[Congressional Record Volume 142, Number 141 (Thursday, October 3, 1996)]
[Senate]
[Pages S12283-S12284]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      THE FEDERAL PRISON INDUSTRIES COMPETITION IN CONTRACTING ACT

  Mr. LEVIN. Mr. President, on May 23, I introduced a bill--S. 1797--to 
implement the recommendation of the National Performance Review that we 
should ``require [Federal Prison Industries] to compete commercially 
for Federal agencies' business'' instead of having a legally protected 
monopoly. My bill would ensure that the taxpayers get the best possible 
value for their Federal procurement dollars. If a Federal agency could 
get a better product at a lower price from the private sector, it would 
be permitted to do so--and the taxpayers would get the savings.
  Mr. President, many in both government and industry believe that FPI 
products are frequently overpriced, inferior in quality, or both. For 
example, I understand that the Veterans Administration has sought 
repeal of FPI's mandatory preference on several occasions, on the 
grounds that FPI pricing for textiles, furniture, and other products 
are routinely higher than identical items purchased from commercial 
sources. Most recently, VA officials estimated that the repeal of the 
preference would save $18 million over a 4-year period for their agency 
alone, making that money available for veterans services.
  Similarly, the Deputy Commander of the Defense Logistics Agency, 
wrote in a May 3, 1996, letter to Members of the House that FPI has had 
a 42-percent delinquency rate in its clothing and textile deliveries, 
compared to a 6-percent rate for commercial industry. For this record 
of poor performance, FPI has charged prices that were an average of 13 
percent higher than commercial prices.
  On July 30, 1996, the master chief petty officer of the Navy 
testified before the House National Security Committee that the FPI 
monopoly on Government furniture contracts has undermined the Navy's 
ability to improve living conditions for its sailors. Master Chief 
Petty Officer John Hagan stated, and I quote:

       In order to efficiently use our scarce resources, we need 
     congressional assistance in changing the Title 18 statute 
     that requires all the Services to obtain a waiver for each 
     and every furniture order not placed with the Federal Prison 
     Industry/UNICOR. * * * Speaking frankly, the FPI/UNICOR 
     product is inferior, costs more, and takes longer to procure. 
     UNICOR has, in my opinion, exploited their special status 
     instead of making changes which would make them more 
     efficient and competitive. The Navy and other Services need 
     your support to change the law and have FPI compete with GSA 
     furniture manufacturers. Without this change, we will not be 
     serving Sailors or taxpayers in the most effective and 
     efficient way.

  Mr. President, S. 1797 is supported by the National Association of 
Manufacturers, the U.S. Chamber of Commerce, the National Federation of 
Independent Business, the Business and Industrial Furniture 
Manufacturers' Association, the American Apparel Manufacturers' 
Association, the Industrial Fabrics Association International, and the 
Competition in Contracting Act Coalition. It is also supported by 
hundreds of small businesses from Michigan and around the country that 
have seen FPI take jobs away from their businesses and give them to 
persons convicted of crimes and serving time in prison, and are 
justifiably outraged.
  We all want to do what we can to ensure that we make constructive 
work available for Federal prisoners, but the way we are doing it is 
wrong. As one small businessman in the furniture industry put it in 
testimony at a House hearing earlier this year:

       Is it justice that Federal Prison Industries would step in 
     and take business away from a disabled Vietnam veteran who 
     was twice wounded fighting for our country and give that work 
     to criminals who have trampled on honest citizens' rights, 
     therefore effectively destroying and bankrupting that hero's 
     business which the Veteran's Administration suggested he 
     enter?

  Mr. President, my bill would not restrict FPI's business. It would 
not require FPI to close any of its facilities. It would not force FPI 
to eliminate any jobs for Federal prisoners. It would not undermine 
FPI's ability to ensure that inmates are productively occupied. It 
would simply require FPI to compete for Federal contracts on the same 
terms as all other Federal contractors. That is simple justice to the 
hard-working citizens in the private sector,

[[Page S12284]]

with whom FPI would be required to compete.

  Mr. President, I intended to offer S. 1797 as an amendment to either 
the Commerce, Justice, State Appropriations bill or the omnibus 
appropriations bill. Unfortunately, the Commerce, Justice, State 
Appropriations bill was never brought to the Senate floor, and the 
omnibus appropriations bill was brought up under an agreement which 
permitted no amendments. This parliamentary situation made it 
impossible for me to bring S. 1797 before the Senate for its 
consideration.
  I want to assure Federal Prison Industries, however, that this issue 
is not going to go away. The issue is too important to the taxpayers, 
and too important to the many small businesses adversely affected by 
unfair competition from Federal Prison Industries, to be ignored.
  Earlier today, I received a letter transmitting the administration's 
formal position on S. 1797. This letter clearly indicates the 
administration's agreement that the process by which Federal agencies 
purchase products from Federal Prison Industries needs to be reformed. 
That letter states:

       The Administration favors reform of Federal Prison 
     Industries to improve its customer service, pricing, and 
     delivery while not endangering its work program for Federal 
     inmates. . . .  The Administration will present reform 
     proposals for the House and Senate Judiciary Committees in 
     the next session of Congress.

  I ask that a copy of this letter appear in the Congressional Record 
immediately following my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. LEVIN. Mr. President, with this letter, the administration has 
promised to join us in a serious reevaluation of the process by which 
Federal Prison Industries sells its products to other Federal agencies. 
The heart of that process is, of course, FPI's mandatory source status. 
The administration has made a commitment to present us with a reform 
proposal in the next Congress, and I intend to hold the administration 
to that commitment.
  Mr. President, I do not consider myself to be an enemy of Federal 
Prison Industries. I am a supporter of the idea of putting Federal 
inmates to work. A strong prison work program not only reduces inmate 
idleness and prison disruption, but can also help build a work ethic, 
provide job skills, and enable prisoners to return to product society 
upon their release.
  However, I believe that a prison work program must be conducted in a 
manner that does not unfairly eliminate the jobs of hard-working 
citizens who have not committed crimes. FPI will be able to achieve 
this result only if it diversifies its product lines and avoids the 
temptation to build its work force by continuing to displace private 
sector jobs in its traditional lines of work.
  We need to have jobs for prisoners, but it is unfair and wasteful to 
allow FPI to designate whose jobs it will take, and when it will take 
them. Competition will be better for FPI, better for the taxpayer, and 
better for working men and women around the country. I look forward to 
working with the administration in the next Congress to make reform of 
Federal Prison Industries a reality.

                               Exhibit 1

         Executive Office of the President, Office of Management 
           and Budget,
                                  Washington, DC, October 3, 1996.
     Hon. Carl Levin,
     U.S. Senate,
     Washington, DC.
       Dear Senator Levin: During consideration of the FY 97 
     appropriations bill for Commerce, Justice and State, you had 
     originally proposed a floor amendment incorporating your 
     bill, S. 1797, regarding the Federal Prison Industries. At 
     the time, the Administration developed a statement regarding 
     that amendment. Since the amendment was never introduced, no 
     statement was ever sent.
       At your request, we are providing you in this letter with 
     the statement that would have been sent. It reads as follows:
       ``The Administration favors reform of Federal Prison 
     Industries to improve its customer service, pricing, and 
     delivery while not endangering its work program for Federal 
     inmates. The appropriations process is not the best way to 
     address this issue. The Administration will present reform 
     proposals for the House and Senate Judiciary Committees in 
     the next session of Congress.''
           Very truly yours,
                                                    Steven Kelman,
     Administrator.

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