[Congressional Record Volume 149, Number 25 (Tuesday, February 11, 2003)]
[Senate]
[Pages S2205-S2207]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself and Mr. Thomas):
  S. 346. A bill to amend the Office of Federal Procurement Policy Act 
to establish a governmentwide policy requiring competition in certain 
executive agency procurements; to the Committee on Governmental 
Affairs.
  Mr. LEVIN. Mr. President, I am pleased to join with Senator Craig 
Thomas in introducing the Federal Prison Industries Competition in 
Contracting Act. Our bill is based on a straightforward premise: it is 
unfair for Federal Prison Industries to deny businesses in the private 
sector an opportunity to compete for sales to their own government.
  I repeat: the bill that we are introducing today, it enacted, would 
do nothing more than permit private sector companies to compete for 
Federal contracts that are paid for with their dollars. It may seem 
incredible that they are denied this opportunity today, but that is the 
law, because if Federal Prison Industries says that it wants a 
contract, it gets that contract, regardless whether a company in the 
private sector may offer to provide the product better, cheaper, or 
faster.
  We have made considerable progress on this issue since Senator Thomas 
and I introduced a similar bill in the 107th congress. Two years ago, 
the Senate voted 74-24 to end Federal Prison Industries' monopoly on 
Department of Defense contracts. Not only was that provision enacted 
into law, we were able to strengthen it with a second provision in last 
year's defense bill.
  Despite this progress, much work remains to be done. As of today, 
Federal Prison Industries retains its monopoly on the contracts of 
every agency of the Federal Government, other than the Department of 
Defense. This means that all other Federal agencies, including the new 
Department of Homeland Security, may be required to purchase products 
from Federal Prison Industries. It also means that private sector 
companies may find it impossible to sell their products to their own 
government, even when their products outperform FPI products in terms 
of price, quality and time of delivery.
  The bill that we are introducing today would not limit the ability of 
Federal Prison Industries to sell its products to Federal agencies. It 
would simply say that these sales should be made on a competitive, 
rather than a sole-source basis.
  FPI starts with a significant advantage in any competition with the 
private sector, since FPI pays inmates less than two dollars an hour, 
far below the minimum wage and a small fraction of the wage paid to 
most private sector workers in competing industries. And of course, the 
taxpayers provide a direct subsidy to Federal Prison Industries 
products by picking up the cost of feeding, clothing, and housing the 
inmates who provide the labor. Given those advantages, there is no 
reason why we should still require Federal agencies to purchase 
products from FPI even when they are more expensive or of a lower 
quality than competing commercial items. I can think of no reason why 
private industry should be prohibited from competing for these federal 
agency contracts.

  We have made several changes to this bill since it was introduced in 
the 107th Congress. The new bill has been harmonized with the 
provisions that we have already enacted for the Department of Defense, 
to ensure that we will have a single, government-wide procurement 
policy for agencies purchasing products available from Federal Prison 
industries. This government-wide policy would be codified in the Office 
of Federal Procurement Policy Act, which is the primary procurement 
statute that applies to both defense and non-defense agencies. I 
believe that these changes will strengthen the bill and reinforce its 
underlying intent.

[[Page S2206]]

  Federal Prison Industries has repeatedly claimed that it provides a 
quality product at a price that is competitive with current market 
prices. Indeed, the Federal Prison Industries statute requires them to 
do so. That statute states that FPI may provide to Federal agencies 
products that ``meet their requirements'' at prices that do not 
``exceed current market prices''.
  Yet, FPI remains unwilling to compete with private sector businesses 
and their employees, or even to permit federal agencies to compare 
their products and prices with those available in the private sector. 
Indeed, FPI has tried to prohibit Federal agencies from conducting 
market research, as they would ordinarily do, to determine whether the 
price and quality or FPI products is comparable to what is available in 
the commercial marketplace. Instead, Federal agencies are directed to 
contact FPI, which acts as the sole arbiter of whether the product 
meets the agency's requirements.
  The result is totally and understandably frustrating to private 
sector businesses and their employees who are denied an opportunity to 
compete for Federal business, as well as to the Federal agencies who 
are forced to buy FPI products. The frustration of these businesses 
comes through in a series of letters that were placed in the record of 
a House Small Business Committee hearing in the last Congress. One 
letter stated with regard to UNICOR--the trade name used by Federal 
Prison Industries:

       Dear Mr. Chairman: My name is Billy Carroll; I am an 
     outside sales representatives with C&C Office Supply Co. in 
     Biloxi Mississippi. Our company has been in business for over 
     20 years and we employ 20 people.
       During the course of our 20-year history we have done 
     considerable business with numerous governmental agencies and 
     military installations. Some of them being Naval Construction 
     Battalion in Gulfport, Mississippi; Air National Guard in 
     Gulfport; Keesler Air Force Base in Biloxi; Naval Station in 
     Pascagoula; and NASA in Stennis Space Center.
       As a result of FPI's unfair monopolistic practices, we have 
     seen sales from these governmental agencies go from 
     $100,000.00 a month to less than $5,000 a month.
       There are numerous horror stories we hear from our 
     customers who deal with UNICOR. The most recent one being 
     that a customer had to wait 5 months to get their furniture. 
     When the furniture finally arrived, it wasn't even what they 
     had ordered. This is something that would have been averted 
     had they been able to use our company or another dealer.
       I could go on about how we could have sold the product much 
     cheaper, which would have saved taxpayers money, faster 
     delivery, which would have increased productivity, and 
     finally better service, but I won't. You get the picture.
           Sincerely,
                                                    Billy Carroll,
                            C&C Office Supply Company, Biloxi, MS.

  Mr. LEVIN. Other vendors expressed even greater frustration about 
FPI's unfair business practices:

       Dear Mr. Chairman: During the past 5 years I have had 
     representatives from UNICOR tell my customers that they had 
     to turn over my proprietary designs to UNICOR, without 
     payment to the dealership. They have told my customers that 
     if they do not buy UNICOR, they will be `reported to 
     congress' and that there is no place else to go for 
     government furniture. They frighten young department of 
     defense officials with words like `illegal' when they ask 
     about waivers.
       The UNICOR reps routinely refuse waivers on the first 
     approach. The answer is a standard `UNICOR has products which 
     will meet your needs.' No explanation. They refuse to answer 
     waiver requests in a timely fashion. I have had a $110,000 
     order for the Arizona Air National Guard in Tucson literally 
     taken away by UNICOR. The representative demanded the designs 
     and said that UNICOR would fill the request. There would be 
     no waiver and no discussion. And she was right. Despite the 
     fact that all of the programming phase had been completed by 
     my designers, at no cost to the federal government, this rep 
     insisted that she knew what was best for this customer. Of 
     course, the products arrived late, in poor condition, was 
     much more expensive than the budgeted GSA furniture--and the 
     reps have not been heard from. The answer is `a 10% discount' 
     or a `free chair.'
       In Texas, my representative worked for 4 months with a 
     customer, completing designs and meeting all relevant 
     criteria. She proposed only products on GSA contract. UNICOR 
     unilaterally refused to waive the chairs, approximately 
     $50,000 worth, because their factories were not at capacity. 
     The fact that the UNICOR chairs do not meet the price point, 
     that UNICOR spent no time with the customers determining 
     function, color or other requirements has no meaning. The 
     seating portion of the order is lost. The remaining portion 
     would have been lost, as well, if the customer had not spent 
     approximately 30 days going from one appeal process to the 
     other attempting to get waivers. Very few customers will take 
     the time to do this. Of course, when the project finally 
     arrives, it will be late and missions will be compromised.
           Sincerely,

                                            Ruthanne S. Pitts,

                                     Simmons Contract Furnishings,
     Tucson, Arizona.
                                  ____

       Dear Mr. Chairman: I personally worked with the staff who 
     had just moved into a new ward at Walter Reed Army Medical 
     Center. We had two meetings during which I took measurements 
     and went over in great detail the furniture items they needed 
     for the report room, reception area, patient education room, 
     two offices and some miscellaneous shelving. The total I 
     quoted to Walter Reed was approximately $13,000 and met their 
     needs exactly. This was in April of 2000. Our delivery would 
     have been completed within a month.
       Because Walter Reed couldn't get a UNICOR waiver (just to 
     determine this fact takes at least 6 weeks) the order was 
     placed with UNICOR and took eight months to be delivered (it 
     just showed up last week) and much of it was not what 
     officials at Walter Reed even ordered. FPI tells their 
     customers what the customer can have rather than meeting the 
     needs of the customer. As an example, we had designed a 
     workstation for the report room to accommodate four 
     computers. UNICOR sent an expensive, massive cherry 
     workstation for an executive office that had to be put in 
     someone's office (who didn't need new furniture) because it 
     was unusable where it was supposed to go. UNICOR charged an 
     additional $1,500.00 to assemble this (and didn't have proper 
     tools to finish the assembly). Our price for the proper item 
     including all set up was less than they charged for set-up 
     alone.
       You know, it's not just the impact FPI has on our 
     businesses, it's the waste of everybody's tax dollars when 
     furniture costs more and doesn't even do the job.
           Sincerely,
                                                       Diane Lake,
     Economy Office Products, Inc. Fairfax, VA.
                                  ____

       Dear Mr. Chairman: I am concerned in the way taxpayers' 
     money is being wasted. A few years ago I had proposed over 
     $100,000.00 in chairs to the VA Medical Center. They were 
     excited about the chair I was proposing on contract. The 
     chair was less expensive than the chair proposed by FPI. The 
     customer also recognized that the chair I was proposing was 
     better in quality and had more ergonomic features, which 
     would assist in some of their health issues. Another comment 
     made by the VA was the problem with the FPI chairs breaking 
     easily. Parts were near impossible to get, so they would 
     throw the FPI chair in the garbage.
       In this situation FPI denied the VA waiver. Regretfully 
     they had to buy FPI chairs. I can not believe this happens in 
     America.
           Sincerely,
                                                    Rick Buchholz,
                                Christianson's Business Furniture.

  Mr. LEVIN. These letters are far from unique. In case after case, 
Federal Prison Industries insists on taking contracts away from private 
businesses, even where FPI's products are inferior, their prices are 
higher, and they are not prepared to deliver in a timely manner. This 
is wrong.
  Avoiding competition is the easy way out, but it isn't the right way 
for FPI, it isn't the right way for the private sector workers whose 
jobs FPI is taking, and it isn't the right way for Federal agencies, 
which too often get stuck with the bill for inferior products that 
can't compete with private sector goods. Competition will be better for 
Federal agencies, better for the taxpayer, and better for working men 
and women around the country.
  Mr. THOMAS. Mr. President, today I am pleased to join Senator Levin 
in introducing a bill that will further my efforts to limit government 
competition with the private sector. Senator Levin and I propose to 
eliminate the mandatory contracting requirement that Federal agencies 
are subject to when it comes to products made by the Federal Prison 
Industries, FPI. Under law, all Federal agencies, except the Department 
of Defense, are required to purchase products made by the FPI. Simply 
put, this bill will require the FPI to compete with the private sector 
for Federal contracts.
  Currently, the FPI employs approximately 22,000 Federal prisoners or 
roughly 20 percent of all Federal prisoners. These prisoners are 
responsible for producing a diverse range of products for the FPI, 
ranging from office furniture to clothing. The remaining 80 percent of 
Federal prisoners, who work, do so in and around Federal prisons.
  While Senator Levin and I believe that it is important to keep 
prisoners working, we do not believe that this effort should unduly 
harm or conflict with law-abiding businesses. This bill seeks to 
minimize the unfair competition that private sector companies face with 
the FPI.

[[Page S2207]]

  The FPI's mandatory source requirement not only undercuts private 
business throughout America, but its mandatory source preference 
oftentimes costs American taxpayers more money. I believe American 
taxpayers would be alarmed to learn of the preferential treatment that 
the FPI enjoys when it comes to Federal contracts.
  As I said before, Senator Levin and I support the goal of keeping 
prisoners busy while serving their time in prison. However, if we allow 
competition in Federal contracts, the FPI will be required to focus its 
efforts in product areas that don't unfairly compete with the private 
sector. Clearly, competitive bidding is a reasonable process that will 
ensure taxpayer's dollars are being spent justly.
  Of particular note, our bill allows contracting officers, within each 
Federal agency, the ability to use competitive procedures for the 
procurement of products. This approach allows Federal agencies to 
select the FPI contracts if he/she believes that the FPI can meet that 
particularly agency's requirements and the product is offered at a fair 
and reasonable price. The above outlined provision in our bill seeks to 
place the control of government procurement in the hands of contracting 
officers, rather than in the hands of the FPI.
  In addition to establishing a competitive procedure for the 
procurement of products, we include a provision that allows the 
Attorney General to grant a waiver to this process if a particular 
contract is deemed essential to the safety and effective administration 
of a particular prison.
  I am confident that by allowing competition for government contracts 
our bill will save tax dollars. As Congress looks for additional cost 
saving practices, the elimination of the FPI's mandatory source 
preference will bring about numerous improvements, not just in cost 
savings, but also in streamlining of the FPI's products.
                                 ______