[Congressional Record (Bound Edition), Volume 152 (2006), Part 13]
[Extensions of Remarks]
[Pages 17900-17901]
[From the U.S. Government Publishing Office, www.gpo.gov]




        CONGRESSIONAL BUDGET OFFICE COST ESTIMATE FOR H.R. 2965

                                 ______
                                 

                    HON. F. JAMES SENSENBRENNER, JR.

                              of wisconsin

                    in the house of representatives

                      Tuesday, September 12, 2006

  Mr. SENSENBRENNER. Mr. Speaker, for purposes of floor consideration 
of H.R. 2965, the ``Federal Prison Industries Competition in 
Contracting Act of 2006,'' the Committee on the Judiciary sets forth, 
with respect to the bill H.R. 2965, the following estimate and 
comparison prepared by the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974. This cost estimate 
is in addition to the one set forth by the Committee in H. Rept. 109-
591.
     H.R. 2965--Federal Prison Industries Competition in 
         Contracting Act of 2006
       Summary: H.R. 2965 would amend the laws that authorize the 
     Federal Prison Industries (FPI), a government-owned 
     corporation that produces goods and services for the federal 
     government with prison labor. Under current law, most federal 
     agencies are required to award purchase contracts to FPI on a 
     noncompetitive basis if FPI has products available to meet 
     the agencies' needs and the cost would not exceed current 
     market prices. Such products include office furniture, 
     textiles, vehicle tags, and fiber optics. Under H.R. 2965, 
     this requirement to award noncompetitive purchase contracts 
     to FPI would be phased out over the 2007-2012 period.
       The bill would authorize the appropriation of $357 million 
     over the 2007-2011 period for new FPI programs. In addition, 
     CBO expects that additional amounts would be needed to pay 
     for security costs at federal prisons. Assuming appropriation 
     of the necessary amounts, CBO estimates that implementing 
     H.R. 2965 would cost $445 million over the 2007-2011 period. 
     Federal agencies might be able to purchase some goods and 
     services less expensively because of the added contracting 
     flexibility the bill would provide, but CBO has no basis for 
     estimating such savings. The bill would have no significant 
     effect on net direct spending by FPI, CBO estimates.
       H.R. 2965 contains an intergovernmental mandate as defined 
     in the Unfunded Mandates Reform Act (UMRA), but CBO estimates 
     that the cost to state, local, and tribal governments for 
     complying with this mandate would be insignificant and well 
     below the threshold established in the act ($64 million in 
     2006, adjusted for inflation). The bill contains no new 
     private-sector mandates.
       Estimated cost to the Federal Government: The estimated 
     budgetary impact of H.R. 2965 is shown in the following 
     table. The cost of this legislation falls within budget 
     function 750 (administration of justice).

 
------------------------------------------------------------------------
                                         By fiscal year, in millions of
                                                   dollars--
                                      ----------------------------------
                                        2007   2008   2009   2010   2011
------------------------------------------------------------------------
              CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Enhanced Vocational Assessment and
 Training:
    Authorization Level..............      0     75     75     75     75
    Estimated Outlays................      0     66     75     75     75
FPI Public Service and Donation
 Programs:
    Authorization Level..............      0     12     12     12     12
    Estimated Outlays................      0     12     12     12     12
Cognitive Abilities Assessment
 Demonstration Program:
    Authorization Level..............      0      3      3      3      0
    Estimated Outlays................      0      2      3      3      1
Additional Security Costs:
    Estimated Authorization Level....      4      5     21     32     38
    Estimated Outlays................      4      5     20     31     37
Total Changes:
    Estimated Authorization Level....      4     95    111    122    125
    Estimated Outlays................      4     85    110    121    125
------------------------------------------------------------------------

       Basis of estimate: CBO assumes that the proposed 
     legislation will be enacted near the beginning of fiscal year 
     2007 and that the authorized amounts will be appropriated for 
     each year. We estimate that implementing the programs 
     specifically authorized by H.R. 2965 would cost $348 million 
     over the 2007-2011 period. In addition, CBO estimates that 
     implementing H.R. 2965 would cost the Bureau of Prisons $4 
     million in 2007 and nearly $100 million over the 2007-2011 
     period for additional security officers to supervise inmates 
     who would no longer be working as a result of implementing 
     this legislation.
     Enhanced in-prison vocational assessment and training
       The bill would authorize the Attorney General to establish 
     a Federal Enhanced In-Prison Vocational Assessment and 
     Training Program in federal institutions and would authorize 
     the appropriation of $75 million a year beginning in fiscal 
     year 2008 for this program. Assuming the appropriation of the 
     specified amounts, CBO estimates that the enhanced program 
     would cost $291 million over the 2007-2011 period.
     FPI public service and donation programs
       The legislation would authorize the Attorney General to 
     establish a new FPI program in federal prisons that, subject 
     to appropriation of the necessary amounts, would produce 
     goods to be donated to nonprofit organizations instead of 
     being offered for purchase to the federal government. In 
     addition, FPI would be authorized to contract with nonprofit 
     organizations and certain public entities for the use of 
     inmate labor to provide charitable services. The bill would 
     authorize the appropriation of $12 million for fiscal year 
     2008 and $48 million over the 2008-2011 period for these 
     programs.
     Cognitive Abilities Assessment Demonstration program
       Section 10 would authorize the appropriation of $3 million 
     for each of the fiscal years 2008, 2009, and 2010 for the 
     Bureau of Prisons to establish a Cognitive Abilities 
     Assessment Demonstration Program in 12 federal institutions., 
     The project would assess inmates' cognitive abilities and 
     perceptual skills to determine what rehabilitative activities 
     would be most successful. CBO estimates that this provision 
     would cost $9 million over the 2007-2011 period, assuming the 
     appropriation of the authorized amounts.
     Additional security costs
       H.R. 2965 would phase out the requirement for federal 
     agencies to purchase products and services from FPI. During 
     the next five years, CBO expects that FPI's total sales to 
     the federal government would decrease by about 25 percent, 
     assuming that FPI would succeed in selling some products and 
     services under competitive bidding procurements.
       The bill would limit FPI's sales to federal agencies to 20 
     percent of the governmentwide purchases of the kinds of 
     products FPI produces and 5 percent of the kinds of services 
     it provides--regardless of whether the government purchase 
     contracts are awarded on

[[Page 17901]]

     a noncompetitive or competitive basis. The legislation, 
     however, would authorize FPI's board of directors to allow 
     FPI a greater market share if an agency has requested 
     additional products or services or if necessary to sustain 
     inmates' work levels. CBO expects that few inmates would lose 
     work over the next five years as a result of this restriction 
     on FPI's market share because we expect that the board would 
     try to maintain the number of inmates working for FPI.
       Because of the reduction in federal sales, CBO expects that 
     there would be a corresponding reduction in the number of 
     inmates employed by FPI. Currently, no funds appropriated to 
     the Bureau of Prisons are used to provide security to 
     prisoners participating in FPI programs during work hours 
     because this security is provided by FPI. Based on 
     information from the Department of Justice about the number 
     of prison security personnel needed to guard the prison 
     population, CBO estimates that an additional 50 security 
     officers would be needed in fiscal year 2007 to secure 
     prisoners no longer working for FPI; that number would grow 
     to more than 400 by 2011. CBO estimates that providing 
     additional security officers would cost $4 million in 2007 
     and nearly $100 million over the five-year period.
     Changes in FPI's direct spending
       CBO estimates that, under the bill, total receipts 
     collected by FPI would decrease over the 5-year period as 
     agencies procure fewer FPI products. But that reduction in 
     collections would be offset by a reduction in the cost to 
     produce such products. Therefore, CBO estimates that enacting 
     this legislation would result in no significant net change in 
     direct spending for each year.
     Impact on other Federal agencies
       The bill would phase out current requirements that federal 
     agencies purchase certain products and services from FPI on a 
     noncompetitive basis. That change might enable agencies to 
     acquire some products or services less expensively through a 
     competitive procurement process. In recent years, agencies 
     have purchased $800 million to $900 million worth of goods 
     and services from FPI. CBO has no basis for estimating the 
     savings that might result, but they would likely be a small 
     percentage of the total sales.
       Estimated impact on State, local, and Tribal Governments: 
     H.R. 2095 contains an intergovernmental mandate as defined in 
     UMRA because it would require most work programs in state and 
     local prisons that provide services in interstate commerce to 
     obtain federal certification in order to continue operating 
     after September 2010 or after the end of their current 
     contract. CBO estimates that the administrative cost to 
     obtain this certification would be insignificant and well 
     below the threshold established in UMRA ($64 million in 2007, 
     adjusted annually for inflation). This bill would impose no 
     other significant costs on state, local, or tribal 
     governments.
       Estimated impact on the private sector: This bill contains 
     no new private-sector mandates as defined in UMRA.
       Estimate prepared by: Federal Costs: Daniel Hoople and 
     Gregory Waring; Impact on State, Local, and Tribal 
     Governments: Melissa Merrell; and Impact on the Private 
     Sector: Paige Piper/Bach.
       Estimate approved by: Robert A. Sunshine, Assistant 
     Director for Budget Analysis.

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