[Congressional Record Volume 147, Number 104 (Tuesday, July 24, 2001)]
[Senate]
[Pages S8126-S8131]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THURMOND (for himself and Mr. Hatch):
  S. 1228. A bill to amend title 18, United States Code, to authorize 
pilot projects under which private companies in the United States may 
use Federal inmate labor to produce items that would otherwise be 
produced by foreign labor, to revise the authorities and operations of 
Federal Prison Industries, and for other purposes; to the Committee on 
the Judiciary.
  Mr. THURMOND. Mr. President, I rise today to introduce legislation 
that would comprehensively reform Federal Prison Industries or UNICOR. 
It would eliminate the preference that Prison Industries currently has 
to make products for the Federal Government, while for the first time 
allowing private companies to partner with FPI for inmate labor. These 
changes would benefit all interested parties without endangering this 
essential inmate work program. I am pleased to have Senator Hatch as an 
original cosponsor for this important bill.
  FPI is a self-sufficient government corporation that provides work 
for over 20,000 inmates in the Federal Bureau of Prisons. This program 
is critical to keeping inmates productively occupied, which helps keep 
prisons safe for staff, inmates, and the public. At the same time, 
inmates learn important job skills that they can use when they return 
to society. FPI has been proven to be the best prison program in 
helping prevent inmates from returning to a life of crime. It does all 
of this without costing any taxpayer money.
  Prison Industries is an especially critical program today as the 
inmate

[[Page S8127]]

population continues to grow dramatically. The number of Federal 
prisoners has doubled since 1989, and is continuing to grow every year. 
For the Bureau of Prisons to maintain just 25 percent of the work-
eligible inmates in FPI, it must produce more and more products to keep 
its growing population working and occupied.
  Since it was created in 1934, Prison Industries has had the authority 
to sell products only to Federal agencies and not to the private 
sector. In return, Federal agencies generally must purchase items that 
FPI makes, if it can provide them on time and at competitive prices. 
This is known as the mandatory source requirement.
  The equity of mandatory source has been debated for years. I believe 
that we should resolve this issue once and for all in this Congress by 
eliminating this governmental preference. However, we should do so in a 
way that will maintain, not destroy, this successful work program.
  The preference that FPI currently has regarding the Federal market is 
essential as long as Prison Industries is only permitted to sell 
products to Federal agencies. However, Prison Industries can do much 
more and actually be a partner with the private sector if it has the 
opportunity. Thus, this bill would eliminate the mandatory source 
requirement, and it would allow private businesses to contract with FPI 
for inmates to make the company's products in the commercial market, 
both domestically and overseas.
  One of the most promising areas for prison labor today is overseas 
markets where American companies simply cannot compete today. 
Economists, including respected labor expert Professor Richard Freeman, 
have argued that one of the best uses of prison labor is to produce 
goods that are not made in the United States, such as toys. This could 
help the American economy by bringing jobs back that we have lost. Of 
course, if prisoners make products that are not made in the United 
States, they are not displacing American workers. However, jobs would 
not only be created in prisons but also in the private sector. Private 
companies would provide raw materials, transport goods, and otherwise 
supplement the prison labor. This is a creative way to bring 
back industries whose entire economic support structure is overseas.

  Also, this could prove to help FPI reduce its need to make the type 
of products that it makes today while keeping inmates just as busy. It 
would also make the work experience for the inmates even more practical 
if they were making products for the private companies. Thus, the 
legislation would permit private companies to contract with FPI to 
provide the labor to make products that are otherwise being made by 
foreign labor outside the United States, and pay the inmates at the 
current prison industry wages.
  We must keep in mind that FPI has hidden burdens that increase its 
labor costs. Inmates are significantly less productive than private 
workers for various reasons including limited skills, less education, 
and the security needs at prisoner work areas. Nevertheless, under this 
legislation, when FPI contracted with private companies domestically, 
it would pay inmates the same as private employees who do the same type 
of work in the area. These ``comparable locality wages'' are identical 
to the wages that state prison industry work programs provide today. As 
under state prison work programs, the pay could never be below the 
Federal minimum wage.
  The additional money that inmates would earn under these new higher 
wages would be used to help pay debts that the inmate owes to society, 
such as more restitution to victims and child support obligations. 
Also, if funds were available, inmates would reimburse the government 
for a portion of their room and board costs.
  Further, the bill would increase the size of the Prison Industries 
Board of Directors to provide greater representation, including members 
recommended by the Senate and House leadership. Also, decisions about 
whether a product is otherwise being made by foreign workers outside 
the United States would be determined by an independent panel, separate 
from the Prison Industries Board. This panel would consist of 
representatives of the Departments of Commerce and Labor, as well as 
labor unions and the business community.
  The cornerstone of the legislation is that the mandatory source 
requirement would be eliminated, which is a change that has long been 
sought by certain business and labor interests. The bill would phase it 
out over five years to permit a smooth transition and prevent any major 
disruptions in inmate labor programs. However, during this period, FPI 
would be prohibited from expanding beyond its current mandatory source 
levels in any existing federal market.
  I believe that this bill represents comprehensive, fundamental reform 
of Prison Industries. It would not be an easy task for Prison 
Industries to transform its market, as this bill would require. 
However, I think this legislation constitutes a fair and equitable 
compromise for this longstanding issue. It eliminates the mandatory 
source once and for all. At the same time, it creates new markets for 
prison labor, especially overseas markets where America simply cannot 
compete today.
  It is time that we took an entirely new approach toward the issue of 
prison labor. We have the opportunity to move Prison Industries into 
the new century as a new, dynamic partner with the private sector. I 
encourage my colleagues to join me and Senator Hatch in supporting this 
bold reform initiative.
  I ask unanimous consent that the text of the bill and a section by 
section analysis be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1228

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Federal Inmate Work Act of 
     2001''.

     SEC. 2. AUTHORITY TO CARRY OUT PILOT PROJECTS USING FEDERAL 
                   INMATE LABOR TO REPLACE FOREIGN LABOR.

       (a) Foreign Labor Substitute Pilot Projects Authorized.--
     Chapter 85 of title 18, United States Code, is amended in 
     section 1761--
       (1) in subsection (b), by striking ``This chapter'' and 
     inserting ``This section'';
       (2) in subsection (c), by striking ``this chapter'' and 
     inserting ``this section'';
       (3) by redesignating subsection (d) as subsection (f); and
       (4) by adding after subsection (c) the following new 
     subsections:
       ``(d) This section shall not apply to goods, wares, or 
     merchandise manufactured, produced, or mined by convicts or 
     prisoners who are participating in industrial operations of 
     Federal Prison Industries.
       ``(e) This section shall not apply to goods, wares, or 
     merchandise manufactured, produced, or mined by convicts or 
     prisoners who are participating in any pilot project approved 
     as a foreign labor substitute by the Foreign Labor Substitute 
     Panel established under section 1762.''.
       (b) Foreign Labor Substitute Panel.--(1) Section 1762 of 
     such chapter is amended to read as follows:

     ``Sec. 1762. Foreign Labor Substitute Panel

       ``(a) The Attorney General shall establish a panel to be 
     known as the Foreign Labor Substitute Panel (in this section 
     referred to as the `Panel').
       ``(b) The Panel shall be composed of eight members, each of 
     whom shall serve at the pleasure of the Attorney General, and 
     who shall be appointed by the Attorney General as follows:
       ``(1) One member who shall be an officer, employee, or 
     other representative of the Department of Commerce.
       ``(2) One member who shall be an officer, employee, or 
     other representative of the Department of Labor.
       ``(3) One member who shall be an officer, employee, or 
     other representative of the International Trade Commission.
       ``(4) One member who shall be an officer, employee, or 
     other representative of the Small Business Administration.
       ``(5) Two members, each of whom shall be an officer, 
     employee, or other representative of the business community.
       ``(6) Two members, each of whom shall be an officer, 
     employee, or other representative of organized labor.
       ``(c)(1) Members of the Panel shall not receive pay, 
     allowances, or benefits by reason of their service on the 
     Panel.
       ``(2) Each member shall receive travel expenses, including 
     per diem in lieu of subsistence, in accordance with 
     applicable provisions under subchapter I of chapter 57 of 
     title 5, United States Code.
       ``(d) The Panel shall review proposals for pilot projects 
     submitted to the Panel. For each proposal reviewed, the Panel 
     shall approve the pilot project as a foreign labor substitute 
     if, and only if, the Panel determines that the pilot project 
     specified in the proposal satisfies each of the following 
     requirements:
       ``(1) The pilot project is to be carried out by one or more 
     private United States companies.

[[Page S8128]]

       ``(2) The goods, wares, or merchandise proposed to be 
     manufactured, produced, or mined wholly or in part by Federal 
     convicts or prisoners under the pilot project would otherwise 
     be manufactured, produced, or mined by foreign labor.
       ``(e) Any determination of the Panel under subsection (d) 
     shall be made available to the public upon request.''.
       (2) In the table of sections at the beginning of such 
     chapter, the item relating to section 1762 is amended to read 
     as follows:

``1762. Foreign Labor Substitute Panel.''.

     SEC. 3. RESTATEMENT AND IMPROVEMENT OF FEDERAL PRISON 
                   INDUSTRIES PROGRAM.

       (a) In General.--Sections 4121, 4122, and 4123 of title 18, 
     United States Code, are amended to read as follows:

     ``Sec. 4121. Federal Prison Industries: status, mission, and 
       management

       ``(a) Status.--Federal Prison Industries is a Government 
     corporation. The headquarters of the corporation is in the 
     District of Columbia.
       ``(b) Mission.--The mission of Federal Prison Industries is 
     to carry out industrial operations in accordance with this 
     chapter using eligible inmate workers.
       ``(c) Board of Directors.--
       ``(1) Composition.--Federal Prison Industries is 
     administered by a board of directors composed of 12 members 
     appointed by the Attorney General as follows:
       ``(A) One member appointed from among individuals 
     recommended by the Speaker of the House of Representatives.
       ``(B) One member appointed from among individuals 
     recommended by the minority leader of the House of 
     Representatives.
       ``(C) One member appointed from among individuals 
     recommended by the majority leader of the Senate.
       ``(D) One member appointed from among individuals 
     recommended by the minority leader of the Senate.
       ``(E) Two members who shall be representatives of the 
     business community.
       ``(F) Two members who shall be representatives of organized 
     labor.
       ``(G) One member who shall be representative of victims of 
     crime.
       ``(H) One member who shall be representative of the 
     prisoner rehabilitation community.
       ``(I) Two members whose background or expertise the 
     Attorney General considers appropriate.
       ``(2) Terms.--
       ``(A) Except as provided in this paragraph, each member 
     shall be appointed for a term of four years.
       ``(B) As designated by the Attorney General at the time of 
     appointment, of the members first appointed--
       ``(i) 3 members shall be appointed for terms of 1 year;
       ``(ii) 3 members shall be appointed for terms of 2 years;
       ``(iii) 3 members shall be appointed for terms of 3 years; 
     and
       ``(iv) 3 members shall be appointed for terms of 4 years.
       ``(C) Any member appointed to fill a vacancy occurring 
     before the expiration of the term for which the member's 
     predecessor was appointed shall be appointed only for the 
     remainder of that term. A member may serve after the 
     expiration of that member's term until a successor has taken 
     office. A vacancy in the Board shall be filled in the manner 
     in which the original appointment was made.
       ``(3) Compensation.--A member of the Board may not receive 
     pay, allowances, or benefits by reason of his or her service 
     on the Board.
       ``(4) Quorum.--Seven members of the Board constitutes a 
     quorum but a lesser number may hold hearings.
       ``(5) Chair.--The Chair of the Board is elected by the 
     members.

     ``Sec. 4122. Federal Prison Industries: operating objectives, 
       standards, and requirements

       ``(a) Operating Objectives.--Federal Prison Industries 
     shall carry out its industrial operations so as to achieve 
     each of the following objectives:
       ``(1) To increase public safety by reducing the rate of 
     recidivism by providing as many inmates as possible with an 
     opportunity to gain meaningful employment and vocational 
     skills and improve their chances of becoming productive and 
     law-abiding citizens after release from prison.
       ``(2) To minimize any adverse effects of the operations on 
     domestic companies or workers.
       ``(3) To provide meaningful employment and vocational 
     training for not less than 25 percent of eligible inmate 
     workers.
       ``(4) To provide inmate workers with a source of income 
     with which they may facilitate their ability to contribute to 
     the discharge of their financial obligations.
       ``(5) To generate sufficient revenue to fund those 
     operations.
       ``(6) To provide products and services that are market 
     quality and competitively priced.
       ``(b) Performance Standards.--Federal Prison Industries 
     shall carry out its industrial operations in compliance with 
     the following standards, as applicable to correctional 
     industry programs:
       ``(1) United Nations standards.
       ``(2) International Labor Organization conventions to which 
     the United States is a signatory party.
       ``(3) Federal standards.
       ``(4) American Correctional Association standards.
       ``(c) Voluntariness.--Federal Prison Industries shall carry 
     out its industrial operations only with inmate workers who 
     participate in those operations voluntarily.
       ``(d) Wage Rates.--Unless otherwise provided by law, each 
     inmate worker participating in the industrial operations of 
     Federal Prison Industries shall be paid at a wage rate 
     prescribed by the Board of Directors of Federal Prison 
     Industries.
       ``(e) Protection of Certain Information.--Federal Prison 
     Industries shall carry out its industrial operations so as to 
     ensure that, in the production of a product or the 
     performance of a service, inmate workers do not have access 
     to--
       ``(1) personal or financial information about any citizen 
     of the United States without prior notice of the access being 
     provided to that citizen, including information relating to 
     the citizen's real property, however described, unless that 
     information is publicly available; or
       ``(2) information that is classified in the national 
     security or foreign policy interests of the United States.
       ``(f) Vocational Training.--At the end of each fiscal year, 
     Federal Prison Industries shall, if the Board of Directors 
     determines that it is financially feasible to do so, 
     contribute not less than 20 percent of its net profits for 
     that fiscal year to provide for the vocational training of 
     inmates without regard to their industrial or other 
     assignments.
       ``(g) Exemption From Public Contracting and Procurement 
     Laws.--Federal Prison Industries is exempt from all laws and 
     regulations governing public contracting and the procurement 
     of property or services by an agency of the Federal 
     Government.
       ``(h) Liability.--The sole remedy for injury, death, or 
     loss resulting from negligence in the design or production of 
     a product, or in the performance of a service, by Federal 
     Prison Industries shall be as follows:
       ``(1) In the case of a person suffering an injury, death, 
     or loss in the performance of duties as an employee of the 
     United States, chapter 81 of title 5, relating to 
     compensation for work-related injuries.
       ``(2) In all other cases, chapter 171 of title 28, relating 
     to tort claims.
       ``(i) Deductions From Wages.--
       ``(1) In general.--Subject to the other provisions of this 
     subsection, the Board of Directors may deduct and withhold 
     amounts from the wages paid to a Federal Prison Industries 
     inmate worker and disburse those amounts for the following:
       ``(A) Payment of fines, special assessments, restitution to 
     the victim, and any other restitution owed by the inmate 
     worker pursuant to court order.
       ``(B) Allocations for support of the inmate worker's family 
     under law, court order, or agreement by the inmate worker.
       ``(C) Reasonable charges for costs of incarceration, as 
     determined by the Board of Directors.
       ``(D) Contributions to any fund established by law to 
     compensate the victims of crime.
       ``(E) Amounts to be held on account and paid to the inmate 
     worker upon release from the custody of the Bureau of 
     Prisons.
       ``(2) Limitation.--The total of all amounts deducted and 
     withheld from the pay of an inmate worker for a pay period 
     may not exceed--
       ``(A) 80 percent of gross pay, in the case of an inmate 
     worker specified in section 4123(d)(2); or
       ``(B) 50 percent of gross pay, in the case of any other 
     inmate worker.
       ``(3) Exception.--The total specified in paragraph (2) may, 
     with the consent of an inmate worker, exceed the limitation 
     in paragraph (2)(A) or (2)(B), as applicable, if the amounts 
     in excess of such limitation are for the purposes described 
     in subparagraphs (B) or (E) of paragraph (1).
       ``(4) Agreement of inmate worker required.--Amounts may not 
     be deducted, withheld, or disbursed under this subsection 
     unless the inmate worker concerned has agreed in advance to 
     the deduction, withholding, or disbursement of those amounts.

     ``Sec. 4123. Federal Prison Industries: transactions 
       authorized

       ``(a) Sales to Agencies and Not-for-Profits.--Federal 
     Prison Industries may sell products and services to 
     government agencies and not-for-profit organizations.
       ``(b) Sales of Certain Commodities.--Federal Prison 
     Industries may carry out a program to manufacture commodities 
     specified in section 1761(b).
       ``(c) Participation in Foreign Labor Substitute Pilot 
     Projects.--Subject to the requirements in subsection (e), 
     Federal Prison Industries may make available inmate workers 
     for participation in a pilot project approved as a foreign 
     labor substitute by the Foreign Labor Substitute Panel, as 
     referred to in section 1761(e).
       ``(d) Participation in BJA Pilot Projects.--
       ``(1) In general.--Subject to the requirements in 
     subsection (e), Federal Prison Industries may make available 
     inmate workers for participation in a pilot project 
     designated by the Director of the Bureau of Justice 
     Assistance, as referred to in section 1761(c).
       ``(2) Wage rate.--Each inmate worker participating in a 
     pilot project specified in paragraph (1) shall be paid at a 
     wage rate that complies with section 1761(c).
       ``(e) Requirements for Contracts With Private Companies.--
     In making available

[[Page S8129]]

     inmate workers for participation in a pilot project under 
     subsection (c) or (d), Federal Prison Industries shall comply 
     with the following requirements:
       ``(1) The inmate workers shall be made available through a 
     contract between Federal Prison Industries and a private 
     United States company.
       ``(2) The contract shall--
       ``(A) require that the labor performed by the inmate 
     workers shall be carried out at a Federal Prison Industries 
     facility;
       ``(B) include a clause that prohibits the company from 
     displacing any of that company's existing domestic workers as 
     a direct result of the contract with Federal Prison 
     Industries; and
       ``(C) provide that any workforce reductions carried out by 
     the company affecting employees performing work comparable to 
     the work performed pursuant to the contract shall first apply 
     to inmate workers employed pursuant to the contract.
       ``(f) Goals for Certain Businesses.--Federal Prison 
     Industries shall, in consultation with the Small Business 
     Administration, establish and strive to meet or exceed 
     realistic goals for entering into contracts with one or more 
     of the following:
       ``(1) A business concern that meets the applicable size 
     standards prescribed pursuant to section 3(a) of the Small 
     Business Act (15 U.S.C. 632(a)).
       ``(2) A small business concern owned and controlled by 
     socially and economically disadvantaged individuals, as that 
     term is defined in section 8(d)(3)(C) of the Small Business 
     Act (15 U.S.C. 637(d)(3)(C)).
       ``(g) Job Opportunities for Blind and Severely Disabled 
     Individuals.--Federal Prison Industries shall establish 
     business partnerships with organizations representing 
     domestic workers who are blind or severely disabled, for the 
     purpose of entering into contracts with private United States 
     companies that would create job opportunities both for blind 
     and severely disabled individuals and for Federal inmates.
       ``(h) Donation of Products and Services.--The Board of 
     Directors may authorize--
       ``(1) the donation of a product or service of Federal 
     Prison Industries that is available for sale; or
       ``(2) the production of a new product, or the performance 
     of a new service, for donation.
       ``(i) Catalog.--Federal Prison Industries shall publish and 
     maintain a catalog of all products and services that it 
     offers for sale to government agencies and not-for-profit 
     organizations. The catalog shall be periodically revised as 
     products and services are added or deleted.''.
       (b) Conforming Amendment.--Section 1761(c)(1) of such title 
     is amended by striking ``non-Federal''.
       (c) Clerical Amendment.--The table of sections at the 
     beginning of chapter 307 of such title is amended by striking 
     the items relating to sections 4121, 4122, and 4123 and 
     inserting the following:

``4121. Federal Prison Industries: status, mission, and management.
``4122. Federal Prison Industries: operating objectives, standards, and 
              requirements.
``4123. Federal Prison Industries: transactions authorized.''.

     SEC. 4. ELIMINATION OF MANDATORY SOURCE PURCHASE REQUIREMENT.

       (a) In General.--Section 4124 of title 18, United States 
     Code, is amended--
       (1) in subsection (a), by adding at the end the following: 
     ``This subsection does not apply to services.'';
       (2) by amending subsection (c) to read as follows:
       ``(c) Each Federal department or agency shall report 
     purchases from Federal Prison Industries to the Federal 
     Procurement Data System (referred to in section 6(d)(4) of 
     the Office of Federal Procurement Policy Act (41 U.S.C. 
     405(d)(4))) in the same manner as it reports to such System 
     any acquisition in an amount in excess of the simplified 
     acquisition threshold (as defined in section 4(11) of that 
     Act (41 U.S.C. 403(11))).''; and
       (3) by amending subsection (d) to read as follows:
       ``(d)(1) The head of a Federal department or agency may 
     purchase directly from Federal Prison Industries any of the 
     following:
       ``(A) Any products with respect to which the requirement in 
     subsection (a) has, under any authority, been suspended, 
     waived, or not invoked.
       ``(B) Any services.
       ``(2) A purchase under this subsection may be made in any 
     quantity and by any method that is determined appropriate by 
     the head of the agency making the purchase without regard to 
     any provision of law or regulation.''.
       (b) Plan for Phased Elimination of Mandatory Source.--Not 
     later than 180 days after the date of the enactment of this 
     Act, the Board of Directors shall submit to Congress a plan 
     for the elimination of the requirement of section 4124(a) of 
     title 18, United States Code. The plan shall provide for the 
     following:
       (1) Annual reductions in the total sales that are made by 
     Federal Prison Industries under the requirement.
       (2) A prohibition on any interim significant expansion of 
     sales under the requirement above levels authorized by the 
     Board of Directors of Federal Prison Industries for such 
     sales before the date of the enactment of this Act.
       (3) A prohibition on sales under the requirement after the 
     date that is five years after the date on which the plan is 
     submitted to Congress under this section.
       (c) Public Availability of Plan.--Not later than 30 days 
     after the date on which the plan is submitted to Congress 
     under this section, Federal Prison Industries shall publish 
     the plan in a commercial business publication with a national 
     circulation. Federal Prison Industries shall make copies of 
     the plan available to the public upon request.
       (d) Repeal of Mandatory Source Requirement.--Effective on 
     the date that is 5 years after the date on which the plan is 
     submitted to Congress under this section, section 4124 of 
     title 18, United States Code, is amended--
       (1) by striking subsections (a) and (b); and
       (2) by amending subsection (d)(1)(A) to read as follows:
       ``(A) Any products.''.

     SEC. 5. PERIODIC EVALUATION AND REPORTS.

       (a) In General.--Section 4127 of title 18, United States 
     Code, is amended to read as follows:

     ``Sec. 4127. Periodic evaluation and reports

       ``(a) Evaluation by GAO.--
       ``(1) Matters evaluated.--The Comptroller General shall 
     provide for an independent evaluation of the operations of 
     Federal Prison Industries to be carried out each year. The 
     matters evaluated shall include the following:
       ``(A) The overall success of the operations.
       ``(B) The effects that any reduction in the purchases made 
     under section 4124(a) has on the viability of Federal Prison 
     Industries.
       ``(C) The extent to which Federal Prison Industries can 
     successfully contract with private companies without 
     adversely affecting domestic companies or workers.
       ``(2) Views included.--The Comptroller General shall ensure 
     that, in the development of appropriate methodologies for the 
     evaluation under paragraph (1), the views of the Foreign 
     Labor Substitute Panel, private industry, organized labor, 
     the Board of Directors of Federal Prison Industries, and the 
     public are solicited.
       ``(3) Report.--Not later than March 31 of each fiscal year, 
     the Comptroller General shall submit to Congress a report on 
     the evaluation of the operations of Federal Prison Industries 
     that was carried out under paragraph (1) for the preceding 
     fiscal year. The report for a fiscal year shall, at a 
     minimum, include the following:
       ``(A) The evaluation.
       ``(B) Any concerns raised about any adverse effects on 
     domestic companies or workers, together with any actions 
     taken in regard to the concerns.
       ``(C) The extent to which Federal Prison Industries 
     maintained at least a 25 percent employment rate for eligible 
     inmate workers.
       ``(D) The extent to which Federal Prison Industries 
     conducted its operations on a financially self-sustaining 
     basis.
       ``(E) Any recommended legislation to improve the 
     administration of this chapter or the effects of the 
     administration of this chapter, including any recommended 
     legislation necessary to authorize remedial actions 
     regarding--
       ``(i) any conduct of the operations of Federal Prison 
     Industries in a manner that adversely affects domestic 
     companies or workers (excluding the effects of normal 
     competitive business practices);
       ``(ii) any failure of Federal Prison Industries to maintain 
     at least a 25 percent employment rate for eligible inmate 
     workers; or
       ``(iii) any failure of Federal Prison Industries to conduct 
     its operations on a financially self-sustaining basis.
       ``(b) Annual Report by Board of Directors.--
       ``(1) In general.--The Board of Directors of Federal Prison 
     Industries shall, each year, report under section 9106 of 
     title 31 on the conduct of the business of Federal Prison 
     Industries and the condition of its funds during the 
     preceding fiscal year.
       ``(2) Matters included.--In addition to the matters 
     required by section 9106 of title 31, and such other matters 
     as the Board considers appropriate, each report for a fiscal 
     year under paragraph (1) shall include the following:
       ``(A) A statement of the amount of obligations issued under 
     section 4129(a)(1) of this title during that fiscal year.
       ``(B) An estimate of the amount of obligations that will be 
     issued under that section during the following fiscal year.
       ``(C) An analysis of--
       ``(i) the total sales by Federal Prison Industries for each 
     product and service sold to Federal agencies and to private 
     United States companies;
       ``(ii) the total purchases by each Federal agency of each 
     product and service; and
       ``(iii) The Federal Prison Industries share of the total 
     Federal Government purchases by product and service.
       ``(D) An analysis of the inmate workforce, including--
       ``(i) the number of inmates employed;
       ``(ii) the number of inmates used to produce products or 
     perform services sold to private United States companies;
       ``(iii) the number and percentage of employed inmates, 
     categorized by term of incarceration; and
       ``(iv) the various hourly wages paid to inmates engaged in 
     the production of the various products and the performance of 
     services authorized for production and sale to

[[Page S8130]]

     Federal agencies and to private United States companies.
       ``(E) Information concerning any employment obtained by 
     former inmates upon release that is useful in determining 
     whether the employment provided by Federal Prison Industries 
     during incarceration provided those former inmates with 
     knowledge and skill in a trade or occupation that enabled 
     them to earn a livelihood upon release.
       ``(3) Availability to public.--The Board of Directors shall 
     make available to the public each report under this 
     subsection.''.
       (b) Clerical Amendment.--In the table of sections at the 
     beginning of chapter 307 of such title, the item relating to 
     section 4127 is amended to read as follows:

``4127. Periodic evaluation and reports.''.

     SEC. 6. RULES OF CONSTRUCTION AND DEFINITIONS.

       (a) In General.--Chapter 307 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 4130. Construction of provisions

       ``Nothing in this chapter shall be construed--
       ``(1) to establish an entitlement of any inmate to--
       ``(A) employment in a Federal Prison Industries facility; 
     or
       ``(B) any particular wage, compensation, or benefit on 
     demand;
       ``(2) to establish that inmates are employees for the 
     purposes of any law or program; or
       ``(3) to establish any cause of action by or on behalf of 
     any person against the United States or any officer, 
     employee, or contractor thereof.

     ``Sec. 4131. Definitions

       ``In this chapter:
       ``(1) The term `eligible inmate worker' means a person 
     who--
       ``(A) is committed to the custody of the Bureau of Prisons 
     pursuant to section 3621 of this title;
       ``(B) is designated to a low, medium, or high security 
     facility operated by the Bureau of Prisons; and
       ``(C) is physically and mentally able to work.
       ``(2) The term `private United States company' means a 
     corporation, partnership, joint venture, or sole 
     proprietorship with a principal place of business in the 
     United States.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 307 of such title is amended by adding 
     at the end the following new items:

``4130. Construction of provisions.
``4131. Definitions.''.

     SEC. 7. CONFORMING AMENDMENT.

       Section 436 of title 18, United States Code, is amended by 
     striking ``Whoever,'' and inserting ``Except as otherwise 
     provided in this title, whoever,''.
                                  ____


      Federal Inmate Work Act of 2001 Section-by-Section Analysis


                         section 1. short title

       This Act may be cited as the ``Federal Inmate Work Act of 
     2001.''

section. 2. authority to carry out pilot projects using federal inmate 
                     labor to replace foreign labor

     (a) Foreign Labor Substitute Pilot Projects
       This section authorizes Federal Prison Industries, FPI or 
     trade name UNICOR, to carry out pilot projects to produce 
     products for private companies that would otherwise be 
     produced by foreign labor. FPI currently has authority to 
     perform commercial market services, but not for products. The 
     interstate commerce restrictions contained in 18 U.S.C. 1761 
     concerning products are deemed not to apply to such projects 
     when the provisions below are met.
     (b) Foreign Labor Substitute Panel
       This section establishes a Foreign Labor Substitute Panel, 
     selected by the Attorney General. The Panel is to consist of 
     eight members. In order to ensure that there is 
     representation from those with expertise in the affected 
     areas, this section provides that the Panel must be comprised 
     of one representative from the Department of Commerce, the 
     Department of Labor, the International Trade Commission, and 
     the Small Business Administration; two representatives from 
     the business community; and two representatives from 
     organized labor. The Panel is not to receive pay, benefits, 
     or allowances for their services, but may receive travel 
     expenses. Any findings of the Panel must be made available to 
     the public.
       This section requires the Panel to review proposals for 
     pilot projects. The Panel is authorized to approve a pilot 
     project if, and only if, the Panel determines that: 1. the 
     pilot will be carried out by one or more United States 
     companies and 2. the goods, wares or merchandise proposed 
     under the pilot would otherwise be manufactured, produced or 
     mined by foreign labor.


  Section 3. Restatement and Improvement of Federal Prison Industries 
                                Program

     Sec. 4121. Federal Prison Industries: status, mission, and 
       management

     (a) Status
       This section states FPI's status as a government 
     corporation, whose headquarters is located in the District of 
     Columbia.
     (b) Mission
       This section states that FPI's mission is to carry out 
     industrial operations in accordance with the parameters of 
     this section.
     (c) Board of Directors
       FPI's current statute provides for six Presidentially 
     appointed Board of Directors who represent industry, labor, 
     agriculture, retailers and consumers, the Secretary of 
     Defense and the Attorney General. This section substitutes 
     the Attorney General for the President and expands FPI's 
     Board of Directors from the current six members to twelve 
     members to increase representation from business, organized 
     labor, victims of crime, and the inmate rehabilitation 
     community. Four members would be required to be selected from 
     the recommendations of the House and Senate majority and 
     minority leadership. The Board also must include two 
     representatives from the business community, two from 
     organized labor, one member representing victims of crime, 
     one representing prisoner rehabilitation community, and two 
     additional members whose background and expertise the 
     Attorney General deems appropriate.
       This section continues the current provision that the Board 
     of Directors serve without pay, allowances, or benefits. The 
     members of the Board shall serve for a four year term or 
     until the remainder of a four year term if a member is 
     replaced. Seven board members constitute a quorum. The term 
     limits for the first appointments are varied in order to 
     provide for term limits that are staggered. The Chairman of 
     the Board is to be elected by members of the Board.

     Sec. 4122. Federal Prison Industries: operating objectives, 
       standards, and requirements

     (a) Operating Objectives
       This section requires that FPI's operations be conducted so 
     as to: 1. increase public safety and reduce recidivism by 
     providing meaningful employment and vocational skills, 2. 
     minimize adverse effects on domestic companies or workers, 3. 
     provide meaningful employment and vocational training for not 
     less than 25 percent of eligible inmate workers, 4. provide 
     income so as to help inmates pay their financial obligations, 
     5. generate sufficient revenue to fund the corporation, and 
     6. provide market quality and competitively priced products 
     and services.
     (b) Performance Standards
       This section requires FPI to comply with standards, as 
     applicable to correctional industry programs, including: 
     United Nations standards, and International Labor 
     Organization Conventions to which the United States is a 
     signatory party, Federal standards, and American Correctional 
     Association Standards.
     (c) Voluntariness
       This section requires that inmates participate in FPI 
     operations voluntarily. This is currently FPI's practice.
     (d) Wage Rates
       This section requires that inmate workers be paid the wage 
     rates prescribed by the Board of Directors, unless otherwise 
     provided by law.
     (e) Protection of Certain Information
       This section prohibits inmates from having access to 
     personal or national security information, that is otherwise 
     not publicly available.
     (f) Vocational Training
       While FPI is authorized to fund vocational training 
     programs, this section specifies that where financially 
     feasible, FPI contribute at least twenty percent of its net 
     profits each year for this purpose.
     (g) Exemption from Public Contracting and Procurement Laws
       In order to be as competitive as possible in commercial 
     market ventures, this section exempts FPI from federal 
     procurement and public contracting requirements. This 
     provision is consistent with exemptions granted to other 
     federal agencies with commercial-like missions, such as the 
     U.S. Postal Service and the U.S. Mint.
     (h) Liability
       This section provides that personal injuries arising out of 
     FPI work shall be compensated pursuant to the Federal 
     Employees' Compensation Act, for Federal Employees, or the 
     Federal Tort Claims Act, for all other persons. This is 
     consistent with current law.
     (i) Deductions from Wages
       This section permits the Board of Directors to make 
     deductions from the amounts paid to FPI inmate workers to pay 
     court ordered fines, restitution, child support, to 
     compensate for reasonable charges for costs of incarceration, 
     to compensate crime victims, and for amounts to be held on 
     account and paid to the inmate upon release from the custody 
     of the BOP. With certain exceptions, the deductions may not 
     exceed 80 percent for FPI inmate workers being paid higher 
     wage rates that comply with 18 U.S.C. 1761(c), for Prison 
     Industry Enhancement pilot projects, or 50 percent for FPI 
     inmate workers being paid prison industry wage rates. Current 
     BOP policy permits these deductions to a maximum of 50 
     percent. This section requires that inmates agree in advance 
     to any deductions, withholdings, or disbursement of those 
     amounts.

     Sec. 4123. Federal Prison Industries: transactions authorized

     (a) Sales to Agencies and Not-For-Profits
       This section permits FPI to sell its products, as well as 
     services (which are already authorized in the commercial 
     market), to government agencies and not for profit 
     organizations. Currently, FPI may only sell its products to 
     the federal government.

[[Page S8131]]

     (b) Sales of Certain Commodities
       This section also permits FPI to carry out programs to 
     manufacture commodities specified in 18 U.S.C. 1761(b) 
     (agricultural commodity sales, as well as commodities sold to 
     federal, D.C. or state entities).
     (c) Participation in Foreign Labor Substitute Pilot Projects
       This section authorizes FPI to participate in pilot 
     projects as approved by the Foreign Labor Substitute Panel.
     (d) Participation in BJA Pilot Projects
       This section authorizes FPI to make its products (in 
     addition to services which are currently authorized) for 
     private companies if inmates are paid a wage rate that 
     complies with 18 U.S.C. 1761(c). This is similar to the 
     authority that state prisons currently have to sell products 
     to the commercial market, provided the inmates are paid 
     comparable locality wages pursuant to the Prison Industry 
     Enhancement, P.I.E., Program.
     (e) Requirements for Contracts with Private Companies
       In FPI contracts with companies pursuant to a pilot 
     program, the contracts must require the inmate work to be 
     carried out in a FPI facility. The contract must prohibit the 
     private company from displacing any of its existing domestic 
     workers as a direct result of the contract with FPI. Any 
     workforce reductions carried out by the company performing 
     comparable work must apply first to the inmate workers 
     performing work under the contract.
     (f) Goals for Certain Businesses
       This section requires FPI, in consultation with the Small 
     Business Administration, to establish and strive to meet or 
     exceed realistic goals for entering into contracts with small 
     business concerns and with small business concerns owned and 
     controlled by socially and economically disadvantaged 
     individuals.
     (g) Job Opportunities for Blind and Severely Disabled 
         Individuals
       This section requires FPI to establish business 
     partnerships with organizations representing domestic workers 
     who are blind and severely disabled to create job 
     opportunities in furtherance of its efforts to contract with 
     private companies.
     (h) Donation of Products and Services
       FPI would be authorized to donate products or services in 
     the Board's discretion, which it currently cannot do.
     (i) Catalog
       This section requires FPI to continue to maintain a catalog 
     of its products and services and keep it updated.


    SECTION 4. ELIMINATION OF MANDATORY SOURCE PURCHASE REQUIREMENT

       This section requires FPI to phase out its use of the 
     mandatory source preference.
     (a) In General
       This section clarifies that the mandatory source preference 
     in section 4124 applies to products only. Neither this 
     section nor section 4124 require any Federal Government 
     agency or department to purchase services from FPI. As is 
     currently required by law, this section requires each Federal 
     department or agency to report purchases from FPI to the 
     Federal Procurement Data System. See 41 U.S.C. 405(d)(4). 
     This section further clarifies that federal entities may 
     continue to buy FPI products or services voluntarily and 
     directly from FPI, even without the mandatory source 
     requirement.
     (b) Plan for Phased Elimination of Mandatory Source
       This section requires that the Board of Directors develop 
     and submit a plan to Congress within 180 days after the 
     enactment of this Act, that would phase out mandatory source 
     over a five year period.
     (c) Public Availability of Plan
       This section requires that FPI publish the plan in a 
     commercial business publication with national circulation, 
     and make it available to the public.
     (d) Repeal of Mandatory Source Requirement
       Effective five years after the date the plan is submitted, 
     this section repeals the mandatory source requirement.


               SECTION 5. PERIODIC EVALUATION AND REPORTS

     Sec. 4127. Periodic evaluation and reports

     (a) Evaluation by GAO
       This section requires the GAO to provide for annual 
     evaluations to assess the continued viability of FPI and its 
     ability to contract with private companies without adversely 
     affecting domestic companies or workers. The GAO is to ensure 
     that the views of the Foreign Labor Substitute Panel, private 
     industry, organized labor, FPI's Board of Directors and the 
     public are sought in the development of appropriate 
     evaluation methodologies by which to assess the program's 
     overall success.
       This Section also requires the GAO to report annually to 
     Congress its evaluation FPI's operations, to include any 
     concerns raised about any adverse impact on domestic 
     companies or workers; the extent to which FPI was able to 
     maintain at least a 25 percent employment rate for work 
     eligible inmates; the extent to which FPI was able to conduct 
     its operations in a financially self-sustaining manner; and 
     any recommended legislation, if any, for statutory changes to 
     improve the administration or effects of the program, 
     including recommended remedial actions.
     (b) Annual Report by Board of Directors
       This section requires FPI to report annually to Congress on 
     its operations and financial condition. Although the current 
     statute requires these annual reports, this section expands 
     the specific information to be included in such reports, such 
     as the total sales of FPI products and services to Federal 
     agencies and to private companies, the total purchase by 
     Federal agency of each product and service, and the FPI share 
     of the total Federal Government purchases. An analysis shall 
     also determine the number of inmates employed, and the number 
     and percentage of employed inmates in the production of 
     products and the performance of services authorized for 
     production and sale to agencies and private companies. The 
     report must also include information concerning any 
     employment obtained by former inmates upon release that is 
     useful in determining whether the employment provided by FPI 
     during incarceration provided those inmates with knowledge 
     and skill in a trade or occupation that enabled those inmates 
     to earn a livelihood upon release.

     Sec. 4130. Construction of Provisions

       This section is intended to preclude Federal inmates from 
     asserting an employee-employer relationship or other 
     entitlements out of their work with FPI.


            SECTION 6. RULES OF CONSTRUCTION AND DEFINITIONS

     Sec. 4131. Definitions

       This section defines the terms used in this Act.


                    SECTION 7. CONFORMING AMENDMENT.

       This section makes a conforming amendment.
                                 ______