locked up, we deserve better.
    After this bill passed last year, no one went to the appropriations 
committee and asked for additional money for these new programs. We 
would love to build items for the underprivileged, however, we have to 
pay the staff and purchase the materials. There is no money in the 
budget for this when we can't even hire correctional officers for 
security. We would love to work for non-profits, again this isn't 
practical, because of limited funds and non-profit's limited budgets.
    And what of the ``competition,'' the furniture industry, who is one 
of the main elements of all this. They have increased profits without 
these changes to FPI by large margins. It has also been reported that 
Steelcase doubled its use of suppliers in lower-cost countries last 
year. (see attached article).
    It seems to me a ``win, win'' would be to partner with FPI and the 
items sent out of the country could be brought back to us. We could 
partner with these companies and help each other. Inmates could learn 
their business under apprenticeships and then perhaps could get hired 
in their production facilities here in the United States. We could do 
that with any business that is struggling against the pressure to 
outsource overseas. Textiles could provide us lists of product that is 
produced only overseas and we could bring back that work. This may 
decrease their shipping costs, it would increase inmate employment, 
helping prison workers, increase domestic raw materials purchases and 
other important economic interests. Wages could be raised for the 
inmates so they could pay fines off earlier, assist their families, pay 
taxes and other parts of their debt to society. It is unfortunate, that 
we can't seem to get to this point.
    We believe any part of this bill must include repatriation of 
services and products into the entire market. We should give up 
mandatory source (which legislatively we have) and you should allow us 
to bring back production from overseas. We have no problems with 
oversight of this. A certification from Department of Commerce, 
Department of Labor or whoever would do this type of certification 
would be welcome. Or a board established of labor, business, and 
prisons who could verify this and establish parameters on what to bring 
back. We think that is the way to go.
    Members of the committee, I want to thank you for inviting me 
today. I hope I have given you some idea of the issues facing 
corrections in the federal system and our extreme challenges. I would 
be more than happy to answer any questions at this time.

    Mr. Coble. Thank you, Mr. Glover.
    Mr. Miller.

   TESTIMONY OF PAUL MILLER, DIRECTOR OF GOVERNMENT AFFAIRS, 
  INDEPENDENT OFFICE PRODUCTS & FURNITURE DEALERS ASSOCIATION

    Mr. Miller. Mr. Chairman, Ranking Member, and Members of 
the Subcommittee, I appreciate the opportunity to testify at 
today's Subcommittee hearing to discuss H.R. 2965, the 
``Federal Prison Industries Competition in Contracting Act of 
2005.'' My name is Paul Miller, and as you mentioned, I serve 
as the director of Government Affairs for the Office Furniture 
Dealers Association. Let me start by saying emphatically that 
the coalition established 9 years ago representing business and 
labor supports the original mission of the Federal Prison 
Industries Program, which was to provide inmates with real job 
skills they can use upon release back into their communities.
    What we don't support is a program that has gone beyond 
this mission and is more about generating profits at the 
expense of business, labor, and, most importantly, the inmates 
this program was supposed to help. Our coalition is often 
criticized for trying to put FPI out of business. This is just 
another scare tactic used by FPI and its trading partners to 
dissuade further action on this important legislation.
    It is also said that H.R. 2965 is intended to be harmful to 
small businesses, prison guards, and inmates. That's pure 
rhetoric. The goal of this legislation is just the opposite.
    I expect we will hear today from opponents that these are 
our intended goals.
    Mr. Chairman, I can assure this Subcommittee that this is 
furthest from the truth. Our coalition is made up of mostly 
small businesses. Our coalition supports the prison guards 
charged with overseeing these inmates in these facilities. I 
would not, nor would any member of our coalition, support 
legislation that puts prison guards in harm's way. Our 
coalition supports rehabilitation of inmates. All this is proof 
in a legislation Representative Hoekstra has once again 
introduced. With his leadership, this bill has come a long way 
from where it was some 12 years ago.
    H.R. 2965 looks to help inmates. It also looks to level the 
playing field for business and labor against the unfair 
advantage FPI has had for far too long. What is lost in this 
whole debate is that changes needed in this program are out-of-
date in today's society. Those charged with creating FPI didn't 
intend it to become a huge profit center at the expense of 
business, labor and inmates. Its mission was to provide 
rehabilitation to inmates at a time in this country when 
economic conditions were bleak. Today, some 61 years later, 
this program does not meet today's needs or demands.
    H.R. 2965 corrects this problem by changing FPI to fit 
today's society and its needs. If opponents to H.R. 2965 really 
look closely as what this legislation does, they should support 
it. The only reason not to support this legislation is to 
support the status quo of a Government monopoly that has for 
years gone unchecked.
    I expect today we will also hear about FPI's need to hold 
on to mandatory source. We will hear how they have lost 
revenues. We will hear how they have lost jobs. We will also 
hear how FPI has cut programs to help level the playing field 
for business and labor.
    I guess whether you believe this or not will be in how you 
interpret FPI's definition of lost revenue, lost jobs, and 
cutting programs. Based on their most recent annual report, I'm 
not sure how FPI can make those assertions. The numbers just 
don't support the facts. With FPI's current operations, I would 
like to know exactly how FPI is able to lay off inmates with 
this kind of growth. I would also like to know how FPI believes 
it is being harmed by H.R. 2965. As I look at the numbers, I 
would say FPI owes Congress a thank you for passing the current 
reforms. It sure seems like they have benefited from them.
    We hear every year how, from FPI passing any legislation, 
will have a negative impact on their ability to survive and 
train inmates. Again, I think the annual report proves 
otherwise. If FPI is laying off inmates today, then the 
questions have to be why and how? Why are inmates being laid 
off at a time when FPI's products appear to be in higher 
demand? Is it that FPI is laying off inmates, or is it simply 
that FPI is shifting inmates to business segments that are in 
greater demand than others? Again, it is all on how you define 
those terms. How can a company like FPI lay off inmates when 
production appears to have increased? The companies we all 
represent would like to know the secret of their success.
    I think one could come to the conclusion that FPI is 
defining the term ``laid off'' to mean any inmate moved from 
one business sector to another, or it could be that FPI is, in 
fact, working with more outside companies to provide the 
products to the customer with little or no inmate work being 
done, and thus actually laying inmates off. Either way, there 
is a problem.
    I'm sure the question will come today why we believe 
further reform is still needed. Well, the answer is simple. 
When you have a Government corporation going out to Government 
customers still today telling them that the old provisions 
allowing for competition have expired and contracting officers 
must once again buy from FPI, there needs to be a more 
permanent solution. H.R. 2965 is that solution. And if there is 
even one case of pass-throughs or drive-by manufacturing, then 
there is a problem, and H.R. 2965 is the answer.
    As I said earlier, H.R. 2965 is not a tool to put FPI out 
of business as claimed by our opponents. This legislation has 
come a long way from its original version some 12-plus years 
ago. Numerous provisions have been added to this legislation to 
deal with such concerns as marketable skills, educational and 
vocational opportunities, and charitable provisions allowing 
FPI to team with organizations like Habitat For Humanity to 
build homes which should prove that we support FPI survival and 
its original mission. We strongly believe that these provisions 
will better help inmates once they are released from prison 
find real long-term opportunities while protecting prison 
guards and small businesses.
    Practices like drive by manufacturing do not provide any of 
this type of training for inmates or protection for prison 
guards. H.R. 2965 does. What these types of provisos do produce 
is large profits.
    Let me conclude by sharing with you some comments made by 
the General Services Administration during a hearing on this 
very issue before the United States Senate last year. The GSA 
witness was asked by Senator Craig Thomas whether FPI could 
sustain itself without mandatory source. The witness' response 
was that it could. GSA told the story of their having mandatory 
source years ago. Congress eliminated GSA's mandatory source, 
and they are thriving. The reason GSA told the Committee is 
they have created a different business model built on 
competition. The witness went on to add that GSA learned how to 
compete in an open market. FPI can too. Thank you for the 
opportunity today. And I will cut my time short and answer any 
questions.
    Mr. Coble. Thank you, Mr. Miller.
    [The prepared statement of Mr. Miller follows:]
                  Prepared Statement of Paul A. Miller












    Mr. Coble. Dr. Wilkinson, you're sort of on the spot. Mr. 
Glover beat the red light. Mr. Miller permitted the red light 
to beat him. So we will be watching the buckeye. Good to have 
you with us, Dr. Wilkinson.

 TESTIMONY OF REGINALD WILKINSON, DIRECTOR, OHIO DEPARTMENT OF 
                 REHABILITATION AND CORRECTION

    Mr. Wilkinson. Thank you, Mr. Chairman.
    Mr. Chairman, Members of the House Subcommittee, I 
appreciate the opportunity to provide testimony to you today 
regarding the impact of resolution 2965 on Federal, State and 
local correctional industries. I would especially like to thank 
Congressman Chabot and Congressman Scott for inviting me to 
speak on behalf of correctional industries and for their 
ongoing support for the development of quality industry 
programs in our Nation's prisons and jails. I am now in my 32nd 
year as a correctional administrator, all in Ohio. A more 
detailed biography is included in my written testimony.
    I would like to provide you with a general overview of the 
importance of prison industries in Federal and State 
correctional institutions, as well as a thumbnail sketch of 
Ohio's approach to prisoner employment before delving into 
further areas impacted by 2965.
    Let me first address the issue of why I believe that it is 
vital to have effective State and Federal prison industrial 
programs. In my view, there are at least six primary rationals. 
First, Federal and State industry jobs are a management tool to 
keep prisoners busy. When prisoners are idle, tensions and 
violence increase in correctional institutions. Prison industry 
programs keep thousands of inmates productively involved in 
day-to-day structured operations of our nations correctional 
facilities, thereby increasing the safety of civilians, inmates 
and the communities surrounding facilities as well as staff 
persons.
    Second, Federal and State correctional industries job 
training programs reduces crime. Inmates who participate in 
meaningful job training demonstrate a statistical reduction in 
recidivism. A Washington State Institute for Public Policy 
showed that for every dollar spent on correctional industry 
programs, as much as $6.23 is saved in future criminal justice 
costs. In Ohio, in 1995, a study conducted by our Department 
showed that participation in prison industry jobs reduced the 
rate of return for offenders by at least 20 percent.
    Third, meaningful job training contributes to successful 
reentry of offenders and increases their chances of finding and 
keeping jobs after release. As one can imagine, former 
prisoners attempting to find jobs are at a natural 
disadvantage. At FPI, it is our mission to teach them skills so 
that they can compete in the job market after they have served 
their prison sentences.
    Fourth, Federal and State prison industries contracts with 
private sector businesses boost economic development and, in 
particular, minority-owned small companies. And in an attempt 
to expand prison industries and create more real world, high-
skilled jobs, prison industries have placed an emphasis in 
recent years on partnering with the private sector. These 
partnerships benefit from both Federal and State departments of 
corrections and companies they contract with. In Ohio, we have 
nine contracts with private sector entities that employ 
approximately 500 inmates, including the furniture industry.
    Fifth, prison industries offset the cost of incarceration. 
Like FPI and most other state correctional industry programs, 
OPI is a self-supporting entity that does not require financial 
assistance from Ohio's general assembly general revenue fund. 
According to an independent study commissioned by our agency, 
again, our prison industries further defrayed taxpayer costs by 
providing 15.9 million dollar annual benefit to Ohio and 
creating 62 private sector spin-off jobs for a net gain to the 
local economy.
    At the end of fiscal year 2004, our industries employed 
over 2100 inmates and generated sales of over 32 million 
dollars.
    Finally, Federal and State prison industries imbue inmates 
with a work ethic and a sense of self responsibility. Many 
inmates have never held a job for any length of time nor have 
they learned to take instruction and feel the satisfaction of a 
job well done.
    Ohio's inmates employment and reentry programs are equally 
as important. We work very hard to increase the employability 
of inmates through initiatives such as our offender job linkage 
program, where we work with local businesses to help employ 
these persons following release. One of our important 
employment initiatives in Ohio is our community service 
program. We have expanded the number of inmates now as devoted 
to this area of over 75,000 hours in 1991 to 6.9 million hours 
in 2004.
    Finally, it is important to note that offender employment 
is just one component of a broad systems approach to managing 
offenders returning to the community. In Ohio and many other 
jurisdictions, innovative reentry initiatives such as the ones 
that were mentioned earlier by the congressman from Michigan, 
are underway that emphasize a continuum of services, 
programming, support, and offender accountability.
    Mr. Chairman, there is much more to say about this, but I 
will reserve comments for questions.
    Mr. Coble. Thank you, Dr. Wilkinson.
    [The prepared statement of Mr. Wilkinson follows:]
            Prepared Statement of Dr. Reginald A. Wilkinson
                              introduction
    Chairman Coble and members of the House Judiciary Subcommittee on 
Crime, Terrorism, and Homeland Security. I appreciate the opportunity 
to provide testimony before you today regarding the impact of House 
Resolution 2965 [HR 2965] on federal, state, and local correctional 
industries. I would especially like to thank Congressmen Chabot and 
Scott for inviting me to speak on behalf of correctional industries, 
and for their on-going support for the development of quality industry 
programs in our nation's prisons and jails.
    I am now in my 32nd year as a correctional administrator--all in 
Ohio. I have served as Director of the Ohio Department of 
Rehabilitation and Correction for fourteen years. I am a past president 
of both the American Correctional Association and the Association of 
State Correctional Administrators: two of the nations leadings 
corrections trade associations. I was appointed a member of the U.S. 
Department of Justice, National Institute of Corrections Advisory Board 
by former U.S. Attorney General John Ashcroft; its members elected me 
chair of the Board. Moreover, I serve as president and executive 
director of the newly formed International Association of Reentry.
    I would like to provide the subcommittee with a general overview of 
the importance of prison industries in federal and state correctional 
facilities, as well as a thumbnail sketch of Ohio's approach to 
prisoner employment, before delving further into the areas impacted by 
HR 2965.
                    importance of prison industries
    Let me first address the issue of why I believe that it is vital to 
have effective state and federal prison industrial programs. In my 
view, there are at least six primary rationales:
    First: Federal and State industry jobs are a management tool to 
keep prisoners busy. When prisoners are idle, tension and violence 
increase in correctional facilities. Prison industry programs keep 
thousands of inmates productively involved in the day-to-day, 
structured operation of our nation's correctional facilities, thereby 
increasing the safety of civilians, inmates, and the communities 
surrounding the facilities. This theory is backed by research data. 
Criminologist Bert Useem, Ph.D., noted in a 1999 multivariate analysis 
of prison protests, disturbances and riots that ``the percentage of 
inmates with paid employment was inversely related to the probability 
of an inmate disturbance.'' Another criminologist, Beth M. Huebner, 
stated in her 2003 multilevel analysis of administrative determinants 
of inmate violence that ``prisoners involved in work programs were 
significantly less likely to assault staff.''
    Second: Federal and State prison industries' job training reduces 
crime. Inmates who participate in meaningful job training demonstrate a 
statistical reduction in recidivism. A Washington State Institute for 
Public Policy study showed that for every $1 spent on prison industry 
programs, as much as $6.23 is saved in future criminal justice costs 
(arrest, conviction, incarceration, post release supervision and crime 
victimization). In Ohio, a 1995 study conducted by the ODRC showed that 
Ohio Penal Industries (OPI), our inmate industrial training program, is 
having a similar positive impact. Participation in OPI jobs reduced the 
return rate of offenders released from prison by 20 percent. 
Participation in high-skilled OPI jobs resulted in a 50 percent 
reduction in recidivism. Similarly, studies also show that Federal 
Prison Industry (FPI) inmates are 24 percent less likely to recidivate 
than those inmates in non-FPI jobs. These studies also indicated that 
certain groups of prisoners benefited differently. For instance, 
federal and state prison industry participation had the greatest 
positive impact on African American males.
    Third: Meaningful job training contributes to the successful 
reentry of offenders and increases their chances of finding and keeping 
jobs after release. As one can imagine, former prisoners attempting to 
find jobs are at a natural disadvantage. Like FPI, it is our mission to 
teach them skills so that they can compete in the job market after they 
have served their prison sentences. Ohio's 105 vocational education 
programs range from building maintenance to welding, from brick laying 
to auto mechanics. Ohio's industries programs work with areas in our 
Department, as well as with other state agencies to enhance the skill-
set obtained by offenders. Our most recent enterprise is the opening of 
our Meat Processing Career Center. It is a multi-functional operation, 
doing both processing and packaging, which has created 100 offender 
jobs who will receive vocational training by The Ohio State University. 
The certification these inmates obtain will assist them in securing 
jobs in the meat processing industry upon release. Our farm operation 
provides the animals processed at the plant and the finished products 
are served in our institutions, driving down the cost to the taxpayers 
of Ohio.
    A solid base of educational, treatment programs, reentry 
activities, and formalized linkages to the community combined with real 
work experience and developing work ethic, buttress prison vocational 
and industry programs. Similar to our experiences in Ohio, studies have 
demonstrated that federal inmates who participate in FPI jobs are 14 
percent more likely to be post release successful than those inmates in 
non-FPI jobs.
    Fourth: Federal and State prison industries contracts with private 
sector businesses boost economic development and in particular minority 
owned and small companies. In an attempt to expand prison industries 
and create more real-world and high-skilled jobs, prison industries 
have placed an emphasis in recent years on partnering with the private 
sector. These partnerships benefit both federal and state Departments 
of Correction and the companies they contract with. In Ohio, we 
currently have 9 contracts with private sector entities that employ 
approximately 500 inmates.
    Before signing, contracts are reviewed by our Prison Labor Advisory 
Council (PLAC), a six-member board that advises and assists the 
Department in its responsibility to create meaningful work for inmates. 
The Council is comprised of business and community leaders, who help 
insure that proposed private sector contracts meet the Department's 
objectives to have no adverse impact on Ohio's labor market. If 
endorsed by the PLAC, companies agree to sign a statement that they 
will not displace Ohio workers in utilizing inmate labor.
    Additionally, many private sector businesses benefit from purchases 
made by federal and state prison industries. In 2003, Federal Prison 
Industries (FPI) purchased $502 million in goods, services, and raw 
materials from the private sector--$1.5 billion from 1997 through 
2001--a figure representing 74 percent of gross sale revenues. Nearly 
two-thirds of these purchase contracts are with small businesses, many 
of them female and minority-owned or disadvantaged. Estimates indicate 
that roughly 5,000 jobs in the private sector are the result of goods 
purchased by FPI.
    Fifth: Prison industries offset the cost of incarceration. Like FPI 
and most other state correctional industry programs, OPI is a self-
supporting entity that does not require financial assistance from 
Ohio's General Revenue Fund. According to an independent study 
commissioned by ODRC, OPI further defrays taxpayer costs by providing a 
$15.9 million annual benefit to Ohio and creating 62 private sector 
``spin-off'' jobs for a net gain to the local economy. Customer 
surveys, moreover, consistently demonstrate that OPI is fulfilling its 
mission to produce quality products.
    At the end of fiscal year 2004, OPI employed over 2,100 inmates and 
generated sales of over $32 million. These sales enable OPI to cover 
expenses and operate self-sufficiently. OPI shops and services range 
from the traditional production of license plates and janitorial 
supplies, to high-tech services such as, asbestos abatement and 
computer refurbishing. Some of our current contracts are saving Ohio 
taxpayers millions of dollars by utilizing inmate workers to convert 
information digitally and make it available to the general public using 
Computer Aided Design (CAD) and Geographical Information Systems (GIS) 
support services. These activities are also preparing inmates for high-
tech employment upon release.
    Finally, federal and state prison industries imbue inmates with a 
work ethic and a sense of self-responsibility. Many inmates have never 
held a job for any length of time, nor have they learned to take 
instruction, and feel the satisfaction of a job well done. In FPI, 
Ohio, and other jurisdictions, prison industries work standards mirror 
the normal work environment as closely as possible so that when 
offenders are released to the community they are as ready as possible 
to join the work world and make a productive contribution.
    It is also important that former prisoners learn to accept the same 
employment responsibilities that you and I do. They must support their 
family, pay rent, and fulfill other obligations. In many cases, they 
are required to pay restitution, child support, and other legal 
judgments. I believe it is our duty to instill these traits.
              ohio's inmate employment and reentry efforts
    In Ohio, we've worked very hard to increase the employability of 
ex-inmates through initiatives such as our Offender Job Linkage 
Program, where we now invite local business leaders to interview 
skilled inmates close to release at job fairs in our prisons. As a 
prerequisite to participation in the job fairs, inmates must be within 
90 days of release and are required to produce a current resume and 
participate in classroom training to develop interview skills. To date, 
close to 10,000 inmates and nearly 500 employers have participated in 
over 300 job fairs across the state. Inmates participating in these job 
fairs gain valuable interview experience, and many have been offered 
employment following their release, or have been encouraged to report 
after their release for additional interviewing and consideration. 
Additionally, as a part of this initiative, we are utilizing innovative 
teleconferencing technology that allows employers in Ohio's urban 
centers to interview job-ready inmates in prisons via video linkages. 
Since 1997, 162 monthly videoconference interviews have been conducted 
with about 350 employers and 42 social service agencies. A total of 
2,344 inmate interviews were conducted using this technology, with 
approximately 38 percent receiving referrals for follow-up interviews.
    One of our most important employment initiatives in Ohio is our 
community service program. We have expanded the numbers of inmates and 
hours devoted to this area from over 75,000 hours in 1991 to over 6.9 
million hours in 2004. Our Department has provided Ohio communities 
with over 35 million hours of volunteer inmate service since the 
inception of the program. This initiative has provided much needed 
assistance to Ohio's schools, government agencies, churches, and many 
other deserving charitable and non-profit organizations. Just as 
important, it has provided valuable job skills to offenders and has 
allowed them to experience the positive rewards of contributing back to 
society.
    Finally, it is important to note that offender employment is just 
one component of a broad systems approach to managing offenders 
returning to the community following a period of incarceration. In 
Ohio, and many other jurisdictions, innovative ``reentry initiatives'' 
are underway that emphasize a continuum of services, programming, 
support, and offender accountability from the time of sentencing to 
well beyond an offender's release to the community. I recently 
testified before Congress in support of landmark legislation entitled 
the Second Chance Act of 2005 (HR 1704) originally initiated by former 
Congressman Rob Portman. Passage of this important initiative would 
further enhance public safety, and ensure that many more offenders 
return home as tax paying and productive citizens.
                   comments on house resolution 2965
    I would now like to briefly address some specific points of 
discussion regarding HR 2965. Ohio and other State Departments of 
Correction are concerned with provisions contained in section 7 of the 
bill amending 18 USC 1761 (a) at the state, and local levels to 
prohibit the interstate sale of services furnished wholly or in part by 
prisoners. We are also concerned with the provisions in section 7 
amending 18 USC 1761 (c) that require the phase-out of existing state 
and local inmate work programs providing services for the commercial 
market and their future certification through the federal Bureau of 
Justice Assistance. This language includes state programs in 
prohibiting services such as packaging, telemarketing, and data entry. 
These are the types of services that are being contracted offshore, 
that states are trying to attract back and return to their prison 
industries. Additionally, we believe that the language in section 3 of 
the bill prohibiting access to geographic data would eliminate two of 
our prison industry shops. These employ 72 inmates working on mapping 
services, including tax-mapping services for counties; mine reclamation 
mapping; gas/water well placement; bedrock geology and cadastral 
imaging; as well as the mapping of utilities.
    Furthermore, we are opposed to restrictions contained in the 
legislation involving FPI. The restrictions on sale of inmate provided 
services into interstate commerce and the phase-out of the mandatory 
source preference could result in further loss of inmate jobs and 
training opportunities, along with the loss of many civilian industry 
jobs. Additionally, many private companies who supply raw materials and 
partner with correctional industries would be placed at risk to lose 
their jobs should HR 2965 pass in its current form. Finally, the states 
would be in jeopardy of being sued by these companies due to the 
abrogation of existing contracts, not to mention the related legal and 
court fees.
                              21conclusion
    As I have stated above, prison industries provide many positive 
benefits to federal, state, and local correctional agencies by keeping 
inmates meaningfully engaged and by providing them with marketable job 
skills that may reduce the likelihood of future recidivism. They also 
provide positive economic benefits to states by reducing reliance on 
general revenue fund sources, creating demand for raw products and 
supplies purchased from the private sector, and by increasing skilled 
labor. Communities and families benefit by offenders being returned to 
society with a greater likelihood for employment, a chance to become 
productive, law-abiding, and drug free citizens.
    Based on the concerns that I and other corrections professionals 
have articulated with HR 2965, I would urge you to delay its passage 
and work towards legislation that enhances rather than constrains 
prison industries.
    Mr. Chairman and Committee members, thank you for the opportunity 
to offer my testimony. I would be pleased to address any questions that 
you may have.

    Mr. Coble. I believe you are clean-up, and we gave you a 
pass on the oath, but you are not immune from the 5-minute 
rule. Representative Hoekstra.

TESTIMONY OF THE HONORABLE PETER HOEKSTRA, A REPRESENTATIVE IN 
 CONGRESS FROM THE STATE OF MICHIGAN, AND CHAIRMAN, PERMANENT 
                SELECT COMMITTEE ON INTELLIGENCE

    Mr. Hoekstra. Thank you, Mr. Chairman. It is good to be 
here. It is good to be here with my friends from the Education 
and Workforce Committee where we had a lot of good times 
together. Mr. Scott, Mr. Conyers, it is good to see you. Mr. 
Lungren and Mr. Chabot, I thank you for being here. Mr. Chabot, 
I just remind you that the buckeye sitting next to me, his 
roots are from the State of Michigan. He was born and raised in 
Detroit. I don't know what went wrong in between there. But we 
can maybe fix that.
    Thank you for the opportunity. I just like to submit my 
statement for the record. Let me make a couple of comments and 
make sure that I stay within the record.
    Mr. Glover, in terms of your statement, I think that we all 
recognize the dangers and the challenges that the organization 
that you represent, the guards, face each and every day. I 
can't imagine a more difficult working environment than some of 
the statistics that you've outlined. I am sure they are 
accurate. We really need to be working on getting you the 
resources that are necessary in the prisons.
    Second, you know that we have been working almost a year to 
craft a work-based inmate training program of the type that you 
are suggesting. I want a proposal that is acceptable to all 
elements of the family of labor, that has been the most 
daunting challenge. I think we can reach an agreement with the 
business community. We just need to make sure that we can reach 
an agreement that is fair and is acceptable to the entire 
family--labor family as well. And we are going to be working on 
that.
    Third, Mr. Frank of Massachusetts and I have a pact. Once 
this bill is passed and becomes law, we will press equally as 
hard to obtain the relatively modest funding necessary for 
these enhanced inmate and educational training programs and the 
alternative inmate work opportunities that are outlined in the 
bill. We suspect that others will join us.
    One of the unique things about this bill has been the broad 
bipartisan support and the unique coalition that we have put 
together. I can tell you that my colleagues, every time they 
get a ``dear colleague'' from Barney Frank and Pete Hoekstra, 
they kind of look at it, and they say, ``What in the world will 
these two folks agree on?'' and they have been getting them now 
for 9 years. And we have kept this coalition together. And I 
think as we have worked to move this bill forward, we will also 
work to make sure that we implement all the sections of the 
bill, which includes the funding for the programs that this 
bill authorizes.
    You know, the solution to the staffing problem that you 
outlined earlier is not to move the correctional officers to 
the FPI payroll. We need to fund these directly and address 
those issues directly.
    Finally, on that, on one of your other points is, FPI 
status of mandatory sourcing is still in place. The other 
interesting thing is, I don't accept the premise that there is 
no correlation between FPI sales and inmate employment. There 
should be a more direct correlation. I think one of the most 
interesting things is that in the period that has been cited, 
2002 to 2004, we have seen significant employment, or excuse 
me, significant increases in sales. FPI has been one of the 
most successful corporations in America during that 3-year 
span. Sales have increased by 18 percent, profits have 
increased by over 70 percent, but yet, employment has 
decreased. And six out of the eight segments of the businesses 
that they are employed in have seen significant increases in 
sales. But yet, employment has gone down. And I think we need 
to take a close look at why, as the company is growing, why 
their employment numbers are actually going down. That is not 
how--or what we would expect to have seen.
    Dr. Wilkinson, let me make some observations on some of 
your statements. We agree, rehabilitation through work and 
vocational training programs are absolutely essential. That is 
why we put more of those things in place. To argue that FPI or 
Government contracting is good for small minority businesses I 
think is a false assumption.
    These businesses can compete for Federal Government 
contracts. Making FPI the gateway by which these entities get 
access to the Federal Government isn't necessary. Now, there 
was just a contract that was awarded, mandatory source, $198 
million. Mandatory sourcing is alive and well, and 1 percent of 
that business went to a vendor, a small company in my district. 
The rest went to the prisons.
    You know, in the real word, the company should have had the 
opportunity to compete for this business rather than having FPI 
as the gateway. You know, I am going to make my red light--beat 
my red light. We have got a great--I am done.
    I don't want to get the Chairman mad at me. I am done.
    [The prepared statement of Mr. Hoekstra follows:]
Prepared Statement of the Honorable Pete Hoesktra, a Representative in 
  Congress from the State of Michigan, and Chairman, Permanent Select 
                       Committee on Intelligence
    Mr. Chairman (Mr. Coble), I appreciate the opportunity to appear 
before the Subcommittee as its considers H.R. 2965, the Hoekstra-Frank-
Maloney-Sensenbrenner-Conyers-Coble Federal Prison Industries 
Competition in Contracting Act of 2005. I expect that we will have a 
spirited discussion of what some assert will be the adverse impacts, 
when the bill is enacted. These opponents of FPI reform will seek to 
use as ``evidence'' the a statement made in FPI's Annual Report 
regarding reductions in inmate work opportunities during fiscal year 
2002 through 2004. Hard numbers reflected in that report, and prior FPI 
Annual Reports since the mid-1980s, would suggest that the assertions 
about losses of inmate work opportunities are questionable, if not 
contrived.
    H.R. 2965 is substantively identical to H.R. 1829 in the 108th 
Congress, which was ordered reported on the Committee on July 25, 2003, 
on a strong bipartisan voice vote. Subsequently, the bill was passed by 
the House on November 6, 2003, by a vote of 350-65.
    H.R. 2965 again enjoys strong bipartisan support within the 
Committee and within the Congress. I am again fortunate to have as lead 
cosponsors, Rep. Barney Frank, Rep. Carolyn Maloney, Rep. Jim 
Sensenbrenner, the Chairman of the full Committee, my colleague from 
Michigan, Rep. John Conyers, the Committee's Ranking Democratic Member, 
and you, Mr. Chairman (Mr. Coble). In all, the bill had 77 original 
cosponsors. An addition, 15 cosponsors were added last night. Chairman 
Sensenbrenner and Rep. Conyers have agreed to schedule H.R. 2965 for 
markup shortly after the House returns for the Independence Day 
District Work Period. Fifteen Member of the Committee are already 
cosponsors of H.R. 2965. I expect that it will enjoy the same strong 
bipartisan support that was enjoyed by H.R. 1829.
    The background information you have furnished to the Members of the 
Subcommittee provides an excellent summary of H.R. 2965. I will not 
repeat it here.
    I would emphasize that the bill before you reflects a broad array 
of improvements that have been made over many, many years. Most of the 
most important improvements were made during the 107th and 108th 
Congress during the bill's consideration by this Committee. H.R. 2965 
continues to reflect the important changes made by an extensive 
Conyers-Frank Amendment, during the Committee consideration of H.R. 
1577 in the 107th Congress. It ingrained in the bill provisions 
designed to substantially increase the likelihood of Federal inmates 
making a successful return to society. The core of the Conyers-Frank 
Amendment was to increase inmate access to educational opportunities, 
both remedial education and modern ``hands-on'' vocational training, 
especially in skills in which there are jobs available in the economy 
after release. Such educational programs have been shown to be more 
effective than traditional inmate work programs in reducing recidivism. 
The most recent analysis of the Post Release Employment Project (PREP) 
data, a multi-year assessment undertaken by the Federal Bureau of 
Prisons, shows that inmates participating in such educational programs 
were 33 percent less likely to return to prison. In contrast, those who 
participate in traditional prison industry programs are 24 percent less 
likely to return to prison.
    Other provisions of the bill come from other diverse sources. The 
bill provides for deductions from inmate wages to be accumulated in an 
account in the inmate's name. These funds can be used by the inmate to 
stay in touch with their family during the term of incarceration. It 
also will provide a so-called ``gate fund,'' resources to sustain the 
inmate immediately upon release. The ``gate fund'' provision was 
initially suggested by Pat Nolan, President of Justice Fellowship, the 
public policy arm of Prison Fellowship. During the consideration of 
H.R. 1829 on the House Floor, an amendment offered by Representative 
Waters and Rep. Millender-McDonald that would increase the 
effectiveness of the gate fund provision. It would require that inmates 
within 24 months of release be paid a wage of $2.50 per hour for work 
performed for FPI.
    Opponents of FPI reform will also argue that it receives no 
appropriated funds, that it is ``self-sustaining.'' It is accurate to 
say that FPI does not receive any appropriated funds to sustain its 
operations. Rather, its mandatory source status enable it to simply 
take funds appropriated to its captive Federal agency customers for the 
execution their missions, whether national defense, homeland security, 
or administration of the Social Security System. In the noncompetitive 
manner in which the program operates today, it more likely than not 
that the captive Federal agencies are not getting the best product, in 
the most timely fashion, at the best price. A steady stream of reports 
from the GAO and various Inspectors general confirm this.
    Those seeking to maintain FPI's mandatory source status will argue 
that enactment of the legislation will cause mass inmate idleness, 
endangering the safety of entire institutions, their guards and 
inmates. This ``prison riot argument'' simply ignores the fact that the 
vast majority of Federal inmates in Federal institutions have work 
assignments helping to run and maintain the institution in which they 
are incarcerated. They help prepare meals, run laundries, maintain 
grounds, and help do electrical, plumbing, carpentry repairs and other 
similar work. These assignments can provide many of the same 
rehabilitative benefits as traditional prison industry work 
assignments. Based on FPI employment figures for FY 2004, approximately 
85 percent of Federal inmates have institutional work assignments. Only 
approximately 15 percent of Federal inmates have FPI work assignments. 
Only these inmates will be affected when H.R. 2965 is enacted, and, I 
believe, that these inmates and the overall institution will be 
affected for the better.
    The ``prison riot argument'' also ignores the authorities granted 
to the Attorney General by the bill. They simply declare that they 
won't be used. Mr. Glover may have no faith in his management, I 
believe that Attorney General Gonzales would not deliberately endanger 
the safety of a Federal correctional institution just to prove a point.
    Mr. Chairman, I expect many other issues may be raised by the 
opponents. I look forward to responding.

    Mr. Coble. I would not be angry with you, Pete. Thank you, 
Mr. Hoekstra. And we have been joined by the distinguished 
gentleman from California, Mr. Lungren. Prior to my time 
starting, I want to take care of a couple of housekeeping 
matters. Several organizations have asked for the opportunity 
to submit statements for the record regarding this very 
important issue. And without objection, the following 
statements will be included in the record, American Apparel and 
Footware Association, Contracts Services Association, United 
States Chamber of Commerce, Citizens United For Rehabilitation 
of Parents, National Federation of Independent Business, 
Management Association of Photogrammetric Surveyors and 
Mappers, and Correctional Vendors Association. Without 
objection, those statements will be made part of the record.
    [The information referred to follows in the Appendix]
    Mr. Coble. And finally, I want the record to reflect that 
my dealings with the Federal Bureau of Prisons from the 
director on down, have been favorable. I am very high on BOP. I 
think they do a good job. And I just wanted the record to 
reflect that. Now you start my time.
    Mr. Glover, in your testimony, you express concern, and Mr. 
Hoekstra responded to that, but your staff members have become 
increasingly prone to violent attacks by inmates.
    Have you reviewed, Mr. Glover, the provisions included in 
2965 that allows FPI to make sales on a noncompetitive basis if 
the Attorney General makes findings regarding the deed for the 
contract to maintain safety of the prison and the community as 
well as the section of the bill which provides for vocational 
training and work for nonprofits? What impact, if any, do you 
believe these provisions would have?
    Mr. Glover. Well, Mr. Chairman, the first issue, with the--
I did review all of the sections. And certainly we have we had 
some other people review them as well from our national union. 
The issue here is frankly money.
    The way FPI works currently with their sales, they hire 
their staff. Those are not S&E funded staff. So FPI runs their 
entire program based on nonappropriated dollars.
    Our vocational and educational staff have been cut since 
2001, every fiscal year, our appropriations, while it appears 
to go up, we have increased the number of facilities 
nationwide. And so what has happened is at current facilities, 
current prisons, you have actually had a decrease in staffing, 
in all departments across the board, by 15 to 20 percent. And 
so where we used to have six teachers before, we may only have 
four. We might only have one voc. tech. teacher right now on 
staff because that is the only appropriated money that that 
warden has.
    Mr. Glover. Now, regarding the fact that the Attorney 
General could step in, I just have a real hard time believing--
and this is just me personally as a correctional worker from a 
line staff member--I don't know a warden in the system that 
would say he is going to lose control of the facility and tell 
the boss that, tell the regional director and the director and 
then the Attorney General that he is going to lose control of 
that prison if he doesn't have a contract from some outside 
supplier. I don't believe that's going to happen. They will do 
anything they have to do, you know, reassign staff, move staff 
around, they'll do whatever they have to do to keep the 
facility safe, but as far as running clean, organized 
correctional programming, we are running out of resources. I 
mean, I'm just trying to be straight.
    Mr. Coble. Mr. Miller, has any member of your association 
experienced detrimental effects as a result of FPI programs? A. 
And B, have you had any small businesses that have been forced 
to go out of business as a direct consequence of competing with 
FPI?
    Mr. Miller. Let me answer the second question first. To our 
knowledge, no, there has not been. We cannot point to a direct 
relationship of any business going out of business because of 
FPI. But we do see our industry--the economy has struggled the 
last few years and our industry has struggled a great deal. We 
lost 30,000 jobs, our companies were losing business. So we do 
see a correlation that had they been able to compete with that 
Government business they may have been able to do a little bit 
better. They may not have had to lay employees off, or they may 
not have had to close down for work periods at a time, weeks at 
a time.
    So we have been harmed, but I can't say that we've closed 
our doors directly because of FPI. It doesn't help.
    Mr. Coble. Thank you, sir.
    Dr. Wilkinson, in your testimony you indicate the studies 
have shown that prisoners involved in work programs were less 
likely to cause disturbances or mischief or violence. Did the 
study discuss whether it makes a difference if these programs 
are for-profit programs or not-for-profit? And if a prisoner is 
engaged in educational programs or jobs around the prison area, 
does that also decrease the likelihood that they will likely 
cause a disturbance?
    Mr. Wilkinson. I don't know. Probably what causes most of 
our concern regarding disturbances, the more sophisticated the 
program, the less likely that person might be to engage him or 
herself in adverse activities.
    Prison Industries is a very sophisticated and much-coveted 
program, and most prisoners who are involved in any Prison 
Industries program aren't going to do very much to jeopardize 
that. So you have a very high level, intelligent group of 
prisoners who are banking on staying out of trouble and trying 
to use those experiences as ones that they can market once they 
get out of prison.
    Mr. Coble. I thank you, Doctor. And I see the red light has 
illuminated in my eye.
    Pete, I will have a question for you because I believe time 
will permit a second round and get me at the airport by 12 
o'clock at the same time. So I now recognize Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    And for our colleague from Michigan, I'd like to remind him 
that, although he has brought bipartisanship in support of the 
legislation, there is equally broad bipartisan support in 
opposition. Some of the letters in opposition come from as 
diverse Members as those in support. It's one of the few areas 
where partisan political affiliation doesn't predict support or 
opposition to the legislation.
    Mr. Hoekstra. If the gentleman will yield? I look forward 
to the day when you and I will have the opportunity to work 
together in a bipartisan way and people will say, ``What in the 
world would Hoekstra and Scott have to be working on 
together?''
    Mr. Scott. We'll do the best we can.
    Mr. Miller, the suggestion has been made that FPI is 
causing problems with the furniture industry. How many 
employees are in the furniture industry?
    Mr. Miller. That number I don't have right now; I'd be 
happy to get that to you. It depends on--I mean, our dealers 
roughly range anywhere from 3 to 25 employees typically.
    Mr. Scott. Well, I mean, you had about a couple thousand in 
the Prison Industries program, and that would be totally 
dwarfed by whatever is in the industry. And if you eliminated 
those 7,000, it wouldn't be a blip to the industry. What are 
the total sales in the furniture industry?
    Mr. Miller. The sales have gone up, but you have to look at 
it in its entirety. We have gone through a very tremendous 
downturn in which we are now just starting to see some recovery 
from that.
    Mr. Scott. And the total sales in the FPI--if you stated 
the total amount of sales in furniture and compared that to, if 
you eliminated FPI, that number wouldn't change, would it?
    Mr. Miller. No. But what it does is allow for us--the 
opportunity to compete for Government contracts has kept some 
of these folks in business and helped them continue to keep 
growing, I guess, now. Without that opportunity, they're not 
able to do that.
    Mr. Scott. If you eliminated sales, which represent a 
miniscule portion of 1 percent of the total sales in furniture, 
it would not have any measurable impact on the furniture 
industry, is that not true?
    Mr. Miller. I would disagree with you.
    Mr. Scott. Well, how much impact would it have if you 
eliminated? What, it is less than one-quarter of 1 percent?
    Mr. Miller. Any lost opportunity from a small business is 
going to have a harmful impact, and for our dealers not to be 
able to compete for those contracts or have a fair playing 
field, it's going to hurt them.
    Mr. Scott. Okay. So if you have a million people working in 
the furniture industry and 5,000 prisoners lose their jobs, I 
guess that would revive the entire furniture industry; isn't 
that right?
    Mr. Miller. No. But what it does--I mean, if we're looking 
at, is FPI laying those employees off or those inmates off, or 
are they just moving it from one product sector to another? 
That's really not laying off, it's putting the resources where 
the opportunity is at this time.
    Mr. Scott. The point I'm making is that the FPI represents 
such a minuscule portion of the furniture industry that it's 
just disingenuous to suggest that whatever FPI does is going to 
have any measurable effect on the industry.
    Mr. Hoekstra. Excuse me, Mr. Scott.
    Mr. Scott. Yes.
    Mr. Hoekstra. Can I?
    Mr. Scott. Yes.
    Mr. Hoekstra. Thank you. It is not a miniscule part. The 
furniture industry is about--probably somewhere in the 
neighborhood of a 12 to $14 billion industry, depending on 
exactly what year you're taking a look at. Office furniture in 
FPI was a $250 million business within the last couple of 
years. It was a fast growing industry. It was the fastest 
growing office furniture company in America as the office 
furniture industry was going through its tough times and was 
probably one of the 10 largest--it would have cracked the top 
10 in terms of its size in the office furniture industry. So 
within the last couple of years----
    Mr. Scott. Are you talking about a full percent?
    Mr. Hoekstra. Two and a half percent, at a minimum.
    So it would have been the faster growing office furniture 
company in America and would have been one of the 10 largest 
office furniture companies in America during that period of 
time.
    Mr. Scott. Are we talking about 1 percent, one and a half 
percent?
    Mr. Hoekstra. You're probably talking--it's probably at 
least 2 percent, depending on exactly what year you're going 
to. If you're going to--I think in 2004 it was about----
    Mr. Scott. So if you eliminated Industries altogether in 
that industry, you're talking 2 percent.
    Mr. Hoekstra. Potentially, yes.
    Mr. Scott. Okay. Thank you.
    Mr. Chairman, if we're going to have a second round, I'll 
just defer so the----
    Mr. Coble. We will permit a second round.
    In order of appearance, the distinguished gentleman from 
Ohio.
    Mr. Chabot. Thank you, Mr. Chairman.
    Before I ask a couple of questions I just want to make a 
brief statement. All of us have histories before we come here, 
and prior to coming here I was a 10-year local elected 
official. I was on city council and the county commission, and 
in that capacity had the opportunity, at least at the local 
level, to be quite involved with prisoner activities as far as 
having them work around the community and other projects within 
the prison. So it's something that I've been involved in at 
some times and care a lot about.
    And as some of the panel members know, I've been a long 
time supporter of the Federal Prison Industries. And it's my 
view that inmates who have shown a willingness to better 
themselves, those who obtain, for example, a GED and maintain a 
clean record of good behavior, should be given the opportunity 
to better themselves.
    FPI has for the most part been a quite effective 
alternative to idleness and has been shown to reduce recidivism 
rates, as inmates with job skills are more likely to find 
gainful employment when their debt to society has been paid. 
Opponents of the FPI argue that the program hurts businesses. I 
disagree with that. According to the Congressional Budget 
Office, the CBO, dismantling the FPI would cost taxpayers $50 
million a year in added security for idle inmates. And last 
year alone the FPI purchased over a half billion dollars in 
goods, services and raw materials from the private sector, a 
figure representing approximately 74 percent of its gross sales 
revenue. Most of those dollars go to small businesses.
    Before we talk about legislation that could effectively end 
this important and worthwhile program, I think we should take a 
step back. Mr. Scott and I are in the process of drafting 
legislation that would establish a commission to study the FPI 
industry issue, its impact on prisoners, and its impact on 
small businesses in this country. I hope the Members of this 
Committee would consider joining Mr. Scott and myself in taking 
a closer look at this 69-year-old program before considering 
legislation which could have such a, I believe, tremendously 
adverse impact on the Federal Industries.
    Let me just, in the time that I have, just ask a couple of 
questions, and any of the panel members are welcome to answer. 
And if I could keep your answers relatively brief.
    First of all, I think one of the most important reasons for 
this program is what Mr. Wilkinson said, and that's the 
recidivism issue. If you have people that are behind bars, and, 
ultimately, unless they're pretty--you know, they're serial 
killers or murderers or somebody like that that aren't ever 
going to get out, these folks are going to get out on the 
streets, and I think studies have shown that you have a lesser 
chance of people that have skills are going to commit crimes 
once they get out. And I would invite any of the panel members 
to just comment briefly on that issue if they'd like to.
    Mr. Wilkinson, if you want to just start to that.
    Mr. Wilkinson. Yeah. And your comments, Congressman, are 
exactly correct. And it's not just the skills that are 
important, what Industries does is teach a work ethic that 
doesn't compare to any other program that we have in our 
prisons. And we know that getting out--and we treat those 
prisoners like real workers on the street. They have to be at 
work at a certain time, they can earn benefits, they can do 
different things that would resemble what a real live work 
situation would be. And that's what we want because we know the 
main thing that keeps the people out of prison, the number one 
thing that keeps persons from coming back to prison is their 
opportunity to find meaningful work, not just a job but 
meaningful work. Industries helps facilitate that.
    Mr. Chabot. Any other panel members? Okay. Let me just 
shift over to another issue real quickly with the time I have 
remaining, and that's relative to the security for the guards 
themselves. Probably, Mr. Glover, you're in the best position 
to comment on that.
    Could you just--as a practical matter, what difference it 
makes if the inmates have something to do to keep them from 
being idle and getting into mischief?
    Mr. Glover. The difference, Congressman, is what 
historically we've had happen is inmates that work in 
Industries are on a waiting list. If they get an incident 
report inside the prison for any infraction, any infraction, 
they drop to the bottom of the list on the waiting list to work 
in Industries. And we have waiting lists. This isn't like a--
we're not forcing inmates into that system. We have waiting 
lists of inmates who want to work in that system.
    If an inmate is working in FPI and gets an incident report, 
he is immediately removed from Federal Industries and placed 
into a lower--frankly, a lower class of jobs, either cleaning 
floors or something else throughout the prison, and then he has 
to work his way back up into--he or she--has to work his way 
back up into the Industries system.
    It's a huge tool for us as far as maintaining order with a 
large group of inmates.
    Mr. Chabot. I see my time has expired, Mr. Chairman.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from Michigan is recognized for 
5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman.
    The big problem that we're really grappling with is the 
determination to eliminate mandatory source. Now, take this 
issue: We eliminate mandatory source, jobs go down--80 percent 
of the inmates don't get into this training system anyway--and 
then crime goes up. And what the bill before us, that's meeting 
so much opposition, does is try to ameliorate that.
    But the problem, Chairman Hoekstra, is that, if we don't 
get the appropriations coming in, the provision that I've added 
to the bill, this bleak picture may come true. So what I want 
to do is just have each of you just briefly comment on it so 
that we can get some sense of direction from you about this 
subject.
    Phil.
    Mr. Glover. Department of Defense, as you know, through the 
last few appropriation years have cut mandatory source out of 
the Department of Defense, their appropriation bills. And so we 
have seen a loss of 3,000 inmate jobs. I don't know how you 
correlate that. I'm not an expert on numbers and how people 
crunch numbers. All I can say is that since we have these 
revisions we have lost inmate jobs.
    Now, if I could just briefly say this, we've had 13 
factories either close or reorganize. Many of those in 
furniture sales--which that should be very promising for----
    Mr. Conyers. Phil, are you willing to risk eliminating 
mandatory source?
    Mr. Glover. I personally don't want to lose mandatory 
source. I have seen what the Congress has done the last few 
years, and I'm looking for a solution to help us keep as many 
inmates employed as possible, and that seems to be the 
partnering effort that oversees employment.
    Mr. Conyers. Mr. Miller, you're for trying to eliminate 
mandatory source with the guarantees that are in the bill, is 
that right?
    Mr. Miller. Correct.
    Mr. Conyers. Okay. Dr. Wilkinson, how do you come out on 
this?
    Mr. Wilkinson. I am not a proponent of eliminating 
mandatory source. You know, we need to keep it. In Ohio it's 
called the State Use Law. There have been attempts in our 
General Assembly to challenge it, and we've been able to keep 
it.
    Mr. Conyers. Chairman Hoekstra, how do we rationalize this? 
This, to me, is the heart of the tension on both sides. Do you 
think that we put together something that can get us through 
these shoals, or when we come back here in a year, if this bill 
goes into effect, we could be in big trouble because some of 
these predictions might come true?
    Mr. Hoekstra. Well, actually, I don't think that in a year 
you would be in big trouble. The first thing we really need to 
take a look at is FPI sales are increasing; I mean, in the last 
2 years they've increased 18 percent, and their profits have 
gone up 71 percent. I think they should be explaining to us why 
prison employment is going down. I can't explain why prison 
employment is going down as their sales are going up 18 
percent. That would be very good performance for a company in 
the private sector. And we know from what we're seeing in the 
State of Michigan, we're not seeing those kinds of results and 
that kind of performance in the private sector, that kind of 
growth in either sales or jobs.
    The second thing is it is a phaseout of mandatory sourcing. 
It is not day one. It is, you know, through 2011. It is a 
phaseout of mandatory sourcing.
    And the third thing is, you know, again, with the work that 
you and Congressman Frank have done, is we have put in a whole 
range of other options, some of which are used in the State of 
Ohio which are not-for-profit. There are other work 
opportunities, there are other training opportunities. And 
again, you know, as I said, Barney and I have committed to work 
on this program together, and I think there are--this would 
probably be a program that all of us here would be united on. 
And if there was a change in the mandatory sourcing statuses, 
we would have a bipartisan effort to put increased funding in 
for vocational training. Because the other thing that we know, 
the statistics will show you that the vocational training 
programs are more effective in recidivism, reducing recidivism 
than inmate work programs.
    So the work that you have done with your colleagues and the 
amendment that we've put in is putting money in focus and 
effort on the things that are more effective than work training 
programs through the vocational training. So the combination 
of--their business is growing, we've put in the authorization 
for these kinds of programs that will really be effective tools 
to reduce recidivism, and it is a 5-6 year phaseout. It is not 
a drop-dead date that says tomorrow you need to change the 
scope of your business.
    Mr. Coble. The gentleman's time has expired. Thank you, Mr. 
Conyers. Thank you, Mr. Hoekstra.
    The distinguished gentleman from California.
    Mr. Lungren. Thank you very much, Mr. Chairman.
    My years in Congress before, and now, and as Attorney 
General, I have always gotten good report cards from the 
various business groups that are allied in support of this bill 
and seemingly in support of a major change in the FPI program. 
And during that time I've been in public life, I've spent most 
of my time trying to make laws tougher, put more people in 
prison who need to go there. During my tenure as Attorney 
General, we dropped the crime rate in California by about 35 
percent, the homicide rate by 50 percent, and we put more 
people in prison, a lot more in prison.
    That's only one half of the equation. The other half of the 
equation is how do we control it and what do we do? We have not 
been able to attack the terrible problem of sexual assault and 
rape in our prisons, we are woefully lacking in that, whether 
it is the Federal or State prisons, and that's a huge mark 
against our country in my judgment.
    We don't do a very good job of rehabilitating our 
prisoners. And this is like deja vu all over again. When I was 
here 20 years ago there were attacks on this program. We were 
told that this program was the death now of various parts of 
our economy, and unless we got rid of the program those parts 
of our economy were going to go down.
    We talk about the cost. What is the cost of getting 
somebody out who is not going to commit crime? I mean, what's 
the cost of keeping somebody in prison when they're not on the 
street and they're not committing crime? That's an economic 
benefit to society.
    We know that there are certain areas we can't allow 
prisoners to work in, certain services. You don't want to call 
up and have a prisoner doing a background check on your credit. 
I mean, we laugh, but that was done, until we found out that 
was a big mistake. So there are certain areas of the economy 
that we can't have them doing.
    They can learn to build things in the electronic area, 
clothing and textiles, and furniture. And I would be loath to 
look at a major restructuring unless we can prove that it will 
not diminish the number of people we've got working. In fact, I 
think we need to have more of them working.
    So I just, you know, this is the tension we always have. 
We've got a lot of people out there, when I ran for office, who 
were willing to throw the book at anybody who commits a crime, 
but they're not willing to put the money into the prison system 
and they're not willing to put the money into taking care of 
prisoners and they're not willing to protect prisoners against 
rape. I don't believe, if I sent someone to prison when I was 
Attorney General and because of the laws I passed here, that 
person is sentenced to rape or sexual assault, yet we go 
blindly out of our way to pretend that that doesn't exist. And 
then we give lip service to the fact that we want to help them 
on the way out to the door, and we don't do anything about it.
    So while I have been very supportive of business interests 
across the board, small business, all these sectors, I am one 
that has to be put down as very skeptical of us making a very 
major change like this.
    Mr. Miller, with all due respect, you've got to come and 
show me that this is really hurting the industry. I mean, to 
come here and say, well, I can't show any loss of jobs anywhere 
and I can't show any particular business going out of business 
but we know it hurts us, frankly is insufficient to convince me 
that we've got to do something. Now, if you've got some real 
hard data to show how this program is really hurting your 
industry in a substantial way, I'd like to hear it.
    Mr. Miller. Congressman, we don't disagree with you that 
there needs to be some work opportunities, and we're with you 
on that. The problem that we have as an industry, and I think 
as a coalition, is that when you have a system or a Government 
corporation that in many cases isn't making furniture--nobody 
has a problem if they want to make furniture, legitimately make 
office furniture. No problem, it's a skill that they can 
utilize. The problem we have is when you hire an outside 
manufacturer to produce that product where you're going to ship 
it directly to the buying agency with little or no inmate labor 
whatsoever. Even one case of pass-through--or drive-by 
manufacturing we refer to it as--is one case too many.
    Mr. Lungren. Selling to whom?
    Mr. Miller. To the Government.
    Mr. Lungren. So we're talking about it's a Government 
enterprise which is putting people in prison in order to 
protect society not having an advantage to sell to Government, 
where taxpayers would say, ``Hey, you're supporting one part of 
our effort here that's costly to us and in part you're 
partnering up on the other side.'' See, that's what I don't--I 
understand that the Federal Government is the largest, I don't 
know, one of the largest purchasers of goods and services in 
America, and we're talking about relatively small percentage of 
what the Federal Government buys going to Industries across the 
board----
    Mr. Miller. But why shouldn't every other manufacturer or 
independent reseller have the same opportunity as Krueger 
International or anybody else who is partnering with FPI to do 
that? If there is no work, inmate labor, going into that 
product whatsoever, how is that helping any inmates to get a 
job once they're released from prison?
    Mr. Lungren. There is no inmate----No inmate labor 
whatsoever in the making of the product. How is that helping 
the inmate once they're released back into the community?
    Mr. Miller. That's a good question.
    Mr. Coble. The gentleman's time has expired. We will have a 
second round, and we will start it now.
    Pete, I didn't get to examine you on my first round, so I 
will do that now. And I don't mean for this to sound like a 
rhetorical softball question, which Mr. Scott will probably 
accuse me of doing, but I want to extend what Mr. Conyers was 
talking about concerning mandatory source.
    Do you believe, Mr. Hoekstra, that the elimination of 
mandatory source will result in the elimination of FPI, or do 
you believe that FPI will still be able to compete with private 
sector business?
    Mr. Hoekstra. Well, I think this is the real key here. 
We've been accused of saying that we want to get rid of Federal 
Industries. We do not want to get rid of Federal Industries. I 
think this bill is structured in a way that constructively 
reforms Federal Industries and it's why we've been able to put 
together the coalition that we've been able to put together.
    Federal Industries will argue day in and day out that they 
can compete with the private sector, that they can provide a 
quality product at a quality price at the delivery schedule 
that the customer wants, and that they can compete with the 
private sector. We're saying give them the opportunity.
    We then go through, and we put in place a whole serious of 
checks and balances to make sure that Federal Industries, if 
they have trouble competing with the elimination of mandatory 
sourcing, that there are things that will enable them to keep 
people working, but more importantly, get them ready to make 
the transition back to private life. You know, we give them the 
opportunity for training programs, we give them the opportunity 
to do work for the not-for-profit sector in new and unique 
ways--again, new and unique to the Federal Government, but not 
new and unique to State prisons. State prisons are doing this 
and it's working very well where they are partnering with not-
for-profit organizations.
    And Mr. Lungren, you talk about, give me the fact where we 
have hurt an industry. Take a look at textiles and clothing. 
Textiles and clothing are the largest supplier to the 
Department of Defense from FPI. They are larger than the next 
three companies combined. And if you go into--if you go into 
Pennsylvania, I've gone to the factory where they have laid off 
workers because they lost significant contracts to Federal 
Industries. I'm sure that is exactly the case in Mr. Coble's 
district, where you would go to textile plants that are either 
shut down or they have large numbers of unused equipment.
    The reason that the Chairman of the Full Committee is 
passionate about this is--he calls me the Johnny come lately to 
this issue because in the 1980's he had a small business that 
went out of business because of losing their business to 
Federal Industries.
    People come on and join this coalition because they have a 
genuine interest in rehabilitating prisoners, but also because 
they've had job losses in their district.
    Mr. Coble. Mr. Hoekstra, before my time expires I want to 
visit Mr. Glover again.
    Mr. Glover, in your statement you said you believe that any 
part of this bill must include repatriation services and 
products into the entire market. We should give up mandatory 
source, you say. I think what you meant to say was ``if'' we 
have to give up mandatory source, did you not?
    Mr. Glover. Yes, sir.
    Mr. Coble. Okay. I wanted to be sure about that.
    And let me revisit with you, Mr. Glover, also something 
that Mr. Hoekstra, I think, mentioned.
    In your testimony you indicated that your staff had been 
reduced, but yet conversely your earnings increased. Comment on 
that for me.
    Mr. Glover. Well, Mr. Chairman, certainly I'm not the head 
of FPI. I'm a senior office specialist in the prison system, so 
as far as how that happened, I don't know.
    Mr. Coble. I think we can all benefit from learning how 
that happened.
    Mr. Glover. Frankly, probably a written question to the 
agency would probably get you the response.
    I do know this; I know that 35--that chart talks from 
2002--my understanding is from 2001-4 we lost--we had a 35 
percent drop in furniture sales. Last year, I think we sold 
about $150 million in furniture, not $250. I mean, I'm not 
trying to get into anything here with the Congressmen. I just 
want to be--I'm trying to be as accurate as possible.
    You know, the assertions keep coming, Mr. Chairman. The 
Sixth Circuit Court of Appeals--this went to the Sixth Circuit 
Court of Appeals, if we were abusing our mandatory sourcing 
privileges, if we were not following the law. And in my 
statement there is an attachment five, and it has an article in 
there about the Sixth Circuit Court of Appeals decision. And we 
keep getting assertions, and this went to court, so they've had 
their chance to air their differences on the statute, and 
frankly the court upheld FPI's position, not the other 
position.
    Mr. Coble. I thank you, Mr. Glover. My time has expired.
    The gentleman from Virginia.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Glover, a suggestion was made that some of the work is 
being done outside the prison and sold. Was that ever done and 
is it going on now?
    Mr. Glover. Mr. Scott, the pass-through issue has come up 
year after year. President Bush appointed a brand new board of 
directors in 2001. He got rid of all the rest, all the other 
ones, the old ones, and he appointed a brand new panel. That 
panel is chaired by Mr. Ken Rocks out of FOP. They have passed 
resolutions since 2002, I believe, the first year they were 
officially on board, that there are to be no pass-throughs of 
any items.
    Mr. Scott. So to the extent that it ever happened before, 
it's not happening now.
    Mr. Glover. It certainly hasn't happened since the new 
board has taken over. And everybody here has had a chance to go 
to that board and air their differences with FPI because 
they've held open hearings.
    Mr. Scott. Okay. Now, one of the problems we have in this 
legislation is it's a two-step process. One, you get rid of 
mandatory source, and two, we hope for some appropriations to 
replace the jobs. And this bill would be a little different if 
the mandatory source were eliminated as the replacements came 
on. I don't think anybody is kind of stuck on mandatory source, 
but mandatory source works. And if you're going to get rid of 
it, you've got to replace it with something. And one suggestion 
has been vocational education.
    Mr. Glover, on vocational--well, maybe Mr. Wilkinson. On 
vocational education, as I understand it, that's just for the 
last couple of years that you're in prison. How long--if 
someone is in for a long time, how long can you do vocational 
education?
    Mr. Wilkinson. Most vocational education programs--they're 
called career tech programs today--are probably no longer than 
a 6-month activity because you earn a certification, you go 
like you're going to a junior college or a tech school. You get 
a certification in a particular area and then you're done. And 
what we'd like to do is to take these people who have gotten 
these skills in career tech and put them in correctional 
industries so that they can use the skills while they're still 
in prison.
    So although we love and want more vocational programs, they 
are not the same as Industries.
    Mr. Scott. Thank you.
    And, Mr. Glover, Mr. Miller suggested that the bill does 
not hurt FPI or correctional workers. Do you want to respond to 
that?
    Mr. Glover. Well, I can only say that over the years we've 
invited anybody that has spoken against FPI to tour our 
facilities and look at FPI, look at the program, look at what 
it does for inmates. I have yet to see anyone from that 
particular coalition, and, certainly, Mr. Miller, I believe, 
was invited at one time or another to come and take a look, or 
if he wants to come and take a look he can certainly do that 
and look at how the program is run and why we run it the way we 
do.
    I believe wholesale changes to the program are going to do 
what the DoD provision did with the appropriations, which is 
it's going to drive a market change. The reason mandatory 
source has been effective is because it gives us steady work. 
We have steady employment for the inmates. We know how many 
contracts we have, we know how much work we have and how to 
schedule it. If you are all the time competing up and down, up 
and down for contracts, I understand their frustration with the 
program, however, prison is based on steadiness and not a lot 
of changes. When you have a lot of changes in prison, you have 
problems. It's how it works. Inmates are not good at change. 
Staff, frankly, aren't that good at change either, but inmates 
are not good at change. And so when you are laying them off, 
sending them back to housing units because you don't have any 
contracts, then the next week you have a contract that you have 
to get out in 2 weeks, so you work three shifts, then you 
cancel the three shifts and lay them off again, it is a 
constant problem in the system.
    Mr. Scott. Thank you.
    Mr. Miller. Congressman, if I could just add one thing? I 
have been invited to their facility, and I have done so. So----
    Mr. Scott. Thank you.
    Mr. Wilkinson, in your written testimony you had comments 
about the--specifically about the legislation. Do you want to 
make those comments now?
    Mr. Wilkinson. About this legislation?
    Mr. Scott. Yes.
    Mr. Wilkinson. Well, first of all, before I say that let me 
acknowledge the proposal that Congressman Chabot and the 
Ranking Member are discussing about the Commission to look at 
exactly what the real situation might be. We know that our 
Industries has a positive impact on industry in general; it 
does not take away from what's going on in the community. There 
is research that shows that when we purchase goods and 
services, when we partner with corporations, that it has a 
major, major impact on the economy. So what we're doing is 
adding to it. And when you add to that, bringing back--and I 
know this is FPI's goal--businesses that are offshore back into 
the prison that nobody else is going to probably do, then it's 
going to aid security, it's going to reduce that person's 
recidivism, it's going to minimize the victimization in the 
community and just have an overall positive impact. So I think 
we've got to be real careful about some of the rhetoric that we 
are now hearing.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from Ohio.
    Mr. Chabot. I thank the Chairman.
    And we've covered an awful lot, so there's only a couple of 
things that I wanted to focus a little bit of attention on at 
this point.
    Mr. Miller, you made this point about the pass-throughs, 
and I would agree, if that's been happening, you know, that 
shouldn't have happened. And that's one of the reasons that Mr. 
Scott and my suggestion about studying this, and if there are 
things that need to be changed as opposed to doing something 
which could gut the whole program, I think should have some 
serious consideration.
    But back to the pass-through issue, Mr. Glover mentioned 
they have a new board back in 2001; they've changed that so 
it's not happening anymore. Do you--is that correct?
    Mr. Miller. I mean, you look at the numbers---
    Mr. Chabot. Because you had mentioned that that's your--you 
said you agree this is something we ought to do. You don't have 
any objection to it but pass-through is bad, and now they said 
they don't do it.
    Mr. Miller. Two points though. One is, you look at the 
annual report numbers, and I question as to how that could not 
be happening. With the numbers and the increases in sales and 
revenues and those type of things and the decreases in the 
workforce, how do you accomplish that? I guess that's one 
question. The second question is----
    Mr. Chabot. But you have no facts to indicate that that is 
what it is----
    Mr. Miller. That's correct, because the only thing I have 
access to is the annual report.
    Mr. Chabot. So you don't have any evidence that this is 
continuing to go on then at this point?
    Mr. Miller. No. But I don't have any evidence to say 
otherwise either.
    Mr. Chabot. Let me ask another question here. It's my 
understanding that the Bureau of Prison inmates are currently 
engaged in a number of other type community service projects; 
for example, like nonprofit, Toys for Tots, that they make this 
out of scrap wood, that they--even some that have the ability 
to do transcribing into braille for the blind, they do mowing 
of grass on military facilities and those types of things, they 
even cleared trails in some of the national forests. Are there 
any--Mr. Glover, I don't know if you wanted to comment on any 
of those activities that are carried out.
    Mr. Glover. We certainly have those programs, Congressman. 
A very small number of inmates, you're talking minimum custody 
to low-end custody, which they would have to be required--they 
would have to be able to have a gate pass to go out of the 
secure facility. So it's a fairly low number that works on the 
outside community projects and the national parks. We have some 
that work with the VAs, one of the VA hospitals, cleaning up 
areas and stuff like that.
    The Toys for Tots program is handled out of Oregon, I 
believe, in our Sheridan facility, and there is probably maybe 
20 to 30 inmates that actually do that work and build Toys for 
Tots program out of scrap pieces of material. That was an 
offshoot of an idea that one of the wardens out there had, and 
he kind of--it's not really a Prison Industries project, it's 
more of a community service project that one of the wardens 
came up with at the time.
    Mr. Chabot. I know we were always very careful--I mentioned 
that I had been involved in this type of activity previously as 
a local elected official. We were always very careful about 
those that went out to the community, that they were your very 
low-risk individuals. I assume that's the same with us at the 
Federal level.
    Mr. Glover. Let's face it, Congressman, if we let an inmate 
out to work somewhere and something bad happens, we're going to 
get some serious egg on our faces and that's not something we 
want.
    Mr. Chabot. Thank you.
    And finally, Mr. Wilkinson, let me ask you, relative to the 
issue of recidivism, as I mentioned before, can you give some 
typical examples as far as jobs that people have gone into 
after they've gotten out and been through your program? Do you 
have any types of examples that you can give us and----
    Mr. Wilkinson. Sure. For example, we have computer-aided 
drawing. And this is a very sophisticated operation, business. 
Every one of those persons who do that work have gotten a job, 
every one of them. Our Industries do asbestos abatement. These 
are some highly skilled, highly trained persons, they all get 
jobs. So it depends on the nature and the sophistication and 
the technology that's involved with the job, is directly 
correlated with their ability to find work.
    A common job that might be in Prison Industries is making 
license plates, where there is no real industry for that on the 
street, but we do that. But what we teach in those instances 
are the work ethic that is extremely important, and sometimes 
the presses that they use can be used for other things.
    You know, one of--the conversation came up about why can 
you have--make more money and have fewer inmates? Well, one of 
the reasons is technology. You know, the same equipment that 
we're using now is not the equipment that we used 30 years ago 
to make license plates. So we need fewer prisoners to do it. 
There are industries, such as the ones that make validation 
stickers in our prison, that are less costly and we need fewer 
inmates to do it, and we make thousands of them. So the 
industry has changed as well.
    Mr. Chabot. Thank you. I see that my time has once again 
expired. Mr. Chairman, thank you for holding this hearing. I 
think it has been very helpful.
    Mr. Coble. Thank you, Mr. Chabot.
    The distinguished gentleman from Michigan, Mr. Conyers.
    Mr. Conyers. I want to go on the Chabot-Scott search for 
truth in this matter. And I only wish we could hear from 
Jocelyn McCurdy at ACLU and Charlie Sullivan for CURE and some 
of the other people who spend huge amounts of time here.
    The question--two questions. What more can we add to this 
bill to make everybody sleep more comfortably in their beds at 
night about the reduction of employment opportunity that might 
come if we eliminate mandatory source? And the issue that hangs 
over this whole Committee is whether mandatory source is, in 
fact, unfair competition. And I'd like to, once again, go down 
very quickly. Forgive me if I interrupt you if you spend too 
much time at the mic.
    Phil.
    Mr. Glover. Well, first I'd like to say that we're not a 
business. Industries keeps being referred to as a business. 
We're a prison program developed in the 1930's to put inmates 
to work, and at that time because wardens were using inmates 
out in the public as frankly, slave labor. I mean, let's face 
it, that's what was going on. They were shelling off labor from 
the prisons out into communities, and so this program was 
built.
    I guess what I would have to say is this, that there should 
be--if this is the bill I have to operate under--which I'm more 
opposed to mandatory--to losing it than getting rid of it. I 
would say that, let us start to expand in the repatriation for 
a couple of years because I think that Congressman Hoekstra is 
right, the Chairman is right, you're not going to see an effect 
in this for a year. A year is not going to give an effect. Give 
us repatriation for a couple of years. Stay our mandatory 
source, status quo it so that we see if we can start bringing 
work back and start to develop factory work that way.
    Mr. Conyers. That's a good idea.
    Mr. Glover. And then----
    Mr. Conyers. Okay. Let me skip to Dr. Wilkinson for a 
minute here.
    Mr. Wilkinson. I'm not sure, Congressman, that there is a 
substitute for mandatory source, and I have been pretty 
vehement about that in my jurisdiction. What we don't want in 
prison is to have an industry that is doing well and then all 
of a sudden that industry and that shop carrying out that 
industry goes idle for 6 months because they don't have any 
work because they may have been outbid by a sister State agency 
or a sister Federal agency. So I am not a proponent of saying 
that there is an alternative to mandatory source or in our case 
State use.
    Mr. Conyers. Is there anything we can add to the bill that 
would beef it up if it comes to that, Doctor?
    Mr. Wilkinson. Congressman, I think--yes. And one of the 
things that I would like to see is more voluntary participation 
by businesses that are unaffiliated with prisons. Now we have 
made a big effort to work with Continental Office Supplies, for 
example, and we are working in partnership with them. We've 
worked in partnership with Thomas Ruff. So I think that to 
develop these collaboratives, these relationships, these 
partnerships with organizations that would be willing to help 
teach the industry, to develop partnerships with the trade 
industries I think can be a big help.
    Mr. Conyers. Thank you.
    Chairman Hoekstra.
    Mr. Hoekstra. Thank you. Knowing the folks at Continental 
Office Supply, I can tell you they've been big supporters of 
reforming Federal Industries.
    But, you know, we can do the study, all right, but we ought 
to do it in the context of making it part of this bill. We have 
two and a half pages of studies that have been completed since 
the 1980's on Federal Industries, and we can do it.
    We have been taking a look at what we can do with 
repatriation, and maybe we need to revisit that. But I think we 
need to move forward. You have to take a look at the impact 
that this has on the other part of society as well. You know, 
you and I are from a State that is getting hammered right now, 
both from the east side and on the west side. You know, 
mandatory source was great for Federal Industries during the 
1990's and 2001 and 2002, but you know what? I think it was 
wrong that Federal Industries was the fastest and probably the 
only growing office furniture company in America during that 
time. As the industry was going through significant lay-offs, 
Federal Industries was growing by double digits each and every 
year.
    Mr. Conyers. Thanks, Pete.
    Mr. Coble. I thank the gentleman.
    The distinguished gentleman from California, Mr. Lungren.
    Mr. Lungren. Mr. Glover, do you have any statistics on what 
the prison population has increased by during this period of 
time we've just been talking about? I'm not talking about your 
program, but the prison population.
    Mr. Glover. No, no. I represent--just to be clear, I 
represent all of the prison workers in the Federal system, not 
just Industries. I am here speaking about it----
    Mr. Lungren. What I'm trying to say is, if we're concerned 
that the program has increased----
    Mr. Glover. It's because of the inmate population.
    Mr. Lungren. Has the inmate population increased?
    Mr. Glover. Over the last 20 years the inmate population is 
up 650,000 percent--I mean, 650 percent. We have only increased 
staffing 250 percent. That was in the Federal Times 
approximately 6 months ago.
    Mr. Lungren. You're talking about the Federal system.
    Mrs. Glover. The Federal prison system has increased 
inmates 650 percent since 1980.
    Mr. Lungren. Well, since we've got the Comprehensive Crime 
Control I passed in 1984, that might be one of the reasons for 
it. And I'm proud of that, and I happen to think it's something 
that has helped bring the crime rate down, but it also means we 
ought to expand programs of opportunity for prisoners, it seems 
to me.
    Chairman Hoekstra, the pass-through, I think we can all 
agree that ought to be eliminated. Do you have evidence that it 
hasn't been eliminated; and what do we need to do if it hasn't 
been?
    Mr. Hoekstra. We have worked very, very hard with the 
board, that when we tried to identify cases where pass-through 
may have occurred or products where it may have occurred, 
brought them to the attention. And I can't tell you whether 
they're going on right now or not. I know that Ken Rocks has 
been committed to eliminating pass-through. He recognizes that 
that is wrong, that Federal Industries should not just have a 
catalogue, sell their stuff and----
    Mr. Lungren. We can all agree on that.
    Mr. Hoekstra. And I think the board has been trying to 
implement that.
    Mr. Lungren. Was there a serious problem at one time?
    Mr. Hoekstra. At one time it was a concern, yes. I can't 
tell you the dollars that would have been involved.
    Mr. Lungren. So as I take it, pass-through is not your big 
problem with the program, it's the mandatory source.
    Mr. Hoekstra. It's not the pass-through, it's the mandatory 
source. And we are not in favor of eliminating and reducing--I 
mean, I hope that the way this bill goes through, and again, 
because the folks that are involved with this are expecting 
that the opportunities will--and the effective opportunities 
for prison workers will increase with a revised Federal 
Industries, not decrease. Federal Industries says they can't 
compete, we open up not-for-profit, new opportunities there, we 
open up the vocational and remedial education. That becomes the 
expanded and effective new model for Federal Industries.
    Mr. Lungren. Okay. Let me ask you a question, though. Do 
you disagree with Dr. Wilkinson that vocational education is 
substantively different than Industries in that it's a short 
term in order to be certified and it wouldn't allow long-term 
participation by those who are in prison?
    Mr. Hoekstra. Yes. We would not see somebody involved in 
vocational education for 5 years, that is correct.
    Mr. Lungren. So it's not a one-for-one substitute?
    Mr. Hoekstra. It is not a one-for-one substitute, that is 
correct.
    Mr. Lungren. If, in fact, it proves out that Industries 
can't compete without mandatory source, would it be your 
position that we ought to eliminate the program because of its 
deleterious effects on sectors in the economy, including 
furniture manufacturing?
    Mr. Hoekstra. You know, if the State--if they came back and 
said that they could not compete, or the facts bore out that 
they could not compete, we would have to take a look at exactly 
how we would restructure work opportunities for prisoners. I 
mean, FPI right now says that they can't compete. They say that 
they do compete, and they compete effectively each and every 
day. And, you know, the head of the Bureau of Prisons has 
indicated that they favor less reliance in moving away from 
mandatory sourcing, but they say they can't compete.
    Mr. Lungren. Mr. Glover, number one, do you think your 
program can compete without mandatory source? And secondly, I 
want to ask this, one of the conundrums we have in dealing with 
prisons is the reality of prison gangs. And as I studied prison 
gangs and youth gangs, their attraction is twofold. One is 
protection racket. You don't join them, you're going to get 
harmed. The second is a lot of these people come from 
backgrounds where they never had authority figures, they never 
had anyone that gave them anything, there was nothing in their 
life which gave them an identification outside of themselves, 
and gangs do that unfortunately.
    What is the mechanism that you see--if there is any 
mechanism--of a Prison Industry to create something outside the 
gang environment? I'm not saying it is the solution, but does 
it give an alternative lifestyle, if you will, alternative 
hopes and aspirations in time?
    Mr. Glover. I believe that the Industries program, as it's 
currently built in our system, what it does is it 
individualizes the inmate. He goes through a screening process, 
he actually goes through a job interview to get into 
Industries. The gang parameters don't really fit in there. In 
order to get hired in the FPI, they certainly look at who the 
inmates are running with in the system. You don't see, like, 10 
people in one gang applying for an FPI job, it doesn't seem to 
work that way. There may be statistics that say different, but 
I haven't seen it work that way.
    What we see is that this program is a long-term program. If 
you have someone that's serving at USP Leavenworth, for 
instance, and they're in for 45 years or 50 years, you know, 
you can educate them, you can vo-tech them, but to keep them 
productive and occupied on a daily basis and feel like they 
have a little bit of worth, this program seems to do that.
    That's where, at least as a correctional officer, that's 
where I come from on this program, is that it gives the inmate 
a sense of worth every day he goes down and does something 
productive.
    A couple years ago there was a proposal to put together an 
engine, let it come through a factory line, come back around, 
break it apart and make it again. You would only get inmates to 
do that for so long. They're not going to go that direction.
    As far as alternatives, like I said, if we could see this 
held off and repatriation looked at as an alternative, but it 
would have to open up--I mean, the Federal market is shrinking 
anyway for us. Now, I realize these statistics. You know, yeah, 
we've made more money, and we've said when you have to make 
more Kevlar helmets--you know, we have one factory that does 
that, we don't have 10. And we don't move factories around that 
often, moving inmate production lines around, we don't do that. 
We don't move inmates around to work in different factories so 
that we can have different product lines. I mean, you have what 
you have in whatever prison you're in, because if he's a USP 
inmate, a high security inmate, you don't move him to a low 
because he used to make one thing and we're making it over here 
now. We don't move that inmate. So you have to retrain the 
entire workforce at the low level facility, or vice versa. It's 
just not that simple.
    Mr. Coble. My airport is calling. I don't want to cut you 
off.
    I want to, first of all, thank the four Members for 
having--yes, Mr. Scott.
    Mr. Scott. Can I make a short statement? Because we were 
talking about the mandatory source, and the problem that we've 
got is that the bill will eliminate mandatory source and 
replace it with a hope and a promise that we will get 
appropriations to replace it, and that's not a realistic hope, 
as the gentleman from California has indicated. Sometimes we 
just don't appropriate money for some of these prisoner 
programs. And nobody is, like I said, married to mandatory 
source, but, if you're going to get rid of it, jobs are going 
to go down, crime is going to go up. That's not a good result.
    And so what we need to do, Mr. Chairman, is make sure that 
before we do anything that we protect the number of jobs that 
we have, and with the increased prison population even have 
more jobs because this program has been proven to be not only 
good for prisoners, but good for the taxpayer in reducing 
recidivism and good for the law-abiding public because you have 
fewer people out there committing additional crimes. We've done 
a lot in this Committee trying to reduce crime, and this is one 
that actually works. Mandatory source works. Now you replace it 
with something else, it might work, it might not, but we ought 
to have some confidence that what we do will in fact work 
before we get rid of something that works.
    Mr. Coble. Well, I think it's been a productive hearing. I 
want to thank the four Members who delayed their departure on 
the first day of the district work period. I want to thank the 
four distinguished witnesses, and for that matter those in the 
audience who stayed with us the entire hearing.
    In order to ensure a full record of adequate consideration 
of this important issue--and it is, indeed, an important 
issue--the record will remain open for additional submissions 
for a 7-day period. Any written question that a Member wants to 
submit should be submitted within that 7-day framework.
    This concludes the legislative hearing on H.R. 2965, the 
``Federal Industries Competition and Contracting Act of 2005.'' 
Thank you for your cooperation. Without objection, the 
Subcommittee standing adjourned.
    [Whereupon, at 11:30 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

   Statement submitted by the U.S. Chamber of Commmerce to the House 
                          Judiciary Committee
    The U.S. Chamber of Commerce appreciates the opportunity to submit 
this statement for the record on Federal Prison Industry Contracting 
Reform and to demonstrate our support for H.R. 2965. The U.S. Chamber 
is the world's largest federation of business organizations, 
representing more than three million businesses and professional 
organizations of every size, sector, and region of the country. Over 
ninety-six percent of our members are small businesses with fewer than 
100 employees. We commend the Subcommittee for their interest in 
holding this legislative hearing on H.R. 2965, a bill that seeks to 
infuse competition in the federal procurement process with regard to 
purchases from Federal Prison Industries (FPI), while providing work, 
training and rehabilitation opportunities for prisoners in a manner 
that does not penalize small businesses and their law abiding 
employees. We would especially like to thank Representatives Hoekstra, 
Frank, Maloney, Sensenbrenner, Conyers and Coble, and so many others, 
for their leadership and dedication to reforming the unfair competitive 
practices of FPI.

FPI in the Free Market

    Our free market system is essential to achieving and maintaining a 
vibrant and productive economy and is a necessary foundation of 
political and social freedom. The United States government is 
responsible for enforcing laws that promote competition in the 
marketplace and ensure a level playing field among competitors to 
benefit American consumers. Monopolies do not belong in a free market 
economy. When you remove competition from the equation you are left 
with higher prices, lower quality of service, and lower productivity as 
a result of lower efficiency. Non-market practices also stifle 
innovation and reduce the availability of goods and services.
    This is exactly the situation with respect to FPI sales in the 
federal market. The federal government-the consumer in this case-is 
paying above market prices for lower quality goods and in doing so, is 
squandering American taxpayer dollars while completely ignoring the 
very rules it enforces in the commercial market. The federal 
procurement process should be aimed to deliver on a timely basis the 
best value product or service to federal agencies while promoting 
competition and reliance on the private sector for commercial items. 
Reform of FPI is aligned with the goals of ensuring fair and full 
competition to ensure the best value for the American taxpayer while 
removing barriers that prevent businesses, particularly small 
businesses, from obtaining government contracts.

The Need for Reform

    In 1934, President Roosevelt established FPI as a government-owned 
corporation. FPI was given special ``mandatory source'' status in the 
government procurement process, forcing government agencies in need of 
a product to purchase that product from FPI. No consideration can be 
given to a private sector competitor unless that agency asks FPI for an 
exception from its own monopoly. It is ironic that there are laws 
prohibiting the U.S. from importing goods that are made by prisoners in 
other countries, yet we have laws that require our own federal 
government to buy goods and services from prisoners in this country.
    Each year, FPI expands to produce even more goods and services. 
FPI's sales growth, all through non-competitive contracts, has been 
formidable: $802.7 million in 2004, up from $666.8 million in 2003, 
$546 million in 2000, $339 million in FY 1990, up from $117 million in 
1980, and $29 million in 1960. Today, FPI produces over 300 products 
and services making it the 49th largest Government contractor. This 
makes FPI a formidable competitor even for a large private sector 
enterprise, much less a small business. Evidence indicates that FPI 
will continue its expansionist behavior, by exploiting its mandatory 
source status and increasingly encroaching on private sector industries 
in order to be a profitable enterprise, forcing businesses to halt 
production lines, lay off employees and even close their doors for 
good.
    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 the Chamber. The Chamber has a long-standing policy that 
the government should not perform the production of goods and services 
for itself or others if acceptable privately owned and operated 
services are or can be made available for such purposes. The private 
sector should be allowed to compete fairly with FPI for federal 
contracts-plain and simple-by eliminating the requirement that 
government agencies purchase products and services from FPI.
    Reform of FPI starts with the realization that FPI has exceeded its 
statutory authority. They are free to set any price they want within 
the range of market prices with no incentive to charge the lowest 
price. Until the recent enactment of reform measures, FPI, rather than 
federal agencies, determined whether FPI's products and services and 
delivery schedule met the agency's needs. While these reform measures 
have provided some relief, permanent comprehensive reform is needed to 
reign in this organization. By granting FPI a monopoly, issues of 
price, quality and efficiency fall by the wayside at the expense of 
U.S. taxpayers. Contrary to FPI's assertions, the General Accounting 
Office (GAO) reported in 1998 that FPI cannot back up its frequent 
claims about being a quality supplier to Federal agencies, furnishing 
quality products at low prices to meet their needs. Once FPI 
commandeers a product, it erodes, displaces, or eliminates private 
sector competition, thus opening the door for it to raise its prices.
    Recent aggressive expansion by FPI into the services arena has 
caused great concern in the business community. Even though FPI's 
authorizing statute does not specifically mention services, FPI has 
interpreted that it is a ``preferential source'' for services and used 
this to enter into sole source contracts with Federal agencies for 
services. They are quickly expanding their services portfolio, which 
includes printing, environmental testing, recycling, mapping and 
imaging, distribution and mailing, laundry services, data conversion, 
and call center and help desk support.
    This expansion is alarming not only because it adversely impacts 
the private sector but also because it is wholly inappropriate to allow 
inmates access to classified or infrastructure information used in 
mapping projects or the personal or financial information of private 
citizens used in call center operations. We should be extremely 
cautious with the information we arm our federal inmates with in 
preparation for life beyond bars.
    FPI's desire to expand into the commercial marketplace is an 
alarming development that is seen as a call to arms by industry. The 
Chamber opposes FPI's move into the commercial marketplace for four 
reasons. First, the decision to expand into the commercial marketplace 
is in conflict with the clear language of FPI's enabling legislation 
and beyond the discretion of the Board. Second, it is a reversal of 
more than sixty years of public policy. Third, FPI has claimed this 
authority for itself without any specific legislative authority from 
Congress. Finally, the creation of a state run enterprise, competing 
with its own citizens, is a policy so at odds with the role of 
government in a free society that it is a decision best left to 
Congress.
    Title 18 U.S.C. section 4122(a) specifically states:
        Federal Prison Industries shall determine in what manner and to 
        what extent industrial operations shall be carried on in 
        Federal penal and correctional institutions for the production 
        of commodities for consumption in such institutions or for sale 
        to the departments or agencies of the United States, but not 
        for sale to the public in competition with private enterprise.
    Now, however, despite this seemingly clear prohibition on entering 
the commercial market found in the statute, recent evidence shows that 
FPI has engaged in expansionist practices. Sixty-five years of public 
policy should not be overturned, especially without public debate. The 
United States should not be selling commercial services in competition 
with law-abiding taxpaying businesses, using prison labor that is paid 
no more than $1.25 an hour. FPI's expansion in the commercial market is 
a dramatic shift in policy, and in conflict with the clear language of 
18 U.S. C. 4122(a). We urge that no proposal to inject Federal inmate 
provided services in the commercial marketplace be entertained by 
Congress.
    While we are empathetic to FPI's goal to employ federal inmates to 
reduce recidivism by providing vocational and remedial opportunities 
while incarcerated, it should not be done at the expense of law-
abiding, taxpaying businesses. It is unfortunate that in today's 
society we are faced with an increasing inmate population. However, we 
believe other sources of work opportunities for inmates should be 
explored that do not infringe upon the private sector's opportunities 
to compete for government contracts, threaten the general safety of our 
citizens, and provide for expansion in the commercial market.

Legislative Solutions

    Legislative reform addressing these concerns is way overdue and 
more oversight by the FPI Board and Congress is needed now. Language 
enacted in the FY02 and FY03 Defense Authorization bills, the FY04 
Consolidated Appropriations Act, and the FY05 Omnibus Appropriations 
Act provided partial interim relief from FPI's monopoly by allowing 
federal agencies to decide how to best meet their procurement needs by 
examining existing marketplace opportunities and purchasing products on 
a competitive basis. In the 108th Congress, the House overwhelmingly 
passed the Hoekstra-Frank-Collins-Maloney-Sensenbrenner-Conyers-Coble 
Federal Prison Industries Competition in Contracting Act of 2003, H.R. 
1829, a comprehensive reform bill that eliminates FPI's preferential 
status, by a 350-65 margin. A companion Senate bill, S. 346, was 
reported from the Senate Committee on Governmental Affairs in 2004.
    For many years, the Chamber has been a leader in the broad-based 
Competition in Contracting Act Coalition, comprised of the business, 
labor and federal manager communities that advocate comprehensive, 
fundamental reform of FPI. The Chamber and the Coalition strongly 
support H.R. 2965. This bipartisan legislation would impose overdue and 
much-needed restraints on the unfair competitive practices of FPI that 
inflict damage on law-abiding businesses and the workers they employ, 
while blatantly wasting taxpayer dollars.
    H.R. 2965 provides for fundamental reform while maintaining a 
process in which FPI can still sell to federal agencies but on a 
competitive, rather than a preferential sole-source basis. It requires 
federal agencies to use competitive procedures for the purchase of 
products. H.R. 2965 would require FPI to be a more responsible supplier 
to Federal agencies and the taxpayer, and would allow the private 
sector to compete fairly with FPI for federal contracts by eliminating 
the requirement that government agencies purchase products from FPI. 
Agency contract officers, not FPI, would determine if FPI's offered 
product best meets buying agencies' needs in terms of quality and time 
of delivery. Most importantly, H.R. 2965 provides new authorities for 
FPI that do not infringe on the private sector and its law abiding 
employees.
    Even with reform, FPI would still have an enormous competitive 
advantage over the private sector. FPI pays its inmates $.23-$1.15 per 
hour and is not required to provide any employee benefits like Social 
Security, unemployment compensation or insurance. In addition, as a 
Government-owned corporation, FPI is exempt from Federal and state 
income taxes, gross receipts taxes, excise tax and state and local 
sales taxes on purchases. FPI does not have to pay for utilities or 
equipment and has a special statutory line-of-credit from the U.S. 
Treasury for $20 million at 0% interest. FPI is also exempt from 
standards, inspections or fines by various Federal, state or local 
enforcement agencies, such as OSHA, that regulate all private sector 
suppliers to the Federal Government.
    H.R. 2965 includes language that would prohibit inmates from having 
access to classified data, critical infrastructure data, and personal 
or financial data under any Federal contracts. The American people 
would be outraged to know that prisoners can be given access to their 
credit card numbers, addresses, and value of their homes, as well as 
location information on our underground gas pipelines and other 
critical infrastructure that, if in the wrong hands, threatens our 
security. Simply yet adequately stated, sensitive information of this 
nature should not be in the hands of convicted criminals.
    H.R. 2965 also protects Federal prime contractors and 
subcontractors at any tier from being forced to use products or 
services furnished by FPI. FPI would no longer be able to force 
contractors to use FPI as a mandatory source for products or to be 
specified as a mandatory source on contracts. We have seen this new, 
expansive authority, which was not enacted by Congress through 
legislation, but claimed by FPI through interpretation, used, for 
example, to force architects and engineers to include FPI products in 
their design specifications, even if those products are not the most 
efficient, cost effective or appropriate solution.
    To assure the safety of the prison guards and the inmates 
themselves, H.R. 2965 would allow the Attorney General to award a 
contract to Federal Prison Industries if he/she believes that the loss 
of such prison work would endanger the safe and effective 
administration of a prison facility. While this is a valid concern, it 
is important to note only a small percentage-roughly 17%-of inmates 
actually work in the FPI program. The remaining able bodied inmates are 
engaged in various tasks relating to the operation and maintenance of 
the correctional facility. These tasks reduce the operating costs of 
the facility and keep inmates occupied in daily work activities.
    Many concessions have been made on behalf of FPI reform supporters 
over the years and H.R. 2965 provides additional safeguards in addition 
to a level playing field on which FPI and the private sector can 
compete. FPI asserts that comprehensive reform will cause inmate 
employment to decline, factories to be shut down, and sales to 
decrease. We argue that for decades businesses have suffered from 
declining employment rates and decreases in sales, and have been forced 
to shut down factories and production lines because of FPI's unfair 
competitive advantage and practices. Therefore, the time is now for 
balanced comprehensive reform.

Conclusion

    The U.S. Chamber and the business community appreciate the 
Subcommittee's examination of FPI's impact on the private sector and 
urge quick consideration of H.R. 2965 by the full committee. Businesses 
rely on an efficient, fair competitive process to provide the federal 
government with goods and services to maintain and grow their 
businesses.
    Thank you for the opportunity to submit this statement for the 
record.

                              ----------                              


   Statement of Roger F. Cocivera, President and CEO, Textile Rental 
                    Services Association of America










                              ----------                              

 Letter from Dan Danner, Executive Vice President, National Federation 
                     of Independent Business (NFIB)
    Dear Chairman Sensenbrenner,
    On behalf of the 600,000 members of the National Federation of 
Independent Business (NFIB), I write to express our strong support for 
H.R. 2965, the Hoekstra-Frank-Maloney-Sensenbrenner-Conyers-Coble 
``Federal Prison Industries Competition in Contracting Act of 2005'' 
and urge swift passage through your committee.
    Eighty-nine percent of NFIB members believe that prison inmates 
should not receive preference for federal contracts. NFIB's members 
have long fought against unfair government competition with the private 
sector. Federal Prison Industries (FPI) has become one of the most 
egregious examples of unfair government competition. FPI, also known by 
its trade name UNICOR, is a government-owned corporation operated by 
the Federal Bureau of Prisons.
    H.R. 2965 would provide for fundamental change of FPI by making it 
less predatory to small business and a more responsible supplier to 
federal agencies and taxpayers. The bill would require FPI to compete 
with the private sector for federal government contracts and require 
FPI to perform its contract obligations in a timely manner, the same as 
all other government contractors. Also, the bill would require FPI 
products to meet the same design and performance specifications as well 
as similar workplace health and safety standards that are applied to 
private sector suppliers.
    A ``soft landing'' provision in the bill would allow FPI to adapt 
to the competitive marketplace, and many of the concerns expressed by 
groups representing prison guards and prison life advocates have been 
addressed. With these protections and other much-needed reforms, H.R. 
2965 enjoys a broad base of support from Members on both sides of the 
aisle. A similar bill, H.R. 1829, passed the House in the 108th 
Congress by a roll call vote of 350-65.
    I want to commend you for your leadership on this issue. I trust 
that your colleagues will follow your lead by voting in favor of this 
common sense reform of FPI and by voting against any extraneous or 
weakening amendments. NFIB looks forward to working with you to pass 
this much-needed legislation.
    Sincerely,
    Dan Danner
    Executive Vice President
    Public Policy and Political

                              ----------                              

Statement submitted by the National Federation of Independent Business 
                                 (NFIB)
    The National Federation of Independent Business (NFIB) is the 
nation's largest small business advocacy organization, representing 
more than 600,000 small-business owners in all 50 states and the 
District of Columbia. We are pleased to present our perspective on how 
current practices of the Federal Prison Industries (FPI) adversely 
impact small businesses and to express our support for the Hoekstra-
Frank-Maloney-Sensenbrenner-Conyers-Coble Federal Prison Industries 
Competition in Contracting Act of 2005, H.R. 2965.
    We applaud the work of Chairman Sensenbrenner and Mr. Hoekstra on 
this very important issue for small business. We also applaud the 
passage of the FY05 omnibus spending bill, which allowed small business 
to compete for federal contracts by ending FPI's mandatory source 
status. However many small businesses across the nation still cannot 
compete fairly against the Federal Prison Industries for federal 
contracts. H.R. 2965 is a comprehensive reform bill that will 
fundamentally change the unfair contracting practices of FPI and 
protect small-business contractors and taxpayers alike.
    FPI has numerous advantages over small business in competing for 
government contracts. Inmate workers are paid hourly rates of $1.23 per 
hour or less, rather than market-driven wages. FPI's facilities are 
built as part of a prison and has access to production equipment from 
other government agencies, at no cost. Congress even gave it direct 
access to the Treasury with authority to borrow up to $20 million, at 
rates far below what would be available to the largest commercial 
enterprise.
    These advantages are illustrated by the amount of business FPI 
conducts with the government. FPI operates a centrally managed chain of 
over 102 prison factories and ranks 49th among the top 100 contractors 
with the federal government. Over 300 products and services are 
produced by federal prisoners, totaling over $800 million in sales to 
the federal government in 2004. FPI's sales growth through mandatory 
source status is staggering: $546 million in 2000, $339 million in FY 
1990, $117 million in 1980, and $29 million in 1960.
    Since the 1980s, NFIB has worked actively to allow small businesses 
to compete fairly with FPI - we're not asking for special treatment, 
we're just asking to be allowed to compete for government contracts. 
NFIB members feel very strongly about this--eighty-nine percent do not 
believe that prisons should receive preference for federal contracts.
    One member from Ohio, Bobbie Gentile, has had several problems 
trying to deal with FPI. Bobbie is president and owner of Q-Mark, Inc., 
a small woman-owned business in Dayton, Ohio. Q-Mark is a 
manufacturers' representative firm that represents fifteen 
manufacturing firms. Of these fifteen firms, twelve are small 
businesses, and four of the twelve are electronic connector 
manufacturers.
    In testimony before the House Small Business Committee on June 6, 
2001, she stated:
        ``The situation with FPI is becoming worse as time progresses. 
        FPI has the right to demand that the government set aside any 
        connector series FPI chooses. They now successfully dominate 
        the circular connector market. I brought with me today examples 
        of quotes that I sent to the government. In all cases, my price 
        was lower than the price offered by FPI. FPI received the 
        awards. Once again the government had no option but to award to 
        them. I find their pricing an example of price gouging when 
        their labor rate is so low.''
    NFIB supports H.R. 2965, Federal Prison Industries Competition in 
Contracting Act of 2005 because it seeks to reform FPI to make it more 
accountable to the public and less predatory to small business. While 
the FY05 omnibus-spending bill did end FPI's mandatory source status, 
this bill is needed for further reform of the FPI.
    H.R. 2965 requires FPI to compete for government contracts with the 
private sector to provide services and products, eliminating mandatory 
contracting with the federal government. It enhances public 
participation in the process by which the FPI Board of Directors 
(Board) considers a proposed expansion of products and extends this 
process to services. It also clearly defines the standards under which 
the Board can authorize these expansions.
    H.R. 2965 also protects prison employees and better prepares 
inmates for life after incarceration. Under the bill, FPI is provided 
with a five-year phase-out schedule of the mandatory sourcing with the 
federal government. This 'soft landing' gives FPI a transition period 
to adjust to private sector competition. The bill also improves 
vocational and educational programs to teach inmates skills that are 
needed for outside employment as well as provide for employment 
assistance programs to help inmates find jobs upon release.
    Thank you for holding this hearing and for allowing NFIB to submit 
testimony for the record. NFIB looks forward to working with you to 
pass H.R. 2965 to further efforts that lessen the harmful impact of FPI 
on small business and economic growth.

                              ----------                              

Letter from Chris Jahn, President, Contract Services Association (CSA) 
                     to the Honorable Howard Coble
    July 1, 2005

    The Honorable Howard Coble
    Chairman
    Subcommittee on Judiciary; Crime, Terrorism and Homeland Security
    207 Cannon House Office Building
    Washington, D.C. 20510

    Dear Mr. Chairman:
    On behalf of the Contract Services Association (CSA), I urge you to 
support the Federal Prison Industries reform bill sponsored by 
Representatives Peter Hoekstra (R-MI) and Barney Frank (D-MA), which 
would establish long overdue and much needed restraints to reign in the 
unfair competitive advantage enjoyed by the Federal Prison Industries 
(FPI). This bill not only has strong bi-partisan support in the 
Congress, it has generated broad support from the business community 
and labor unions.
    CSA is the nation's oldest and largest association of service 
contractors representing over 200 companies that provide a wide array 
of services to Federal, state, and local governments. CSA members 
perform over $40 billion in Government contracts and employ nearly 
500,000 workers, with two-thirds of CSA companies using private sector 
union labor. CSA members represent the diversity of the government 
services industry and include small businesses, 8(a)-certified 
companies, small disadvantaged businesses, women-owned, HubZone, Native 
American owned firms and global multi-billion dollar corporations. 
Unfair competition from FPI increasingly is important to CSA members 
because FPI sees services as ripe for aggressive expansion, both within 
the Government contracting and the commercial markets.
    As a mandatory source of supply, the FPI has a virtual lock on the 
Federal market in several broad classes of products, and its growth 
comes at the expense of employers in every corner of the country and 
their hardworking, law-abiding employees. Furthermore, the FPI need not 
comply with the laws and regulations imposed on the private sector such 
as those governing minimum wage rates, retirement and other fringe 
benefits, insurance costs and compliance with OSHA regulations. 
Increasingly, employers and workers are losing their livelihood as FPI 
looks for new areas in which to expand.
    The Hoekstra-Frank bill offers a rational approach, allowing the 
private sector to compete fairly with FPI for all Federal contracts by 
eliminating the mandatory source requirement that FPI currently enjoys. 
It also will provide additional opportunities for vocational and 
remedial education opportunities to better prepare inmates for a 
successful return to society.
    In conclusion, I again urge you to support H.R. 2965. CSA believes 
that both industry and the Government benefit from fair competition 
based on the price and quality of the product in question. Thank you 
for your consideration.
    Sincerely,
    Chris Jahn
    President
                               __________
Letter from Chris Jahn, President, Contract Services Association (CSA) 
                      to the Honorable Bobby Scott
    July 1, 2005

    The Honorable Bobby Scott
    Ranking Member
    Subcommittee on Judiciary; Crime, Terrorism and Homeland Security
    207 Cannon House Office Building
    Washington, D.C. 20510

    Dear Representative Scott:
    On behalf of the Contract Services Association (CSA), I urge you to 
support the Federal Prison Industries reform bill sponsored by 
Representatives Peter Hoekstra (R-MI) and Barney Frank (D-MA), which 
would establish long overdue and much needed restraints to reign in the 
unfair competitive advantage enjoyed by the Federal Prison Industries 
(FPI). This bill not only has strong bi-partisan support in the 
Congress, it has generated broad support from the business community 
and labor unions.
    CSA is the nation's oldest and largest association of service 
contractors representing over 200 companies that provide a wide array 
of services to Federal, state, and local governments. CSA members 
perform over $40 billion in Government contracts and employ nearly 
500,000 workers, with two-thirds of CSA companies using private sector 
union labor. CSA members represent the diversity of the government 
services industry and include small businesses, 8(a)-certified 
companies, small disadvantaged businesses, women-owned, HubZone, Native 
American owned firms and global multi-billion dollar corporations. 
Unfair competition from FPI increasingly is important to CSA members 
because FPI sees services as ripe for aggressive expansion, both within 
the Government contracting and the commercial markets.
    As a mandatory source of supply, the FPI has a virtual lock on the 
Federal market in several broad classes of products, and its growth 
comes at the expense of employers in every corner of the country and 
their hardworking, law-abiding employees. Furthermore, the FPI need not 
comply with the laws and regulations imposed on the private sector such 
as those governing minimum wage rates, retirement and other fringe 
benefits, insurance costs and compliance with OSHA regulations. 
Increasingly, employers and workers are losing their livelihood as FPI 
looks for new areas in which to expand.
    The Hoekstra-Frank bill offers a rational approach, allowing the 
private sector to compete fairly with FPI for all Federal contracts by 
eliminating the mandatory source requirement that FPI currently enjoys. 
It also will provide additional opportunities for vocational and 
remedial education opportunities to better prepare inmates for a 
successful return to society.
    In conclusion, I again urge you to support H.R. 2965. CSA believes 
that both industry and the Government benefit from fair competition 
based on the price and quality of the product in question. Thank you 
for your consideration.
    Sincerely,
    Chris Jahn
    President

                              ----------                              

     Statement submitted by the Contract Services Association (CSA)
    Mr. Chairman and Members of the Committee, the Contract Services 
Association (CSA) requests that this statement be included in the 
official record for your July 1, 2005, hearing on the ``Federal Prison 
Industries Competition in Contracting Act of 2005'' (H.R. 2965).
    CSA is the nation's oldest and largest association of service 
contractors representing over 200 companies that provide a wide array 
of services to Federal, state, and local governments. CSA members 
perform over $40 billion in Government contracts and employ nearly 
500,000 workers, with two-thirds of CSA companies using private sector 
union labor. CSA members represent the diversity of the government 
services industry and include small businesses, 8(a)-certified 
companies, small disadvantaged businesses, women-owned, HubZone, Native 
American owned firms and global multi-billion dollar corporations.
    CSA would like to register its longstanding concerns over the 
operations of the Federal Prison Industries (FPI) and its impact on the 
services industry, in both the Federal government and commercial 
markets. As a result, we have worked closely with private sector labor 
unions, the U.S. Chamber of Commerce and other associations and 
individual companies to develop an equitable resolution to the problems 
that FPI poses for our Nation's small businesses. While the goals of 
FPI are laudable - to employ prisoners - the manner in which it has 
aggressively pushed itself into the Federal marketplace - and many 
legitimate businesses out of that same market - is not. Such tactics 
harm law abiding citizens, while not necessarily improving employment 
prospects for prisoners attempting to re-enter society.

Background

    The history of FPI is well known--created in 1934 to employ Federal 
prisoners to manufacture products exclusively for all Federal agencies. 
But over the years, as a mandatory source of supply, FPI has had a 
virtual lock on several aspects of the Federal market - putting the 
rights of felon's above the need for the Government to get the best 
value for its procurement needs, and above the rights of law abiding 
businesses, and their employees, to bid on Government procurements.
    How does this mandatory source status work? Current law and 
regulation obligates a Federal agency to look first to FPI to fulfill 
its requirements for a product - and to negotiate a contract with FPI 
on a sole source basis. The final determination of the price to be paid 
for its products is left to FPI - not to the Federal manager. The only 
way around buying from the prisons is for an agency to request a waiver 
from FPI itself, which controls both the waiver and appeals process. 
This ties the hands of Federal managers on FPI designated items. The 
mandatory source is also contrary to the bi-partisan efforts of the 
past decade to encourage greater commercial practices in how the 
Federal government conducts its business. These reform initiatives 
(e.g., the 1994 Federal Acquisition Streamlining Act, the 1996 Clinger-
Cohen Act and the FAR Part 15 rewrite) require Federal agencies to 
conduct market research, have informal discussions with industry and 
take similar steps to assist agencies in identifying their needs. 
Acquisition reform, with its emphasis on best value, also has led to 
more performance based contracting, the issuance of more refined 
statements of work, a reduction in procurement lead times, and an 
improvement in quality control.
    Of course, FPI claims it can provide products of equal or better 
quality than the private sector, make deliveries as promptly as the 
private sector, and sell some products at a lower price than the 
private sector thereby saving taxpayer dollars. But these statements 
are not accurate. That is why FPI fights so hard to keep its ``super 
preference'' that allows it to force out the private sector and prevent 
companies from competing for contracts.
    Indeed, contrary to FPI's assertions, General Accountability Office 
(GAO) reports stated that Federal Prison Industries cannot back-up its 
frequent claims about being a quality supplier to Federal agencies, 
furnishing products that meet their needs in terms of quality, price, 
and timeliness of delivery. Once FPI commandeers a product, it erodes, 
displaces, or eliminates private sector competition, thus opening the 
door for it to raise its future prices.
    Further, FPI has several additional unfair advantages over the 
private sector. It need not comply with the laws and regulations 
imposed on the private sector such as those governing minimum wage 
rates, retirement and other fringe benefits, insurance costs, and 
compliance with OSHA requirements. And, according to the General 
Accountability Office, the cost of prison labor ranges from $0.25 to 
$1.23 per hour.

Unfair Expansion into Services Contracting

    So far, these comments have focused on FPI's mandatory source in 
the manufacturing arena. So why should Contract Services Association 
(CSA) and its members care about FPI's impact in the manufacturing 
world? CSA has entered the debate because FPI sees services as ripe for 
aggressive expansion. While the authorizing statute is silent with 
respect to services, FPI already is involved in numerous service-
related activities including laundry services, mailing and distribution 
services, data services, and telephone support services.
    While the mandatory source requirement does not strictly apply to 
services, FPI has implied that it is a ``preferential source'' for 
services and used this to enter into sole source contracts with Federal 
agencies for services. Unfortunately, the approval process and the 
requirement for an adverse market impact study that affords some 
coverage for private sector manufacturers are not applied to services. 
Furthermore, FPI does NOT have to pay any competitive wages to 
prisoners. As noted earlier, this ensures they have an advantage over 
service companies that must comply with the Service Contract Act and 
other labor laws and regulations.

Recent Legislative Actions

    Congress has recognized these concerns, and has taken action. 
Section 811 of the Fiscal Year 2002 Defense Authorization Act requires 
the Department of Defense (DOD) to conduct market research before 
purchasing products which are listed in the catalog for the Federal 
Prison Industries (FPI), to determine whether the FPI product is 
comparable in price, quality and time of delivery to products available 
in the private sector. If the FPI product is not comparable, DOD must 
use competitive procedures to acquire the product - and NO waiver (from 
FPI) is required should DOD determine FPI is not comparable. The 
determination of comparability is ``a unilateral decision made solely 
at the discretion of the department or agency'' (e.g., the Department, 
Service or defense agency). Furthermore, the comparability 
determination is based on whether FPI can provide the product on the 
basis of price, quality AND time of delivery. Additional clarifying 
language (section 810) was included in the conference report for the 
Fiscal Year 2003 Defense Authorization Act. An interim rule to 
implement this provision was published in the Defense Federal 
Acquisition Regulation Supplement (DFARS) on April 26, 2002.
    For DOD, Section 811 ensures that contracting offices have the 
freedom to explore the market for products to see if FPI's pricing is 
reasonable, and compares in terms of cost and quality to the private 
sector, or other agency providers. Thus, Section 811applies the 
acquisition reform initiatives (including market research) to FPI - and 
by doing so FPI and the Department of Defense will benefit. In the 
Fiscal Year 2005 Consolidated Appropriations Act (P.L. 108-447), 
Section 367 extended this authority permanent government-wide. In April 
2005, the FAR Council issued a proposed rule to implement this statue.

Vocational Training

        Certainly, CSA does recognize that FPI must balance two 
        legitimate needs currently defined in the law:

        1)  The need to provide work opportunities to help combat 
        idleness and recurrence of law-breaking through the TRAINING of 
        prisoners for gainful employment so they may become productive 
        members of society upon their release from prison; and

        2)  The need to minimize the effect of the FPI's work program 
        on the private sector and its non-inmate employees.

    However, these goals are not being met. A number of individuals 
have testified at various hearings that FPI's current operations fail 
at inmate rehabilitation while hurting businesses and non-inmate 
workers. The inmate workers of FPI are not receiving the vocational 
training that will prepare them for viable jobs upon release. Much of 
the Government contract work that FPI obtains often is not actually 
performed by the prisoners, but rather outside the prison, and simply 
stamped with the FPI label; or the prisoners are only minimally 
involved in the product. For example, screwing legs onto already-made 
tables (manufactured outside the prison) is not a life-sustaining 
skill. Furthermore, the equipment used by the prisoners often is out-
dated, and not used in any modern facility in which they may hope to 
work upon release.
    CSA believes that vocational skills training is extremely important 
to a prisoner's future once he/she has returned to the ``real world.'' 
Yet such training does not appear to exist. That is why CSA and its 
members continue to support this common-sense proposal sponsored by 
Representative Peter Hoekstra (R-MI). Among its many provisions, 
training and education are primary components of that bill.
    In 2004, the House of Representatives overwhelmingly passed the 
Hoekstra FPI reform bill, the ``Federal Prison Industries Competition 
in Contracting Act'' (H.R. 1829), which also would eliminate the 
mandatory source requirement for the FPI, forcing it to follow the same 
competitive procedures that are required of all Federal government 
contractors. In addition, the bill calls for deductions to be made from 
wages earned by the prisoners to cover such purposes as payment of 
fines, restitution of victims, support for an inmate's family, and for 
a fund that will facilitate the inmate's assimilation into society. 
While this measure did not receive final congressional action in the 
last Congress, we are hopeful final passage will occur this year.

Conclusion

    If FPI is to become a vehicle for reducing idleness and preparing 
inmates for the private sector, it should prepare those inmates for the 
reality of the competitive pressures faced by real life employers and 
employees, and the need to respond to, rather than dictate, customer 
needs.
    As the association that represents the broadest sector of service 
companies, CSA believes that both industry and the Government benefit 
from fair competition based on the price and quality of the produce or 
service in question. CSA looks forward to working with you to promote 
that goal.

                              ----------                              

    Statement submitted by the Coalition for Government Procurement








                               __________
                 Statement by Remy International, Inc.
    We appreciate the opportunity to submit a written statement for the 
record regarding Remy International's correctional industries program 
as it pertains to House Bill 2965, Federal Prison Industries 
Competition in Contracting Act of 2005.
    Remy International, Inc. (formerly ``Delco Remy International'') is 
one of the leading manufacturers and refurbishers of automotive 
components in the world. Integrating correctional industries along with 
a variety of lean industrial engineering initiatives has enabled Remy 
to survive in a highly competitive global marketplace-a marketplace 
that has not only slashed Remy's sales prices but has resulted in the 
insolvency of many of Remy's competitors during the past decade.
    Remy respectfully submits that Section 7 of H.R. 2965 (Federal 
Prison Industries Competition in Contracting Act of 2005) pertaining to 
the prohibition of service agreements should be deleted. If service 
agreements were prohibited, Remy - which currently has two such 
agreements in Virginia - would be forced to pay offenders the higher of 
minimum wage or the prevailing wage for the area in which such jobs are 
located. This is tantamount to compelling Remy to move these operations 
abroad. In today's global economy, there simply is no way in which Remy 
can competitively price its products without the use of low-cost labor. 
Many major companies are in the process of moving a portion of their 
operations abroad; some have moved their entire operations to foreign 
countries.

Correctional Industries Preserves Civilian Jobs

    We live and work in a different world now, and it has forced us to 
look to countries with lower labor costs, as we are continually 
pressured by our customer base to reduce costs in the products that we 
produce and refurbish. Through the use of correctional services, Remy 
has been able to preserve 600 civilian jobs in Virginia. (A former Remy 
subsidiary, Williams Technologies preserved 500 civilian jobs in South 
Carolina by entering into a Services Agreement with the State of South 
Carolina) With a total of nearly 3,000 civilian employees in the United 
States, Remy continues to maintain a strong presence in this country; 
correctional industries is one of many initiatives exercised to 
maintain this presence and to ensure the company survives intense 
competition from abroad.
    As presently composed, H.R. 2965 will result in the loss of 600 
civilian jobs in Virginia. This is because the operations that employ 
these workers are dependent upon the refurbishment of automotive 
components produced in the correctional facilities that would be closed 
through the passage of this Bill. If these correctional facility 
operations were to be closed, this work would NOT be placed in the 
United States. Rather, it would be relocated to existing factories in 
Xiamen, China and San Luis Potosi, Mexico.
    We respectfully urge you to consider deleting Section 7 of H.R. 
2965 to preserve not only the 360 offender jobs in Virginia but also 
the 600 civilian jobs that are supported by our correctional industries 
operations.
    Remy is committed to employing American workers. Using service 
agreements with correctional institutions helps ensure that Remy can 
keep both civilian and inmate jobs here in the United States, and 
provides significant work experience to participating inmates that 
helps reduce recidivism once they are released from confinement.

Remy's Virginia Correctional Industries Program

    Remy's agreement with the Virginia Department of Corrections and 
Federal Prison Industries has provided 360 jobs for inmates in Virginia 
(230 offenders with the state and 130 offenders with Federal Prison 
Industries). The Commonwealth of Virginia receives $1,732,224 annually 
in Remy payments, and Federal Prison Industries receives $2,471,0040 
annually.
    Since opening a factory in Leiber Correctional Facility in South 
Carolina, Remy has opened refurbishment factories in a state 
correctional facility in Culpeper, Virginia and a federal correctional 
facility in Petersburg, Virginia. The Petersburg and Culpeper 
operations are worthy substitutes for our traditional production model 
of having low-variety, high-volume production capacity in low-labor-
cost countries while maintaining high-variety, low volume production in 
the United States. Again, these operations were initiated with the 
understanding that civilian workers would not be displaced by such 
operations. For the Culpeper operation, Remy pays $3.47 per offender 
hour to Virginia, and Virginia pays either 65 cents or $1.25 (depending 
on length of service) per hour to the offender workers. For the 
Petersburg operation, Remy pays $3.60 per offender hour to Federal 
Prison Industries and Federal Prison Industries pays either 65 cents or 
$1.25 (depending on length of service) per hour to the offender 
workers. (The difference between what we pay and amount the offenders 
receive is used to help fund a program for victim restitution as well 
as help pay the cost of operating the correctional institution).

Why A Subminimum Wage?

    The services agreement with the Commonwealth of Virginia ensures 
that we can keep both civilian and offender jobs within the United 
States. Because of challenges unique to operating a factory in 
correctional facility (versus a civilian factory), Remy utilizes more 
offenders for jobs in the correctional facility operations than it 
would ordinarily require in its civilian factories and, therefore, to 
ensure financial viability of the program, the offenders are paid a 
sub-minimum wage. It is not uncommon to have ``lockdowns'' within the 
entire correctional facility, causing us to lose productivity for 
several days at a time. If there is a heavy fog, offenders are not 
released from their dormitories to work. Offenders are frequently 
transferred from our correctional facility to other correctional 
facilities with little or no notice, causing a disruption to our 
operations. Many of the offenders suffer medical problems that require 
special accommodation through frequent medical treatment. Moving 
product in and out of the correctional facility is a very time-
consuming procedure with costly delays. Contractors charge us a premium 
to service our equipment and machinery because of delays to enter and 
exit the factory within the walls of the correctional institution. With 
the significant inefficiencies inherent in a correctional industries 
environment, it is most difficult for a ``for-profit'' company to 
develop a business case for operating a factory within a correctional 
facility. A sub-minimum wage, as afforded by service agreements, 
enables correctional industries to be competitive with foreign labor 
and, as such, Remy has repatriated work from China and Malaysia to the 
United States.
    If service agreements were to be prohibited, we would be required 
to close both correctional facility operations in Virginia, and these 
jobs would be relocated to existing operations in San Luis Potosi, 
Mexico and/or Xiamen, China, resulting in the loss of 330 offender jobs 
in Virginia.
    In addition, through our service agreements with the Virginia 
Department of Corrections and Federal Prison Industries, we currently 
pay $1,732,224 annually to the Commonwealth of Virginia and $2,471,040 
to Federal Prison Industries for offender workers. These revenues would 
disappear if service agreements were to be prohibited.

Why Remy's Correctional Institutional Programs Work

        1.   Service agreements with correctional facilities add jobs 
        for American civilian citizens, and prevent the relocation of 
        these jobs to other countries.

    As described above, our correctional facility operations actually 
add jobs, rather than displace American workers. Our contracts with the 
Commonwealth of Virginia and Federal Prison Industries state that 
civilian workers shall not be displaced by the activities we place in 
the correctional facility operations. In addition, when we service 
products in correctional facilities we tend to source a majority of our 
component parts from U.S.-based vendors. Since beginning our 
correctional industries programs, we have added 65 civilian jobs in 
Virginia. .
    Moreover, the location of these jobs in the United States helps 
ensure that related parts and support services foster activity in both 
the local and national economy. The competitive realities of today's 
automotive parts manufacturing and refurbishment world is that this is 
work that would otherwise be performed, as much of it currently is, in 
Mexico and Asia. Like our competitors, much of our refurbishment of 
parts is done so abroad. And when these products are serviced in Mexico 
and China, a majority of the component parts and materials used in the 
servicing process are procured from vendors in these countries. 
Therefore, servicing our products in U.S. correctional facilities is 
much better for the U.S. economy and the U.S. job market than servicing 
them in Mexico or China. If H.R. 2965 becomes law without deletion of 
Section 7, it will most certainly result in the loss of U.S. jobs.

        2.   Since any of Remy's competitors can enter into service 
        agreements with correctional facilities, these agreements are 
        well within the realm of fair competition.

    U.S. companies, including our competitors, are flocking to develop 
operations in Mexico and Asia. Some of them also have operations in 
correctional facilities. Both small and large businesses can 
participate in correctional industries with service agreements and, in 
fact, most companies that have operations within correctional 
facilities are small businesses.
    In Virginia, there are over 30,000 offenders incarcerated at any 
one time and there are over 2,000,000 people incarcerated nationwide. 
Remy employs a total of 230 offenders in its state correctional 
operations and 130 offenders in its federal correctional operation, 
leaving hundreds of thousands of offenders seeking gainful work. Any of 
our competitors who are not currently using offender labor have the 
same opportunity to use it as we do. (Recently, one competitor ceased 
using correctional industries labor because they secured lower costs by 
relocating to Mexico.)

        3.   Remy's program of employing offenders provides them with 
        valuable work experience and reduces recidivism.

    Since 94% of all those incarcerated will eventually be released 
into society, work experience assists our correctional institutions in 
preparing offenders for a stable transition into society. According to 
some studies, work experience can reduce recidivism by up to 60% (Pride 
Enterprises of Florida). Most offenders learn what it means to ``get up 
each morning and go to a job'' for the first time in their lives. This 
would not be possible if service agreements were to be prohibited.
    It is important to note that all of the workers in our correctional 
facility operations are working because they desire to work. No one is 
required to work for us and any offender may resign at any time without 
providing notice to us. Offenders consider Remy jobs very desirable 
because they provide:

        *   real-life work experience (the first ``real'' job for many 
        offenders)
        *   hand-tool skills amenable to various trade jobs
        *   compensation that is significantly more than traditional 
        correctional work programs such as floor sweeping, food 
        preparation, and litter collection.

    In fact, some offenders have come to work for Remy following their 
release from incarceration.
    Remy provides a safe working environment for all of its offenders, 
as our correctional industry factories must adhere to the same high 
standards for safety and cleanliness as our civilian factories. 
Offenders receive the same mandatory safety education and training 
programs that are provided to our civilian employees. The environmental 
regulations in our correctional facility operations are just as strict 
as in our civilian operations. (Our operation in the Federal 
institution in Petersburg was delayed by more than six months in 
obtaining all of the necessary operating permits from the Virginia 
Department of Environmental Quality.) Moreover, because Remy's staff 
within the correctional facility must work in an OSHA-compliant 
environment, the correctional facility factories adhere to OSHA rules 
and regulations.
    We are very proud of our correctional industry programs and we 
strongly encourage those who are interested to tour these operations. 
Although Remy is a US-owned company with a 110-year history, there are 
no government mandates requiring our continued existence. Surviving in 
the new global economy has been a struggle despite our significant 
capital investments to procure state-of-the-art equipment and 
machinery, as well as having introduced the most modern lean 
refurbishment techniques to all of our factories. These items, in-and-
of themselves, have not been sufficient to be competitive. Our 
continued survival has required us to develop production capacity 
abroad. Correctional industries have enabled us to slow down, and we 
hope halt long-term, the exodus of many jobs leaving U.S. soil for 
Mexico and Asia.

                              ----------                              

 Statement submitted by Michael B. Styles, National President, Federal 
                       Managers Association(FMA)
    Chairman Howard Coble, Ranking Member Bobby Scott and distinguished 
members of the Subcommittee:
    My name is Michael B. Styles and I am the National President of the 
Federal Managers Association (FMA). On behalf of the nearly 200,000 
executives, managers, and supervisors in the Federal Government whose 
interests are represented by FMA, I would like to thank you for 
allowing us to submit our views regarding the Federal Prison Industries 
(FPI) reform measure, H.R. 2965, before your subcommittee.
    Established in 1913, FMA is the largest and oldest Association of 
managers and supervisors in the Federal Government. FMA has 
representation in nearly 30 different Federal departments and agencies. 
We are a non-profit advocacy organization dedicated to promoting 
excellence in government. As those who are responsible for the daily 
management and supervision of government programs and personnel, our 
members are keenly aware of the important role they play in ensuring 
efficient and effective service to the American people.

FEDERAL MANAGERS CARE ABOUT HOW TAXPAYER DOLLARS ARE SPENT

    The main message that FMA wants to convey to you and Members of the 
Subcommittee is that Federal managers and supervisors - and the civil 
servants we lead - try extremely hard to be good stewards of the tax 
dollars entrusted to us. We dedicate ourselves daily to delivering to 
the American people the most value for their hard-earned dollars. 
Routinely, we are called upon to do it ``better,'' ``faster,'' and 
``cheaper.'' ``Doing more with less'' is the norm, not the exception.
    In our view, the FPI mandatory-source requirement ties the hands of 
Federal managers when it comes to making smart purchasing decisions. 
While combating inmate idleness and providing 21 percent of the inmate 
work opportunities for Federal prisoners are important public policy 
objectives, the cost of the FPI program should not be transferable to 
the increasingly tight budgets of other agencies with their own 
missions in service to the American people.
    That is why FMA supports passage of H.R. 2965, which would 
eliminate this mandatory-source requirement burdening Federal agencies.
    No doubt that you will hear from the FPI staff about how many 
waivers FPI grants, permitting Federal agency managers to make 
purchases from the private sector. The statistics may sound impressive, 
but I would ask you to consider some fundamental questions about the 
waiver process and how it works.
    To begin, why should Federal managers be required to seek FPI's 
permission before being able to spend the money of American taxpayers 
in the best possible manner? Under the waiver process, FPI - rather 
than the buying agency - determines whether FPI's offered product, 
delivery schedule, and reasonableness of FPI's offered price meet the 
needs of the agency. Waivers are not granted on the basis of price 
unless FPI's offered price exceeds the statutory standard of ``current 
market price.'' Current market price is not the same thing as a ``fair 
market price'' and is substantially different from the ``best value'' 
standard that applies to competitive procurements. Rather, the buying 
agency can be required to pay FPI's offered price provided that FPI's 
offered price does not exceed the highest price offered to the 
government for a comparable product. Therefore, no actual sales need to 
be made for the standard to be met.
    A 1998 General Accounting Office study (GAO/GGD-98-151) of 20 FPI 
products found that ``FPI generally did not offer Federal agencies the 
lowest prices for products that they purchased. Therefore, if it were 
not for FPI's mandatory source status, customer agencies might have 
decided to purchase comparable products at less cost.'' This assessment 
is consistent with the anecdotal experiences of our members.
    FMA members are also concerned that it frequently takes longer to 
receive products from FPI than from other commercial vendors. Another 
GAO report (GAO/GGD-98-118) regarding the timeliness of FPI deliveries 
showed similar results. In more than 50 percent of the cases reviewed 
the actual delivery date was later than the buying agency had 
originally requested. Again, this is congruent with the experiences of 
our members.
    Small businesses in the private sector, on the other hand, strive 
hard to keep costs low, quality good, and delivery services efficient. 
Otherwise, they would find themselves out of business. Consumers 
benefit from their efforts. These benefits do not exist when a business 
holds its customers hostage, as is the case with FPI and Federal 
agencies.
    Aside from the questionable policy of placing the burden on a 
Federal manager to have to request and justify a waiver request, the 
waiver process itself raises substantial issues. The initial 
consideration of the request is undertaken by the FPI sales division, 
which will take the contract if the waiver is not granted. More 
recently, FPI has begun to utilize contract sales representatives, paid 
on a commission basis, to augment its own marketing staff. Thus, it 
seems reasonable to FMA to presume that neither FPI's own marketing 
force nor its contract sales force have much incentive to initially 
grant a waiver.
    A Federal manager willing to invest yet more time and effort can 
take an appeal of a waiver denial to FPI's Ombudsman, a member of FPI's 
senior management team. Federal managers feel that the decision to 
grant a waiver - either initially or on appeal - is a unilateral 
decision made by FPI without the benefit of any standards upon which to 
independently assess FPI's actions.
    Like the underlying mandatory-source status it is designed to 
buttress, FPI's waiver process presents the Federal manager with a 
``stacked deck'' that may not be worth pursuing, unless accepting FPI's 
product or delivery schedule would substantially impede the attainment 
of the buying agency's mission, or FPI's price constitutes an egregious 
waste of the buying agency's limited operating budget.
    Some have sought to cast the ongoing debate regarding FPI reform as 
a simple economic clash over government business between FPI and the 
business community. I am here to tell you that the current system also 
places an unacceptable burden on Federal managers in terms of both 
mission accomplishment and the quality of work life. If FPI were to 
deliver a quality product, on time, and at a reasonable price, then FPI 
will be able to compete, Federal agencies would give the American 
taxpayer more ``bang for their buck,'' and inmates would be given an 
opportunity to truly learn the skills they will need in the outside job 
market.
    If FPI's product does not represent the ``best value'' for the tax 
dollars expended, FPI's captive Federal agency customers are then being 
forced to use their scarce resources to subsidize FPI's program to 
create inmate work opportunities. In turn, Federal workers are being 
forced to make do with products of lesser quality and suffer the 
consequences of delayed deliveries - consequences that can adversely 
affect their ability to perform their jobs as well as the quality of 
their services.

SCARCE RESOURCES GREATLY HEIGHTENS COST CONSCIOUSNESS

    As taxpayers first and civil servants second FMA members want to 
see their tax dollars used in the most productive manner possible. A 
factor in our heightened concern about making the best use of scarce 
agency resources is the mandated increase in public-private competition 
for Federal functions.
    Federal functions performed by civil servants are being subjected 
to unprecedented competition with the private sector. As part of the 
President's Management Agenda and in subsequent memoranda from the 
Office of Management and Budget, Federal agencies have been called on 
to increase public-private competitions as well as provide more in-
depth justification of what constitutes an ``inherently governmental'' 
position in adhering to revision to OMB Circular A-76.
    The Bush administration has called for up to 850,000 Federal jobs 
to be put up for competition in the coming years, yet Federal prisoners 
do not have to compete - they are guaranteed a job. Hardworking Federal 
employees not only have to worry about their job being put up for 
public-private competition, but the same government that is mandating 
the competition is placing Federal workers at a disadvantage by not 
allowing them to purchase needed goods at a reasonable price.
    In this time of increased scrutiny on the use of taxpayer dollars 
by the government, it is necessary to remove the mandatory-source 
status held by FPI so that Federal agencies are able to purchase the 
products they need at the best value possible.

LIFTING MANDATORY SOURCE WOULD ENABLE AGENCIES TO GET BETTER DEALS

    The Federal Government spends more than $235 billion a year on 
goods and services. Between $110 and $120 billion of this amount is 
spent on contracting-out for services. The remainder is spent on 
products. Current law requires us to purchase over half a billion 
dollars' worth of supplies from FPI. The almost $700 million in annual 
sales for FPI in this context is significant.
    Section 811 of the fiscal 2002 National Defense Authorization Act 
removed FPI's mandatory-source status for the Department of Defense 
(DOD). The provision allows the Secretary of Defense to conduct market 
research before being forced to purchase inmate-manufactured goods from 
FPI. If prisoner-manufactured products are not comparable to private-
sector products in price, quality, and time of delivery, DOD 
contracting officers can purchase with taxpayer dollars the best and 
most cost-efficient goods from other private vendors rather than be 
forced to buy from FPI.
    As part of the fiscal 2003 National Defense Authorization Act, 
Congress passed language (Sec. 819) which strengthened the enforcement 
of the provision passed in the FY02 Defense Authorization bill. Section 
819 will:

        *   make explicit that DOD contracting officers are empowered 
        to determine if a product offered by FPI is ``comparable to 
        products available from the private sector that best meet the 
        Department's needs in terms of price, quality, and time of 
        delivery'';

        *   provide DOD contracting officers the full range of ``market 
        research'' tools to make the required comparability 
        determination;

        *   make explicit that the full range of competitive 
        procurement techniques are available to a DOD contracting 
        officer, including making a purchase through a GSA Multiple 
        Award Schedule contract;

        *   prevent FPI from referring to the FPI Arbitration Review 
        Panel, established by Section 4124(b) of FPI's 1934 authorizing 
        statute, allowing an FPI challenge of a DOD contracting 
        officer's determination regarding the comparability of a 
        product offered by FPI; and,

        *   empower DOD contracting officers to ensure that FPI 
        ``performs its contractual obligations to the same extent as 
        any other contractor for the Department of Defense.''

    Last year, Congress approved a provision in the Consolidated 
Appropriations bill for fiscal year 2005 (H.R. 4818), which ended FPI's 
mandatory-sourcing status for all non-DOD agencies. This is another 
step in the right direction. The House has also passed similar 
authorizing legislation in the form of H.R. 1829 on November 6, 2005, 
but the measure stalled in the Senate. We must see a final end through 
the codification of this issue into law. As has been done with DOD, 
H.R. 2965 is the final step in releasing the rest of the Federal 
government from the captivity of mandatory-sourcing through FPI.

CONCLUSION

    In closing, Mr. Chairman, Federal managers and supervisors are 
currently receiving two conflicting messages from Washington, DC. On 
the one hand, we are being asked to ``do more with less.'' From 
Congress, we frequently hear that the bureaucracy should act more like 
the private sector. In contrast, the law requires us to purchase over 
half a billion dollars' worth of supplies from a non-competitive source 
that frequently charges more than other commercial vendors.
    We are simply asking that the FPI Board of Directors and the FPI 
management staff allow us to be better stewards of the taxpayers' hard-
earned dollar by untying our hands when it comes to making smart 
purchasing decisions for the Federal government.
    Thank you again for providing FMA an opportunity to present our 
views and we look forward to working with you on this important issue.

                              ----------                              

    Letter from Matthew T. Powers, General Manager, Prison Industry 
             Authority (PIA) to the Honorable Howard Coble
    July 8, 2005

    The Honorable Howard Coble, Chair
    Subcommittee on Crime, Terrorism, and Homeland Security
    207 Cannon House Office Building
    Washington, D. C. 20515

    Dear Mr. Coble:

    I am writing you today to oppose H.R. 2965, the Federal Prison 
Industries Competition in Contracting Act of 2005, due to the 
detrimental impact of this proposal on correctional industries 
throughout the nation. I would urge you to delay its passage and work 
towards legislation that enhances rather than constrains prison 
industries. Prison industries programs provide inmates with productive 
employment and teach marketable skills, which can be used to transition 
to meaningful jobs upon parole.
    Prison industries are an investment in public safety because 
employed inmates and parolees mean safer prisons and safer communities. 
These programs provide inmates with productive marketable skills that 
can assist them in obtaining meaningful jobs upon parole. Additionally, 
prison industries help to reduce idleness, thereby decreasing violence 
and tension in correctional institutions.
    Thank you for your assistance in assuring the success of 
correctional programs. Please contact me at (916) 358-2699, if I can 
provide you or your staff with additional information.

    Sincerely,
    Original signed by
    MATTHEW T. POWERS
    General Manager

                              ----------                              

   Supplemental attachments submitted by Philip Glover, President of 
   Coucil of Prison Locals, American Federal of Government Employees


























                               __________
   Supplemental attachments submitted by Paul A. Miller, Director of 
  Government Affairs, Independent Office Products & Furniture Dealers 
                              Association


















                               __________
  Statement submitted by Kevin M. Burke, President and CEO, American 
                Apparel and Footwear Association (AAFA)
    Chairman Coble, Ranking Member Robert C. Scott, and members of the 
Subcommittee:
    The American Apparel & Footwear Association (AAFA) is pleased to 
submit the following statement in strong support of H.R. 2965, the 
Federal Prison Industries (FPI) Competition in Contracting of 2005. 
AAFA is the national trade association representing over 700 apparel, 
footwear and other sewn products companies, and their suppliers. These 
companies represent approximately 80% of U.S. wholesale apparel sales 
and over 100 of these companies supply specialized sewn goods and 
products to the military. These companies depend on a fair process to 
compete for the limited number of contracts from the U.S. military. FPI 
has long been a major producer of military uniforms, further depleting 
the contracts available to sustain the warm industrial base of apparel 
and footwear manufacturers. Comprehensive reform of FPI will benefit 
AAFA members by opening up more of these contracts for fair 
competition. AAFA members thank you for having this hearing and for 
your support for this legislation.
    I would also like to thank the sponsors of H.R. 2965, 
Representatives Peter Hoekstra (MI), Barney Frank (MA), Carolyn Maloney 
(NY), John Conyers (MI), Chairman Jim Sensenbrenner (WI) and former 
Representative Mac Collins (GA) for their leadership on FPI reform and 
continued support. The business community owes this team a debt of 
gratitude for the years of work on this issue and the ongoing 
commitment to more comprehensive FPI reform.
    H.R. 2965 is almost identical to H.R. 1829, which passed 
overwhelming in the House during the 108th Congress by a vote of 350-
65. This legislation will require FPI to compete for federal contracts 
and allow agencies to make a qualified determination on whether or not 
FPI provides the best value. It deserves immediate consideration and 
enactment.
    In order to minimize any adverse impact of this reform on the 
prison community, H.R. 2965 has a five-year phase-in period. Safeguard 
provisions to protect prison guards, their jobs and the prisons are 
also included. Additionally, this legislation provides for additional 
educational and vocational opportunities for inmates to further their 
development in preparation for their productive contributions to 
society upon release. This legislation is balanced and will benefit the 
U.S. government, private industry as well as FPI. All benefit when the 
market principles of competition are unimpeded.
    FPI will likely always retain advantages over private industry, 
which unlike FPI, is regulated by the Department of Labor, Internal 
Revenue Service and the Environmental Protection Agency. From a cost 
perspective, businesses are burdened with meeting minimum wage 
requirements (compared to pennies on the hour for FPI), providing 
health benefits, contributing to social security and the most basic 
costs of plant and equipment. FPI enjoys an tremendous edge and it is 
clear that a mandatory source is not essential for FPI to compete with 
the private industry.
    H.R. 2965 is needed because recent reforms have had little effect 
on FPI's reach. FPI continues to grow by leaps and bounds - increasing 
sales in clothing and textiles from $158,399 million in FY 2003 to 
$184,465 million in FY 2004 - and increasing total sales by $136 
million in the same span. Further, FPI continues to finds ways to cut 
private industry out of the competitive process. The Federal Prison 
Industries is well known for their creative interpretations of the law 
and only clarification and more comprehensive reform will counter such 
interpretations. For example, earlier this year the Bureau of Prisons 
issued a solicitation (No. CT1703-05) for the distribution of uniforms 
rather than the production. It was stated in the solicitation that the 
uniforms would be provided by FPI, though previously the BOP uniforms 
were supplied by private industry. FAR regulation 8.607(a) restricts 
agencies from requiring contractors to use FPI; however, because this 
is not an actual contract but an ``arrangement'' that FPI has with BOP 
their interpretation is that this does not violate FAR 8.6.
    There are so many examples of FPI's ingenuity in maneuvering around 
current reforms to the detriment of private industry. One of the best 
is their supposed commitment to take not more than a 20% market share 
of any particular product. Under current law, FPI must ``operate . . . 
[so] that no single private industry shall be forced to bear an undue 
burden of competition from the products of the prison workshops and to 
reduce to a minimum competition with private industry or free labor.'' 
(18 US Code 4122) This has not kept FPI from taking more than 20% and 
much more due once again to their creative interpretations. In this 
instance, it is the definition of a ``specific product'' that has 
enabled the manipulation of market share statistics. FPI has stated 
that, ``a specific product . . . may include a number of different 
items.'' Specifically, with regard to AAFA, this interpretation allowed 
a significant expansion into work clothing. Several Federal Supply 
Classification (``FSC'') codes were combined in order to create larger 
product concentration under one category. This enabled FPI to mask the 
actual percentage of the marketplace of a particular product produced 
by FPI. In this example, ``work clothing'' included at least four 
different FSC codes. FPI has stated that it is their intention to use 
the product classifications used by the Defense Supply Center in 
Philadelphia; however, we have yet to see any documentation.
    In the past year, FPI has also increased their approved sales 
ceiling and units on uniforms due respectively to the increased cost of 
material for the army combat uniform and an exigency referencing the 
crisis of war. AAFA has member companies that are struggling for enough 
contract work to keep their employees on the payroll and yet FPI 
continues to come up with ways to infringe upon arguably the last 
significant source of demand for apparel manufacturing in the U.S. - 
military contracts. ``The vast majority of FPI's clothing/textiles 
sales were in support of the Department of Defense's war effort.'' 
(U.S. Department of Justice, Federal Prison Industries, Inc. FY 2004 
Annual Report) These sales to the DoD by FPI are in direct competition 
with AAFA members and a serious detriment to the industrial base as 
military contracts continue to be a primary source of income for a 
majority of the remaining domestic textile and apparel manufacturers. 
These manufacturers have retained a presence in the United States due 
primarily to the Berry Amendment, which requires the military to buy 
their uniforms and sewn products from U.S. companies containing all 
U.S. inputs. The current level of purchasing from the military has 
increased due to the war effort, yet that is not enough to sustain the 
industrial base of apparel and textile suppliers and especially not in 
competition with FPI. AAFA members will be severely impacted when 
spending for the war effort decreases and thus will the industrial 
base. In support of these suppliers, FPI should pursue the government 
contracts outside of the DoD in order to retain the market for the 
domestic base of textile and apparel producers supplying the military. 
This will not happen unless directed by Congress.
    The ability of FPI to bid on solicitations for small business set-
asides is yet another reason for comprehensive reform. Currently, when 
an FPI product is found to be non-comparable to a private sector 
product, FPI is then able to bid on solicitations for those products 
reserved for competition among small business. Surely this is an 
unintended loophole that should be rectified by Congress in a more 
comprehensive reform bill. Small businesses can not be expected to 
compete with a company whose sales were approximately $803 million in 
FY 2004.
    In conclusion, AAFA supports the mandate of FPI to rehabilitate 
inmates for their reintroduction into society as productive citizens. 
However, we are confident that it was not the intent of Congress to 
create a nongovernmental agency to stymie competition, private industry 
development and take jobs away taxpaying citizens. H.R. 2965 provides 
access to educational opportunities that will be even more beneficial 
to inmates by training and preparing them for more viable vocational 
opportunities in industries that are more likely to have available 
jobs, rather than having them learn outdated textile manufacturing 
processes in an industry that does not have the demand it once had in 
the U.S. for jobs.
    Thank you for the opportunity to submit this statement on behalf of 
the American Apparel & Footwear Association and the companies we 
represent and to share our point of view on FPI reform.

    Kevin M. Burke
    President & CEO

                              ----------                              

  Letter from Kevin M. Burke, President and CEO, American Apparel and 
 Footwear Association (AAFA) to the Honorable F. James Sensenbrenner, 
                                  Jr.


                               __________
                  Letter submitted by various Dealers
























                               __________
       Statement submitted by Management Association for Private 
                   Photogrammetric Surveyors (MAPPS)




                               __________
  Fact Sheet submitted by the Correctional Vendors Association, ``FPI 
                           Fact or Fiction?''


                               __________
    Summary Statement submitted by the National Citizens United for 
                    Rehabilitation of Errants (CURE)






























                                 
