[House Report 107-583]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-583

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



 
    FEDERAL PRISON INDUSTRIES COMPETITION IN CONTRACTING ACT OF 2002

                                _______
                                

 July 16, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1577]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1577) to amend title 18, United States Code, to 
require Federal Prison Industries to compete for its contracts 
minimizing its unfair competition with non-inmate workers and 
the firms that employ them and increasing the likelihood that 
Federal agencies get the best value for taxpayers dollars, to 
require that Federal Prison Industries fully and timely perform 
its Government contracts by empowering Federal contracting 
officers with the contract administration tools generally 
available to assure full and timely performance of other 
Government contracts, to enhance the opportunities for 
effective public participation in decisions to expand the 
activities of Federal Prison Industries, to provide to Federal 
agencies temporary preferential contract award authority to 
ease the transition of Federal Prison Industries to obtaining 
inmate work opportunities through other than its mandatory 
source status, to provide additional work opportunities for 
Federal inmates by authorizing Federal Prison Industries to 
provide inmate workers to nonprofit entities with protections 
against commercial activities, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................    13
Background and Need for the Legislation..........................    16
Hearings.........................................................    18
Committee Consideration..........................................    18
Vote of the Committee............................................    18
Committee Oversight Findings.....................................    22
Performance Goals and Objectives.................................    22
New Budget Authority and Tax Expenditures........................    22
Congressional Budget Office Cost Estimate........................    22
Constitutional Authority Statement...............................    26
Section-by-Section Analysis and Discussion.......................    26
Changes in Existing Law Made by the Bill, as Reported............    29
Markup Transcript................................................    42
Dissenting Views.................................................   207

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Prison Industries 
Competition in Contracting Act of 2002''.

SEC. 2. GOVERNMENTWIDE PROCUREMENT POLICY RELATING TO PURCHASES FROM 
                    FEDERAL PRISON INDUSTRIES.

    Section 4124 of title 18, United States Code, is amended to read as 
follows:

``Sec. 4124. Governmentwide procurement policy relating to purchases 
                    from Federal Prison Industries

    ``(a) In General.--Purchases from Federal Prison Industries, 
Incorporated, a wholly owned Government corporation, as referred to in 
section 9101(3)(E) of title 31, may be made by a Federal department or 
agency only in accordance with this section.
    ``(b) Solicitation and Evaluation of Offers and Contract Awards.--
(1) If a procurement activity of a Federal department or agency has a 
requirement for a specific product or service that is authorized to be 
offered for sale by Federal Prison Industries, in accordance with 
section 4122 of this title, and is listed in the catalog referred to in 
subsection (g), the procurement activity shall solicit an offer from 
Federal Prison Industries, if the purchase is expected to be in excess 
of the micro-purchase threshold (as defined by section 32(f) of the 
Office of Federal Procurement Policy Act (41 U.S.C. 428(f))).
    ``(2) A contract award for such product or service shall be made 
using competitive procedures in accordance with the applicable 
evaluation factors, unless a determination is made by the Attorney 
General pursuant to paragraph (3) or an award using other than 
competitive procedures is authorized pursuant to paragraph (7).
    ``(3) The procurement activity shall negotiate with Federal Prison 
Industries on a noncompetitive basis for the award of a contract if the 
Attorney General determines that--
            ``(A) Federal Prison Industries cannot reasonably expect 
        fair consideration to receive the contract award on a 
        competitive basis; and
            ``(B) the contract award is necessary to maintain work 
        opportunities otherwise unavailable at the penal or 
        correctional facility at which the contract is to be performed 
        to prevent circumstances that could reasonably be expected to 
        significantly endanger the safe and effective administration of 
        such facility.
    ``(4) Except in the case of an award to be made pursuant to 
paragraph (3), a contract award shall be made with Federal Prison 
Industries only if the contracting officer for the procurement activity 
determines that--
            ``(A) the specific product or service to be furnished will 
        meet the requirements of the procurement activity (including 
        any applicable prequalification requirements and all specified 
        commercial or governmental standards pertaining to quality, 
        testing, safety, serviceability, and warranties);
            ``(B) timely performance of the contract can be reasonably 
        expected; and
            ``(C) the contract price does not exceed a current market 
        price.
    ``(5) A determination by the Attorney General pursuant to paragraph 
(3) shall be--
            ``(A) supported by specific findings by the warden of the 
        penal or correctional institution at which a Federal Prison 
        Industries workshop is scheduled to perform the contract;
            ``(B) supported by specific findings by Federal Prison 
        Industries regarding why it does not expect to win the contract 
        on a competitive basis; and
            ``(C) made and reported in the same manner as a 
        determination made pursuant to section 303(c)(7) of the Federal 
        Property and Administrative Services Act of 1949 (41 U.S.C. 
        253(c)(7)).
    ``(6) If the Attorney General has not made the determination 
described in paragraph (3) within 30 days after Federal Prison 
Industries has been informed of a contracting opportunity by a 
procurement activity, the procurement activity may proceed to conduct a 
procurement for the product or service in accordance with the 
procedures generally applicable to such procurements by the procurement 
activity.
    ``(7) A contract award may be made to Federal Prison Industries 
using other than competitive procedures if such product or service is 
only available from Federal Prison Industries and the contract may be 
awarded under the authority of section 2304(c)(1) of title 10 or 
section 303(c) of the Federal Property and Administrative Services Act 
of 1949 (41 U.S.C. 252(c)(1)), as may be applicable, and pursuant to 
the justification and approval requirements relating to such 
noncompetitive procurements specified by law and the Governmentwide 
Federal Acquisition Regulation.
    ``(c) Offers From Federal Prison Industries.--A timely offer 
received from Federal Prison Industries to furnish a product or service 
to a Federal department or agency shall be considered for award without 
limitation as to the dollar value of the proposed purchase.
    ``(d) Performance by Federal Prison Industries.--Federal Prison 
Industries shall perform its contractual obligations under a contract 
awarded by a Federal department or agency to the same extent as any 
other contractor.
    ``(e) Finality of Contracting Officer's Decision.--(1) A decision 
by a contracting officer regarding the award of a contract to Federal 
Prison Industries or relating to the performance of such contract shall 
be final, unless reversed on appeal pursuant to paragraph (2) or (3).
    ``(2) The Chief Executive Officer of Federal Prison Industries may 
appeal to the head of a Federal department or agency a decision by a 
contracting officer not to award a contract to Federal Prison 
Industries pursuant to subsection (b)(4). The decision of the head of a 
Federal department or agency on appeal shall be final.
    ``(3) A dispute between Federal Prison Industries and a procurement 
activity regarding performance of a contract shall be subject to--
            ``(A) alternative means of dispute resolution pursuant to 
        subchapter IV of chapter 5 of title 5; or
            ``(B) final resolution by the board of contract appeals 
        having jurisdiction over the procurement activity's contract 
        performance disputes pursuant to the Contract Disputes Act of 
        1978 (41 U.S.C. 601 et seq.).
    ``(f) Reporting of Purchases.--Each Federal department or agency 
shall report purchases from Federal Prison Industries to the Federal 
Procurement Data System (as 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 by 
section 4(11) of the Office of Federal Procurement Policy Act (41 
U.S.C. 403(11))).
    ``(g) Catalog of Products.--Federal Prison Industries shall publish 
and maintain a catalog of all specific products and services that it is 
authorized to offer for sale. Such catalog shall be periodically 
revised as products and services are added or deleted by its board of 
directors (in accordance with section 4122(b) of this title).
    ``(h) Compliance With Standards.--Federal Prison Industries shall 
comply with Federal occupational, health, and safety standards with 
respect to the operation of its industrial operations.''.

SEC. 3. PUBLIC PARTICIPATION REGARDING EXPANSION PROPOSALS BY FEDERAL 
                    PRISON INDUSTRIES.

    Section 4122(b) of title 18, United States Code, is amended--
            (1) by redesignating paragraph (6) as paragraph (12); and
            (2) by striking paragraphs (4) and (5) and inserting the 
        following new paragraphs:
    ``(4) A decision to authorize Federal Prison Industries to offer a 
new specific product or specific service or to expand the production of 
an existing product or service shall be made by its board of directors 
in conformance with the requirements of subsections (b), (c), (d), and 
(e) of section 553 of title 5, and this chapter.
    ``(5)(A) Whenever Federal Prison Industries proposes to offer for 
sale a new specific product or specific service or to expand production 
of a currently authorized product or service, the Chief Operating 
Officer of Federal Prison Industries shall submit an appropriate 
proposal to the board of directors and obtain the board's approval 
before initiating any such expansion. The proposal submitted to the 
board shall include a detailed analysis of the probable impact of the 
proposed expansion of sales within the Federal market by Federal Prison 
Industries on private sector firms and their noninmate workers.
    ``(B)(i) The analysis required by subparagraph (A) shall be 
performed by an interagency team on a reimbursable basis or by a 
private contractor paid by Federal Prison Industries.
    ``(ii) If the analysis is to be performed by an interagency team, 
such team shall be led by the Administrator of the Small Business 
Administration or the designee of such officer with representatives of 
the Department of Labor, the Department of Commerce, and the Federal 
Procurement Data Center.
    ``(iii) If the analysis is to be performed by a private contractor, 
the selection of the contractor and the administration of the contract 
shall be conducted by one of the entities referenced in clause (ii) as 
an independent executive agent for the board of directors. Maximum 
consideration shall be given to any proposed statement of work 
furnished by the Chief Operating Officer of Federal Prison Industries.
    ``(C) The analysis required by subparagraph (A) shall identify and 
consider--
            ``(i) the number of vendors that currently meet the 
        requirements of the Federal Government for the specific product 
        or specific service;
            ``(ii) the proportion of the Federal Government market for 
        the specific product or specific service currently furnished by 
        small businesses during the previous 3 fiscal years;
            ``(iii) the share of the Federal market for the specific 
        product or specific service projected for Federal Prison 
        Industries for the fiscal year in which production or 
        performance will commence or expand and the subsequent 4 fiscal 
        years;
            ``(iv) whether the industry producing the specific product 
        or specific service in the private sector--
                    ``(I) has an unemployment rate higher than the 
                national average; or
                    ``(II) has a rate of unemployment for workers that 
                has consistently shown an increase during the previous 
                5 years;
            ``(v) whether the specific product is an import-sensitive 
        product;
            ``(vi) the requirements of the Federal Government and the 
        demands of entities other than the Federal Government for the 
        specific product or service during the previous 3 fiscal years;
            ``(vii) the projected growth or decline in the demand of 
        the Federal Government for the specific product or specific 
        service;
            ``(viii) the capability of the projected demand of the 
        Federal Government for the specific product or service to 
        sustain both Federal Prison Industries and private vendors; and
            ``(ix) whether authorizing the production of the new 
        product or performance of a new service will provide inmates 
        with the maximum opportunity to acquire knowledge and skill in 
        trades and occupations that will provide them with a means of 
        earning a livelihood upon release.
    ``(D)(i) The board of directors may not approve a proposal to 
authorize the production and sale of a new specific product or 
continued sales of a previously authorized product unless--
            ``(I) the product to be furnished is a prison-made product; 
        or
            ``(II) the service to be furnished is to be performed by 
        inmate workers.
    ``(ii) The board of directors may not approve a proposal to 
authorize the production and sale of a new prison-made product or to 
expand production of a currently authorized product if the product is--
            ``(I) produced in the private sector by an industry which 
        has reflected during the previous year an unemployment rate 
        above the national average; or
            ``(II) an import-sensitive product.
    ``(iii) The board of directors may not approve a proposal for 
inmates to provide a service in which an inmate worker has access to--
            ``(I) personal or financial information about individual 
        private citizens, including information relating to such 
        person's real property, however described, without giving prior 
        notice to such persons or class of persons to the greatest 
        extent practicable;
            ``(II) geographic data regarding the location of surface 
        and subsurface infrastructure providing communications, water 
        and electrical power distribution, pipelines for the 
        distribution of natural gas, bulk petroleum products and other 
        commodities, and other utilities; or
            ``(III) data that is classified.
    ``(iv)(I) Federal Prison Industries is prohibited from furnishing 
through inmate labor construction services, unless to be performed 
within a Federal correctional institution pursuant to the participation 
of an inmate in an apprenticeship or other vocational education program 
teaching the skills of the various building trades.
    ``(II) For purposes of this clause, the term `construction' has the 
meaning given such term by section 2.101 of the Federal Acquisition 
Regulation (48 CFR part 2.101), as in effect on June 1, 2001, including 
the repair, alteration, or maintenance of real property in being.
    ``(6) To provide further opportunities for participation by 
interested parties, the board of directors shall--
            ``(A) give additional notice of a proposal to authorize the 
        production and sale of a new product or service, or expand the 
        production of a currently authorized product or service, in a 
        publication designed to most effectively provide notice to 
        private vendors and labor unions representing private sector 
        workers who could reasonably be expected to be affected by 
        approval of the proposal, which notice shall offer to furnish 
        copies of the analysis required by paragraph (5) and shall 
        solicit comment on the analysis;
            ``(B) solicit comments on the analysis required by 
        paragraph (5) from trade associations representing vendors and 
        labor unions representing private sector workers who could 
        reasonably be expected to be affected by approval of the 
        proposal to authorize the production and sale of a new product 
        or service (or expand the production of a currently authorized 
        product or service); and
            ``(C) afford an opportunity, on request, for a 
        representative of an established trade association, labor 
        union, or other private sector representatives to present 
        comments on the proposal directly to the board of directors.
    ``(7) The board of directors shall be provided copies of all 
comments received on the expansion proposal.
    ``(8) Based on the comments received on the initial expansion 
proposal, the Chief Operating Officer of Federal Prison Industries may 
provide the board of directors a revised expansion proposal. If such 
revised proposal provides for expansion of inmate work opportunities in 
an industry different from that initially proposed, such revised 
proposal shall reflect the analysis required by paragraph (5)(C) and be 
subject to the public comment requirements of paragraph (6).
    ``(9) The board of directors shall consider a proposal to authorize 
the sale of a new specific product or specific service (or to expand 
the volume of sales for a currently authorized product or service) and 
take any action with respect to such proposal, during a meeting that is 
open to the public, unless closed pursuant to section 552(b) of title 
5.
    ``(10) In conformity with the requirements of paragraphs (5) 
through (9) of this subsection, the board of directors may--
            ``(A) authorize the donation of products produced or 
        services furnished by Federal industries and available for 
        sale; or
            ``(B) authorize the production of a new specific product or 
        the furnishing of a new specific service for donation.''.

SEC. 4. TRANSITIONAL MANDATORY SOURCE AUTHORITY.

    (a) In General.--Notwithstanding the requirements of section 4124 
of title 18, United States Code (as amended by section 2 of this Act), 
a Federal department or agency having a requirement for a product that 
is authorized for sale by Federal Prison Industries and is listed in 
its catalog (referred to in section 4124(g) of title 18, United States 
Code) shall first solicit an offer from Federal Prison Industries and 
make purchases on a noncompetitive basis in accordance with this 
section.
    (b) Preferential Source Status.--Subject to the limitations of 
subsection (d), a contract award shall be made on a noncompetitive 
basis to Federal Prison Industries if the contracting officer for the 
procurement activity determines that--
            (1) the product offered by Federal Prison Industries will 
        meet the requirements of the procurement activity (including 
        commercial or governmental standards or specifications 
        pertaining to design, performance, testing, safety, 
        serviceability, and warranties as may be imposed upon a private 
        sector supplier of the type being offered by Federal Prison 
        Industries);
            (2) timely performance of the contract by Federal Prison 
        Industries can be reasonably expected; and
            (3) the negotiated price does not exceed a fair and 
        reasonable price.
    (c) Contractual Terms.--The terms and conditions of the contract 
and the price to be paid to Federal Prison Industries shall be 
determined by negotiation between Federal Prison Industries and the 
Federal agency making the purchase. The negotiated price shall not 
exceed a fair and reasonable price determined in accordance with the 
procedures of the Federal Acquisition Regulation.
    (d) Performance of Contractual Obligations.--
            (1) In general.--Federal Prison Industries shall perform 
        the obligations of the contract negotiated pursuant to 
        subsection (c).
            (2) Performance disputes.--If the head of the contracting 
        activity and the Chief Operating Officer of Federal Prison 
        Industries are unable to resolve a contract performance dispute 
        to their mutual satisfaction, such dispute shall be resolved 
        pursuant to section 4124(e)(3) of title 18, United States Code 
        (as added by section 2 of this Act).
    (e) Limitations on Use of Authority.--
            (1) In general.--As a percentage of the sales made by 
        Federal Prison Industries during the base period, the total 
        dollar value of sales to the Government made pursuant to 
        subsection (b) and subsection (c) of this section shall not 
        exceed--
                    (A) 90 percent in fiscal year 2004;
                    (B) 85 percent in fiscal year 2005;
                    (C) 70 percent in fiscal year 2006;
                    (D) 55 percent in fiscal year 2007; and
                    (E) 40 percent in fiscal year 2008.
            (2) Sales within various business sectors.--Use of the 
        authority provided by subsections (b) and (c) shall not result 
        in sales by Federal Prison Industries to the Government that 
        are in excess of its total sales during the base year for each 
        business sector.
            (3) Limitations relating to specific products.--Use of the 
        authorities provided by subsections (b) and (c) shall not 
        result in contract awards to Federal Prison Industries that are 
        in excess of its total sales during the base period for such 
        product.
            (4) Changes in design specifications.--The limitations on 
        sales specified in paragraphs (2) and (3) shall not be affected 
        by any increases in the unit cost of production of a specific 
        product arising from changes in the design specification of 
        such product directed by the buying agency.
    (f) Duration of Authority.--The preferential contracting 
authorities authorized by subsection (b) may not be used on or after 
October 1, 2008, and become effective on the effective date of the 
final regulations issued pursuant to section 17.
    (g) Definitions.--For the purposes of this section--
            (1) the term ``base period'' means the total sales of 
        Federal Prison Industries during the period October 1, 2000, 
        and September 30, 2001 (Fiscal Year 2001);
            (2) the term ``business sectors'' means the eight product/
        service business groups identified in the 2001 Federal Prison 
        Industries annual report as the Clothing and Textile Business 
        Group, the Electronics Business Group, the Fleet Management and 
        Vehicular Components Business Group, the Furniture Business 
        Group, the Graphics Business Group, the Industrial Products 
        Business Group, the Recycled Electronics Products and Services 
        Business Group, and the Services Business Group; and
            (3) the term ``fair and reasonable price'' shall be given 
        the same meaning as, and be determined pursuant to, part 15.8 
        of the Federal Acquisition Regulation (48 C.F.R. 15.8).
    (h) Finding by Attorney General With Respect to Public Safety.--(1) 
Not later than 60 days prior to the end of each fiscal year specified 
in subsection (e)(1), the Attorney General shall make a finding 
regarding the effects of the percentage limitation imposed by such 
subsection for such fiscal year and the likely effects of the 
limitation imposed by such subsection for the following fiscal year.
    (2) The Attorney General's finding shall include a determination 
whether such limitation has resulted or is likely to result in a 
substantial reduction in inmate industrial employment and whether such 
reductions, if any, present a significant risk of adverse effects on 
safe prison operation or public safety.
    (3) If the Attorney General finds a significant risk of adverse 
effects on either safe prison management or public safety, he shall so 
advise the Congress.
    (4) In advising the Congress pursuant to paragraph (3), the 
Attorney General shall make recommendations for additional 
authorizations of appropriations to provide additional alternative 
inmate rehabilitative opportunities and additional correctional 
staffing, as may be appropriate.

SEC. 5. AUTHORITY TO PERFORM AS A FEDERAL SUBCONTRACTOR.

    (a) In General.--Federal Prison Industries is authorized to enter 
into a contract with a Federal contractor (or a subcontractor of such 
contractor at any tier) to produce products as a subcontractor or 
supplier in the performance of a Federal procurement contract. The use 
of Federal Prison Industries as a subcontractor or supplier shall be a 
wholly voluntary business decision by the Federal prime contractor or 
subcontractor, subject to any prior approval of subcontractors or 
suppliers by the contracting officer which may be imposed by the 
Federal Acquisition Regulation or by the contract.
    (b) Commercial Sales Prohibited.--The authority provided by 
subsection (a) shall not result, either directly or indirectly, in the 
sale in the commercial market of a product or service resulting from 
the labor of Federal inmate workers in violation of section 1762(a) of 
title 18, United States Code. A Federal contractor (or subcontractor at 
any tier) using Federal Prison Industries as a subcontractor or 
supplier in furnishing a commercial product pursuant to a Federal 
contract shall implement appropriate management procedures to prevent 
introducing an inmate-produced product into the commercial market.
    (c) Prohibitions on Mandating Subcontracting With Federal Prison 
Industries.--Except as authorized under the Federal Acquisition 
Regulation, the use of Federal Prison Industries as a subcontractor or 
supplier of products or provider of services shall not be imposed upon 
prospective or actual Federal prime contractors or a subcontractors at 
any tier by means of--
            (1) a contract solicitation provision requiring a 
        contractor to offer to make use of Federal Prison Industries, 
        its products or services;
            (2) specifications requiring the contractor to use specific 
        products or services (or classes of products or services) 
        offered by Federal Prison Industries in the performance of the 
        contract;
            (3) any contract modification directing the use of Federal 
        Prison Industries, its products or services; or
            (4) any other means.

SEC. 6. INMATE WAGES AND DEDUCTIONS.

    Section 4122(b) of title 18, United States Code (as amended by 
section 3 of this Act), is further amended by adding a new paragraph 
(11) as follows:
    ``(11)(A) The Board of Directors of Federal Prison Industries shall 
prescribe the rates of hourly wages to be paid inmates performing work 
for or through Federal Prison Industries. The Director of the Federal 
Bureau of Prisons shall prescribe the rates of hourly wages for other 
work assignments within the various Federal correctional institutions.
            ``(B) The various inmate wage rates shall be reviewed and 
        considered for increase on not less than a biannual basis.
            ``(C) Wages earned by an inmate worker shall be paid in the 
        name of the inmate. Deductions, aggregating to not more than 80 
        percent of gross wages, shall be taken from the wages due for--
                    ``(i) applicable taxes (Federal, State, and local);
                    ``(ii) payment of fines and restitution pursuant to 
                court order;
                    ``(iii) payment of additional restitution for 
                victims of the inmate's crimes (at a rate not less than 
                10 percent of gross wages);
                    ``(iv) allocations for support of the inmate's 
                family pursuant to statute, court order, or agreement 
                with the inmate;
                    ``(v) allocations to a fund in the inmate's name to 
                facilitate such inmate's assimilation back into 
                society, payable at the conclusion of incarceration; 
                and
                    ``(vi) such other deductions as may be specified by 
                the Director of the Bureau of Prisons.
            ``(D) Each inmate worker working for Federal Prison 
        Industries shall indicate in writing that such person--
                    ``(i) is participating voluntarily; and
                    ``(ii) understands and agrees to the wages to be 
                paid and deductions to be taken from such wages.''.

SEC. 7. CLARIFYING AMENDMENT RELATING TO SERVICES.

    (a) In General.--Section 1761 of title 18, United States Code, is 
amended in subsection (a), by striking ``any goods, wares, or 
merchandise manufactured, produced, or mined'' and inserting ``products 
manufactured, services furnished, or minerals mined''.
    (b) Completion of Existing Agreements.--Any prisoner work program 
operated by a prison or jail of a State or local jurisdiction of a 
State which is providing services for the commercial market through 
inmate labor on October 1, 2001, may continue to provide such 
commercial services until--
            (1) the expiration date specified in the contract or other 
        agreement with a commercial partner on October 1, 2001, or
            (2) until September 30, 2004, if the prison work program is 
        directly furnishing the services to the commercial market.
    (c) Approval Required for Long-Term Operation.--A prison work 
program operated with a correctional institution operated by State or 
local jurisdiction of a State may continue to provide inmate labor to 
furnish services for sale in the commercial market after the dates 
specified in subsection (b) if such program has been certified pursuant 
to section 1761(c)(1) of title 18, United States Code, and is in 
compliance with the requirements of such subsection and its 
implementing regulations.

SEC. 8. CONFORMING AMENDMENT.

    Section 4122(a) of title 18, United States Code, is amended by 
striking ``production of commodities'' and inserting ``production of 
products or furnishing of services''.

SEC. 9. RULES OF CONSTRUCTION RELATING TO CHAPTER 307.

    Chapter 307 of title 18, United States Code, is further amended by 
adding 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, except as otherwise specifically provided by 
                law or regulation;
            ``(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 inmate against the United States or any officer, employee, 
        or contractor thereof.''.

SEC. 10. PROVIDING ADDITIONAL OPPORTUNITIES FOR POST INCARCERATION 
                    VOCATIONAL AND REMEDIAL EDUCATIONAL OPPORTUNITIES 
                    FOR INMATES.

    (a) Federal Reentry Center Demonstration.--
            (1) Authority and establishment of demonstration project.--
        From funds made available to carry out this section, the 
        Attorney General, in consultation with the Director of the 
        Administrative Office of the United States Courts, shall 
        establish the Federal Reentry Center Demonstration project. The 
        project shall involve appropriate prisoners from the Federal 
        prison population and shall utilize community corrections 
        facilities, home confinement, and a coordinated response by 
        Federal agencies to assist participating prisoners in preparing 
        for and adjusting to reentry into the community.
            (2) Project elements.--The project authorized by paragraph 
        (1) shall include the following core elements:
                    (A) A Reentry Review Team for each prisoner, 
                consisting of representative from the Bureau of 
                Prisons, the United States Probation System, the United 
                States Parole Commission, and the relevant community 
                corrections facility, who shall initially meet with the 
                prisoner to develop a reentry plan tailored to the 
                needs of the prisoner.
                    (B) A system of graduated levels of supervision 
                within the community corrections facility to promote 
                community safety, provide incentives for prisoners to 
                complete the reentry plan, including victim 
                restitution, and provide a reasonable method for 
                imposing sanctions for a prisoner's violation of the 
                conditions of participation in the project.
                    (C) Substance abuse treatment and aftercare, mental 
                and medical health treatment and aftercare, vocational 
                and educational training, life skills instruction, 
                conflict resolution skills training, batterer 
                intervention programs, assistance obtaining suitable 
                affordable housing, and other programming to promote 
                effective reintegration into the community as needed.
            (3) Probation officers.--From funds made available to carry 
        out this section, the Director of the Administrative Office of 
        the United States Courts shall assign one or more probation 
        officers from each participating judicial district to the 
        Reentry Demonstration project. Such officers shall be assigned 
        to and stationed at the community corrections facility and 
        shall serve on the Reentry Review Teams.
            (4) Project duration.--The Reentry Center Demonstration 
        project shall begin not later than 6 months following the 
        availability of funds to carry out this subsection, and shall 
        last 3 years.
    (b) Definitions.--For the purposes of this section, ``Appropriate 
prisoner'' shall mean a person who is considered by prison 
authorities--
            (1) to pose a medium to high risk of committing a criminal 
        act upon reentering the community, and
            (2) to lack the skills and family support network that 
        facilitate successful reintegration into the community.
    (c) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated, to remain available until 
expended--
            (1) to the Federal Bureau of Prisons--
                    (A) $1,375,000 for fiscal year 2003;
                    (B) $1,110,000 for fiscal year 2004;
                    (C) $1,130,000 for fiscal year 2005;
                    (D) $1,155,000 for fiscal year 2006; and
                    (E) $1,230,000 for fiscal year 2007;
            (2) to the Federal Judiciary--
                    (A) $3,380,000 for fiscal year 2003;
                    (B) $3,540,000 for fiscal year 2004;
                    (C) $3,720,000 for fiscal year 2005;
                    (D) $3,910,000 for fiscal year 2006; and
                    (E) $4,100,000 for fiscal year 2007.

SEC. 11. PROVIDING ADDITIONAL TRAINING AND EDUCATIONAL OPPORTUNITIES 
                    FOR INMATES.

    (a) Amendment Regarding the Department of Justice Assets Forfeiture 
Fund.--Section 524(c)(1) of title 28, United States Code, is amended--
            (1) by redesignating the second appearance of subparagraph 
        (I) as subparagraph (J); and
            (2) by amending subparagraph (J) (as redesignated by 
        paragraph (2)) to read as follows:
            ``(J) payments to the Bureau of Prisons exclusively for the 
        purpose of establishing the Federal Enhanced In-Prison 
        Vocational Assessment and Training Program in all Federal 
        institutions, which shall provide in-prison assessments of 
        prisoners' needs and aptitudes, enhanced work skills developed, 
        enhanced release readiness programming, and other components as 
        appropriate to reduce inmate idleness and prepare Federal 
        prisoners for release and reentry into the community;''; and
            (4) by adding at the end the following new subparagraph:
            ``(K) payments to the Bureau of Prisons exclusively for the 
        purpose of establishing a nonprofit component for inmate work 
        in all Federal institutions, in carrying out which Federal 
        Prison Industries shall (i) work actively to identify and 
        donate to nonprofit organizations that provide goods and 
        services to low income individuals who can use Federal Prison 
        Industry products and have difficulty purchasing these products 
        on their own, and (ii) focus on organizations that would not 
        otherwise be available to purchase such products.''.
    (b) Priority Established.--During each fiscal year after fiscal 
year 2002, the Attorney General shall, to carry out the programs 
described in subparagraphs (J) and (K) of section 524(c)(1) of title 
28, United States Code (as added by subsection (a)), allocate such 
funds as may be appropriate, but in no event less than $75,000,000, 
from the excess unobligated balance in the Department of Justice Assets 
Forfeiture Fund. If the unobligated balance of the Fund is less than 
such amount or such funds are otherwise unavailable from the Fund, such 
allocation shall be made from the General Treasury.

SEC. 12. RESTRUCTURING THE BOARD OF DIRECTORS.

    Section 4121 of title 18, United States Code, is amended to read as 
follows:

``Sec. 4121. Federal Prison Industries; Board of Directors: executive 
                    management

    ``(a) Federal Prison Industries is a government corporation of the 
District of Columbia organized to carry on such industrial operations 
in Federal correctional institutions as authorized by its Board of 
Directors. The manner and extent to which such industrial operations 
are carried on in the various Federal correctional institutions shall 
be determined by the Attorney General.
    ``(b)(1) The corporation shall be governed by a board of 11 
directors appointed by the President.
    ``(2) In making appointments to the Board, the President shall 
assure that 3 members represent the business community, 3 members 
represent organized labor, 1 member shall have special expertise in 
inmate rehabilitation techniques, 1 member represents victims of crime, 
1 member represents the interests of Federal inmate workers, and 2 
additional members whose background and expertise the President deems 
appropriate. The members of the Board representing the business 
community shall include, to the maximum extent practicable, 
representation of firms furnishing services as well as firms producing 
products, especially from those industry categories from which Federal 
Prison Industries derives substantial sales. The members of the Board 
representing organized labor shall, to the maximum practicable, include 
representation from labor unions whose members are likely to be most 
affected by the sales of Federal Prison Industries.
    ``(3) Each member shall be appointed for a term of 5 years, except 
that of members first appointed--
            ``(A) 2 members representing the business community shall 
        be appointed for a term of 3 years;
            ``(B) 2 members representing labor shall be appointed for a 
        term of 3 years;
            ``(C) 2 members whose background and expertise the 
        President deems appropriate for a term of 3 years;
            ``(D) 1 member representing victims of crime shall be 
        appointed for a term of 3 years;
            ``(E) 1 member representing the interests of Federal inmate 
        workers shall be appointed for a term of 3 years;
            ``(F) 1 member representing the business community shall be 
        appointed for a term of 4 years;
            ``(G) 1 member representing the business community shall be 
        appointed for a term of 4 years; and
            ``(H) the members having special expertise in inmate 
        rehabilitation techniques shall be appointed for a term of 5 
        years.
    ``(4) The President shall designate 1 member of the Board as 
Chairperson. The Chairperson may designate a Vice Chairperson.
    ``(5) Members of the Board may be reappointed.
    ``(6) Any vacancy on the Board shall be filled in the same manner 
as the original appointment. 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 for the remainder of that 
term.
    ``(7) The members of the Board shall serve without compensation. 
The members of the Oversight Board shall be allowed travel expenses, 
including per diem in lieu of subsistence, at rates authorized for 
employees of agencies under subchapter I of chapter 57 of title 5, 
United States Code, to attend meetings of the Board and, with the 
advance approval of the Chairperson of the Board, while otherwise away 
from their homes or regular places of business for purposes of duties 
as a member of the Board.
    ``(8)(A) The Chairperson of the Board may appoint and terminate any 
personnel that may be necessary to enable the Board to perform its 
duties.
    ``(B) Upon request of the Chairperson of the Board, a Federal 
agency may detail a Federal Government employee to the Board without 
reimbursement. Such detail shall be without interruption or loss of 
civil service status or privilege.
    ``(9) The Chairperson of the Board may procure temporary and 
intermittent services under section 3109(b) of title 5, United States 
Code.
    ``(c) The Director of the Bureau of Prisons shall serve as Chief 
Executive Officer of the Corporation. The Director shall designate a 
person to serve as Chief Operating Officer of the Corporation.''.

SEC. 13. PRE-RELEASE EMPLOYMENT ASSISTANCE.

    (a) In General.--The Director of the Bureau of Prisons shall, to 
the maximum extent practicable, afford to inmates opportunities to 
participate in programs and activities designed to help prepare such 
inmates to obtain employment upon release.
    (b) Pre-Release Employment Placement Assistance.--Such pre-release 
employment placement assistance required by subsection (a) shall 
include--
            (1) training in the preparation of resumes and job 
        applications;
            (2) training in interviewing skills;
            (3) training and assistance in job search techniques;
            (4) conduct of job fairs; and
            (5) such other methods deemed appropriate by the Director 
        of the Bureau of Prisons.
    (c) Priority Participation.--Priority in program participation 
shall be accorded to inmates who are participating in work 
opportunities afforded by Federal Prison Industries and are within 12 
months of release from incarceration.

SEC. 14. PROVIDING ADDITIONAL MANAGEMENT FLEXIBILITY TO FEDERAL PRISON 
                    INDUSTRY OPERATIONS.

    Section 4122(b)(3) of title 18, United States Code, is amended--
            (1) by striking ``(3)'' and inserting ``(3)(A)''; and
            (2) by adding at the end the following new paragraphs:
    ``(B) Federal Prison Industries may locate more than one workshop 
at a Federal correctional facility.
    ``(C) Federal Prison Industries may operate a workshop outside of a 
correctional facility if all of the inmates working in such workshop 
are classified as minimum security inmates.''.

SEC. 15. FEDERAL PRISON INDUSTRIES REPORT TO CONGRESS.

    Section 4127 of title 18, United States Code, is amended to read as 
follows:

``Sec. 4127. Federal Prison Industries report to Congress

    ``(a) In General.--Pursuant to chapter 91 of title 31, the board of 
directors of Federal Prison Industries shall submit an annual report to 
Congress on the conduct of the business of the corporation during each 
fiscal year and the condition of its funds during the fiscal year.
    ``(b) Contents of Report.--In addition to the matters required by 
section 9106 of title 31, and such other matters as the board considers 
appropriate, a report under subsection (a) shall include--
            ``(1) a statement of the amount of obligations issued under 
        section 4129(a)(1) of this title during the fiscal year;
            ``(2) an estimate of the amount of obligations that will be 
        issued in the following fiscal year;
            ``(3) an analysis of--
                    ``(A) the corporation's total sales for each 
                specific product and type of service sold to the 
                Federal agencies and the commercial market;
                    ``(B) the total purchases by each Federal agency of 
                each specific product and type of service;
                    ``(C) the corporation's share of such total Federal 
                Government purchases by specific product and type of 
                service; and
                    ``(D) the number and disposition of disputes 
                submitted to the heads of the Federal departments and 
                agencies pursuant to section 4124(e) of this title;
            ``(4) an analysis of the inmate workforce that includes--
                    ``(A) the number of inmates employed;
                    ``(B) the number of inmates utilized to produce 
                products or furnish services sold in the commercial 
                market;
                    ``(C) the number and percentage of employed inmates 
                by the term of their incarceration; and
                    ``(D) the various hourly wages paid to inmates 
                employed with respect to the production of the various 
                specific products and types of services authorized for 
                production and sale to Federal agencies and in the 
                commercial market; and
            ``(5) data concerning employment obtained by former inmates 
        upon release to determine whether the employment provided by 
        Federal Prison Industries during incarceration provided such 
        inmates with knowledge and skill in a trade or occupation that 
        enabled such former inmate to earn a livelihood upon release.
    ``(c) Public Availability.--Copies of an annual report under 
subsection (a) shall be made available to the public at a price not 
exceeding the cost of printing the report.''.

SEC. 16. DEFINITIONS.

    Chapter 307 of title 18, United States Code, is amended by adding 
at the end the following new section:

``Sec. 4131. Definitions

    ``As used in this chapter--
            ``(1) the term `assembly' means the process of uniting or 
        combining articles or components (including ancillary finished 
        components or assemblies) so as to produce a significant change 
        in form or utility, without necessarily changing or altering 
        the component parts;
            ``(2) the term `current market price' means, with respect 
        to a specific product, the fair market price of the product 
        within the meaning of section 15(a) of the Small Business Act 
        (15 U.S.C. 644(a)), at the time that the contract is to be 
        awarded, verified through appropriate price analysis or cost 
        analysis, including any costs relating to transportation or the 
        furnishing of any ancillary services;
            ``(3) the term `import-sensitive product' means a product 
        which, according to Department of Commerce data, has 
        experienced competition from imports at an import to domestic 
        production ratio of 25 percent or greater;
            ``(4) the term `labor-intensive manufacture' means a 
        manufacturing activity in which the value of inmate labor 
        constitutes at least 10 percent of the estimate unit cost to 
        produce the item by Federal Prison Industries;
            ``(5) the term `manufacture' means the process of 
        fabricating from raw or prepared materials, so as to impart to 
        those materials new forms, qualities, properties, and 
        combinations;
            ``(6) the term `reasonable share of the market' means a 
        share of the total purchases by the Federal departments and 
        agencies, as reported to the Federal Procurement Data System 
        for--
                    ``(A) any specific product during the 3 preceding 
                fiscal years, that does not exceed 20 percent of the 
                Federal market for the specific product; and
                    ``(B) any specific service during the 3 preceding 
                fiscal years, that does not exceed 5 percent of the 
                Federal market for the specific service; and
            ``(7) the term `services' has the meaning given the term 
        `service contract' by section 37.101 of the Federal Acquisition 
        Regulation (48 C.F.R. 36.102), as in effect on July 1, 2001.''.

SEC. 17. IMPLEMENTING REGULATIONS AND PROCEDURES.

    (a) Federal Acquisition Regulation.--
            (1) Proposed revisions.--Proposed revisions to the 
        Governmentwide Federal Acquisition Regulation to implement the 
        amendments made by this Act shall be published not later than 
        60 days after the date of the enactment of this Act and provide 
        not less than 60 days for public comment.
            (2) Final regulations.--Final regulations shall be 
        published not later than 180 days after the date of the 
        enactment of this Act and shall be effective on the date that 
        is 30 days after the date of publication.
            (3) Public participation.--The proposed regulations 
        required by subsection (a) and the final regulations required 
        by subsection (b) shall afford an opportunity for public 
        participation in accordance with section 22 of the Office of 
        Federal Procurement Policy Act (41 U.S.C. 418b).
    (b) Board of Directors.--
            (1) In general.--The Board of Directors of Federal Prison 
        Industries shall issue regulations defining the terms specified 
        in paragraph (2).
            (2) Terms to be defined.--The Board of Directors shall 
        issue regulations for the following terms:
                    (A) Prison-made product.
                    (B) Prison-furnished service.
                    (C) Specific product.
                    (D) Specific service.
            (3) Schedule for regulatory definitions.--
                    (A) Proposed regulations relating to the matter 
                described in subsection (b)(2) shall be published not 
                later than 60 days after the date of enactment of this 
                Act and provide not less than 60 days for public 
                comment.
                    (B) Final regulations relating to the matters 
                described in subsection (b)(2) shall be published not 
                less than 180 days after the date of enactment of this 
                Act and shall be effective on the date that is 30 days 
                after the date of publication.
            (4) Enhanced opportunities for public participation and 
        scrutiny.--
                    (A) Administrative procedure act.--Regulations 
                issued by the Board of Directors shall be subject to 
                notice and comment rulemaking pursuant to section 553 
                of title 5, United States Code. Unless determined 
                wholly impracticable or unnecessary by the Board of 
                Directors, the public shall be afforded 60 days for 
                comment on proposed regulations.
                    (B) Enhanced outreach.--The Board of Directors 
                shall use means designed to most effectively solicit 
                public comment on proposed regulations, procedures, and 
                policies and to inform the affected public of final 
                regulations, procedures, and policies.
                    (C) Open meeting processes.--The Board of Directors 
                shall take all actions relating to the adoption of 
                regulations, operating procedures, guidelines, and any 
                other matter relating to the governance and operation 
                of Federal Prison Industries based on deliberations and 
                a recorded vote conducted during a meeting open to the 
                public, unless closed pursuant to section 552(b) of 
                title 5, United States Code.

SEC. 18. RULE OF CONSTRUCTION.

    Subsection (e) of section 4124 of title 18, United States Code, as 
amended by section 2, is not intended to alter any rights of any 
offeror other than Federal Prison Industries to file a bid protest in 
accordance with other law or regulation in effect on the date of the 
enactment of this Act.

SEC. 19. EFFECTIVE DATE AND APPLICABILITY.

    (a) Effective Date.--Except as provided in subsection (b), this Act 
and the amendments made by this Act shall take effect on the date of 
enactment of this Act.
    (b) Applicability.--Section 4124 of title 18, United States Code, 
as amended by section 2, shall apply to any requirement for a product 
or service offered by Federal Prison Industries needed by a Federal 
department or agency after the effective date of the final regulations 
issued pursuant to section 16(a)(2), or after September 30, 2003, 
whichever is earlier.

SEC. 20. CLERICAL AMENDMENTS.

    The table of sections for chapter 307 of title 18, United States 
Code, is amended--
            (1) by amending the item relating to section 4121 to read 
        as follows:

``4121. Federal Prison Industries; Board of Directors: executive 
management.'';
            (2) by amending the item relating to section 4124 to read 
        as follows:

``4124. Governmentwide procurement policy relating to purchases from 
Federal Prison Industries.'';
            (3) by amending the item relating to section 4127 to read 
        as follows:

``4127. Federal Prison Industries report to Congress.'';
        and
            (4) by adding at the end the following new items:

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

SEC. 21. INDEPENDENT STUDY TO DETERMINE THE EFFECTS OF ELIMINATING THE 
                    FEDERAL PRISON INDUSTRIES MANDATORY SOURCE 
                    AUTHORITY.

    (a) Study Required.--The Comptroller General shall undertake to 
have an independent study conducted on the effects of eliminating the 
Federal Prison Industries mandatory source authority.
    (b) Solicitation of Views.--The Comptroller General shall ensure 
that in developing the statement of work and the methodology for the 
study, the views and input of private industry, organized labor groups, 
Members and staff of the relevant Congressional committees, officials 
of the executive branch, and the public are solicited.
    (c) Submission.--Not later than January 31, 2003, the Comptroller 
General shall submit the results of the study to Congress, including 
any recommendations for legislation.

                          Purpose and Summary

    H.R. 1577 would fundamentally amend Federal Prison 
Industries' (FPI) 1934 authorizing statute. This bill would 
gradually phase out the exclusive right of FPI, deemed 
``mandatory source,'' to sell goods to Federal agencies by 
October 1, 2008. The bill changes the manner in which FPI sells 
its products and services to the various Federal departments 
and agencies. During the phase-out period, FPI would be 
required to provide the agencies with a product that meets its 
needs at a ``fair and reasonable price'' in a timely manner.
    Today, FPI's offered price meets the ``current market'' 
price standard if it does not exceed the highest price offered 
to the Government for a comparable item, even if no actual 
sales have been made at that price. Under the Federal 
Acquisition Regulations (FAR), the buying agency must obtain 
FPI's permission through a ``waiver'' to solicit competitive 
offers from the private sector.
    This legislation would establish new competitive procedures 
for Government procurement of products or services that are 
offered for sale by FPI. H.R. 1577 would require that FPI sales 
to its Federal agency customers be made through contracts won 
on a competitive basis, for both products and services. Like 
other suppliers to the Federal Government, FPI would be 
required to fulfill its contractual obligations in a timely 
manner.
    To enable FPI to adjust to the requirement that it obtain 
contracts on a competitive basis, H.R. 1577 provides FPI with a 
5-year transitional period to phase-out its sole-source 
dealings with its Federal agency customers. Under this 
authority, Federal agencies could continue to contract with FPI 
on a noncompetitive basis, subject to annually declining caps 
on the use of the preferential contracting authority. During 
the first transitional year, FY 2004, Federal agencies could 
make noncompetitive awards to FPI in an amount not to exceed 90 
percent of FPI's sales in FY 2001. The percentage decreases to 
85 percent in FY 2005, 70 percent in FY 2006, 55 percent in FY 
2007, and 40 percent in the final transitional year FY 2008.
    To assure that the loss of a contract by FPI does not 
endanger the safety of a Federal Correctional Institution 
(FCI), H.R. 1577 contains a provision that permits the Attorney 
General to authorize a sole source contract award to prevent 
idleness ``that could reasonably be expected to significantly 
endanger the safe and effective administration'' of the FCI at 
which the work required by the contract is scheduled to be 
performed. To prevent abuse of this sole-source authority by 
FPI, the provision requires that the Attorney General's 
decision to authorize the sole source contract award be 
supported by findings by the FCI's warden.
    H.R. 1577 does not alter a broad array of advantages that 
FPI enjoys when it competes with private sector firms. Inmates 
working for FPI will continue to be paid at sub-minimum wage 
rates, the highest of which is $1.15 per hour. FPI factory 
space is provided by the host FCI, and is constructed at 
taxpayer expense. Similarly, FPI receives its utilities from 
the host FCI. As a Government corporation, FPI may receive 
industrial equipment excess without cost from other Departments 
and agencies, including the substantial quantities of 
industrial equipment returned to the Department of Defense by 
its contractors. FPI has had a $20 million line-of-credit from 
the U.S. Treasury on an interest-free basis since 1988.
    In addition to requiring that FPI competes for its Federal 
agency sales, H.R. 1577 improves the process by which FPI's 
Board of Directors considers proposals from FPI's career 
management staff to authorize production expansion. The bill 
provides clearer standards to guide the Board deliberations 
regarding expansion proposals. It improves, and makes 
independent, the process by which the impact on private sector 
suppliers is evaluated. It increases the opportunities for 
public comment on the proposed expansions and assures that FPI 
has direct access to those comments. For the first time, it 
extends the process to proposals to offer a new service as well 
as a new product or to expand the production of a currently 
authorized product or service.
    The legislation substantially modifies the structure of 
FPI's Board of Directors. Currently, the FPI Board of Directors 
is composed of six-members, appointed by the President. Two are 
public members, one representing the Attorney General and 
another representing the Secretary of Defense. Of the four 
private sector members, one represents ``industry,'' one 
represents ``labor,'' one represents ``agriculture'' (although 
FPI does not sell agricultural products), and one represents 
``retailers and consumers'' (although FPI is not authorized to 
sell products or services in the commercial market).
    H.R. 1577 replaces the current Board with an 11-member 
Board, with three members representing business, three members 
representing labor, one member with special expertise in inmate 
rehabilitation techniques, one member representing victims of 
crime, one member representing inmate workers, and two 
additional members ``whose background and expertise the 
President deems appropriate.'' The restructuring of the Board 
was modeled after the Internal Revenue Service Oversight Board, 
enacted as part of the Internal Revenue Service Restructuring 
and Reform Act of 1998. Most important, H.R. 1577 requires that 
the Board deliberate and make decisions in public rather than 
in closed session as they do today.

                     SENSENBRENNER-FRANK AMENDMENT

                     IN THE NATURE OF A SUBSTITUTE

    The amendment in the nature of a substitute offered by Mr. 
Sensenbrenner and Mr. Frank was based upon the text of H.R. 
1577 with a series of substantive modifications based upon 
detailed discussions with Federal Prison Industries (FPI) 
designed to address concerns regarding the phase-out of 
mandatory source.

                         MR. CONYERS AMENDMENT

    Mr. Conyers offered an amendment to the amendment in the 
nature of the substitute, which was adopted by the Committee, 
that will expand upon the provisions of the legislation that 
provide alternative rehabilitative opportunities for more 
Federal inmates to better prepare them for a successful return 
to society. It allows a demonstration project for a Federal 
Reentry program to be established to protect communities and 
help prisoners reintegrate into society after release. The 
amendment provides increased opportunities to participate in 
programs providing fundamental remedial education as well as 
modern hands-on vocational and apprenticeship training. 
Additionally, the amendment provides alternative paid work 
opportunities by authorizing FPI to produce products for 
donation to nonprofit organizations that provide goods and 
services to low income individuals who can use these goods and 
have difficulty purchasing these products on their own.

                             HYDE AMENDMENT

    Mr. Hyde offered an amendment to the amendment in the 
nature of a substitute that was approved by the Committee, 
after being modified by an amendment offered by Mr. Frank, 
which would require the Attorney General to make a finding 
regarding the effects of the phase-out of mandatory source 
authority on inmate employment and safety in the prisons and of 
the public. If the Attorney General finds a significant risk of 
adverse effects, he would notify the Congress and postpone any 
further phase-out of mandatory source for 1 year. The phase-out 
postponed shall resume 1 year later if the Attorney General 
makes a finding 60 days prior to the start of that fiscal year 
that it will not result in a substantial reduction in inmate 
employment or will not present significant threats to prison 
operations or public safety.

                            FRANK AMENDMENT

    The Committee approved an amendment offered by Mr. Frank to 
the Hyde amendment to the amendment in the nature of a 
substitute to allow for a study and report to Congress by the 
Attorney General, but did not allow the Attorney General to 
postpone the phase-out.

                         JACKSON LEE AMENDMENT

    The Committee adopted an amendment to the amendment in the 
nature of a substitute offered by Ms. Jackson Lee to allow the 
Comptroller General to have an independent study performed on 
the effects of eliminating mandatory source contracting.

                            GREEN AMENDMENT

    Mr. Green offered an amendment to the amendment in the 
nature of the substitute, which was adopted by the Committee, 
that would add two additional members to the Board of 
Directors, one member to represent victims of crime and another 
to represent Federal inmate workers.

                             WATT AMENDMENT

    The Committee adopted an amendment offered by Mr. Watt to 
the amendment in the nature of a substitute that would alter 
the first of two determinations that the Attorney General must 
make to allow procurement activity to be had on a 
noncompetitive basis by FPI to require a determination that FPI 
cannot reasonably expect fair consideration to receive the 
contract award on a competitive basis.

                            SCOTT AMENDMENT

    Mr. Scott offered an amendment to the amendment in the 
nature of a substitute that the Committee adopted which would 
require the Attorney General to include information in his 
annual report to Congress (adopted by the Hyde amendment) on 
the impact of the loss of prison industry jobs on the safety 
and work environment of the workers.

                Background and Need for the Legislation

    The Federal Bureau of Prisons (BOP) has approximately 
150,000 prisoners convicted of Federal crimes in custody. The 
BOP operates 98 institutions that hold more than 126,000 
prisoners. Prisoners who are physically able must work in some 
capacity 5 days a week. The Federal Prison Industries (FPI), a 
Government corporation that operates the BOP's correctional 
program, employs approximately 17 percent of the Federal prison 
population to manufacture goods for, and provide services to, 
Federal agencies.
    FPI is a large and growing Government-owned corporation. It 
currently operates 102 factories at 67 of its correctional 
institutions where it produces products in over 150 different 
product lines under the trade name UNICOR. It offers products 
and services through eight business groups. They are the 
Clothing and Textile Business Group, the Electronics Business 
Group, the Fleet Management and Vehicular Components Business 
Group, the Furniture Business Group, the Graphics Business 
Group, the Industrial Products Business Group, the Recycled 
Electronics Products and Services Business Group, and the 
Services Business Group.
    In Fiscal Year 2001, FPI had sales of $583.5 million, up 
from $546.4 million in FY 2000. These sales place FPI among the 
top 40 contractors to the Federal Government, in the same 
league with Motorola and Dell Computer Corporation. By 
contrast, FPI sales were $29 million in 1960. They reached $117 
million in 1980. By 1985, they had grown to $240 million. 
Although total Federal procurement expenditures were dropping, 
FPI sales were $339 million in 1990 and climbed to $459.1 
million by 1995.
    Federal agencies are required by law, under 18 U.S.C. 
Sec. 4124, to purchase FPI products if a product is available 
that meets the agencies' requirements and does not exceed 
current market prices. Under FPI's 1934 authorizing statute 
Federal agencies ``shall purchase at not to exceed current 
market prices, such products . . . as meet their requirements 
and may be available'' (18 U.S.C. Sec. 4124). This provision in 
the law, deemed `mandatory source preference,' does not specify 
how the current market price should be determined. The General 
Accounting Office (GAO) concluded in a 1998 report to Congress 
that ``the only limitation on FPI's price is that it may not 
exceed the upper end of the current market price range.''
    The ``mandatory preference'' given FPI is viewed as an 
exception to the Federal Acquisition Regulation standards 
established for a ``fair and reasonable price.'' Agencies are 
required to purchase products from FPI regardless of whether 
FPI provides the agency with a price it considers reasonable or 
factually supports the price it offered. An agency must obtain 
a waiver from FPI to purchase a product from another source; 
however, differences in price alone cannot sustain the request 
for a waiver.
    Under FPI's mandatory source status, FPI, rather than the 
buying Federal agency, determines if FPI's offered product and 
proposed delivery schedule meet the mission needs of the buying 
agency and whether FPI's offered price meets the ``current 
market'' price standard. Thus, FPI's mandatory source status 
deprives the Federal agencies from using competitive 
procurement procedures to get the ``best value'' for the tax 
dollars they expend. Private sector businesses, and their non-
inmate workers, are deprived of even the opportunity to bid on 
a broad array of contracting opportunities funded with their 
tax dollars.
    Although FPI is precluded from selling its goods in the 
commercial market under 18 U.S.C. Sec. 1761, the Bureau of 
Prisons (BOP) has taken the position that the language 
prohibiting interstate transport of goods does not prohibit it 
from selling services in the commercial market. Many private 
companies and small business have trouble competing with the 
advantages the prison industry enjoys such as a guaranteed 
market for its products and reduced costs for labor and 
capital.
    Opponents of this legislation maintain that FPI is 
completely self-sufficient and serves a vital purpose. FPI 
provides inmates with employment skills and the opportunity to 
learn a trade that will help them obtain a job upon release. 
Some studies have shown that inmates who participate in work 
programs are less likely to commit new offenses. Additionally, 
allowing prisoners to work helps productivity and minimizes 
opportunities for conflict within the prison. Some wages paid 
to the prisoners are directed toward restitution payments owed 
to victims.
B. Legislative History
    H.R. 1577, the ``Federal Prison Industries Competition in 
Contracting Act of 2001'' was introduced on April 24, 2001 and 
referred to the House Subcommittee on Crime, Terrorism, and 
Homeland Security on April 25, 2001. The bill is similar to two 
different bills that were introduced in the 106th Congress to 
address the mandatory source preference in FPI. Hearings were 
held on these bills in the Subcommittee and H.R. 1577 was 
forwarded to the House Committee on the Judiciary.

                                Hearings

    The Committee's Subcommittee on Crime, Terrorism, and 
Homeland Security held 1 day of hearings on H.R. 1577 on April 
26, 2001. During that hearing Rep. Peter Hoekstra (MI-2d), the 
sponsor of H.R. 1577, testified and submitted for the record 
the printed hearing records from five oversight hearings 
conducted by the Subcommittee on Oversight and Investigations 
of the Committee on Education and the Workforce during the 
104th, 105th, and 106th Congress. Testimony was received from 
three other witnesses, representing business and labor 
organizations, with additional material submitted by two 
individuals and organizations.

                        Committee Consideration

    On April 18, 2002 and April 24, 2002, the Committee met in 
open session and ordered favorably reported the bill H.R. 1577 
with amendments by a voice vote, a quorum being present.

                         Vote of the Committee

    1. Mr. Conyers offered an amendment to the amendment in the 
nature of the substitute which would provide funds for 
additional vocational and educational opportunities for inmates 
during their incarceration and establish a demonstration 
project for a Federal offender reentry program after release to 
assist prisoners in adapting to life outside of prison, 
including skills training. The amendment would also allow FPI 
to donate products to nonprofit organizations that serve low 
income individuals. This amendment was adopted by voice vote.
    2. Mr. Green of Wisconsin offered an amendment to the 
amendment in the nature of a substitute which would allow FPI 
to sell on a noncompetitive basis to agencies only in 
accordance with the applicable laws and regulations and not in 
accordance with the procedures described in the amendment in 
the nature of a substitute. It would also require agencies to 
solicit bids from FPI for any purchase even those under the 
micro-purchase threshold. This amendment was defeated on a 
rollcall vote, 8-18.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................              X
Mr. Gekas.......................................................                              X
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................
Mr. Bryant......................................................
Mr. Chabot......................................................              X
Mr. Barr........................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Graham......................................................
Mr. Bachus......................................................              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................              X
Mr. Keller......................................................                              X
Mr. Issa........................................................              X
Ms. Hart........................................................                              X
Mr. Flake.......................................................
Mr. Pence.......................................................
Mr. Conyers.....................................................                              X
Mr. Frank.......................................................                              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................
Mr. Scott.......................................................              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................                              X
Mr. Meehan......................................................                              X
Mr. Delahunt....................................................
Mr. Wexler......................................................
Ms. Baldwin.....................................................                              X
Mr. Weiner......................................................                              X
Mr. Schiff......................................................
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................              8              18
----------------------------------------------------------------------------------------------------------------

    3. Mr. Hyde offered an amendment to the amendment in the 
nature of a substitute that would require the Attorney General 
to make a finding regarding the effects of the phase-out of 
mandatory source authority on inmate employment and safety 
within the prisons and to the public. If the Attorney General 
finds a significant risk of adverse effects, he would notify 
the Congress and postpone for 1 year any further phase-out of 
mandatory source. The phase-out postponed shall resume 1 year 
later if the Attorney General makes a finding 60 days prior to 
the start of that fiscal year that it will not result in a 
substantial reduction in inmate employment or will not present 
significant threats to prison operations or public safety. The 
Hyde amendment was adopted by voice vote after being modified 
by an amendment offered by Mr. Frank.
    4. Mr. Frank offered an amendment to the Hyde amendment to 
the amendment in the nature of a substitute to allow for a 
study and report to Congress by the Attorney General, but did 
not allow the Attorney General to postpone the phase-out. The 
Frank amendment to the Hyde amendment was adopted by a rollcall 
vote, 18-9.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................                              X
Mr. Gekas.......................................................              X
Mr. Coble.......................................................              X
Mr. Smith (Texas)...............................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................
Mr. Bryant......................................................
Mr. Chabot......................................................                              X
Mr. Barr........................................................              X
Mr. Jenkins.....................................................              X
Mr. Cannon......................................................              X
Mr. Graham......................................................              X
Mr. Bachus......................................................                              X
Mr. Hostettler..................................................              X
Mr. Green.......................................................                              X
Mr. Keller......................................................              X
Mr. Issa........................................................                              X
Ms. Hart........................................................              X
Mr. Flake.......................................................                              X
Mr. Pence.......................................................
Mr. Conyers.....................................................              X
Mr. Frank.......................................................              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................                              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................                              X
Ms. Jackson Lee.................................................
Ms. Waters......................................................              X
Mr. Meehan......................................................
Mr. Delahunt....................................................
Mr. Wexler......................................................
Ms. Baldwin.....................................................
Mr. Weiner......................................................              X
Mr. Schiff......................................................                              X
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             18               9
----------------------------------------------------------------------------------------------------------------

    5. Ms. Jackson Lee offered an amendment to the amendment in 
the nature of a substitute to allow the Comptroller General to 
have an independent study performed on the effects of 
eliminating mandatory source contracting. This amendment was 
adopted by a voice vote.
    6. Mr. Green offered an amendment in the nature of a 
substitute that would add two additional members to the Board 
of Directors, one member to represent victims of crime and 
another to represent Federal inmate workers. This amendment was 
adopted by a voice vote.
    7. Mr. Watt offered an amendment to the amendment in the 
nature of the substitute that would alter the first of two 
determinations that the Attorney General must make to allow 
procurement activity to be had on a noncompetitive basis by FPI 
to require a determination that FPI cannot reasonably expect 
fair consideration to receive the contract award on a 
competitive basis. This amendment was adopted by a voice vote.
    8. Mr. Issa offered an amendment that would have allowed 
Federal Prison Industries to continue to utilize mandatory 
source if 80 percent of the products are manufactured by 
inmates within 2 years of release or in a pre-release program. 
This amendment was defeated by a rollcall vote, 5-22.

                                                   ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Gekas.......................................................                              X
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................                              X
Mr. Gallegly....................................................
Mr. Goodlatte...................................................                              X
Mr. Bryant......................................................                              X
Mr. Chabot......................................................              X
Mr. Barr........................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Graham......................................................
Mr. Bachus......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................              X
Mr. Keller......................................................                              X
Mr. Issa........................................................              X
Ms. Hart........................................................                              X
Mr. Flake.......................................................                              X
Mr. Pence.......................................................
Mr. Conyers.....................................................                              X
Mr. Frank.......................................................                              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................                              X
Mr. Scott.......................................................              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................                              X
Mr. Meehan......................................................                              X
Mr. Delahunt....................................................
Mr. Wexler......................................................
Ms. Baldwin.....................................................                              X
Mr. Weiner......................................................
Mr. Schiff......................................................                              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................              5              22
----------------------------------------------------------------------------------------------------------------

    9. Mr. Scott offered an amendment that would require the 
Attorney General to include information in his annual report to 
Congress (as added by the Hyde amendment) on the impact of the 
loss of prison industry jobs on the safety and work environment 
of the workers. This amendment was adopted by voice vote.
    10. Mr. Scott offered an amendment that would allow the 
Board of Directors to approve a proposal authorizing FPI to 
exceed a ``reasonable share of the market,'' as defined in the 
Sensenbrenner-Frank amendment in the nature of a substitute, if 
it is specifically requested by the agency and the contract 
award is made using competitive procedures. This amendment was 
defeated by voice vote.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                    Performance Goals and Objectives

    The legislation as amended includes an authorization of 
funds to improve vocational training and educational 
opportunities within the Federal prison system and to allow a 
demonstration project for a Federal offender reentry program. 
The goal is to ensure that with the phase-out of mandatory 
source, inmates in prison are still receiving skills training 
to improve job opportunities after release. Additionally, the 
Federal reentry program will establish plans for individual 
prisoners to address community safety, substance abuse/mental 
health treatment, vocational and educational training, and 
programming to assist with successful reintegration into the 
community.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1577, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 27, 2002.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1577, the Federal 
Prison Industries Competition in Contracting Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lanette J. 
Walker, who can be reached at 226-2860.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 1577--Federal Prison Industries Competition in Contracting Act of 
        2002.

                                SUMMARY

    H.R. 1577 would amend the laws that authorize the Federal 
Prison Industries (FPI), a Government-owned corporation that 
produces products for the Federal Government with prison labor. 
Under current law, Federal agencies are required to purchase 
products from FPI if products are 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 the bill, this 
requirement would be reduced over the next several years, and 
the share of the Federal market that FPI holds for the products 
and services it provides would be limited to 20 percent and 5 
percent, respectively.
    Section 11 would authorize the Attorney General to 
establish a Federal Enhanced In-Prison Vocational Assessment 
and Training Program in all Federal institutions and establish 
an FPI program that would produce products to be donated to 
nonprofit organizations. The bill also would appropriate a 
minimum of $75 million per year for such programs. Based on 
information from the Department of Justice (DOJ) and major FPI 
customers, CBO estimates that enacting this provision would 
result in direct spending of about $1.9 billion over the 2003-
2007 period and $5.3 billion over the 2003-2012 period. Because 
enactment of H.R. 1577 would affect direct spending, pay-as-
you-go procedures would apply to the bill.
    The bill also would authorize the appropriation of $4 
million to $5 million each year over the 2003-2007 period for 
the Bureau of Prisons and the Federal courts to establish a 
Federal Reentry Center Demonstration project. CBO estimates 
that implementing this provision would cost $24 million over 
the 2003-2007 period to establish and operate the program, 
assuming the appropriation of the authorized amounts.
    H.R. 1577 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on State, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 1577 is shown in the 
following table. The cost of this legislation falls within 
budget function 750 (administration of justice).


                           BASIS OF ESTIMATE

    CBO assumes that H.R. 1577 will be enacted near the end of 
fiscal year 2002 and that amounts authorized by the bill will 
be appropriated. The bill's effects on direct spending and 
spending subject to appropriation are described in the 
following paragraphs.
Direct Spending
    H.R. 1577 would authorize the Attorney General to spend no 
less than $75 million a year to establish and administer the 
programs authorized in section 11. CBO estimates that direct 
spending as a result of enacting H.R. 1577 would exceed that 
minimum level and would total about $1.9 billion over the 2003-
2007 period and $5.3 billion over the next 10 years. Our 
estimate is based primarily on the assumption that all able 
inmates continue to work as under current law.
    FPI Donation Program. The bill would facilitate developing 
a significant donation program by restricting the portion of 
the Federal market for goods and services that FPI can serve 
and by reducing the requirement for Federal agencies to 
purchase such goods and services from FPI. H.R. 1577 would 
limit the portion of the Federal market for any product or 
service that FPI can provide to the government to 20 percent 
and 5 percent, respectively. For example, FPI provides 94 
percent of all mail carrier bag repair for the U.S. Postal 
Service. H.R. 1577 would prevent FPI from providing more than 5 
percent of that service. In addition, the bill would gradually 
reduce the requirement for Federal agencies to purchase FPI 
products and services. Based on information from DOJ and major 
Federal customers of FPI, we expect that FPI's total sales to 
the Federal Government would decrease under the bill by 20 
percent of projected sales in 2003 and that such sales would 
continue to decline--eroding by 50 percent of anticipated sales 
by 2008.
    H.R. 1577 also would authorize the Attorney General to 
establish a new FPI program in every Federal institution that 
would produce goods and services to be donated to nonprofit 
organizations instead of being offered for purchase to the 
Federal Government. Because the Bureau of Prisons requires all 
able inmates to work, CBO assumes that the loss in production 
due to reduced demand by Federal agencies for FPI products and 
services would be offset by the production of goods and 
services for donation under this new program.
    CBO estimates that the donation program would cost $137 
million in fiscal year 2003, about $1.1 billion over the 2003-
2007 period, and about $3.1 billion over the 2003-2012 period 
to operate in existing facilities. Costs would include inmate 
and civilian salaries, raw materials, maintenance, and other 
expenses to convert manufacturing facilities to produce 
products desirable to nonprofit organizations.
    The cost of operating the FPI donation program would 
increase as more prison facilities are added to the Federal 
system. DOJ anticipates that about 25 new Federal prison 
facilities will open during the next 10 years. Based on 
information from DOJ, CBO estimates that implementing the FPI 
donation program in those new facilities would cost $700 
million over the 2003-2007 period and about $1.9 billion over 
the 2003-2012 period.
    Enhanced In-Prison Vocational Assessment and Training. 
Section 11 would authorize the Attorney General to establish a 
Federal Enhanced In-Prison Vocational Assessment and Training 
Program in all Federal institutions. Federal institutions 
currently participate in vocational assessment and training 
programs, and we assume that the program that would be 
authorized by H.R. 1577 would be an expanded version of the 
current program. Based on information from DOJ, CBO estimates 
that the enhanced program would cost $28 million to $30 million 
per year to increase the number of inmates who participate in 
the training and expand the services provided by the program.
Spending Subject to Appropriation
    Section 10 would authorize the appropriation of $1 million 
each year to the Bureau of Prisons and $3 million to $4 million 
each year to the Federal courts to establish the Federal 
Reentry Center Demonstration project. The project would include 
substance abuse treatment, vocation and educational training, 
conflict resolution skills training, and assistance with 
affordable housing. CBO estimates that this provision would 
cost $24 million over the 2003-2007 period, assuming the 
appropriation of the authorized amounts.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. The changes in direct spending that would 
be subject to pay-as-you-go procedures are shown in the 
following table. For the purposes of pay-as-you-go procedures, 
only the effects through 2006 are counted.


              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 1577 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no cost on State, 
local, or tribal governments.

                         ESTIMATE PREPARED BY:

Federal Costs: Lanette J. Walker (226-2860)
Impact on State, Local, and Tribal Governments: Angela Seitz 
    (225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2940)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clauses 3, 14 and 18, 
of the Constitution.

               Section-by-Section Analysis and Discussion

    Section 1. Short Title. The short title of this bill is the 
``Federal Prison Industries Competition in Contracting Act of 
2002.''
    Section 2. Government-Wide Procurement Policy Relating to 
Purchases from Federal Prison Industries. Amends Title 18 to 
replace provisions regarding the purchase of prison-made 
products by Federal departments with provisions establishing a 
Government-wide procurement policy relating to purchases from 
FPI, which will generally require the use of competitive 
procedures.
    This section includes a provision to allow FPI to make 
sales on a noncompetitive basis if the Attorney General makes 
two findings regarding the ability of FPI to receive the 
contract and the need for the contract to maintain safety in 
the prison and the community. Additionally, this section 
requires the Attorney General to study the effects of the 
phase-out of mandatory source and provide a report to Congress 
with recommendations regarding the need for further 
appropriations to provide additional staffing for prison safety 
and inmate rehabilitation.
    Section 3. Public Participation Regarding Expansion 
Proposals by Federal Prison Industries. Requires that, whenever 
FPI proposes to authorize the sale of a new product or service 
or to expand production of a current product or service, an 
analysis of the probable impact of the proposed expansion on 
private sector firms be performed.
    Section 4. Transitional Mandatory Source Authority. 
Establishes a 5-year phase-out of the Federal Prison Industries 
mandatory source preference. It requires that during the phase-
out period Federal agencies must solicit contracts from FPI 
first, if FPI has a product that meets the agency's needs, can 
provide that product in a timely manner, and can provide it at 
a fair and reasonable price.
    Section 5. Authority to Perform as a Federal Subcontractor. 
Authorizes FPI to enter into a contract with a Federal 
contractor to produce products as a subcontractor or supplier 
in the performance of a Federal procurement contract. The use 
of FPI as a subcontractor or supplier must be a voluntary 
business decision by the Federal prime contractor or 
subcontractor.
    Section 5 prohibits commercial sales of a product or 
service either directly or indirectly, resulting from the labor 
of inmate workers. It also requires a Federal contractor using 
FPI as a subcontractor to implement appropriate management 
procedures to prevent introducing an inmate-produced product 
into the commercial market.
    The use of FPI as a subcontractor or supplier of products 
or provider of services cannot be imposed upon Federal prime 
contractors or subcontractors as a condition of the contract 
requiring it to make use of Federal Prison Industries, its 
products or services.
    Section 6. Inmate Wages and Deductions. Requires the 
director of the BOP to establish the rates of hourly wages to 
be paid inmates performing work for FPI and other work 
assignments within the correctional institutions.
    Wages earned by an inmate worker will be paid in the name 
of the inmate. Deductions will be taken from the wages as 
follows: (1) applicable taxes (Federal, State, and local); (2) 
payment of fines and restitution pursuant to court order; (3) 
payment of additional restitution for victims of the inmate's 
crimes; (4) allocations for support of the inmate's family 
pursuant to statute, court order, or agreement with the inmate; 
(5) allocations to a fund in the name of the inmate to 
facilitate assimilation back into society, payable at the 
conclusion of incarceration; and (6) such other deductions as 
may be specified by the Director of the Bureau of Prisons.
    Section 7. Clarifying Amendment Relating to Services. 
Amends section 1761(a) of Title 18, United States Code, to 
clarify that the prohibition on the results of inmate labor 
being introduced into interstate commerce extends to services 
as well as products. The section also provides transitional 
authority to hold harmless prison industry programs operated by 
the states and their units of local government, which may have 
engaged in the commercial sale of inmate services in reliance 
on the February 1998 memorandum opinion from a special counsel 
in the Criminal Division of the U.S. Department of Justice.
    Section 8. Conforming Amendment. Provides FPI with explicit 
statutory authority to offer services to the various Federal 
departments and agencies. Presently, FPI's authorizing statute 
only specifically addresses the sale of products to Federal 
agencies.
    Section 9. Rules of Construction Relating to Chapter 307. 
Establishes a series of rules of construction relating to 
Chapter 307 (Employment, Prisons and Prisoners) to prevent 
causes of action by inmates with regard to employment in the 
Federal prisons.
    Section 10. Providing Additional Opportunities for 
Vocational and Remedial Educational Opportunities for Inmates. 
Authorizes appropriations to the Federal Bureau of Prisons and 
the Federal Judiciary to establish a Federal Reentry Center 
Demonstration to develop prisoner reentry plans to ensure the 
safety of the community and assist prisoners in successful 
reintegration into the community after release.
    Section 11. Allocation of Profits to Vocational Training. 
Amends the United States Code, regarding the Department of 
Justice Assets Forfeiture Fund, to authorize disbursements to 
the BOP exclusively for the purpose of providing vocational 
assessments and training, paid work opportunities for FPI to 
donate goods to nonprofits, and remedial educational training 
for inmates.
    Section 12. Restructuring the Board of Directors. 
Restructures FPI's Board of Directors by increasing it from its 
current 6-member board to 11 members appointed by the President 
including 3 members to represent the business community, 3 
members to represent organized labor, and 1 member with special 
expertise in inmate rehabilitation techniques, 1 member 
representing the interests victims of crime, 1 member 
representing Federal inmates, and 2 members ``whose background 
and expertise the President deems appropriate.''
    Section 13. Pre-Release Employment Assistance. Requires the 
director of the BOP, to the extent practicable, to provide 
inmates opportunities to participate in programs and activities 
designed to help prepare such inmates to obtain employment upon 
release.
    The pre-release employment placement assistance required by 
this section will include(1) training in the preparation of 
resumes and job applications; (2) training in interviewing 
skills; (3) training and assistance in job search techniques; 
(4) conduct of job fairs; and (5) such other methods deemed 
appropriate by the director.
    Section 14. Providing Additional Management Flexibility to 
Federal Prison Industry Operations. Allows FPI to locate more 
than one workshop at a facility and also allows Federal Prison 
Industries to operate a workshop outside a correctional 
facility if all of the inmates in such workshop are classified 
as minimum security inmates.
    Section 15. Federal Prison Industries Report to Congress. 
Requires the Board of Directors of FPI to submit an annual 
report to Congress on the conduct of the business of the 
corporation during each fiscal year and the condition of its 
funds during the fiscal year. The report will include an 
analysis of the number of inmates served by the program and the 
products and services offered.
    Section 16. Definitions. This section defines relevant 
terms in the bill.
    Section 17. Implementing Regulations and Procedures. 
Establishes a time line for revisions to the Federal 
Acquisition Regulations and other regulations, consistent with 
this legislation.
    Section 18. Rule of Construction. Specifies this 
legislation does not alter the rights of any offerer other than 
FPI to file a bid protest.
    Section 19. Effective Date and Applicability. Establishes 
the effective date for the various provisions of the bill. It 
also provides a time line for the issuance of proposed and 
final regulations, spanning approximately a 1-year period, to 
assure ample time for public comment on proposed regulations 
and time to revise the proposed regulations in response to 
public comments.
    Section 20. Clerical Amendments. This section makes 
clerical changes to Title 18 consistent with the changes in the 
legislation.
    Section 21. Independent Study to Determine the Effects of 
Eliminating The Federal Prison Industries Mandatory Source 
Authority. Allows the Comptroller General to have an 
independent study performed on the effects of eliminating 
mandatory source contracting.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                     TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *


                            PART I--CRIMES

           *       *       *       *       *       *       *


                     CHAPTER 85--PRISON-MADE GOODS

           *       *       *       *       *       *       *


Sec. 1761. Transportation or importation

    (a) Whoever knowingly transports in interstate commerce or 
from any foreign country into the United States [any goods, 
wares, or merchandise manufactured, produced, or mined] 
products manufactured, services furnished, or minerals mined, 
wholly or in part by convicts or prisoners, except convicts or 
prisoners on parole, supervised release, or probation, or in 
any penal or reformatory institution, shall be fined under this 
title or imprisoned not more than two years, or both.

           *       *       *       *       *       *       *


                   PART III--PRISONS AND PRISONERS

           *       *       *       *       *       *       *


                        CHAPTER 307--EMPLOYMENT

Sec.
[4121.  Federal Prison Industries; board of directors.]
4121.  Federal Prison Industries; Board of Directors: executive 
          management.
     * * * * * * *
[4124.  Purchase of prison-made products by Federal departments.]
4124.  Governmentwide procurement policy relating to purchases from 
          Federal Prison Industries.
     * * * * * * *
[4127.  Prison Industries report to Congress.]
4127.  Federal Prison Industries report to Congress.
     * * * * * * *
4130.  Construction of provisions.
4131.  Definitions.

           *       *       *       *       *       *       *


[Sec. 4121. Federal Prison Industries; board of directors

    [``Federal Prison Industries'', a government corporation of 
the District of Columbia, shall be administered by a board of 
six directors, appointed by the President to serve at the will 
of the President without compensation.
    [The directors shall be representatives of (1) industry, 
(2) labor, (3) agriculture, (4) retailers and consumers, (5) 
the Secretary of Defense, and (6) the Attorney General, 
respectively.]

Sec. 4121. Federal Prison Industries; Board of Directors: executive 
                    management

    (a) Federal Prison Industries is a government corporation 
of the District of Columbia organized to carry on such 
industrial operations in Federal correctional institutions as 
authorized by its Board of Directors. The manner and extent to 
which such industrial operations are carried on in the various 
Federal correctional institutions shall be determined by the 
Attorney General.
    (b)(1) The corporation shall be governed by a board of 11 
directors appointed by the President.
    (2) In making appointments to the Board, the President 
shall assure that 3 members represent the business community, 3 
members represent organized labor, 1 member shall have special 
expertise in inmate rehabilitation techniques, 1 member 
represents victims of crime, 1 member represents the interests 
of Federal inmate workers, and 2 additional members whose 
background and expertise the President deems appropriate. The 
members of the Board representing the business community shall 
include, to the maximum extent practicable, representation of 
firms furnishing services as well as firms producing products, 
especially from those industry categories from which Federal 
Prison Industries derives substantial sales. The members of the 
Board representing organized labor shall, to the maximum 
practicable, include representation from labor unions whose 
members are likely to be most affected by the sales of Federal 
Prison Industries.
    (3) Each member shall be appointed for a term of 5 years, 
except that of members first appointed--
            (A) 2 members representing the business community 
        shall be appointed for a term of 3 years;
            (B) 2 members representing labor shall be appointed 
        for a term of 3 years;
            (C) 2 members whose background and expertise the 
        President deems appropriate for a term of 3 years;
            (D) 1 member representing victims of crime shall be 
        appointed for a term of 3 years;
            (E) 1 member representing the interests of Federal 
        inmate workers shall be appointed for a term of 3 
        years;
            (F) 1 member representing the business community 
        shall be appointed for a term of 4 years;
            (G) 1 member representing the business community 
        shall be appointed for a term of 4 years; and
            (H) the members having special expertise in inmate 
        rehabilitation techniques shall be appointed for a term 
        of 5 years.
    (4) The President shall designate 1 member of the Board as 
Chairperson. The Chairperson may designate a Vice Chairperson.
    (5) Members of the Board may be reappointed.
    (6) Any vacancy on the Board shall be filled in the same 
manner as the original appointment. 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 
for the remainder of that term.
    (7) The members of the Board shall serve without 
compensation. The members of the Oversight Board shall be 
allowed travel expenses, including per diem in lieu of 
subsistence, at rates authorized for employees of agencies 
under subchapter I of chapter 57 of title 5, United States 
Code, to attend meetings of the Board and, with the advance 
approval of the Chairperson of the Board, while otherwise away 
from their homes or regular places of business for purposes of 
duties as a member of the Board.
    (8)(A) The Chairperson of the Board may appoint and 
terminate any personnel that may be necessary to enable the 
Board to perform its duties.
    (B) Upon request of the Chairperson of the Board, a Federal 
agency may detail a Federal Government employee to the Board 
without reimbursement. Such detail shall be without 
interruption or loss of civil service status or privilege.
    (9) The Chairperson of the Board may procure temporary and 
intermittent services under section 3109(b) of title 5, United 
States Code.
    (c) The Director of the Bureau of Prisons shall serve as 
Chief Executive Officer of the Corporation. The Director shall 
designate a person to serve as Chief Operating Officer of the 
Corporation.

Sec. 4122. Administration of Federal Prison Industries

    (a) 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] production of products or 
furnishing of services 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.
    (b)(1)  * * *

           *       *       *       *       *       *       *

    (3)(A) Federal Prison Industries shall diversify its 
products so that its sales are distributed among its industries 
as broadly as possible.
    (B) Federal Prison Industries may locate more than one 
workshop at a Federal correctional facility.
    (C) Federal Prison Industries may operate a workshop 
outside of a correctional facility if all of the inmates 
working in such workshop are classified as minimum security 
inmates.
    [(4) Any decision by Federal Prison Industries to produce a 
new product or to significantly expand the production of an 
existing product shall be made by the board of directors of the 
corporation. Before the board of directors makes a final 
decision, the corporation shall do the following:
            [(A) The corporation shall prepare a detailed 
        written analysis of the probable impact on industry and 
        free labor of the plans for new production or expanded 
        production. In such written analysis the corporation 
        shall, at a minimum, identify and consider--
                    [(i) the number of vendors currently 
                meeting the requirements of the Federal 
                Government for the product;
                    [(ii) the proportion of the Federal 
                Government market for the product currently 
                served by small businesses, small disadvantaged 
                businesses, or businesses operating in labor 
                surplus areas;
                    [(iii) the size of the Federal Government 
                and non-Federal Government markets for the 
                product;
                    [(iv) the projected growth in the Federal 
                Government demand for the product; and
                    [(v) the projected ability of the Federal 
                Government market to sustain both Federal 
                Prison Industries and private vendors.
            [(B) The corporation shall announce in a 
        publication designed to most effectively provide notice 
        to potentially affected private vendors the plans to 
        produce any new product or to significantly expand 
        production of an existing product. The announcement 
        shall also indicate that the analysis prepared under 
        subparagraph (A) is available through the corporation 
        and shall invite comments from private industry 
        regarding the new production or expanded production.
            [(C) The corporation shall directly advise those 
        affected trade associations that the corporation can 
        reasonably identify the plans for new production or 
        expanded production, and the corporation shall invite 
        such trade associations to submit comments on those 
        plans.
            [(D) The corporation shall provide to the board of 
        directors--
                    [(i) the analysis prepared under 
                subparagraph (A) on the proposal to produce a 
                new product or to significantly expand the 
                production of an existing product,
                    [(ii) comments submitted to the corporation 
                on the proposal, and
                    [(iii) the corporation's recommendations 
                for action on the proposal in light of such 
                comments.
In addition, the board of directors, before making a final 
decision under this paragraph on a proposal, shall, upon the 
request of an established trade association or other interested 
representatives of private industry, provide a reasonable 
opportunity to such trade association or other representatives 
to present comments directly to the board of directors on the 
proposal.
    [(5) Federal Prison Industries shall publish in the manner 
specified in paragraph (4)(B) the final decision of the board 
with respect to the production of a new product or the 
significant expansion of the production of an existing 
product.]
    (4) A decision to authorize Federal Prison Industries to 
offer a new specific product or specific service or to expand 
the production of an existing product or service shall be made 
by its board of directors in conformance with the requirements 
of subsections (b), (c), (d), and (e) of section 553 of title 
5, and this chapter.
    (5)(A) Whenever Federal Prison Industries proposes to offer 
for sale a new specific product or specific service or to 
expand production of a currently authorized product or service, 
the Chief Operating Officer of Federal Prison Industries shall 
submit an appropriate proposal to the board of directors and 
obtain the board's approval before initiating any such 
expansion. The proposal submitted to the board shall include a 
detailed analysis of the probable impact of the proposed 
expansion of sales within the Federal market by Federal Prison 
Industries on private sector firms and their noninmate workers.
    (B)(i) The analysis required by subparagraph (A) shall be 
performed by an interagency team on a reimbursable basis or by 
a private contractor paid by Federal Prison Industries.
    (ii) If the analysis is to be performed by an interagency 
team, such team shall be led by the Administrator of the Small 
Business Administration or the designee of such officer with 
representatives of the Department of Labor, the Department of 
Commerce, and the Federal Procurement Data Center.
    (iii) If the analysis is to be performed by a private 
contractor, the selection of the contractor and the 
administration of the contract shall be conducted by one of the 
entities referenced in clause (ii) as an independent executive 
agent for the board of directors. Maximum consideration shall 
be given to any proposed statement of work furnished by the 
Chief Operating Officer of Federal Prison Industries.
    (C) The analysis required by subparagraph (A) shall 
identify and consider--
            (i) the number of vendors that currently meet the 
        requirements of the Federal Government for the specific 
        product or specific service;
            (ii) the proportion of the Federal Government 
        market for the specific product or specific service 
        currently furnished by small businesses during the 
        previous 3 fiscal years;
            (iii) the share of the Federal market for the 
        specific product or specific service projected for 
        Federal Prison Industries for the fiscal year in which 
        production or performance will commence or expand and 
        the subsequent 4 fiscal years;
            (iv) whether the industry producing the specific 
        product or specific service in the private sector--
                    (I) has an unemployment rate higher than 
                the national average; or
                    (II) has a rate of unemployment for workers 
                that has consistently shown an increase during 
                the previous 5 years;
            (v) whether the specific product is an import-
        sensitive product;
            (vi) the requirements of the Federal Government and 
        the demands of entities other than the Federal 
        Government for the specific product or service during 
        the previous 3 fiscal years;
            (vii) the projected growth or decline in the demand 
        of the Federal Government for the specific product or 
        specific service;
            (viii) the capability of the projected demand of 
        the Federal Government for the specific product or 
        service to sustain both Federal Prison Industries and 
        private vendors; and
            (ix) whether authorizing the production of the new 
        product or performance of a new service will provide 
        inmates with the maximum opportunity to acquire 
        knowledge and skill in trades and occupations that will 
        provide them with a means of earning a livelihood upon 
        release.
    (D)(i) The board of directors may not approve a proposal to 
authorize the production and sale of a new specific product or 
continued sales of a previously authorized product unless--
            (I) the product to be furnished is a prison-made 
        product; or
            (II) the service to be furnished is to be performed 
        by inmate workers.
    (ii) The board of directors may not approve a proposal to 
authorize the production and sale of a new prison-made product 
or to expand production of a currently authorized product if 
the product is--
            (I) produced in the private sector by an industry 
        which has reflected during the previous year an 
        unemployment rate above the national average; or
            (II) an import-sensitive product.
    (iii) The board of directors may not approve a proposal for 
inmates to provide a service in which an inmate worker has 
access to--
            (I) personal or financial information about 
        individual private citizens, including information 
        relating to such person's real property, however 
        described, without giving prior notice to such persons 
        or class of persons to the greatest extent practicable;
            (II) geographic data regarding the location of 
        surface and subsurface infrastructure providing 
        communications, water and electrical power 
        distribution, pipelines for the distribution of natural 
        gas, bulk petroleum products and other commodities, and 
        other utilities; or
            (III) data that is classified.
    (iv)(I) Federal Prison Industries is prohibited from 
furnishing through inmate labor construction services, unless 
to be performed within a Federal correctional institution 
pursuant to the participation of an inmate in an apprenticeship 
or other vocational education program teaching the skills of 
the various building trades.
    (II) For purposes of this clause, the term `construction' 
has the meaning given such term by section 2.101 of the Federal 
Acquisition Regulation (48 CFR part 2.101), as in effect on 
June 1, 2001, including the repair, alteration, or maintenance 
of real property in being.
    (6) To provide further opportunities for participation by 
interested parties, the board of directors shall--
            (A) give additional notice of a proposal to 
        authorize the production and sale of a new product or 
        service, or expand the production of a currently 
        authorized product or service, in a publication 
        designed to most effectively provide notice to private 
        vendors and labor unions representing private sector 
        workers who could reasonably be expected to be affected 
        by approval of the proposal, which notice shall offer 
        to furnish copies of the analysis required by paragraph 
        (5) and shall solicit comment on the analysis;
            (B) solicit comments on the analysis required by 
        paragraph (5) from trade associations representing 
        vendors and labor unions representing private sector 
        workers who could reasonably be expected to be affected 
        by approval of the proposal to authorize the production 
        and sale of a new product or service (or expand the 
        production of a currently authorized product or 
        service); and
            (C) afford an opportunity, on request, for a 
        representative of an established trade association, 
        labor union, or other private sector representatives to 
        present comments on the proposal directly to the board 
        of directors.
    (7) The board of directors shall be provided copies of all 
comments received on the expansion proposal.
    (8) Based on the comments received on the initial expansion 
proposal, the Chief Operating Officer of Federal Prison 
Industries may provide the board of directors a revised 
expansion proposal. If such revised proposal provides for 
expansion of inmate work opportunities in an industry different 
from that initially proposed, such revised proposal shall 
reflect the analysis required by paragraph (5)(C) and be 
subject to the public comment requirements of paragraph (6).
    (9) The board of directors shall consider a proposal to 
authorize the sale of a new specific product or specific 
service (or to expand the volume of sales for a currently 
authorized product or service) and take any action with respect 
to such proposal, during a meeting that is open to the public, 
unless closed pursuant to section 552(b) of title 5.
    (10) In conformity with the requirements of paragraphs (5) 
through (9) of this subsection, the board of directors may--
            (A) authorize the donation of products produced or 
        services furnished by Federal industries and available 
        for sale; or
            (B) authorize the production of a new specific 
        product or the furnishing of a new specific service for 
        donation.
    (11)(A) The Board of Directors of Federal Prison Industries 
shall prescribe the rates of hourly wages to be paid inmates 
performing work for or through Federal Prison Industries. The 
Director of the Federal Bureau of Prisons shall prescribe the 
rates of hourly wages for other work assignments within the 
various Federal correctional institutions.
    (B) The various inmate wage rates shall be reviewed and 
considered for increase on not less than a biannual basis.
    (C) Wages earned by an inmate worker shall be paid in the 
name of the inmate. Deductions, aggregating to not more than 80 
percent of gross wages, shall be taken from the wages due for--
            (i) applicable taxes (Federal, State, and local);
            (ii) payment of fines and restitution pursuant to 
        court order;
            (iii) payment of additional restitution for victims 
        of the inmate's crimes (at a rate not less than 10 
        percent of gross wages);
            (iv) allocations for support of the inmate's family 
        pursuant to statute, court order, or agreement with the 
        inmate;
            (v) allocations to a fund in the inmate's name to 
        facilitate such inmate's assimilation back into 
        society, payable at the conclusion of incarceration; 
        and
            (vi) such other deductions as may be specified by 
        the Director of the Bureau of Prisons.
    (D) Each inmate worker working for Federal Prison 
Industries shall indicate in writing that such person--
            (i) is participating voluntarily; and
            (ii) understands and agrees to the wages to be paid 
        and deductions to be taken from such wages.
    [(6)] (12) Federal Prison Industries shall publish, after 
the end of each 6-month period, a list of sales by the 
corporation for that 6-month period. Such list shall be made 
available to all interested parties.

           *       *       *       *       *       *       *


[Sec. 4124. Purchase of prison-made products by Federal departments

    [(a) The several Federal departments and agencies and all 
other Government institutions of the United States shall 
purchase at not to exceed current market prices, such products 
of the industries authorized by this chapter as meet their 
requirements and may be available.
    [(b) Disputes as to the price, quality, character, or 
suitability of such products shall be arbitrated by a board 
consisting of the Attorney General, the Administrator of 
General Services, and the President, or their representatives. 
Their decision shall be final and binding upon all parties.
    [(c) Each Federal department, agency, and institution 
subject to the requirements of subsection (a) shall separately 
report acquisitions of products and services from Federal 
Prison Industries to the Federal Procurement Data System (as 
referred to in section 6(d)(4) of the Office of Federal 
Procurement Policy Act) in the same manner as it reports other 
acquisitions. Each report published by the Federal Procurement 
Data System that contains the information collected by the 
System shall include a statement to accompany the information 
reported by the department, agency, or institution under the 
preceding sentence as follows: ``Under current law, sales by 
Federal Prison Industries are considered intragovernmental 
transfers. The purpose of reporting sales by Federal Prison 
Industries is to provide a complete overview of acquisitions by 
the Federal Government during the reporting period.''.
    [(d) Within 90 days after the date of the enactment of this 
subsection, Federal Prison Industries shall publish a catalog 
of all products and services which it offers for sale. This 
catalog shall be updated periodically to the extent necessary 
to ensure that the information in the catalog is complete and 
accurate.]

Sec. 4124. Governmentwide procurement policy relating to purchases from 
                    Federal Prison Industries

    (a) In General.--Purchases from Federal Prison Industries, 
Incorporated, a wholly owned Government corporation, as 
referred to in section 9101(3)(E) of title 31, may be made by a 
Federal department or agency only in accordance with this 
section.
    (b) Solicitation and Evaluation of Offers and Contract 
Awards.--(1) If a procurement activity of a Federal department 
or agency has a requirement for a specific product or service 
that is authorized to be offered for sale by Federal Prison 
Industries, in accordance with section 4122 of this title, and 
is listed in the catalog referred to in subsection (g), the 
procurement activity shall solicit an offer from Federal Prison 
Industries, if the purchase is expected to be in excess of the 
micro-purchase threshold (as defined by section 32(f) of the 
Office of Federal Procurement Policy Act (41 U.S.C. 428(f))).
    (2) A contract award for such product or service shall be 
made using competitive procedures in accordance with the 
applicable evaluation factors, unless a determination is made 
by the Attorney General pursuant to paragraph (3) or an award 
using other than competitive procedures is authorized pursuant 
to paragraph (7).
    (3) The procurement activity shall negotiate with Federal 
Prison Industries on a noncompetitive basis for the award of a 
contract if the Attorney General determines that--
            (A) Federal Prison Industries cannot reasonably 
        expect fair consideration to receive the contract award 
        on a competitive basis; and
            (B) the contract award is necessary to maintain 
        work opportunities otherwise unavailable at the penal 
        or correctional facility at which the contract is to be 
        performed to prevent circumstances that could 
        reasonably be expected to significantly endanger the 
        safe and effective administration of such facility.
    (4) Except in the case of an award to be made pursuant to 
paragraph (3), a contract award shall be made with Federal 
Prison Industries only if the contracting officer for the 
procurement activity determines that--
            (A) the specific product or service to be furnished 
        will meet the requirements of the procurement activity 
        (including any applicable prequalification requirements 
        and all specified commercial or governmental standards 
        pertaining to quality, testing, safety, serviceability, 
        and warranties);
            (B) timely performance of the contract can be 
        reasonably expected; and
            (C) the contract price does not exceed a current 
        market price.
    (5) A determination by the Attorney General pursuant to 
paragraph (3) shall be--
            (A) supported by specific findings by the warden of 
        the penal or correctional institution at which a 
        Federal Prison Industries workshop is scheduled to 
        perform the contract;
            (B) supported by specific findings by Federal 
        Prison Industries regarding why it does not expect to 
        win the contract on a competitive basis; and
            (C) made and reported in the same manner as a 
        determination made pursuant to section 303(c)(7) of the 
        Federal Property and Administrative Services Act of 
        1949 (41 U.S.C. 253(c)(7)).
    (6) If the Attorney General has not made the determination 
described in paragraph (3) within 30 days after Federal Prison 
Industries has been informed of a contracting opportunity by a 
procurement activity, the procurement activity may proceed to 
conduct a procurement for the product or service in accordance 
with the procedures generally applicable to such procurements 
by the procurement activity.
    (7) A contract award may be made to Federal Prison 
Industries using other than competitive procedures if such 
product or service is only available from Federal Prison 
Industries and the contract may be awarded under the authority 
of section 2304(c)(1) of title 10 or section 303(c) of the 
Federal Property and Administrative Services Act of 1949 (41 
U.S.C. 252(c)(1)), as may be applicable, and pursuant to the 
justification and approval requirements relating to such 
noncompetitive procurements specified by law and the 
Governmentwide Federal Acquisition Regulation.
    (c) Offers From Federal Prison Industries.--A timely offer 
received from Federal Prison Industries to furnish a product or 
service to a Federal department or agency shall be considered 
for award without limitation as to the dollar value of the 
proposed purchase.
    (d) Performance by Federal Prison Industries.--Federal 
Prison Industries shall perform its contractual obligations 
under a contract awarded by a Federal department or agency to 
the same extent as any other contractor.
    (e) Finality of Contracting Officer's Decision.--(1) A 
decision by a contracting officer regarding the award of a 
contract to Federal Prison Industries or relating to the 
performance of such contract shall be final, unless reversed on 
appeal pursuant to paragraph (2) or (3).
    (2) The Chief Executive Officer of Federal Prison 
Industries may appeal to the head of a Federal department or 
agency a decision by a contracting officer not to award a 
contract to Federal Prison Industries pursuant to subsection 
(b)(4). The decision of the head of a Federal department or 
agency on appeal shall be final.
    (3) A dispute between Federal Prison Industries and a 
procurement activity regarding performance of a contract shall 
be subject to--
            (A) alternative means of dispute resolution 
        pursuant to subchapter IV of chapter 5 of title 5; or
            (B) final resolution by the board of contract 
        appeals having jurisdiction over the procurement 
        activity's contract performance disputes pursuant to 
        the Contract Disputes Act of 1978 (41 U.S.C. 601 et 
        seq.).
    (f) Reporting of Purchases.--Each Federal department or 
agency shall report purchases from Federal Prison Industries to 
the Federal Procurement Data System (as 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 by section 4(11) of the 
Office of Federal Procurement Policy Act (41 U.S.C. 403(11))).
    (g) Catalog of Products.--Federal Prison Industries shall 
publish and maintain a catalog of all specific products and 
services that it is authorized to offer for sale. Such catalog 
shall be periodically revised as products and services are 
added or deleted by its board of directors (in accordance with 
section 4122(b) of this title).
    (h) Compliance With Standards.--Federal Prison Industries 
shall comply with Federal occupational, health, and safety 
standards with respect to the operation of its industrial 
operations.

           *       *       *       *       *       *       *


[Sec. 4127. Prison Industries report to Congress

    [The board of directors of Federal Prison Industries shall 
submit an annual report to the Congress on the conduct of the 
business of the corporation during each fiscal year, and on the 
condition of its funds during such fiscal year. Such report 
shall include a statement of the amount of obligations issued 
under section 4129(a)(1) during such fiscal year, and an 
estimate of the amount of obligations that will be so issued in 
the following fiscal year.]

Sec. 4127. Federal Prison Industries report to Congress

    (a) In General.--Pursuant to chapter 91 of title 31, the 
board of directors of Federal Prison Industries shall submit an 
annual report to Congress on the conduct of the business of the 
corporation during each fiscal year and the condition of its 
funds during the fiscal year.
    (b) Contents of Report.--In addition to the matters 
required by section 9106 of title 31, and such other matters as 
the board considers appropriate, a report under subsection (a) 
shall include--
            (1) a statement of the amount of obligations issued 
        under section 4129(a)(1) of this title during the 
        fiscal year;
            (2) an estimate of the amount of obligations that 
        will be issued in the following fiscal year;
            (3) an analysis of--
                    (A) the corporation's total sales for each 
                specific product and type of service sold to 
                the Federal agencies and the commercial market;
                    (B) the total purchases by each Federal 
                agency of each specific product and type of 
                service;
                    (C) the corporation's share of such total 
                Federal Government purchases by specific 
                product and type of service; and
                    (D) the number and disposition of disputes 
                submitted to the heads of the Federal 
                departments and agencies pursuant to section 
                4124(e) of this title;
            (4) an analysis of the inmate workforce that 
        includes--
                    (A) the number of inmates employed;
                    (B) the number of inmates utilized to 
                produce products or furnish services sold in 
                the commercial market;
                    (C) the number and percentage of employed 
                inmates by the term of their incarceration; and
                    (D) the various hourly wages paid to 
                inmates employed with respect to the production 
                of the various specific products and types of 
                services authorized for production and sale to 
                Federal agencies and in the commercial market; 
                and
            (5) data concerning employment obtained by former 
        inmates upon release to determine whether the 
        employment provided by Federal Prison Industries during 
        incarceration provided such inmates with knowledge and 
        skill in a trade or occupation that enabled such former 
        inmate to earn a livelihood upon release.
    (c) Public Availability.--Copies of an annual report under 
subsection (a) shall be made available to the public at a price 
not exceeding the cost of printing the report.

           *       *       *       *       *       *       *


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, except as otherwise 
                specifically provided by law or regulation;
            (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 inmate against the United States or any 
        officer, employee, or contractor thereof.

Sec. 4131. Definitions

    As used in this chapter--
            (1) the term ``assembly'' means the process of 
        uniting or combining articles or components (including 
        ancillary finished components or assemblies) so as to 
        produce a significant change in form or utility, 
        without necessarily changing or altering the component 
        parts;
            (2) the term ``current market price'' means, with 
        respect to a specific product, the fair market price of 
        the product within the meaning of section 15(a) of the 
        Small Business Act (15 U.S.C. 644(a)), at the time that 
        the contract is to be awarded, verified through 
        appropriate price analysis or cost analysis, including 
        any costs relating to transportation or the furnishing 
        of any ancillary services;
            (3) the term ``import-sensitive product'' means a 
        product which, according to Department of Commerce 
        data, has experienced competition from imports at an 
        import to domestic production ratio of 25 percent or 
        greater;
            (4) the term ``labor-intensive manufacture'' means 
        a manufacturing activity in which the value of inmate 
        labor constitutes at least 10 percent of the estimate 
        unit cost to produce the item by Federal Prison 
        Industries;
            (5) the term ``manufacture'' means the process of 
        fabricating from raw or prepared materials, so as to 
        impart to those materials new forms, qualities, 
        properties, and combinations;
            (6) the term ``reasonable share of the market'' 
        means a share of the total purchases by the Federal 
        departments and agencies, as reported to the Federal 
        Procurement Data System for--
                    (A) any specific product during the 3 
                preceding fiscal years, that does not exceed 20 
                percent of the Federal market for the specific 
                product; and
                    (B) any specific service during the 3 
                preceding fiscal years, that does not exceed 5 
                percent of the Federal market for the specific 
                service; and
            (7) the term ``services'' has the meaning given the 
        term ``service contract'' by section 37.101 of the 
        Federal Acquisition Regulation (48 C.F.R. 36.102), as 
        in effect on July 1, 2001.

           *       *       *       *       *       *       *

                              ----------                              


              SECTION 524 OF TITLE 28, UNITED STATES CODE

Sec. 524. Availability of appropriations

    (a)  * * *

           *       *       *       *       *       *       *

    (c)(1) There is established in the United States Treasury a 
special fund to be known as the Department of Justice Assets 
Forfeiture Fund (hereafter in this subsection referred to as 
the ``Fund'') which shall be available to the Attorney General 
without fiscal year limitation for the following law 
enforcement purposes--
            (A)  * * *

           *       *       *       *       *       *       *

            [(I) after all reimbursements and program-related 
        expenses have been met at the end of fiscal year 1989, 
        the Attorney General may transfer deposits from the 
        Fund to the building and facilities account of the 
        Federal prison system for the construction of 
        correctional institutions.]
            (J) payments to the Bureau of Prisons exclusively 
        for the purpose of establishing the Federal Enhanced 
        In-Prison Vocational Assessment and Training Program in 
        all Federal institutions, which shall provide in-prison 
        assessments of prisoners' needs and aptitudes, enhanced 
        work skills developed, enhanced release readiness 
        programming, and other components as appropriate to 
        reduce inmate idleness and prepare Federal prisoners 
        for release and reentry into the community;
            (K) payments to the Bureau of Prisons exclusively 
        for the purpose of establishing a nonprofit component 
        for inmate work in all Federal institutions, in 
        carrying out which Federal Prison Industries shall (i) 
        work actively to identify and donate to nonprofit 
        organizations that provide goods and services to low 
        income individuals who can use Federal Prison Industry 
        products and have difficulty purchasing these products 
        on their own, and (ii) focus on organizations that 
        would not otherwise be available to purchase such 
        products.

           *       *       *       *       *       *       *


                           Markup Transcript



                            BUSINESS MEETING

                        THURSDAY, APRIL 18, 2002

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:00 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order. We 
have a working quorum here. Pursuant to notice I now call up 
the bill H.R. 1577, the ``Federal Prison Industries Competition 
and Contracting Act,'' for purposes of markup and move its 
favorable recommendation to the House. Without objection, the 
bill will be considered as read and open for amendment at any 
point.
    [The bill, H.R. 1577, follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Without objection, the amendment in the nature of a 
substitute before all Members will be considered as read and 
open for amendment at any point in the original text of the 
amendment.
    [The amendment follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner.  The Chair recognizes himself for 5 
minutes to explain the bill. Although Federal Prison Industries 
(FPI) may have started with good intentions, it has been 
surrounded by controversy since its inception. FPI is in direct 
competition with private companies for labor, goods and 
services. It enjoys a guaranteed market for its products and 
reduced cost for labor and capital. This has resulted in unfair 
competition with industries that are struggling. Since I was 
first elected to Congress, I have been working to correct this 
situation and level the playing field for industry. I feel that 
we as Members of Congress have a duty to ensure that Government 
corporations do not take away opportunities from small 
business. We also have a duty to ensure the taxpayer money is 
wisely spent. Neither one of these things can be guaranteed 
under the current law governing FPI.
    Today we will mark up legislation to change that law. 
Today's markup comes after extensive work and effort by 
Representative Smith. Chairman Smith dedicated numerous staff 
hours and his own time to try to achieve a workable compromise 
among the many differing viewpoints on this issue. Although he 
was able to achieve agreement on some issues, he was unable to 
achieve a comprehensive compromised package. The reform package 
we will mark up today incorporates many of those agreed-upon 
changes that follows recent reforms to the Defense Department 
procurement process with regards to FPI. The provision in the 
Department of Defense authorization bill which changed 
procurement to allow DOD to determine if FPI products best meet 
the department needs for price, quality and timeliness of 
delivery can be seen as a victory for labor, business, industry 
and the American taxpayer. FPI hurts private industry.
    In 1998 FPI sold over $220 million in office furniture 
directly in competition with the private sector. It is a large 
and growing government corporation. The legislation that we are 
marking up today is a substitute amendment based on H.R. 1577 
introduced by Representative Hoekstra through a series of 
substantive modifications that have been agreed upon after 30 
hours of detailed discussion. The legislation will force 
competition not only on DOD contracts, but those of other 
Federal agencies. It will fundamentally alter FPI's 
relationship with the Government customers. They will no longer 
be held captive by mandatory source requirements. All Federal 
Government agencies will have the ability to utilize taxpayer 
dollars in the most efficient manner possible. Decisions about 
purchases will be based on what is valuable in the market, such 
as timeliness of delivery, reasonableness of price and quality 
of products.
    The legislation includes the following: First, requires FPI 
to compete for its contracts by phasing out the mandatory 
source requirement unless the Attorney General authorizes sole 
source award; eliminates FPI's ability to charge a price that 
exceeds the fair market value; allows contracting officers 
rather than FPI to determine if the product was best serviced 
by the agency's mission; allows the buying agency rather than 
FPI to determine the adequacy of FPI's performance; increases 
the opportunity for public participation in the process; 
ensures that FPI is prohibited from offering products or 
services as a subcontractor for private for-profit business 
concerns; authorizes FPI to produce products or provide 
services to be donated to meet public needs that will not be 
met by private sector for-profit businesses, requires better 
reporting of FPI sales to Federal agency customers, and 
specifies the data to be included in the FPI annual report to 
Congress so we can better assess the impact of FPI on private 
sector firms and their law-abiding workers.
    I am proud to be a part of this legislation and look 
forward to the chance to create a more competitive marketplace 
for Government contracts, and recognize the gentleman from 
Michigan.
    Mr. Conyers. Good morning Mr. Chairman and Members. I am 
happy to join you here on the prison industries problem, which 
is an important and difficult one. And I want to begin by 
acknowledging the hard work that everybody has put in on this. 
In one sense that is good, because I can remember a time when 
prison industries was a neglected subject. I mean who cared. 
Now we have a lot more interest in it and I think that is 
healthy.
    Now on one hand, we have a prison industry program which 
does cry out for reform, which has grown far too reliant on 
sole source contracting. Once the small program focused solely 
on rehabilitation, Federal Prison Industries is now a massive 
enterprise that has, in effect, a monopoly in the Federal 
marketplace on over 300 products and services that generated 
nearly 600 million in sales last year. The program has seen 
these sales go from $29 million to $580 million and all too 
often these sole source sales come at the expense of hard-
working individuals outside the prison system.
    The fact that Federal Prison Industries is exempt from 
labor and safety laws, pays its workers a small fraction of the 
minimum wage, does not provide us with a model of fair 
competition. But, on the other hand, we are faced with the 
tremendously important dilemma of how we rehabilitate our 
inmates and prepare them for reentry into society. For all its 
critics, the Federal Prison Industries program clearly serves 
this important objective and in particular benefits minority 
individuals.
    For example, a long term post-release employment study 
conducted by the Bureau of Prisons found that inmates who were 
released as long as 8 to 12 years ago who participated in 
Industry's work or vocational training programs were 24 percent 
less likely to be recommitted to Federal prisons than a 
comparison group of inmates who had no such training. I think 
that is significant.
    Another study conducted in Florida found that less than 13 
percent of the released inmates that participated in a State 
prison work program were recommitted after 2 years as compared 
to the national average rate of 60 percent recidivism.
    So it is my view that if we do away with mandatory source, 
it is incumbent on this Committee to replace it with programs 
that give hope and skills to our prison population. So I come 
to this hearing today hoping to work out some common frames of 
reference where we can combine the best features of both the 
views that I know are present on the Committee. The increased 
vocational training provided in the underlying bill is a good 
start, but I plan to offer a provision which also increases the 
opportunity for nonprofit work and facilitates an inmate 
reentry back into society. And I hope my colleagues will 
examine that very carefully.
    Federal Prison Industries can work, and our reform here 
today must be carefully crafted with as much compassion as we 
can muster. Thank you, Mr. Chairman.
    Chairman Sensenbrenner. Gentleman's time has expired. For 
purposes of markup, unanimous consent has already been granted 
that the text we will be working off is an amendment in the 
nature of a substitute offered by the gentleman from 
Massachusetts, Mr. Frank, and myself. Are there any amendments 
to the amendment in the nature of a substitute? Gentleman from 
Virginia.
    Mr. Scott. I thought the gentleman from Michigan had 
amendments that we were going to do first.
    Chairman Sensenbrenner. Do we have a manager's amendment? 
The gentleman from Michigan has an amendment. The clerk will 
report the amendment when she gets it.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577, offered by Mr. Conyers.
    [The amendment follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    The Clerk. Strike sections 10 and 11 and insert the 
following: Section 10----
    Mr. Conyers. I ask unanimous consent the amendment be 
considered as read.
    Mr. Gekas. Reserving a point of order.
    Chairman Sensenbrenner. Point of order is reserved by the 
gentleman from Pennsylvania. Without objection, the amendment 
is considered as read. The gentleman from Michigan is 
recognized for 5 minutes.
    Mr. Conyers. Members of the Committee, we add two new 
sections to the bill, as you have heard, strike a couple. The 
first section would provide for a reentry program for Federal 
offenders, including drug treatment and aftercare.
    Second, it would provide for improved programs for 
vocational and educational training programs along with the 
programs by which Federal Prison Industries is empowered to 
donate prison industry products to not-for-profit organizations 
that provide goods and services to low income individuals.
    This latter change is based in large part on suggestions 
from several Members, particularly the gentleman from 
Massachusetts. I hope that we are past the days where the 
solution to crime is to lock people up for as long as we 
possibly can, ignore them, punish them along the way and hope 
the problem would go away. We have got tens of thousands of 
Federal inmates, an all-time record, by the way, and a world 
record, incidentally, who have been in prison for 10 years, 20 
and even longer.
    The very last thing that I hope we would want to do is 
return them to society with no skills and no hope. Now I have 
seen this happen. A person gets out of Jackson Prison with no 
money, nothing, a bus ticket, and you can start your watch 
ticking before the time he gets in trouble again and gets 
busted. I mean it is so incredibly elementary that you wonder 
how this could be going on in the 21st century with a straight 
face. Nothing, no skills, nobody, no relatives, no jobs, no 
prospects, and they say, see you, under their breath, later.
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Conyers. Of course.
    Chairman Sensenbrenner. I have reviewed the gentleman's 
amendment and I think he is going in the right direction, and 
at this point in time I am prepared to accept it with a couple 
of words of caution of what we have to do in working matters 
out between now and the floor.
    First of all, the gentleman's amendment provides for 
authorizations in the neighborhood of $5 million, plus or 
minus, to the Bureau of Prisons and the judiciary for each of 
the next five fiscal years. I think that DOJ would go ballistic 
over that and I hope we can reach out some kind of an agreement 
where there is perhaps a different figure put in that they 
would be willing to accept.
    The other concern that I have relates to the provisions in 
section 11 relating to the Department of Justice assets 
forfeiture fund. I think we will have the same concern 
expressed by the Department of Justice, and I am prepared to 
put this in the bill kind of as a negotiating point with DOJ, 
but with the express understanding that this language is not 
written in stone tablets.
    Mr. Conyers. Well, that is a very good start, Mr. Chairman. 
I am happy to hear you say that. I yield to the gentleman from 
Massachusetts.
    Mr. Frank. I must say it is a lot easier for all of us--I 
want to express my strong support for the gentleman's 
amendment. It is a lot easier for us to be flexible when we 
know that the appropriators will have a lot to say about this, 
anyway. In acknowledging flexibility, we are not giving away 
any of our own decision-making. But I just want to thank the 
Ranking Member for offering this. Many of us are torn because 
we certainly want to see people who are incarcerated being 
given opportunities to learn to break this pattern. We also are 
concerned about the negative competitive effect it has on low 
wage private sector people. There were several things in here 
that tried to bridge that, and one that I have been working on, 
and I thank the Chairman and the Ranking Member for working 
with us on it to get a more active program of donations, and I 
want to highlight that this is part of what we are talking 
about.
    I would ask for an additional minute.
    Chairman Sensenbrenner. Without objection.
    Mr. Frank. We have in here an authorization for them to 
begin an active program of seeking out nonprofit groups that 
cannot afford to go into the private market and buy furniture 
and buy clothing and buy draperies and get this donated to 
them. In other words, the prisoners are presumably not doing a 
lot of marketing. The prisoners are doing the physical work. 
What we are trying to do here is more actively create a program 
whereby we will seek out groups, daycare centers, homeless 
shelters, drug treatment centers, who cannot now be in the 
market, and this will allow the prisoners to still make the 
machinery and make the stuff and have it donated. And I must 
say it seems to me this is an area in the whole faith-based 
area, this would be one of the areas we could be reaching out 
to groups that would not otherwise have been able to afford it. 
So I realize we will have difficulties over the financing, but 
I think this is a very constructive amendment that tries to 
deal with this conflict.
    Chairman Sensenbrenner. The time of the gentleman has once 
again expired. Does the gentleman from Pennsylvania insist upon 
his point of order?
    Mr. Gekas. I do not. I ask unanimous consent to withdraw.
    Chairman Sensenbrenner. The point of order is withdrawn. 
The question is on the amendment.
    Mr. Scott. Mr. Chairman.
    Chairman Sensenbrenner. Gentleman from Virginia.
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Thank you, Mr. Chairman. The prison industries 
program, or FPI, has been around since the 1930's. Under the 
law, Federal agencies are required to buy needed products from 
FPI if they can meet the order. The purpose of the program is 
to teach prisoners real work skills so 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 
crimes in the future. There is no question that the program has 
worked. Follow-up studies covering as much as 16 years of data 
has shown that inmates who participate in prison industry 
programs are more likely to be employed and less likely to 
commit crimes than those who did not participate in the 
program. But it certainly benefits offenders and their 
families. That is beside the point from a public policy 
perspective. The real benefit to all of us is that as a result 
of this program, we are less likely to be victims of crime.
    We are prepared to spend billions of dollars in prison 
construction and prison upkeep in our efforts to reduce crime, 
but this is a program that reduces crime while it essentially 
pays for itself. FPI works through a process of requiring 
Federal agencies to seek as a first resort to meet its 
procurement needs from prison-made goods. The total revenues of 
FPI represent a very small percent, much less than 1 percent, 
about one quarter of 1 percent of Federal agency procurement 
dollars. The furniture and apparel industry are two industries 
which the FPI does most of its work, and when representatives 
of those industries were asked at a hearing to estimate the 
impact on their industry, words such as ``insignificant'' and 
``negligible'' were used. If such industries are having 
problems, it is probably not--it is obviously not due to the 
impact of FPI. The program generates almost as much business as 
it takes by pumping in three quarters of its revenue back into 
the economy through purchases, much of it going to small, 
minority and women-owned businesses.
    For several years FPI has received awards for spending 
money in this sector of the economy. All able-bodied inmates in 
the Federal system are required by law to work. Few offenders 
enter the prison program with marketable work skills. The vast 
majority do not even have credible work habits such as showing 
up for work, cooperating with employees, and working 
productively with others. Such habits are required to be 
maintained in an FPI job. With elimination of parole, good 
conduct credits, Pell Grants and other incentives, Federal 
prison system has little to offer as an incentive for self-
development. But FPI is an exception. FPI jobs pay much more 
than the other prison jobs. To hold down an FPI job, an inmate 
must have completed high school or be making steady progress 
towards obtaining a GED and maintaining a good record of good 
behavior. This is true not only for those already in an FPI job 
but those on the waiting list.
    Some have suggested that vocational education is a good 
substitute for FPI work experience. While vocational education 
is important and ought to be available for all inmates, no 
amount of educational course work can substitute for real work 
at a workplace in terms of work experience. The average 
sentence for prisoners in the Federal prison is 8 years. The 
vocational education program usually runs 2 years or less.
    In any case, we have a situation what do you do with the 
other 6 years. I am first to concede there are problems at FPI 
which should be fixed. When a small business is making a single 
client product such as Army helmets, and depends on DOD 
contracts for its operations, FPI should not be able to take 
that business away. We don't need to fix the problem through a 
meat cleaver approach that the bill has before us. While it 
suggests that the lack of competition is a problem, the bill 
seeks to stranglehold FPI as a competitor not only by 
strengthening the prohibition against activities in the 
commercial market, but in the Government market as well. We 
should fix the problems and we should do so in such a way that 
breaks the cycle of crime by ensuring the viability of this 
vital crime reducing program.
    With 20 new programs scheduled to come on-line in the next 
few years, we can ill afford to diminish the successful crime 
reduction programs, and we should not believe that if any job 
goes to an FPI project that somebody will lose a job. We have 
to focus on the fact that this Committee with oversight 
responsibility should look at the safe, efficient and 
productive operation of our prison system, and that is why we 
need, Mr. Chairman, to make sure if we are going to get rid of 
the mandatory source, we need to make sure that the FPI system 
is alive and well.
    Ms. Lofgren. Would the gentleman yield?
    Mr. Scott. I yield.
    Chairman Sensenbrenner. The gentleman's time has expired. 
Without objection, he gets two more minutes.
    Ms. Lofgren. Thank you, Mr. Chairman. In addition to those 
excellent comments, I would like to note that an additional 
benefit of the industry's program is the reduction of violence 
and disorder in the institution itself. That is true not only 
in the Federal prisons, but in all of the State and local jails 
and prisons we have looked at. That if you have focused job 
activity, the institutions become much less violent, and I 
think that is why correctional officers associations tend to be 
very big fans of these industry programs because it gives--idle 
hands lead to problems and this gives something productive for 
inmates to do and learn a skill that will allow them to be 
successful after entering when their term is served.
    Mr. Conyers. Would the gentleman from Virginia yield?
    Mr. Scott. I yield.
    Mr. Conyers. I want to thank the gentleman for his 
statement because I think it is important that all of us 
appreciate where the gentleman is coming from. I mean I think 
it is a very important and enlightened position that Mr. Scott 
is taking here. And I think it is important that we see if we 
can marry these new ideas that are here, that we go beyond the 
private sector and that we get into the places where there 
isn't any money and there isn't any competition either. And so 
it is in that spirit that I appreciate the gentleman's comment 
on my amendment.
    Chairman Sensenbrenner. The gentleman's time has expired. 
The gentleman from Georgia, Mr. Barr.
    Mr. Barr. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Barr. I know this isn't very popular here in response 
to the arguments from the other side, but let me interject a 
small dose of reality here. For those who claim that 
maintaining the monopoly of FPI to be the sole source for 
Federal contracting and provision of furniture and other 
paraphernalia to Federal agencies as being a cure-all for 
prison violence and for rehabilitation, let me remind folks 
that the major prison uprising that we had at the Federal 
penitentiary in Atlanta back in the late 1980's was centered at 
the FPI building there because it was high profile. It was the 
first target and cost millions upon millions of dollars when 
that facility was burned down. So, yes, it can be a benefit, 
but it is not going to be a cure-all and simply because you 
have a Federal Prison Industries facility at a Federal prison 
facility does not mean that you are not going to have serious 
problems, and sometimes it can be a catalyst for more serious 
violence than if you don't have it. So these things can cut 
both ways. Let us look at it on its merit and not based on some 
Pollyannaish theory in saying that we ought to interject that 
the alien concept of competition into the provision of 
Government furnishings and services will decimate our ability 
to do away with prison violence and rehabilitate prisoners. 
That is not really so.
    Let us look at it on its merits. I think it is a very 
meritorious bill. It does not do away with Federal Prison 
Industries. It simply interjects the concept of competition and 
rationality into that process on behalf of the American 
taxpayers who are the people that we represent here. I yield 
back.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Michigan, Mr. Conyers. For what 
purpose does the gentleman from Wisconsin seek recognition?
    Mr. Green. Mr. Chairman, move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Green. Real briefly, I don't believe I take a 
Pollyannaish approach to FPI and the concept of rehabilitation, 
but I do believe that the FPI program can be an important part 
of the answer as we deal with increasing number of prisoners 
and increasingly long prison terms. Even with those longer 
terms, these prisoners will return to society some day, and 
unless we have assisted them in getting job skills, we know 
where they are going to be within a short period of time after 
release, and that is right back in prison.
    It is interesting to note that the supporters of this bill 
don't say that they are doing away with FPI. They claim to be 
reforming it and fixing it. I think most of us can agree that 
FPI does need reform. It does need improvements. But I think we 
will also learn during the debate today if you take a look at 
some of the issues raised by amendment that this bill doesn't 
reform FPI. It is an effort to do away with it entirely. And 
if, in fact, this bill succeeds and if, in fact, we do away 
with FPI, I think we will see just how valuable the program has 
been and can be, and I think it will be a sad day. I yield back 
my time.
    Chairman Sensenbrenner. Gentleman yields back. Question is 
on the Conyers amendment. Those in favor will say aye. Opposed, 
no. The ayes appear to have it. The ayes have it and the 
Conyers amendment is agreed to. Are there further amendments?
    Mr. Frank. Mr. Chairman.
    Chairman Sensenbrenner. The gentleman from Massachusetts, 
Mr. Frank.
    Mr. Frank. I move to strike the last word.
    Chairman Sensenbrenner. You are recognized for 5 minutes.
    Mr. Frank. I agree that there is a self-interest in helping 
those prisoners who can be rehabilitated. Obviously not all of 
them can be, but many of them, we hope, can be and I think it 
is very important to try. And that is why I was appreciative 
that the Chairman and the Ranking Member have accepted the 
amendment on donations. I think this is something that is 
really quite important.
    We have in this society a large number of institutions, 
many of them religious-based, some of them nonreligious-based, 
that try to provide help to some of the most unfortunate people 
in our society. They deal with drug rehab, they deal with 
homelessness. They deal with daycare for people at the low end. 
Many of them could benefit from clothing and furniture, two of 
the areas that the Federal Prison Industries does so much of 
its work. On the other hand, I don't want to see them in the 
market.
    I do want to make a couple of points. First of all, let us 
note that we ban from import into America, because we think it 
is unfair competition, goods made in foreign countries with 
prison labor. And nobody has yet to explain to me the moral 
difference. If prison labor should not be the source of goods 
and commerce because it was foreign, I don't understand this. 
Indeed, under world trade rules, are we allowed to solely 
discriminate? If we send into the stream of commerce prison-
made goods in America without restriction and then in effect 
give them a preference, by what right do we discriminate 
internationally?
    Secondly, let us note, there are people, for instance, in 
the garment and textile field who have been those most affected 
by international trade. It is not a good idea, and I would say 
this to people who try to promote acceptance of a trade regime. 
The FPI has a terrific impact, and so do many of the State 
prison programs, on precisely that segment of our economy, 
workers and smaller business people who are already very 
negatively affected by trade. And I think it would be a grave 
error. It is piling on.
    On the other hand, with the amendment that has been 
adopted, we are instructing the Bureau of Prisons to find 
groups actively that could take furniture, that could take 
clothing, take draperies, that would not otherwise be in the 
market, so they are not competing. They are not taking away 
from anything that would be sold. They could even start a 
special line that would be aimed at some of these facilities 
which have special needs for this and that would give the 
prisoners the work because, as I said, I am a strong supporter 
of rehabilitation, but having the prisoners actively engaged in 
marketing doesn't seem a good idea.
    Mr. Scott. Would the gentleman yield.
    Mr. Frank. I yield.
    Mr. Scott. Mr. Chairman, I say to the gentleman I agree 
with his assessment, but there is one problem. If you are 
supplying people that can't pay, then the program isn't paying 
for itself.
    Mr. Frank. I would say to them--I agree, but I think the 
notion that it has to pay for itself is not one that I accept. 
We don't say that putting people in prison has to pay for 
itself. But that is a separate issue. Frankly, maybe we ought 
to pay for itself by cutting back on some of the excess in 
imprisonment. But I don't think we have to have a prison 
program pay for itself. I would yield back.
    Chairman Sensenbrenner. We have two votes on the floor. The 
Committee is recessed until after the votes and it is the 
intention of the Chair to start up as soon as we get a working 
quorum. The Committee stands in recess.
    [Recess.]
    Chairman Sensenbrenner. The Committee will be in order. 
When the Committee recessed for the votes, the bill H.R. 1577 
was under consideration. The Conyers amendment had been agreed 
to. Are there further amendments? Gentleman from North 
Carolina.
    Mr. Coble. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Coble. I will not consume the entire 5 minutes. I come 
to this bill subjectively involved because I represent many 
furniture and textile employees in my district. This bill has 
been in the stream for a long, long time. I have met with the 
Federal Bureau of Prisons director and her able staff and, 
without exception, those conferences were harmonious, but we 
left failing to convince each other that either side was right 
or wrong. We need balance. I don't want to do anything that 
would endanger life inside the walls, that is public safety and 
prison safety. I think we must be ever conscious of the 
significance of that both as to inmates, guards, prison 
administrative personnel as well. And I want to commend you and 
the gentleman from Massachusetts, Mr. Frank. I think your work 
has resulted in striking this balance.
    I think by eliminating ultimately the mandatory source 
rule, which plagues my textile and furniture people back home 
and it plagues me, by gradually getting rid of that, striking 
the balance that you and Mr. Frank have seen to it that now 
exists, I think is a good way to go, a good course to pursue. 
And having said that, Mr. Chairman, I yield back my time.
    [The prepared statement of Mr. Coble follows:]
 Prepared Statement of the Honorable Howard Coble, a Representative in 
               Congress From the State of North Carolina
    Mr. Chairman and Members of the Committee,
    Federal statute authorizes Federal Prison Industries (FPI), the 
government corporation that employs federal inmates, to sell the goods 
and services produced by these inmates to federal agencies but not to 
the public in competition with the private sector. Federal law also 
mandates that federal agencies purchase FPI products. This requirement 
is generally referred to as ``FPI's mandatory source status.''
    While I support efforts to train prisoners to become productive 
members of society, I strongly believe that such efforts should take 
great care not to threaten the jobs of hard-working taxpayers. This 
issue is especially important to the 6th Congressional District of 
North Carolina, home to more than 40,000 textile and furniture workers, 
since two major classes of items produced by FPI are textiles and 
furniture. The mandatory source status gives FPI an unfair advantage 
over private manufacturers contending for federal contracts. Therefore, 
many of my constituents are deprived of employment opportunities in 
order to give work to federal inmates. In addition, the furniture 
industry in North Carolina is already competing with an increasing 
number of furniture imports arriving to the U.S. from countries such as 
China.
    For these reasons, I am greatly concerned about FPI's proposal to 
begin selling inmate-furnished services in the commercial marketplace. 
I am equally concerned with FPI's publication of a regulation that 
professes to be a codification of ``existing standards and procedures 
utilized to accomplish FPI's mission.'' It is my opinion that FPI is in 
need of reform before it is allowed to expand.
    I am strong proponent of H.R. 1577 because it does just that--
eliminates FPI's mandatory source advantage. It also prohibits FPI from 
entering the commercial market which I believe may have an adverse 
effect on private companies not able to compete with the low wages and 
cost benefits enjoyed by FPI. Further, the bill incorporates vocational 
and educational programs to teach inmates job-hunting and professional 
skills and coordinates funding to help inmates transition back into 
society.

    Chairman Sensenbrenner. Are there further amendments? The 
gentleman from Wisconsin, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. I have an amendment at 
the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment. It is Green point 050.
    [The amendment follows:]
    
    
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577 offered by Mr. Green of Wisconsin. Page 
1, beginning on line 15, strike ``only in accordance with this 
section'' and insert ``in accordance with applicable laws and 
regulations.'' .
    Page 2, strike line 6 through 9 and insert ``shall advise 
Federal Prison industries of the requirement so that Federal 
Prison Industries may submit a timely offer.''.
    Chairman Sensenbrenner. The gentleman from Wisconsin is 
recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Mr. Chairman, I would 
not be involved in the debate here before this Committee today 
if I believed that this bill would do what its strongest 
supporters suggest. If this bill were merely about reforming 
FPI, I would be supporting it, but it isn't. It claims to 
reform FPI when it really condemns FPI. It claims to add 
elements of competition, but what it really does is stack the 
deck against competition. And section 2 of this bill is a prime 
example of that, and that is what this amendment gets at.
    Section 2 of the bill provides that after the mandatory 
source is phased out, contracting officers aren't required to 
even solicit a competitive offer from FPI if the purchase 
involved is under the micropurchase threshold, which is $2500. 
Understand that three-fourths of all of FPI's orders are under 
$2500.
    Now if, as the supporters of this bill suggest, they are 
trying to introduce competitive forces here, surely for these 
types of purchases FPI should at least be advised of the 
purchase and given a chance to compete for it. But under this 
bill, they aren't even advised of it. This amendment merely 
provides that purchases from FPI after the mandatory source 
rule has been phased out be accomplished in accordance with the 
applicable laws and regulations, and it provides that Federal 
agencies should advise FPI of any procurement requirements that 
they have so that FPI can at least have the chance to make an 
offer, to make a bid. If we don't do this, we are condemning 
FPI.
    What we are essentially saying is in the name of reform, we 
are going to turn out the lights. FPI will essentially cease to 
exist after the mandatory phaseout has taken place. That would 
be terribly unfortunate for a lot of the reasons that you 
already heard. So if we are really about creating a soft 
landing for FPI, if we are really about introducing market 
forces into this program, if we are really about continuing FPI 
to sort of push them in a new direction, then this is the type 
of amendment we should support. It gives FPI at least a modest 
ability and opportunity to continue. With that, I yield back my 
time.
    Chairman Sensenbrenner. I move to strike the last word and 
ask the Members to vote in opposition to the amendment. I will 
be very brief.
    Currently nobody is required to solicit bids for purchases 
under $2500. What this amendment proposes to do is to go 
through the expense of soliciting bids for minor purchases and 
that is going to increase the cost to every other agency of the 
Government simply because FPI might be in the market.
    I think that if we are interested in eliminating 
unnecessary paperwork, the amendment should go down and we 
should continue the present law where bids or purchases under 
$2500 can be done without competitive bidding.
    Yield to the gentleman from Massachusetts.
    Mr. Frank. I thank the Chairman and I agree with his 
remarks. I don't think you are going to see on the part of 
Federal agencies an anti-FPI bias. And I think there may be an 
apprehension there. I don't think there is any basis for it. 
Where the FPI has had good relationships with agencies and been 
a good supplier, they are likely to get the same kind of 
treatment as anybody else, and I don't see the need for any 
special provisions.
    Mr. Green. Will the gentleman yield?
    Chairman Sensenbrenner. The gentleman from Wisconsin.
    Mr. Green. My question to Mr. Frank is if what Mr. Frank 
says is true, shouldn't those agencies at least be required to 
advise FPI of opportunities to compete for contracts?
    Chairman Sensenbrenner. I yield to the gentleman from 
Massachusetts.
    Mr. Frank. We are talking about a de minimis situation and 
I think the normal rule again is the potential supplier ought 
to be doing the job of monitoring this. I don't believe that 
the--as I said, I don't want to give a preferential situation 
here. I don't believe that the agencies are required to inform 
everybody else. I don't want FPI to be discriminated against, 
but I don't want there to be some special rule. And it is my 
understanding that they are currently required to notify every 
potential supplier.
    Ms. Lofgren. Would the gentleman yield?
    Chairman Sensenbrenner. I yield to the gentlewoman from 
California.
    Ms. Lofgren. I think the amendment is a reasonable one, and 
one of the reasons why is that the prison system doesn't have a 
marketing arm. I mean the private sector has marketers, but the 
prison industries do not, that I am aware of. And so as time 
goes on, the sales relationship will diminish, and there is no 
ability to really to resurrect it in the budget, and so I think 
it was at least notified that some competition is sensible and 
reasonable, and I thank the gentleman for yielding.
    Mr. Frank. Will the gentleman yield.
    Chairman Sensenbrenner. I yield to the gentleman from 
Massachusetts.
    Mr. Frank. I will say for an agency that does not have a 
marketing arm, the FPI has done a pretty good job of staying in 
touch with a lot of us and getting other people to stay in 
touch with a lot of us. They may not have a marketing arm, but 
they sure do a lot of marketing.
    Chairman Sensenbrenner. I yield back the balance of my 
time. The gentleman from Virginia, Mr. Scott.
    Mr. Scott. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, you talk about the vitality and 
viability and industry of the present system. 75 percent of the 
contracts are under $2,500 and that is $2,500 each. You can 
purchase an awful lot of goods if make them in sequential 
$2,500 or less purchases. If we can eliminate mandatory source 
and, as the gentlewoman from California mentioned, you have no 
ability to market, you will be losing 25, 75 percent of all of 
your orders if this amendment does not pass. All this is is 
that you have to at least notify them so you can make the 
offer. You do not have to accept the offer. The price may be 
better, the delivery situation may be better if you go 
somewhere else, but at least FPI would have the notice that the 
purchase is about to be made so they can at least compete.
    Without this amendment, the very viability of prison 
industries is at risk. We are going to be building several new 
prisons in the upcoming years. I think it is about 20 new 
prisons. And if you do not have this amendment, the ability to 
put a prison industry in those new prisons will be seriously at 
risk. I would certainly hope we would agree to the amendment.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Scott. I yield back.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman.
    Mr. Watt. Mr. Chairman, I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Just for the purpose of asking Mr. Frank a 
question. Under the micro purchase threshold standards now--in 
excess of the micro purchase standards, is the FPI required to 
give the prison industries notice of a bid, notice of 
opportunity?
    Mr. Frank. I do not know if the FPI--the FPI is prison 
industries.
    Mr. Watt. Is anybody required to give the prison 
industries----
    Mr. Frank. I do not know the exact status. I think the FPI 
ought to be treated in this regard like any other potential 
supplier so that if notices go out, they ought to get the same 
notices that anybody else does. I do not want them to be given 
any kind of special rule or not.
    Meanwhile, help has arrived in the person of someone who 
knows the answer. I might be able to give the gentleman an 
answer. If the gentleman would withhold for a minute, we might 
be able to have it for him.
    I am informed that the legislation that we are considering 
does require for above that micro level that there be a notice 
to FPI to Federal agencies that are in the business.
    Mr. Watt. And below the level, is the FPI guaranteed the 
contract or is this available?
    Mr. Frank. It is available to anyone, and I think you have 
a problem of paperwork requirements on the agencies for these 
small purchases.
    Mr. Watt. Okay.
    Mr. Scott. Will the gentleman yield.
    Mr. Watt. Yes.
    Mr. Scott. One of the problems in these so-called micro 
purchases, if you are doing $2,000, you are buying a lot of 
computers one at a time, $2,000 will add up to a lot of money. 
What happens under these is you have no notice to--requirement 
to notify anybody.
    Mr. Watt. Does not that put everybody on the same basis, 
then?
    Mr. Scott. It puts everybody on the same basis if you have 
a marketing arm. But you are right.
    Mr. Watt. Why should we be required to give a Government 
agency more notice than the general public has? You would think 
they would be on the inside of the system. They would be more 
likely to get the information.
    Mr. Scott. If the gentleman would yield. We are eliminating 
the mandatory source and going to competition. 75 percent of 
the orders----
    Mr. Watt. If--you want to put them on the same basis that 
we put everybody else, I thought.
    Mr. Watt. If you put them----
    Mr. Scott. If you put them in the dark.
    Mr. Watt. That is not in the dark. It is no more in the 
dark than private industry.
    Mr. Scott. You can go to wherever you want, to your 
brother-in-law, wherever you want. I think the requirement is 
you have to do a little--you can pick a couple of office supply 
companies and let them kind of do an informal--but you 
basically can go where you want. And if you do not, and 75 
percent of the orders in FPI are under $2,500 and they do not 
have a marketing arm, and maybe they would have to. But all the 
Government agencies, all this says is you are at least posted 
somewhere where prison industries can at least know where they 
have given up mandatory source, at least let them know so the 
prisoners will have some work to do so they will be less likely 
to commit crimes in the future.
    Mr. Frank. Will the gentleman yield?
    Mr. Watt. I yield to Mr. Frank.
    Mr. Frank. The gentleman from Virginia says this is to 
prevent people from giving preferential treatment to the 
brother-in-law. That is assuming the brother-in-law is not in 
prison. I do not always want to assume that. But beyond that, I 
am informed, not surprisingly, the FPI has a budget for 
marketing. They have a budget of $25 million for marketing. 
They do do the marketing. It does not say post it somewhere 
where they can see it. It says they get a special notice.
    And I would also note, remember, the FPI starts out here to 
some extent with existing law, with existing relationships. 
Where they have existing relationships with agencies, why would 
an agency go out of its way to terminate that relationship? In 
fact, they probably have a lot of advantage over others because 
there is this ongoing relationship with others.
    We are saying everybody ought to be treated equally. Where 
there is a notice, they should get it. If there is no 
requirement for notice, they should not be treated any 
differently than anybody else. I do think because of the 
relationships they have enjoyed under the mandatory sourcing, 
they start out with an advantage.
    Chairman Sensenbrenner. The gentleman's time has expired. 
The question is on the amendment of the gentleman from 
Wisconsin, Mr. Green. All those in favor, say aye. Those 
opposed, no. The noes appear to have it.
    Mr. Green of Wisconsin. Mr. Chairman, on that I ask the 
yeas and nays.
    Chairman Sensenbrenner. rollcall is ordered. Those in 
favor, say aye. Those opposed, no. The clerk will call the 
roll.
    The Clerk. Mr. Hyde.
    Mr. Hyde. Aye.
    The Clerk. Mr. Gekas.
    [No response.]
    The Clerk. Mr. Coble.
    Mr. Coble. No.
    The Clerk. Mr. Smith.
    Mr. Smith. No.
    The Clerk. Mr. Gallegly.
    Mr. Gallegly. No.
    The Clerk. Mr. Goodlatte.
    [No response.]
    The Clerk. Mr. Bryant.
    [No response.]
    The Clerk. Mr. Chabot.
    Mr. Chabot. Aye.
    The Clerk. Mr. Barr.
    Mr. Barr. No.
    The Clerk. Mr. Jenkins.
    [No response.]
    The Clerk. Mr. Cannon.
    Mr. Cannon. No.
    The Clerk. Mr. Graham.
    [No response.]
    The Clerk. Mr. Bachus.
    [No response.]
    The Clerk. Mr. Hostettler.
    Mr. Hostettler. No.
    The Clerk. Mr. Green.
    Mr. Green. Aye.
    The Clerk. Mr. Keller.
    [No response.]
    The Clerk. Mr. Issa.
    Mr. Issa. Aye.
    The Clerk. Ms. Hart.
    [No response.]
    The Clerk. Mr. Flake.
    [No response.]
    The Clerk. Mr. Pence.
    [No response.]
    The Clerk. Mr. Conyers.
    Mr. Conyers. No.
    The Clerk. Mr. Conyers, no.
    Mr. Frank.
    Mr. Frank. No.
    The Clerk. Mr. Berman.
    [No response.]
    The Clerk. Mr. Boucher.
    [No response.]
    The Clerk. Mr. Nadler.
    [No response.]
    The Clerk. Mr. Scott.
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye.
    Mr. Watt.
    Mr. Watt. Pass.
    The Clerk. Mr. Watt, pass.
    Ms. Lofgren.
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye.
    Ms. Jackson Lee.
    Ms. Jackson Lee. Pass.
    The Clerk. Ms. Jackson Lee, pass.
    Ms. Waters.
    Ms. Waters. No.
    The Clerk. Ms. Waters, no.
    Mr. Meehan.
    Mr. Meehan. No.
    The Clerk. Mr. Meehan, no.
    Mr. Delahunt.
    [No response.]
    The Clerk. Mr. Wexler.
    [No response.]
    The Clerk. Ms. Baldwin.
    Ms. Baldwin. No.
    The Clerk. Mr. Weiner.
    Mr. Weiner. No.
    The Clerk. Mr. Schiff.
    [No response.]
    The Clerk. Mr. Chairman.
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional Members in the 
room who wish to pass or change their vote? The gentleman from 
Pennsylvania, Mr. Gekas.
    The Clerk. Mr. Gekas.
    Mr. Gekas. No.
    Chairman Sensenbrenner. Gentlewoman from Pennsylvania, Ms. 
Hart.
    Ms. Hart. No.
    Chairman Sensenbrenner. Gentleman from Florida, Mr. Keller.
    Mr. Keller. No.
    Chairman Sensenbrenner. Gentleman from Tennessee, Mr. 
Jenkins.
    Mr. Jenkins. No.
    Chairman Sensenbrenner. Gentleman from North Carolina, Mr. 
Watt.
    Mr. Watt. No.
    The Clerk. Mr. Watt, no.
    Chairman Sensenbrenner. Other Members who wish to cast or 
change their votes?
    Gentlewoman from Texas, Ms. Jackson Lee.
    Ms. Jackson Lee. Aye.
    Chairman Sensenbrenner. Gentleman from Alabama, Mr. Bachus.
    Mr. Bachus. Aye.
    The Clerk. Mr. Bachus, aye.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their vote? If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 8 ayes and 18 nays.
    Chairman Sensenbrenner. The amendment is not agreed to. Are 
there further amendments? Ms. Jackson Lee.
    Ms. Jackson Lee. I have an amendment at the desk.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577, offered by Ms. Jackson Lee of Texas.
    [The amendment follows:]
      
      

  


    The Clerk. At the end of the bill add the following new 
section. ``section. Independent study to determine the effect 
of eliminating the Federal Prison Industries mandatory source 
authority.''.
    Ms. Jackson Lee. I ask unanimous consent that the amendment 
be considered as read.
    Chairman Sensenbrenner. Without objection, ordered. The 
gentlewoman is recognized for 5 minutes.
    Ms. Jackson Lee. Thank you, Mr. Chairman. This is an 
informative and instructional amendment that I ask my 
colleagues to support to provide us with the information of 
what impact the Federal Prison Industries have. We obviously 
appreciate the advantage the program can have on persons who 
are incarcerated and society at large. At the same time there 
is, I think, the need to be able to determine what value comes 
to those who are incarcerated with respect to training and 
experience with development of job skills and work ethic. Also 
how these particular industries compete with opportunities 
needed by low income families and, as well, other small private 
contractors. Information goes a long way. It is instructional, 
and I believe this study is long overdue, Mr. Chairman. We have 
never had one, to my understanding, and, of course, one of the 
issues that could be raised is whether or not it brings down 
recidivism, which is something we all want to encourage to 
happen; that recidivism is diminished, if you will. This 
provides an opportunity in the community for those individuals 
who are to go back into the community.
    I would ask my colleagues to support this study because we 
can only be better policymakers and legislators if we have this 
information. I yield back.
    Chairman Sensenbrenner. I move to strike the last words and 
recognize myself for 5 minutes.
    I do not think we need to have an independent study on 
this. It kind of punts the whole question on whether or not the 
mandatory source rule should be repealed, continued, or phased 
out. I think most of the Members of this Committee have 
realized that mandatory source is not in the public interest. 
What the legislation proposes to do is phase out mandatory 
source in the way to prevent the rug from being pulled out from 
underneath Federal Prison Industries. The Comptroller General 
is overloaded with GAO studies. Any Member can ask for a GAO 
study. It does not require a Committee action.
    I believe this amendment really fuzzes the issue of whether 
mandatory sourcing shall be taken away. I would point out that 
the Department of Justice supports the phaseout of mandatory 
sourcing that is contained in this bill. The AFL-CIO does as 
well, with letters that have been delivered to the Committee 
today, and it seems to me that we ought to bite the bullet, 
make a decision, and do it.
    I yield to the gentleman from Michigan.
    Mr. Conyers. I thank the Chair for yielding. The Chair must 
consider the fact that there are some Members who have never 
seen a study that they did not like. So what is one more study 
onto all the hundreds of other studies that have been ordered 
in the 107th Congress. And so if it will give the gentlewoman 
support for final passage, will reduce the number of amendments 
she might otherwise introduce, I am for it.
    Ms. Jackson Lee. You are so eloquent, Mr. Ranking Member. 
Would the gentleman yield?
    Chairman Sensenbrenner. I am happy to yield to the 
gentlewoman from Texas.
    Ms. Jackson Lee. My Ranking Member has expressed himself in 
such an eloquent fashion that I just want to echo the 
sentiments. I believe that information is not negative and I 
believe that the refined information coming from the 
Comptroller would be very helpful to us. I appreciate the 
general support of the mandatory source, but there is not only 
a question about that. It raises many additional issues dealing 
with the impact of the prison bureau industries, the impact on 
local private entrepreneurs, employment issues. It is a helpful 
document to be able to not have other Congresses revisit this 
question again.
    I would ask my colleagues to support this amendment.
    Chairman Sensenbrenner. I yield to the gentleman from 
Massachusetts.
    Mr. Frank. I would suggest another reason why the majority 
might want to authorize this study. You might want to give the 
Controller General more to do, in which case he would stop 
trying to find out just what the Vice President was doing last 
year.
    Chairman Sensenbrenner. Well, we will think about that. I 
yield back the balance of my time. The question is on the 
amendment offered by the gentlewoman from Texas, Ms. Jackson 
Lee. Those in favor, say aye. Those opposed, no. The ayes 
appear to have it. The ayes have it, and the amendment is 
agreed to.
    Are there further amendments?
    Mr. Hyde. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
substitute.
    The Clerk. Amendment to the amendment in the nature of an 
substitute to H.R. 1577 offered by Mr. Hyde.
    [The amendment follows:]
      
      

  


      
      

  


    The Clerk. Page 18 after line 14 insert the following.
    Mr. Hyde. Mr. Chairman, I ask unanimous consent that the 
further reading of the amendment be dispensed with.
    Chairman Sensenbrenner. Without objection.
    Mr. Hyde. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes in support of his amendment.
    Mr. Hyde. Mr. Chairman, I am offering what I believe to be 
a perfecting amendment designed to ensure that the bill will 
serve the purposes for which its authors intend, which is to 
improve Federal Prison Industries rather than destroy it. It 
will provide a safety valve just in case the provisions of the 
bill do not work out as planned. I believe it is important to 
preserve Federal Prison Industries because it has a proven 
record of improving prison safety as well as overall public 
safety. Participation in Federal Prison Industries works 
programs has been shown to reduce recidivism, to increase the 
likelihood that inmates will be gainfully employed after they 
are released. Those programs are currently providing employment 
and training to about 22,000 inmates which is about 25 percent 
of the total number of inmates who are eligible for work 
programs, and there are plans to increase that number by 
building new factories in some of the Federal prisons, the 
newer Federal prisons.
    Mr. Chairman, the proponents of this bill believe they can 
preserve these social benefits by gradually phasing out the 
preference that Federal Prison Industries projects gets in the 
Federal Government's procurement system. Each year the number 
of items sold under this preference will become smaller and 
smaller until 2008 when there would be no preference at all. In 
theory, by then, Federal Prison Industries would have 
reorganized its operation so that they could continue to sell 
their product to the Government agencies even without a 
preference. I hope this plan works. But the bill as currently 
drafted makes no provision for what will happen if it does not 
work.
    Mr. Chairman, there are at least three reasons why turning 
Federal Prison Industries into an enterprise that can undersell 
private contractors may be easier said than done.
    First, even though prison wages are lower than private 
wages, productivity is also far lower.
    Second, the overhead cost for such items as supervision and 
security are far higher in prison factories than in private 
enterprises.
    Finally, Federal Prison Industries is forbidden by law to 
sell its product on the open market. Unlike private 
competitors, it can sell only to the Federal Government. So it 
can take advantage of economies of scale to nearly the same 
extent as its competitors.
    Mr. Chairman, my amendment would require the Attorney 
General to make a determination each year about whether the 
phasing-out of Federal Prison Industries' procurement 
preference has resulted in a reduction in the number of inmates 
provided employed in-work programs or is likely to do during 
the following year. If, and only if, there had been or was 
likely to be a substantial reduction in the number of inmates 
employed, the Attorney General would then determine whether 
this reduction posed a significant threat to prison safety or 
to general public safety. If not, then further reductions would 
be imposed on schedule. But if the Attorney General found both, 
that the phasing-out of the preference would substantially 
reduce prison work opportunities and that this reduction posed 
a significant threat to prison safety or public safety, then 
any further phasing-out would be postponed for at least a year. 
The phasing-out would occur only after the Attorney General 
found that it was safe to proceed.
    Mr. Chairman, I hope the Committee will adopt this 
amendment. If the proponents of the bill are correct in 
assuming that their reforms will make Federal Prison Industries 
more competitive rather than putting it out of business, then 
the safety valve provided by this amendment will never come 
into play. But if the proponents are wrong and if our highest 
law enforcement official determines there is a significant risk 
to prison safety or public safety, then the safety valve which 
I am providing will be badly needed.
    I urge my colleagues to support this perfecting amendment.
    Chairman Sensenbrenner. Mr. Chairman, I move to strike the 
last words and recognize myself for 5 minutes.
    Mr. Chairman, this amendment guts the bill. And with all 
due respect to my good friend from Illinois, what he has 
proposed to do is to have a rolling postponement of the phase-
out of the mandatory procurement practices.
    In the early determination from the Attorney General we can 
postpone that phase-out 1 year at a time so it never gets 
phased out. Now, nobody on this Committee is in favor of making 
prisons unsafe and we do not endorse prison riots and we want 
to make sure prisoners are kept in safe and humane conditions. 
But the effect of this amendment, given the way the Federal 
Bureau of Prisons operates will be to prevent the transferring 
of people who are presently in money-making industrial 
practices in the prison into the vocational rehabilitation 
programs that were authorized under the Conyers amendments and 
which will give those prisoners better skills to get jobs in 
the private sector once they are released from prison and are 
looking for jobs.
    I think that the adoption of the Hyde amendment will allow 
Federal Prison Industries to keep doing business as usual, but 
also will really disadvantage the prisoners who do want to make 
a sincere attempt at rehabilitation from being forced into the 
vocational rehab jobs that the gentleman from Michigan, Mr. 
Conyers, is correctly pushing.
    So I would hope that this amendment would not be adopted.
    Mr. Frank. Mr. Chairman.
    Chairman Sensenbrenner. I yield to the gentleman from 
Massachusetts.
    Mr. Frank. Mr. Chairman, I have an amendment to the 
amendment at the desk.
    Chairman Sensenbrenner. I would yield back the balance of 
my time.
    Mr. Frank. Mr. Chairman, I move to offer an amendment to 
the amendment.
    Chairman Sensenbrenner. The clerk will report the amendment 
to the amendment.
    [The amendment follows:]
    
    
    The Clerk. Amendment offered by Mr. Frank to the Hyde 
amendment to the amendment in the nature of a substitute to 
H.R. 1577 moves to amend the amendment by striking all after 
the word Congress on line 17.
    Chairman Sensenbrenner. The gentleman from Massachusetts is 
recognized in 5 minutes in support of the amendment to the 
amendment.
    Mr. Frank. Mr. Chairman, the effect of this amendment is 
very simple. That is why we have not distributed copies. It 
would just amendment at the word Congress on line 17 of page 
one. It would leave in place the requirement that the Attorney 
General make this double finding. As you remember, the Attorney 
General is instructed to find whether or not there has been a 
substantial reduction in employment and whether or not that 
reduction in employment has presented a significant risk of 
adverse effects. It would have the Attorney General report that 
to the Congress, which is the appropriate policymaking body.
    In its current form it seems to me to be a degree of 
delegation much too far. It lets the Attorney General 
unilaterally amend the legislation based on the finding. Now we 
understand that these are not the findings of great 
specificity. I think it is worth having this. That is why I did 
not want to oppose the amendment altogether but simply get the 
finding. But we all know that the issues here are somewhat 
going to be ambiguous.
    One, there is perhaps the more quantifiable question about 
whether there has been a reduction. There is a more difficult 
question as to whether or not this causes adverse risks to 
public safety. Whether there might be alternative methods of 
trying to rehabilitate prisoners, whether there are other 
things we can do. It does not seem to me this is a legislative 
principle we ought to adopt. It almost comes close to the 
reverse of the legislative veto, an executive unilateral power 
to suspend a significant impact of a statute.
    I do believe if the Attorney General--and the Attorney 
General came to this Committee and said, look, we have a 
serious problem here, that we would not ignore it. We would 
look at it. It seems to me that is the appropriate process. It 
ought to trigger a serious investigation from this Committee.
    I would also point out there is a little bit of an 
inconsistency in the amendment because in the first part, the 
report requires a finding that there has been a loss of 
employment that has led to adverse risk of public safety. But 
on page 2, those are independent factors. They have been 
delinked. There is an ``or'' there on line 11 and that what I 
would strike out. So that once there has been a suspension, a 
finding that there has been a drop in employment, even in the 
absence of finding that that had an adverse risk of public 
safety, would allow the Attorney General to continue to suspend 
an Act of Congress. I think that is not a good idea.
    So I agree that this kind of a report from the Attorney 
General would be useful, but I do not think this is, either in 
this particular instance or as a general legislative matter, an 
appropriate way to structure a program, and that is why I 
offered offer the amendment.
    I yield to my Ranking Member.
    Mr. Conyers. I thank the gentleman for yielding. I want my 
friend Mr. Hyde to know that I just called Lionel Hampton, 
whose birthday we celebrated in this room yesterday, and he 
supports your amendment and Henry Hyde's amendment.
    Mr. Frank. I just hope the gentleman vibrates with me on 
this particular issue.
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, I have a different reading of the 
language on page 2, line 11. That order seems to me that the 
postponement would be withdrawn and the reductions take place 
if either there is A or B. So that if it has been postponed by 
the Attorney General, he would find either A or B and then it 
goes into effect.
    Mr. Chairman, we have delegated a lot of authority to the 
Attorney General in the past few months. I mean, we delegated 
him to name terrorist organizations and start taking their 
property without any judicial review. So this little delegation 
pales in consideration of some of the other powers we have 
given him.
    Congress, as we know from the way we have dealt with this 
very issue, will take a long time to respond to such a finding.
    It seems to me if we want to ignore his findings that we 
would allow this postponement to go into effect or take 
affirmative action to go ahead and limit the prison industry 
program notwithstanding his specific finding, and we could pass 
a bill to that effect. It seems to me if the Attorney General 
has made such a finding that we ought to stop the process right 
where it is before we go much further. The Attorney General has 
the ultimate responsibility in the Government or responsibility 
in his department to make sure the prisons are being run 
safely. And if he finds the implementation of this bill is 
jeopardizing that, he ought to have the power to continue the 
prison industry program to make sure that the prisons are safe 
and the public safety is not adversely affected.
    Finally, Mr. Chairman, if the amendment without the Frank 
amendment guts the bill, then the bill in fact guts prison 
industries. And that is the ultimate question before us, 
whether we are going to have a viable prison industry program 
or not. And I think this amendment at least will make sure that 
we have a viable prison industry program, the amendment without 
the Frank amendment. I would hope we defeat the Frank amendment 
and adopt the Hyde amendment.
    Mr. Bachus. I seek recognition in opposition to the Frank 
amendment.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Bachus. Mr. Chairman, I would hate to pick up the paper 
3 or 4 years from now and read that there was a prison riot in 
my district or my State or anywhere in the United States, and 
one of the root causes of that was some program had been--had 
been shut down, some work program of prison industries, as a 
result of what we have passed today. I believe that the Hyde 
amendment would assure us at least that we would be watching 
out for any unforeseen or foreseen consequences of the 
legislation which did make prison safety or undermine prison 
safety.
    I would just tell you that I was sent to work at 14 years 
of age here in the summer for a month or two because my dad 
said that was the best way to keep me out of trouble, and I do 
not think I ever got in trouble when I was at work, any serious 
trouble. And I believe that it also builds character. I believe 
it builds a work ethic, and I do not want to deny the prisoners 
an opportunity to do something to feel better about themselves. 
And this amendment offers me a great deal of comfort with the 
overall bill. I believe for the safety of the community we 
represent, we ought to support this amendment.
    Mr. Hyde. Would the gentleman yield?
    Mr. Bachus. I would yield.
    Mr. Hyde. I want to thank the gentleman for his remarks and 
I want to thank Mr. Scott for his analysis. I think he is 
exactly right. Prison industries is a valuable asset. You get 
somebody locked up in a prison who has no hope, especially when 
they leave the prison, and they have not had a work experience, 
they can learn they can put the time there in prison to good 
use and come out a person who can cope with life. And I think 
to deny that--and that is really what the bill does, the bill 
eviscerates prison industries.
    It is not an enormous gash into the commerce of the 
community. It is worthwhile, it gives the prisoners a work 
experience, and I think we ought to nurture it and not destroy 
it.
    The Attorney General has to make two findings. One is that 
the limitation has resulted or is likely to result in a 
substantial reduction in inmate industrial employment. Well, if 
the program makes that, you would want to correct that, would 
you not? And the other is, the other finding is, and he has to 
find both, is that it presents a significant risk of adverse 
effect on safe prison operation or public safety.
    So I do not think this is such a big deal to preserve the 
viability of prison industries. I think it is therapeutic. I 
think it helps society. It helps the inmates, and it does not 
harm the local shoe store or delicatessen or anybody we are 
trying to protect.
    I thank Mr. Bachus and I thank Mr. Scott.
    Chairman Sensenbrenner. The time belongs to the gentleman 
from Alabama.
    Mr. Bachus. I yield back the balance of my time.
    Chairman Sensenbrenner. The gentleman from Michigan.
    Mr. Conyers. Mr. Chairman, we have to recognize here that, 
first of all, that my dear friend Mr. Hyde's amendment 
effectively destroys the objective of the bill. You have to 
start out with that premise. If we are going to let the 
distinguished Attorney General call the last shots on prison 
industries, you have got to start out with that recognition.
    The Frank amendment gives us some life. It gives the 
Attorney General some responsibility, but it does not give him 
the chance to pull the switch. So as long as you understand 
that when you are voting on the amendment, we will go along 
with the majority.
    I yield to the gentleman from Massachusetts.
    Mr. Frank. I thank the gentleman.
    I want to stress the amendments that we adopted offered by 
the gentleman from Michigan do encourage prison industries to 
keep going. We talk about a wide donation program so they can 
give things away. We talked about some other aspect of 
rehabilitation. No one is talking about simply having the 
prisoners sit there and sulk. We are talking about having stuff 
given away rather than sold in competition. But beyond that, 
here is the problem with the amendment. Let us be very clear 
that the finding about whether or not there has been a drop in 
sales is a fairly specific one, but does that lead to a risk of 
public safety? Most of the Members in this Committee know what 
they think about this now. This is not some objective 
determination to be made by the Attorney General. This is a 
basic philosophical thing. Members here have been arguing on 
behalf of the Attorney General making that finding. They have 
been arguing the finding. They are calling for it.
    Let us also understand--and I know we have given other 
forms of delegation to the Attorney General and I used to join 
the gentleman from Virginia in being a little skeptical of 
those. But here is the problem, too. We are not talking about a 
purely intellectual issue. The Attorney General is the chief 
operating officer for the Federal department. The FPI brings in 
revenue to his department. He is going to be heavily lobbied by 
the people within his department to do something that stops 
this program from going into effect. We had FPI lobbying us 
very heavily to oppose any such legislation. They wanted an 
expansion. The fact is that the revenues here are useful to the 
department.
    In fact, if you were going to give somebody the power to 
stop it, I do not think we should do that as appropriate 
legislative policy. It probably should not be the Cabinet 
budget officer whose budget will be directly affected one way 
or another. You might want to give it to somebody else. I do 
not think we ought to give it to anybody.
    I do think if the Attorney General sends Congress a well-
documented report that says we had trouble in the prisons 
because of this, we can go on. A short suspension can be part 
of an appropriations bill. It does not require a whole 
legislative operation.
    I will say to my friends on my side, these kinds of 
principles are not good for one bill only. Give the Attorney 
General the power to suspend the program affecting the prisons 
based on his unilateral unchallengeable finding, why does it 
stop here? Are there other things that this Attorney General or 
the next Attorney General could? Did my friends on the other 
side want Janet Reno to have that? Do we want John Ashcroft to 
have it? Attorneys general are not neutral figures. They are 
often very high profile, very ideologically defined figures. 
What a precedent we are setting here to give the Attorney 
General of the United States the power unilaterally to suspend 
because of a finding that is part philosophical and part 
factual.
    Mr. Hyde. Will the gentleman yield?
    Mr. Frank. Yes.
    Mr. Hyde. You have said the amendment guts the bill.
    Mr. Frank. I did not say that. Other people have said it.
    Mr. Hyde. You have not objected to them using those words.
    Mr. Frank. No.
    Mr. Hyde. I am told by Mr. Conyers that under his breath he 
has said that.
    In any event, the bill is not gutted because it requires 
the Attorney General to make two findings. One is that a 
substantial limitation in inmate industrial employment has 
occurred and the other is it presents a significant risk of 
adverse effect on safe prison operation or public safety. So if 
those two elements are not found, the bill is in its full 
glory. If they are found, we have some flexibility to adjust 
the situation and keep Federal industries flying.
    Mr. Frank. Let me take back my time and ask for an 
additional minute to respond.
    Chairman Sensenbrenner. No objection.
    Mr. Frank. I did not say the bill was gutted. I say what I 
say, and other people can say what they say, and if I objected 
to everything with which I disagreed, nobody else would get a 
chance to talk around here. The fact is that there is still a 
principle here of delegation that seems to me very unwise and 
precedential to say on an issue that is partly factual but 
partly philosophical that we will let one of the most high 
profile, often politically sharply defined public officials, 
Janet Reno or John Ashcroft or any Attorney General that you 
think of, will allow that kind of a suspension. And I think 
that is a grave error. No, I do not say it guts the bill. I 
would note that it does appear to be kind of a tendency for 
people who do not like the bill to vote one way and people who 
do like the bill to vote another. I think it is a mistake, as I 
said, of setting this precedent of giving that power.
    I think the part of the amendment that requires the finding 
by the Attorney General is a useful one. But having the 
Attorney General, highly ideological in either party's case, 
the man whose budget or woman whose budget is influenced by 
this has the unilateral power to suspend congressional action 
is a bad idea.
    Chairman Sensenbrenner. The gentleman's time has expired. 
The gentleman from North Carolina, Mr. Watt, is recognized for 
5 minutes.
    Mr. Watt. Mr. Chairman, I move to strike the last words.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. First of all, Mr. Chairman, I would just say that 
there is among the best debates I think I have ever witnessed 
in this Committee. When you have a bill and an amendment that 
divides allies like the Chairman and the former Chairman on one 
side and Bobby Scott and myself on the other side--and this is 
not along political lines, it is along substantive and public 
policy lines--you have got the ingredients of a very difficult 
issue that needs to have this kind of public debate. And a lot 
of it goes back to your opinion about what prison industries, 
whether there even ought to be such a thing as prison 
industries and what it does to contribute to a complex out 
there that many of us perceive as growing out of control. But I 
am not going to go there.
    I want to go back to the substantive part of this. I 
clearly disagree with the former Chairman's amendment, and the 
trouble I have with Mr. Frank's amendment to the amendment is 
that it seems to have been once we have passed Ms. Jackson 
Lee's amendment, if we also passed this amendment, Mr. Frank's 
amendment, we would then have a study by the Comptroller 
General that under Ms. Jackson Lee's amendment, which I presume 
would do essentially the same thing that the Attorney General's 
study would do under this amendment as amended by Mr. Frank. I 
am just, I guess, I am a little concerned that what if the 
Comptroller General comes up with one set of findings and if, 
as I presume the Attorney General would, he would find whatever 
is necessary to, I think to preserve prison industries? I mean, 
I think it probably would be easier to document that if you cut 
out prison industries, somebody is more likely to not be 
rehabilitated or go back into the community and engage in some 
counterproductive activity. I mean, the Attorney General could 
easily find that. The Comptroller General could conduct the 
same study and find the exact opposite.
    Where does that leave us if that happens? If either the 
sponsor of the amendment or the sponsor of the amendment to the 
amendment would address that?
    Mr. Frank. Will the gentleman yield?
    I would say I think that is right, but I worry about the 
duplication. But it is an important issue. It would leave us, 
the Congress, in a better position because, as the gentleman 
knows, particularly the gentleman who studies these things, we 
would not simply get that conclusion. We would get presumably 
the reasons behind that conclusion, and I would not find myself 
unhappy if we got two conflicting recommendations, each the 
product not simply of an ideological free disposition but of a 
kind of a study. But I think obviously that is why I do not 
want it to be automatically triggered by either finding. But if 
we got two studies that were contradictory but if they were 
both serious studies, maybe we would have more good debates.
    Mr. Watt. That is a fair answer. I would obviously favor 
Mr. Frank's over Mr. Hyde's amendment, and with that 
explanation, I think I will support Mr. Frank's amendment to 
the amendment. I yield back the balance of my time.
    Mr. Green. Mr. Chairman, I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman.
    Again, I think this amendment and the debate surrounding 
this amendment really points out what is going on here. Those 
who are arguing that the bill is about reform and making FPI 
work should in no way or form object to the Hyde amendment. 
There is no reason to object. If they are confident of this 
quote/unquote soft landing, if they are confident that prison 
industries can continue after the phase-out of the preference 
that takes place, then they should be just fine with this 
amendment. They will have no reason to be nervous about it or 
to be anxious about it at all. The fact that they are 
protesting so much shows that this is not about reforming FPI. 
It is instead about trying to condemn it and trying to 
terminate it and trying to make the program go away.
    I would note that the Department of Justice, as the 
Chairman has pointed out, is in favor of the phase-out. So you 
have got the Department of Justice here in favor of the phase-
out. This amendment, the Hyde amendment, the underlying 
amendment, simply has them look at this, has the Department of 
Justice, the Attorney General's office, take a look year by 
year monitoring the progress of the phase-out and monitoring 
the progress of prison industries to determine whether or not 
they are wrong. And, in fact, this does have the type of effect 
that many of us who are opposed to this bill fear. And I 
appreciate the good intentions of many of the supporters who 
talk about how because of the donation initiatives that are in 
this bill that there will still be FPI. Let us not fool 
ourselves. There will not be, because under these donation 
provision--and again the Bureau of Prisons has a public works 
seperate from FPI, it is going to cost money. Where is that 
money going to come from?
    Right now we have in FPI essentially a self-funding 
institution. It pays for itself. That is one of the beauties of 
it. But if this bill goes through and if it has the effect that 
many of us fear, what will happen is if FPI is going to 
continue at all, if it is going to have these donation 
programs, these donation elements, they will have to come to us 
in Congress and ask for a lot of money, an awful lot of money.
    So, again, we should really understand what is going on in 
this debate. This is not about whether or not we are reforming 
FPI and making it work better. This is about whether or not we 
are going to end FPI, whether we will condemn it and terminate 
the program. It is for that reason that despite, I think, the 
constructive comments of my friend, Congressman Frank, I must 
oppose his amendment and strongly support the underlying Hyde 
amendment. I yield back my time.
    Chairman Sensenbrenner. The question is on the Frank 
amendment to the Hyde amendment. Those in favor will say aye. 
Those opposed will say no. The ayes appear to have it.
    Mr. Hyde. I ask for a rollcall vote, Mr. Chairman.
    Chairman Sensenbrenner. This is a rollcall vote. Those in 
favor of the Frank amendment to the Hyde amendment will say 
aye. The clerk will call the roll.
    The Clerk. Mr. Hyde.
    Mr. Hyde. No.
    The Clerk. Mr. Gekas.
    [No response.]
    The Clerk. Mr. Coble.
    [No response.]
    The Clerk. Mr. Smith.
    Mr. Smith. Yes.
    The Clerk. Mr. Smith, aye.
    Mr. Gallegly.
    Mr. Gallegly. Aye.
    The Clerk. Mr. Goodlatte.
    [No response.]
    The Clerk. Mr. Bryant.
    [No response.]
    The Clerk. Mr. Chabot.
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr.
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye. Mr. Jenkins.
    [No response.]
    The Clerk. Mr. Cannon.
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye. Mr. Graham.
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye. Mr. Bachus.
    Mr. Bachus. No.
    The Clerk. Mr. Hostettler.
    Mr. Hostettler. Aye.
    The Clerk. Mr. Green.
    Mr. Green. No.
    The Clerk. Mr. Keller.
    Mr. Keller. Aye.
    The Clerk. Mr. Issa.
    [No response.]
    The Clerk. Ms. Hart.
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye. Mr. Flake.
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Pence.
    [No response.]
    The Clerk. Mr. Conyers.
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers, aye. Mr. Frank.
    Mr. Frank. Aye.
    The Clerk. Mr. Frank, aye. Mr. Berman.
    [No response.]
    The Clerk. Mr. Boucher.
    [No response.]
    The Clerk. Mr. Nadler.
    [No response.]
    The Clerk. Mr. Scott.
    Mr. Scott. No.
    The Clerk. Mr. Scott, no. Mr. Watt.
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren.
    Ms. Lofgren. No.
    The Clerk. Ms. Jackson Lee.
    [No response.]
    The Clerk. Ms. Waters.
    [No response.]
    The Clerk. Mr. Meehan.
    [No response.]
    The Clerk. Ms. Waters.
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan.
    [No response.]
    The Clerk. Mr. Delahunt.
    [No response.]
    The Clerk. Mr. Wexler.
    [No response.]
    The Clerk. Ms. Baldwin.
    [No response.]
    The Clerk. Mr. Weiner.
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner, aye. Mr. Schiff.
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no. Mr. Chairman.
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Are there additional Members who 
wish to cast or change their vote? Gentleman from North 
Carolina, Mr. Coble.
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye.
    Chairman Sensenbrenner. Gentleman from Tennessee, Mr. 
Jenkins.
    Mr. Jenkins. Aye.
    The Clerk. Mr. Jenkins, aye.
    Chairman Sensenbrenner. Gentleman from California, Mr. 
Issa.
    Mr. Issa. No.
    Chairman Sensenbrenner. Gentleman from Pennsylvania, Mr. 
Gekas.
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye.
    Chairman Sensenbrenner. Gentleman from New York, Mr. 
Nadler.
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler, aye.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their votes? Hearing none, the clerk will report.
    The Clerk. Mr. Chairman, there are 18 ayes and 9 nays.
    Chairman Sensenbrenner. The amendment to the amendment is 
agreed to. The question is now on the amendment of the 
gentleman from Illinois, Mr. Hyde, as amended. Those in favor, 
say aye. Opposed no. The ayes appear to have it. The ayes have 
it and the amendment as amended is agreed to.
    The Chair will give a bit of a scheduling note. We are due 
for a vote at 12:15. It is not the intention of the Chair to 
bring us back after the vote on the rule on the tax bill. So we 
will recess the Committee subject to the call of the Chair at 
the time the bell rings. Members will get at least 24 hours 
notice on when the Committee will resume its sitting.
    Mr. Conyers. Mr. Chairman, are there other major amendments 
that are outstanding?
    Chairman Sensenbrenner. I believe there are.
    For what purpose does the gentleman from Virginia seek 
recognition?.
    Mr. Scott. Mr. Chairman, I have an amendment at the desk 
that I hope will take more than 5 minutes.
    Chairman Sensenbrenner. You are not getting more than 5 
minutes to speak on it. The clerk will report the amendment.
    Mr. Scott. Mr. Chairman, I think there are other amendments 
that may go quicker.
    Chairman Sensenbrenner. The clerk will report the Scott 
amendment.
    [The amendment follows:]
    
    
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577 offered by Mr. Scott and Mr. Green. 
``section 21, additional pilot authorities for inmate work 
opportunities. A, section 4124 of title 18, United States Code, 
is amended to read as follows: Subsection 4132.''.
    Mr. Scott. Mr. Chairman, I ask the amendment be considered 
as read.
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read. The gentleman from Virginia is recognized 
for 5 minutes.
    Mr. Scott. Mr. Chairman, last fall with your support, 
discussions were held in good faith between the gentleman from 
Virginia, Mr. Wolf, the gentleman from Texas, Mr. Smith, the 
gentleman from Michigan, Mr. Hoekstra, and their staffs to work 
out a compromise to the various bills restructuring FPI and to 
present to us some kind of compromise people could agree to.
    The proposal was developed. Many of the elements agreed to 
were reflected in your substitute version of H.R. 1577 before 
us now, and this amendment applied to that underlying 
substitute is that entire proposal. The proposal was never 
presented to us because some who had originally joined in 
decided to reflect the compromise approach. The key element to 
this amendment, which is in the proposal developed but not in 
the substitute, is a provision to authorize FPI to pilot 
potential ways to offset the effect of the elimination of its 
mandatory source provision for obtaining work for inmates.
    This amendment offers the same language regarding these 
pilot authorities as everyone agreed to last fall. 
Specifically, FPI would be authorized to produce commercial 
market items for private companies which have been produced 
offshore for at least 3 years providing inmates are at least 
paid twice the foreign market wage. That is to ensure that the 
lower wage is not the focus of the pilot.
    FPI is also authorized to produce items for the domestic 
commercial market, provided inmates are paid at the domestic 
market wages. This will allow FPI to pilot a program similar to 
the Federal PIE or Prison Industries Enhancement program, 
already in operation for State prison industry programs.
    Under this program, FPI would be allowed to pilot the 
production of products for services for which there is no 
domestic labor force available. There are strong protections 
against American worker displacements. Again the language is a 
language that was developed by representatives involved in the 
compromise.
    The third pilot would allow FPI to produce products or 
perform services for nonprofit agencies in support of their 
charitable activities. During this pilot this amendment would 
authorize there would be extensive input from the International 
Trade Commission and the Department of Labor and other 
interested groups, proposals are noticed to the public and 
affected parties. All actions taken by the board are open to 
public meetings. We are talking about piloting these notions. 
They are in both the Wolf bill and the gentleman from Wisconsin 
Mr. Green's bill restructuring FPI. If they do not work, it 
will create the kind of problems that some rhetorically suggest 
are possible, then we can simply put a stop to them.
    Mr. Chairman, if we are going to take away the only 
reliable basis the prison system has to ensure the real work 
opportunities for prisoners since 1934 because one quarter of 1 
percent of Federal procurement expenditures are too much to 
allow for a program that has been proven to reduce crime, it 
would be irresponsible for us to not at least test out other 
ways to give the program some reliability.
    I hope my colleagues would support the amendment. And I 
point out, Mr. Chairman, that this amendment is being offered 
by myself and Mr. Green.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Massachusetts seek recognition?
    Mr. Frank. To strike the requisite number of words.
    Chairman Sensenbrenner. Gentleman is recognized for 5 
minutes.
    Mr. Frank. Mr. Chairman, I want to speak in opposition to 
the amendment, and I will say it is the first I have seen it so 
I cannot fully comment, but there were things that disturb me 
right from the beginning.
    One, I am troubled by the fundamental inconsistency here 
that this to some extent exacerbates. I and many of my 
colleagues have campaigned hard against foreign-made goods made 
by prison labor coming into the U.S. I think that has been an 
important human rights cause and it has been a bipartisan one. 
And I must stay I am struck at the outset and no one has yet 
explained to me that fundamental contradiction why we are 
morally right in not allowing foreign prison goods into the 
U.S. And simultaneously allowing the expansion of prison-made 
goods within the U.S.
    Here in particular this is exacerbated because this says 
one of the things it encourages is the production of products 
and performance of services which have been otherwise produced 
or performed by the companies by foreign labor outside of the 
U.S.. Here is what we are saying.
    On the one hand, we will be encouraging prison labor to 
displace foreign-made goods. That may have some appeal to 
people. But how then do we go to various world trade 
organizations and object to foreign-made goods coming here? It 
is not always important to be 100 percent consistent, but I am 
really troubled by this.
    On the one hand we are saying, look, one of the things we 
will try to do is replace and displace your foreign-made goods 
with our prison-made goods, but do not dare send any prison-
made goods here. That is troubling to me.
    Secondly, on first reading, this says they can produce 
three kinds of products. They can produce products and services 
that are performed by foreign labor, or they can produce 
products or perform services for commercial companies which 
would otherwise be performed for the companies by domestic 
labor.
    Well, it seems between foreign labor and domestic labor, on 
the assumption that extraterrestrial labor does not do a 
significant amount of business here, I think we have pretty 
much everything. So I am not sure what we have domestic and 
foreign. I would yield if I am missing something.
    Mr. Scott. I think the operative language there is ``if 
available.'' it could have been done by domestic labor if 
domestic labor had been available and it was not available.
    Mr. Frank. It does not say ``if not available''. It says 
produce products and perform services for commercial companies 
which would otherwise be performed for the companies by 
domestic labor, if available.
    Again, we are giving an agency that has got a budget--and 
one of the arguments that has been made by the gentleman from 
Wisconsin, and I appreciate his presenting the argument in this 
way, this is a way for the prison industries to get some money. 
I would say to the gentleman, and this is relevant to this 
whole pilot, by the way, it is an interesting pilot. I may 
misunderstand pilot. Pilot sounds to me like something small. 
By the time I add it up, 35 percent of the total inmates can be 
in this pilot program, which is a pretty big pilot program.
    But here is the problem. I want to do some things for the 
people in prison, but why should garment and furniture workers 
be paying for this as opposed to the taxpayer? Let us not do 
this work on the backs of some of the lowest wage people in the 
country.
    You say, how are we going to pay for it? You are paying for 
it now by displacing workers, garment workers, furniture 
workers, and I think that is wrong. I am prepared to vote for 
good programs. But I guess let us take that financing issue 
head-on.
    Should we finance a program that is of general benefit to 
the society by I think competing at a subsidized way, in a 
monopoly way--not even competing, taking work that would 
otherwise be done by some of the lower wage people in our 
society, or should we do it by a more general form of 
financing? I would say to the gentleman that is a difference 
between us.
    I do say there are programs in prisons I want to support. 
By the way, why just this program? Why not prison guards? Let 
us find some other industry that we can displace to pay for 
prison guards. Why do we single out rehabilitation as the one 
example of something that is publicly-funded here?
    I still want to go back and say I am troubled by this on 
the foreign side, but also as it reads, it is pretty much 
anything. It can be foreign or domestic. And you say maybe they 
left out on the words ``understood if available'' so it is only 
for places that were not available. Again, these are not hard-
and-fast decisions. These are not strict factual questions. Is 
the labor available or not available? At what wage? With or 
what unions? Under what working conditions? This is a real 
problem.
    Chairman Sensenbrenner. The gentleman's time has expired.
    Mr. Green. Mr. Chairman, I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Green. Thank you. I will not take the full time. I 
appreciate the gentleman, Mr. Frank, his reference to 
extraterrestrial labor. That may be all that is left for FPI 
after this bill passes.
    Again, the other part that we need to think about here is 
whether or not the purpose of this bill is to reform abuses and 
problems within FPI or whether or not it is an effort to simply 
terminate it and condemn it and put away. I would argue the 
bill does the latter. I think what this substitute amendment 
tries to do is to provide at least a limited opportunity, 
limited, very limited opportunity for the program to continue.
    Mr. Green. Everyone here has talked about the value of the 
program, but no one here is arguing that FPI doesn't perform an 
important valuable service. And yet this bill would take that 
service away. It will end it. There is no doubt--there should 
be no doubt in anybody's mind. This amendment was a simple 
limited way to offer some hope that the program might continue. 
And our goal with these reforms is to offer competition. I 
would argue the other side wishes to take it away.
    At this point I would like to yield the balance of my time 
to my friend, Mr. Scott.
    Mr. Scott. Could you yield to the gentlelady from 
California? She had a question to ask.
    Ms. Lofgren. Very quickly. If I am reading this correctly, 
the only work that could be provided under this amendment is 
work that has already gone offshore, and inmates would be paid 
the prevailing wage. I mean--the question I have, though, has 
to do with limitations on the service side. Several years ago 
when I was on the crime subcommittee Mark Clask came and gave 
testimony to us that inmates were doing data entry relative to 
private information in children, which was a shocking thing to 
me and many people, and I would want to make sure that there 
would be privacy limitations in terms of the service side, 
because I think this is a very interesting and useful 
amendment, but there is that element that needs to be guarded 
against. And I yield back and I thank the gentleman.
    Mr. Conyers. Would the gentleman yield for a second.
    Mr. Green. I have very little time. I need to get to Mr. 
Scott.
    Mr. Conyers. Have we checked--I asked the author of the 
bill with the Virginia AFL-CIO on this question.
    Mr. Scott. Not specifically, Mr. Chairman.
    Mr. Conyers. What about the National AFL-CIO?
    Mr. Scott. Well, Mr. Chairman, I would say that the prison 
industry program has been--has been proven to reduce crime 
significantly for those who are--who are potentially victims of 
crime. I think they would appreciate it if we would pass 
legislation that would reduce crime. This prison industry 
program reduces crime. I think there are a lot of hard-working 
Americans who would like the opportunity not to be victims of 
crime, and if we can do something about the crime rate, they 
would appreciate it.
    Mr. Conyers. Well, that is a good answer.
    Mr. Green. Mr. Chairman, I yield time to my friend, Mr. 
Scott.
    Mr. Scott. The gentleman from Massachusetts has indicated 
that he has not had time to fully read the amendment. I would 
ask that we withdraw it if we could have the opportunity to 
have it considered as a floor amendment.
    The Chairman. If the gentleman from Wisconsin will yield, I 
will ask the Rules Committee in its wisdom to protect you. 
Sometimes my pleas fall on deaf ears there, but you know what 
that is like.
    Mr. Scott. You are very persuasive.
    Mr. Frank. If the gentleman would yield. As a sponsor of 
the bill, I would similarly agree to go and lobby for the right 
to offer this amendment as long as I didn't have to read it.
    The Chairman. The amendment is withdrawn. So we can make a 
clean get-away, the Committee is recessed subject to the call 
of the Chair.
    [Whereupon, at 12:05 p.m., the Committee was adjourned, 
subject to the call of the Chair.]

           *         *         *         *         *

    The Committee met, pursuant to notice, at 10:09 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. [Presiding.] The Committee will be 
in order.
    When the Committee recessed last week, the bill H.R. 1577 
was the pending business. A motion had been made to report the 
bill favorably, and the bill had been considered as read and 
open for amendment at any point. There was no amendment pending 
at the time of the recess.
    Chairman Sensenbrenner. Are there further amendments?
    The gentleman from Wisconsin, Mr. Green.
    Mr. Green. Mr. Chairman, I have amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Green. It should be Green.052.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577, offered by Mr. Green of Wisconsin. 
Page 25, line 24, strike----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
      
      

  


    Chairman Sensenbrenner. And the gentleman from Wisconsin is 
recognized for 5 minutes.
    Mr. Green. Thank you.
    Mr. Chairman, as we've gone through the debate on this 
legislation, it is my belief that in some ways the debate is 
inappropriately focused, because I don't believe that the 
debate or that the efforts in this legislation are, as they 
suggest, really aimed at improving FPI and merely attacking its 
abuses and making it operate more effectively and more 
efficiently.
    Instead, I believe that the legislation that's before us 
seeks to terminate FPI. I believe it seeks to condemn FPI----
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Green. Yes.
    Chairman Sensenbrenner. This looks like a constructive 
amendment to this bill, and we're happy to accept it.
    Mr. Frank. Will the gentleman yield?
    Mr. Green. Yes, I will yield.
    Mr. Frank. Me, too. [Laughter.]
    Chairman Sensenbrenner. Does the gentleman yield back the 
balance of his time?
    Mr. Green. Seeing such strong bipartisan direction being 
sent my way, I do yield back the balance of my time. And I 
appreciate the efforts of the Chair and the Ranking Member.
    Chairman Sensenbrenner. The question is on the adoption of 
the amendment by the gentleman from Wisconsin, Mr. Green.
    Those in favor will say aye.
    Opposed, no.
    The ayes appear to have it. The ayes have it, and the 
amendment is agreed to.
    Are there further amendments?
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Watt. It's Watt number 2.
    Chairman Sensenbrenner. Watt 2.
    Mr. Watt. Mr. Chairman, I ask unanimous consent the 
amendment be considered as read.
    Chairman Sensenbrenner. Without objection, so ordered.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. And the gentleman is recognized for 
5 minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    I actually think this is a good and well-balanced bill. 
However, I am concerned that in one important area, the area 
which this amendment seeks to address, this bill leaves a 
gaping loophole. And either we need to correct it or maybe 
somebody will be able to explain to me exactly why the language 
is worded the way it is.
    As I understood the purpose of the bill, the objective was 
to basically create an opportunity during the interim here for 
Federal Prison Industries to be competitive. And I certainly 
support that.
    Unfortunately, this language on page 2, starting at line 
21, I think basically guarantees the Federal Prison Industries 
the receipt of the contract award. And I can't understand why 
the language is worded the way it is. I think the Federal 
Prison Industries should always----
    Chairman Sensenbrenner. Will the gentleman yield?
    Mr. Watt. Yes, I----
    Chairman Sensenbrenner. We've looked at your amendment. We 
think it's a good one.
    Mr. Watt. Okay. Well, in that case, some other brilliant 
minds must have thought the same way. I think----
    Mr. Frank. Will the gentleman yield?
    I concur.
    Mr. Watt. Thank you.
    I will yield back the balance of my time and shut up.
    Chairman Sensenbrenner. The question is on the--agreeing to 
the amendment of the gentleman from North Carolina, Mr. Watt.
    Those in favor will say aye.
    Opposed, no.
    The ayes appear to have it. The ayes have it, and the 
amendment is agreed to.
    Are there further amendments?
    The gentleman from California, Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Issa. I have three, actually. I'll take 1, the one that 
begins ``Page 7, strike line 6.''
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1544, offered by Mr. Issa. Page 7, strike 
line 6, and insert the following: of its industrial 
operations----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. And the gentleman is recognized for 
5 minutes.
    Mr. Issa. Thank you, Mr. Chairman.
    My amendment seeks to, if you will, mend it, not end it, 
when it comes to the Federal Prison Industries.
    I recognize there have been abuses of the requirement to 
purchase prison-made goods in the past. But I also recognize, 
as I think all of my colleagues do, that we need to find 
training and work skills for prisoners being released.
    My amendment specifically requires that in order retain any 
preference in this case, Prison Industries would have to have 
programs in which 80 percent of the inmates are within 2 years 
of their release from prison, or they're released to a 
prerelease program, which obviously takes them out of being 
able to have this kind of training.
    In order to do this, we would end a policy that I believe 
is one of the major abuses in the Prison Industries system, 
which is the tendency to use what I call lifers, or long-term 
prisoners, because they're easier to work with. And even though 
they're not going to be released, and they're certainly not in 
need of training, it's a great way for wardens to have less 
problems behind bars. I don't believe that when an industry 
competes--could I have order, Mr. Chairman?
    Thank you, Mr. Chairman. I don't believe when prisons 
compete with private enterprise they should do so unless there 
is a compelling reason. In this case a 2-year imminent release 
back into society would seem to be an example where we must 
ensure that these--that those being released in fact have 
skills and have a work ethic so that we can ensure that they 
will not return.
    And with that I yield back the balance of my time and ask 
for approval.
    Chairman Sensenbrenner. I yield myself 5 minutes to oppose 
the amendment.
    This just gets FPI back into the same business of predatory 
practices that makes it impossible for anybody else to compete, 
and it is an administrative nightmare because nobody knows who 
in the prison, you know, is within 2 years of release or not. 
You know, if they are eligible for parole, that's up to the 
Parole Board to make a determination and parole hearings don't 
occur 2 years out. And if the prison management, you know, 
wants to start stacking an FPI facility with people who might 
be within 2 years of release, I think that flies directly in 
the face of good management of the prison and good management 
of the inmates.
    I don't think this amendment fixes the problem. You know, 
it compounds it and it causes more administrative problems 
within the prison, and I would hope that the amendment would 
not be agreed to.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. I yield to the gentleman from 
Massachusetts.
    Mr. Frank. I'll take the 5.
    Chairman Sensenbrenner. The gentleman is recognized.
    Mr. Frank. I move to strike the last word. I join in 
opposing it. First, in the amendment that we previously adopted 
offered by the gentleman from Michigan, we sought to provide 
opportunities, vocational and other for prisoners. The 
gentleman's amendment includes a specific section mandating 
that FPI seek out and service nonprofits and other entities 
that seek to provide services to low income people that are not 
now in the market, and I think, frankly, there was a great 
market in day care centers, in homeless shelters, in drug rehab 
places. Many of them would be faith-based institutions that are 
not now in the market. So the premise of this is, apparently, 
that absent this there wouldn't be any work for the prisoners. 
We hope that there will be work for the prisoners, but it won't 
be work that will be depriving private sector workers, 
particularly in beleaguered industries like furniture and 
clothing from doing their job.
    Secondly, there is the problem that the Chairman pointed 
out. One, I don't believe you always know who's 2 years away 
from release. Release dates are not always fixed. People are 
able to get off short of the maximum sentence. Secondly, from 
the standpoint of prison administration, segregating the 
prisoners so that only those who are--even if you are sure that 
there are some who have less than 2 years because they're up 
against their maximum sentences or whatever, trying to run a 
prison so that only they get the--they're involved, seems to me 
to be very difficult. It adds an enormous complication.
    But I also say this assumes, I think, incorrectly, that 
absent mandatory sourcing, there's no work for the prisoners. 
And we believe that in the amendment offered by the gentleman 
from Michigan, which was adopted in other ways, we are 
providing some work opportunities, some rehabilitation and 
vocational opportunities. So I would agree with the Chairman 
and hope the amendment is defeated.
    Mr. Green. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose the gentleman from 
Wisconsin seek recognition?
    Mr. Green. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman. I rise in support of 
the Issa amendment. I believe that it is narrowly drafted, and 
I believe that it focuses the mandatory source rule on those 
who most need it, in the sense of those who we know are about 
to be release, they're on the verge of being released. And we 
believe that FPI presents some rehabilitative opportunities for 
them. We know that the majority of inmates don't lack 
employability skills. This is one way of providing them with 
some of the skills that they will need to be successful when 
they are released, so hopefully they won't be going back into 
prison.
    But the balance of my time, I'd like to yield to Mr. Issa.
    Mr. Issa. Thank you, Mr. Green.
    Mr. Chairman, as you may be aware, I served on a Prison 
Industry Board for the State of California, the largest program 
in the United States, actually in many ways larger than the 
Federal Government's program. I'm very well aware of the 
abuses, but I'm also well aware that in fact under the Federal 
Prison, although there will not be a very large group that 
could be assessed under this amendment, it would be a targeted 
group and if you read the language of the amendment, it 
specifically limits it to a burden on the prison industry, 
meaning that if they cannot fill it with 80 percent of people 
who are within 2 years, then they lose the exemption. So the 
burden would be on the Federal Prison Industries. This would be 
a small group, targeted specifically at an area in which the 
private sector has very, very little concern.
    Again, having served on a Prison Industry Board, I'm well 
aware and very sympathetic that simply competing, using people 
who will not be release, is unfair competition. This seeks to 
remedy this by making it a pre-release program, and I once 
again strongly urge the adoption of this based on its narrow 
focus and the burden being on the Prison Industries. And I 
yield back to Mr. Green.
    Mr. Nadler. Mr. Chairman?
    Mr. Green. Mr. Chairman, yield back my time.
    Chairman Sensenbrenner. Gentleman from New York, Mr. 
Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. Mr. Chairman, I have 
to oppose this amendment. I think that--I strongly support this 
bill because it's wrong for prisons to be competing--for Prison 
Industries competing with private companies, when the wages 
paid to the prisoners are, compared to private wage rates, 
virtually nonexistent. And this amendment, aside from the 
obvious practical problem pointed out by several Members 
previously about how do you know who's going to--within 2 years 
of release, would simply continue the preference for Prison 
Industries, which is wrong. I do hope that Prison Industries 
continue, and as Mr. Frank said, there are many other uses for 
the products, but we should not be competing at an advantage, 
at a great advantage, at a subsidized advantage with private 
enterprise. So I oppose the amendment and I support the bill. 
Thank you. I yield back.
    Chairman Sensenbrenner. For what purpose the gentleman from 
Virginia, Mr. Scott, seek recognition?
    Mr. Scott. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, just very briefly, the average 
sentence that people are serving now in Federal prisons is 
about 8 years. This would mean that for the last two of those 
years, they would be--have an advantage and have much more 
likelihood of having work to do. I think we ought to consider 
the fact that these people are going to be released. We ought 
to consider the impact of the reduced recidivism for those who 
will be participating in the Federal Prison Industry program.
    I would think that the average citizen would like us to do 
what we can to reduce recidivism and increase public safety. 
This amendment certainly goes in that direction, and I hope it 
would be adopted.
    Mr. Watt. Mr. Chairman.
    Chairman Sensenbrenner. The question is--what purpose the 
gentleman from North Carolina seek recognition?
    Mr. Watt. I move to strike the last word just briefly.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. I actually support the thrust of Mr. Issa's 
amendment. I think the 2-year period, however, is too short and 
there are some practical problems with how it would be 
implemented, as the Chairman has pointed out, so on balance I 
think while he's thinking in the right direction, I don't think 
we can support this amendment as it's drawn. I yield back.
    Chairman Sensenbrenner. The question is on agreeing to the 
amendment offered by the gentleman from California, Mr. Issa, 
those in favor will say aye.
    Opposed, no.
    The noes appear to have it.
    Mr. Issa. Mr. Chairman, I request a recorded vote.
    Chairman Sensenbrenner. A recorded vote is ordered. Those 
in favor of the Issa amendment will, as your names are called, 
answer aye, those opposed no, and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no. Mr. Smith?
    Mr. Smith. No.
    The Clerk. Mr. Smith, no. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    [No response.]
    The Clerk. Mr. Bryant?
    Mr. Bryant. No.
    The Clerk. Mr. Bryant, no. Mr. Chabot?
    [No response.]
    The Clerk. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins, no. Mr. Cannon?
    [No response.]
    The Clerk. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    [No response.]
    The Clerk. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    Mr. Issa. Yes.
    The Clerk. Mr. Issa, aye. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Pence?
    [No response.]
    The Clerk. Mr. Conyers?
    Mr. Conyers. No.
    The Clerk. Mr. Conyers, no. Mr. Frank?
    Mr. Frank. No.
    The Clerk. Mr. Frank, no. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. No.
    The Clerk. Mr. Nadler, no. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. No.
    The Clerk. Mr. Watt, no. Ms. Lofgren?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
    Ms. Jackson Lee. No.
    The Clerk. Ms. Jackson Lee, no. Ms. Waters?
    Ms. Waters. No.
    The Clerk. Ms. Waters, no. Mr. Meehan?
    Mr. Meehan. No.
    The Clerk. Mr. Meehan, no. Mr. Wexler--Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    [No response.]
    The Clerk. Ms. Baldwin?
    [No response.]
    The Clerk. Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional Members who 
wish to cast or change their vote? Gentleman from Virginia, Mr. 
Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no.
    Chairman Sensenbrenner. Gentleman from Ohio, Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye.
    Chairman Sensenbrenner. Gentleman from Utah, Mr. Cannon?
    Mr. Cannon. No.
    The Clerk. Mr. Cannon, no.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their votes? If not, the clerk will report.
    Gentlewoman from Wisconsin, Ms. Baldwin.
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no.
    Chairman Sensenbrenner. The other gentleman from Wisconsin, 
Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye.
    Chairman Sensenbrenner. Anybody else who wish to cast or 
change their vote? The clerk will try again.
    The Clerk. Mr. Chairman, there are 5 ayes and 22 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to. 
Are there further amendments?
    Mr. Scott. Yes.
    Chairman Sensenbrenner. Gentleman from Virginia, Mr. Scott.
    Mr. Scott. Mr. Chairman, is this--do we have a vote 
pending?
    Chairman Sensenbrenner. No, this is a recess.
    Mr. Scott. Mr. Chairman, I have an amendment at the desk, 
Number 1.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Scott. No. 1.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577 offered by Mr. Scott. After Section 4, 
subsection (h)(3) (as added by the Hyde Amendment), insert the 
following:
    (4) In advising the Congress pursuant to (3)----
    Chairman Sensenbrenner. Without objection the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. And the gentleman from Virginia is 
recognized for 5 minutes.
    Mr. Scott. Mr. Chairman, this amendment is requested by 
correctional workers and the American Federation of Government 
Employees. It simply requires the Attorney General, in his 
Hyde-Frank Annual Report to Congress----
    Chairman Sensenbrenner. The gentleman yield?
    Mr. Scott. I yield.
    Chairman Sensenbrenner. This is a good amendment. I urge 
the Members to accept it.
    Mr. Frank. Mr. Chairman yield?
    Mr. Scott. I yield.
    Mr. Frank. I agree. I certainly wouldn't want to stop John 
Ashcroft from asking for more money. [Laughter.]
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Scott. Yes, Mr. Chairman.
    Chairman Sensenbrenner. All those in favor of allowing the 
Attorney General to ask for more money by supporting the Scott 
amendment will say aye
    Opposed, no.
    The ayes have it, and the Attorney General can go to it.
    Further amendments?
    Mr. Issa. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577 offered by Mr. Issa. Page 7, strike 
line 6 and insert the following:
    ``of its industrial operations.''
    ``(i) Rule For Certain Products--Federal Prison Industries 
shall be the mandatory source supplier to all Federal 
agencies''----
    Chairman Sensenbrenner. Without objection the amendment is 
read--considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. And the Gentleman from California 
is recognized for 5 minutes.
    Mr. Issa. Mr. Chairman, I would once again predict that if 
we want to mend, not end, Prison Industries, this is an 
excellent opportunity to do so. What we are doing here is 
crafting a narrow exception for nonprofit humanitarian and 
disaster relief. Literally here all we're saying in this 
amendment is if the government is going to give it away for 
these purposes, then it may choose to use what is effectively 
its own workforce rather than going to the outside.
    Now, good example of where these types of things go on is 
prisoners could in fact be paid their, albeit less than minimum 
wage, small wages, but put to work for small wages making toys 
for tots for Christmas, or making supplies for disaster relief, 
or in fact sleeping bags for the children of Kosovo. You can 
name a lot of good uses in which the government purchases and 
gives away products.
    I am not asking for them to have office supplies, modular 
furniture, any of the normal things. Those don't go to 
charities. We're talking about disaster relief limited to 
501(c)(3) corporations, and particularly in support of 
humanitarian aid and disaster relief activities.
    Mr. Chairman, I strongly ask you to consider leaving a 
carve out for times again, in which the government is going to 
have it made for the purpose of giving it away. And I yield 
back the balance of my time.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Massachusetts.
    Mr. Frank. Mr. Chairman, I support much of this amendment 
to the point where we've already done it. And I would say to 
the gentleman, I would hope he wouldn't press for a vote at 
this point, and we could work out, particularly the part about 
humanitarian and disaster relief.
    But let me call Members' attention to the amendment offered 
by the gentleman from Michigan, which we've already adopted, 
and I'll just read--it's on page 5 of the Conyers amendment, 
beginning line 10. ``Payments to the Bureau of Prisons 
exclusively for the purpose of establishing a nonprofit 
component for inmate work in all Federal institutions in 
carrying out which FPI shall work actively to identify and 
donate to nonprofit organizations that provide goods and 
services to low-income individuals and have difficulty 
purchasing them on their own, to focus on organizations that 
would not otherwise be available to purchase such products.''
    Indeed, I'd point out to the gentleman, this is somewhat 
broader in scope as a permission than his, because it says 
``nonprofit.'' It doesn't restrict that to 501(c)(3)'s because 
there are nonprofit organizations that aren't 501(c)(3)'s. So 
we're in agreement on that.
    The gentleman does, I think, make a contribution when he 
talks about explicitly in support of humanitarian aid or 
disaster relief activities, and I would urge him--if he would 
withdraw this, I would be glad to work with him, I think the 
Chairman would, so that when we got to the floor we explicitly 
dealt with that, but I certainly agree with the gentleman, and 
that, as I said, is the thrust of an amendment already adopted.
    Chairman Sensenbrenner. Will the gentleman from 
Massachusetts yield?
    Mr. Frank. I yield to the Chairman.
    Chairman Sensenbrenner. I think that in terms of the 
humanitarian aid or disaster relief activities, the Conyers 
amendment is sufficient. But I agree with the gentleman from 
Massachusetts as well, that restricting this just to 
501(c)(3)'s might be unduly restrictive, and I would be willing 
to commit between now and the floor that we deal with the 
issues as he and I have described.
    Mr. Frank. I would yield to the gentleman from California.
    Mr. Issa. Thank you. And with that, I very delightfully 
withdraw this and thank you for your assistance on making it 
better.
    Chairman Sensenbrenner. The amendment is withdrawn. Are 
there further amendments?
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. Could I just strike the last word for 1 minute?
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. I didn't want Mr. Issa's comments to go by 
unnoticed. I think we do ourselves a severe disservice to 
consider people who are in prison as part of the Federal 
workforce. That is not, I repeat, not something that I 
subscribe to, even though I could support the thrust of the 
gentleman's amendment. The comments that Mr. Issa made, I just 
think we ought to--we ought to be very careful about how we do 
this.
    If we said the same thing about a foreign country, we would 
be offended and we ought to be offended thinking about people 
being in prison being part of the Federal workforce in the 
United States.
    Mr. Scott. Will the gentleman yield?
    Mr. Watt. I'll yield to Mr. Scott.
    Mr. Scott. Thank you for yielding. I would think that the 
gentleman meant that we'd use this as an opportunity to give 
work opportunities to prisoners, rather than consider it part 
of the workforce. I agree with the amendment, and I also agree 
that we ought to have more opportunities for work. It reduces 
recidivism, helps the prison operations, and I yield back.
    Mr. Watt. I yield back the balance of my time.
    Chairman Sensenbrenner. Are there further amendments? The 
gentleman from California, Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman. No. 3 please.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. And amendment offered by Mr. Issa to the 
amendment in the nature of a substitute to H.R. 1577. Page 5, 
line 2, after ``regulation insert contract award shall be made 
to Federal Prison''----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. And the gentleman from California 
is recognized for 5 minutes.
    Mr. Issa. Thank you, Mr. Chairman. I believe this is my 
third, final and least controversial amendment.
    What this seeks to do is specifically recognize that the 
reform of Prison Industries proposed by the Chairman and I 
believe by the Committee as a whole, is to eliminate a practice 
of unfair competition by Federal Prison workers through the 
Prison Industry authority. And I agree with that completely.
    However, if what we are concerned about is protecting 
American jobs, while the other side is worrying about putting 
gainful employment to people to teach them skills prior to 
their release, and to keep them from being idle, which 
certainly is very difficult in a prison environment, then we 
want to make sure that this reform only protects Americans.
    I think we can all agree, Mr. Chairman, that if we are 
going to outsource to China or to any other foreign country, 
the goods, the services and the production for Federal 
purchasers, we--it serves no purpose when compared to employing 
Americans who are incarcerated and who need the skills that 
this would train. And so it's very narrowly focused only on the 
fact that if there is no competitive American market, then this 
preference, if you will, remains, but it only remains because 
there is not a market, and certainly I believe that in any 
contract in which we're concerned about American jobs, we 
should be able to find at least two competitors who can certify 
that they make in the United States.
    And with that, Mr. Chairman, I gladly yield back the 
balance of my time.
    Ms. Waters. Mr. Chairman?
    Chairman Sensenbrenner. Gentlewoman from California.
    Ms. Waters. Thank you very much, Mr. Chairman. I'm going to 
oppose all of these amendments that claim to be concerned about 
training the prisoners so that they will be competitive for 
jobs when they get out.
    One of the things that we refuse to wrestle with is the 
fact that we've had prisoners doing work. I can remember at one 
time prisoners were doing some reservations for the airline 
industry, but when they get out, they can't get any jobs, they 
don't hire them. Their applications go in the wastebasket. This 
Congress, no other Congress that I know of, have really taken 
into consideration the fact that one of the problems that we 
have is recidivism, it's not because they're not trained. It's 
not because they can't do things. It's because employers will 
not hire them. I don't care where they have gotten training. 
You spend 5, 6, 7, 8, 9, 10 years in our Federal Penitentiary, 
we make sure that you don't get hired. They put it on the 
application. It's right there. We don't have any way by which 
to give support to ex-felons, and this business about the 
Prison Industries training them and getting them prepared to do 
away recidivism is--it's not real.
    The fact of the matter is, until we are prepared to deal 
with how, we'll say to industries who have used prisoners in 
the past, that they have some responsibility to hire them when 
they get out, then this is for nought.
    I oppose it.
    Mr. Issa. Would the gentlewoman yield?
    Ms. Waters. Yeah.
    Mr. Issa. I thank the gentlelady. I couldn't agree with you 
more, that a fundamental problem we have within our existing 
laws is in fact the ongoing stigma of Federal prisoners, and 
for that matter, other prisoners who have paid their dues, 
being denied repeatedly their ability to get the vast majority 
of jobs. As the gentlelady may not know, not only did I serve 
on the Prison Industries, but to be as candid as can be, I have 
a brother who served in both State and Federal prison. I'm 
acutely aware of the lifetime stigma, the problems, the jobs, 
that even though he has a master's degree, that are closed to 
him. And I look forward to, on another bill--and I'd be glad to 
co-author it with you--that we try to address this, we try to 
craft the ability for those who want to put the past behind 
them to be able to, but I must reassert that if we are to make 
sure that those jobs will be available, including working as 
reservation people or whatever the skill that we've taught 
them, that in fact we have to make sure that we beget the 
skill, because if they don't have the skill and yet the 
stigma's gone, they're still not going to get hired, and I hope 
the gentlelady----
    Ms. Waters. Reclaiming my time.
    Mr. Issa. Thank you.
    Ms. Waters. Thank you very much. And I appreciate what the 
gentleman is saying. I have a whole section, one part of my 
district, not all of my district, but one section of my 
district, where we have returning ex-felons or felons, whatever 
you want to call them, and that's the problem. The problem is 
they cannot find jobs, and I'm sure that the gentleman would 
like to think of something to do, but the fact of the matter 
is, a bill by you and I would no good in this Congress, 
absolutely none. Take it up with your caucus. See if they're 
prepared to give you some support on it, and then talk to me.
    And I'd be happy to do something, but otherwise, you're 
going to get defeated in any attempts to talk about what you do 
with helping to give some support to felons who are returning 
to these communities, who want to work, and they go about 
looking for work sometimes for several years, and then they 
give up. And guess what? Yeah, they go back to prison because 
they refuse to stand on the street and die and not eat. They do 
bad things. And I don't want to fool you. I don't want to fool 
anybody. Yes, I'm interested in doing something, but we don't 
have the will in my caucus or your caucus. We're all afraid to 
deal with felons and ex-felons. We're afraid we're going to be 
tagged as soft on crime, and protecting felons is such a false 
thing that goes on here, that I'm not going to support any of 
this, because actually we're just blowing smoke about training 
people for jobs when they get out of prisons. They will not get 
hired. And when we're prepared to do something about it, then 
we can talk about real training in the prisons.
    Chairman Sensenbrenner. I yield myself 5 minutes in 
opposition to the amendment. First of all, the amendment is not 
necessary. The bill already provides for sole source 
contracting if there's no competition. But the real rub with 
this amendment on that is that the Federal agencies who are 
buying products will not have the ability to make an 
independent decision regarding the contract or its terms. And 
Federal Prison Industries would again have uncontrolled 
monopoly power not governed by other provisions of law 
including the Federal acquisition regulations.
    So for those two reasons, one is, is that when there isn't 
competition, this is already taken care of, and secondly, the 
fact that FPI will be able to write the terms of the contract 
and the purchaser really will not have very much to say about 
it, I believe this amendment should be rejected.
    Mr. Scott. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. Strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Scott. Thank you, Mr. Chairman. Mr. Chairman, I agree 
with the comments of the gentlelady from California that we 
need to do more to improve the employability of inmates after 
they get out. That is not what this amendment addresses. This 
amendment will actually help improve the employability of 
inmates. It will help manage the prisons. It will reduce crime. 
And we have a choice of doing that or protecting foreign jobs.
    I would support the amendment because I think improving the 
employability of inmates, helping to manage the prison, and 
reducing crime are more important to me than protecting foreign 
jobs. So I support the amendment and hope it will be adopted.
    Ms. Waters. Will the gentleman yield?
    Mr. Scott. I yield to the gentlelady from California.
    Ms. Waters. Would you be willing to amend the amendment to 
say that they would get a letter of reference from the Prison 
Industry where they were trained, to say that they have done a 
good job, they have worked well, and that particularly if they 
have not caused any problems in prison, that would say this was 
an ideal employee, and you think that IBM should hire them?
    Mr. Scott. Reclaiming my time, I would assume that that was 
the situation now, that they get--that they would get a letter 
indicating what their job history was, and if not, I would--I 
don't know if it's relevant to this amendment, but I'd 
certainly support such a thing, because it's just telling the 
truth about what they did.
    Ms. Waters. Well, the fact of the matter is, they get no 
letters of reference about their good work in the Prison 
Industries.
    Mr. Scott. Well, that's something we need to deal on. I 
would agree with the gentlelady.
    And I yield back, Mr. Chairman.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Florida seek recognition?
    Mr. Keller. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Keller. Mr. Chairman, I just have a--if I can have just 
a little colloquy with my colleague from California.
    I know your intent is to protect American jobs, and at the 
same time, help with reducing recidivism by the positive thing 
Prison Industries does. My question is this: what if you have a 
foreign company, let's say Toyota or Mitsubishi, definitely a 
foreign corporation. The product is manufactured in that 
company, but yet it employs hundreds of people in America, for 
example, they assemble the product here in America. Would that 
company still be one that could bid for various government 
projects, or would it be excluded under your particular rule 
because it's a foreign corporation?
    Mr. Issa. I thank the gentleman. No, we wouldn't be 
prohibiting foreign corporations. We simply would ask for the 
federally determined made in the United States requirement, 
which is a content rule, and it requires that you substantially 
change the form of the energy. You can bring in raw goods, turn 
them into something. The raw goods can be imported. But there 
has to be a substantive change, and there's various standards 
the Federal Government has determined for it, and it's not 
uncommon. We require the same thing--if you want to export to 
Mexico or import from Mexico, we require a certain content 
level be declared. In this case, what we're talking about is an 
effort to save jobs in America, whether they are by 
incarcerated individuals or by Americans on the outside. And so 
this would not intend to reduce any American jobs. It would 
simply say why--why export American jobs in your buying 
practices if there are people needing training and work, albeit 
inside the Federal prisons?
    Mr. Keller. If that is the case, would you be willing to 
amend the language and tweak it slightly to say who are able to 
certify the product to be provided is made or assembled in the 
United States since a lot of foreign products are assembled in 
the United States and benefits American jobs?
    Mr. Issa. I don't have a problem with that if that would 
bring additional people into the fold. The intention is to save 
American jobs.
    Mr. Keller. Mr. Chairman, I'll yield back.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Massachusetts?
    Mr. Frank. Mr. Chairman, with or without the amended 
language--and I think the gentleman from Florida made a good 
point, and I'm glad he clarified it. I'm opposing this for a 
couple reasons. First--and I admire the diligence of the 
gentleman from California, and I appreciate his bringing his 
experience to bear, and that's why on that amendment for 
charitable donations I very much agreed with him and want to 
make sure we take the fullest account of it. Yes, we should be 
providing vocational experience to the extent that it's 
rehabilitative and training to prisoners. But I disagree when 
he says we must protect American jobs whether they are being 
performed by people in or out of prison. I really do think 
there is a qualitative difference between employment of people 
in the private sector, trying to earn livings to support 
themselves and their families, and job training, in effect, 
that we provide the people in prison. They ought not to be 
equated.
    Yes, it's important to protect those people in the American 
private sector from unfair competition, but that can be unfair 
competition from within the prisons as well as from outside. 
There are a couple of problems I have with this.
    First of all, it says FPI gets it as a monopoly, sole 
source, if there are not at least two bidding contractors. 
Well, what if there's one? In other words, if there was one 
American manufacturer employing workers in the furniture 
industry, in the clothing industry, in other vulnerable 
industries, he or she moves it out to FPI. Why--why does the 
tie go to FPI even if there are two?
    Secondly, we are talking about a dynamic economy. We are 
talking about--we're not talking about the production of super-
computers here. We're talking about product lines where there's 
not a high barrier to entry. So there may not be at a given 
point two people ready to do this, but there may be 6 months 
from now or a year from now. It may be that the Federal 
Government going into a new line of work, expanding--we've got 
a situation now where the Federal Government is increasing its 
purchases in the area of homeland security. We're all familiar 
with companies that are now gearing up to do this. If the 
Federal Government were to begin to expand its purchases in a 
particular area and there was only one supplier before because 
it wasn't a major activity and now it's a bigger activity, why 
should we be discouraging the creation and development of new 
companies?
    So you're talking here as if it's a static situation 
economically that there's only one bidding contractor, and that 
seems to me in error.
    I would yield to the gentleman from California.
    Mr. Issa. Yes, are you asking unanimous consent to amend 
that, and would you support it if amended?
    Mr. Frank. No. I'm asking for unanimous consent to defeat 
it, to be honest, because I think--you, I think, have several 
flaws with it. One is the two versus the one. One is--and this 
is another one that concerns me. We do have exports as well as 
imports. We have a national policy that says goods made with 
prison labor can be excluded from the U.S. In fact, it's one of 
the few categories where I think we are able to exclude goods 
that unfairly compete. They can be made in terrible working 
conditions. They can be made by children. And we still can't 
exclude them. But we can exclude prison goods.
    Well, what you're saying here is, okay, if anybody in the--
if the American prison industry is making it, that becomes a 
basis for an exclusion of any foreign good. What basis do we 
then have when China says we're not going to import any 
American goods if we can make them in Chinese prisons? I want 
our ability to oppose Chinese prison labor to be unencumbered 
by our giving ourselves this kind of preference.
    You know, trade is not a one-way street, and, yes, we 
should be protecting American jobs against unfair, subsidized, 
low-wage competition. But to have a rule that says if it can be 
made in an American prison and there is not another American 
major supplier--by the way, the gentleman--if there is only one 
American supplier, we're not going to--we're going to let the 
prison have it, and you totally exclude the foreign goods, 
where do we go to object in that case?
    And then, finally, I would go back to the gentleman's point 
about the two bidding contractors. If you said there were no 
contractors--it already says that in the bill. A contract may 
be made if it's only available from Federal Prison Industries. 
Right on page 4, just the section the gentleman's amending, it 
already says if there are none. So if you were to amend it to 
say if there's not at least one, then it goes to FPI, the bill 
already says that. And I don't want to, as I said, discourage 
the development of more competition. I don't want to put an 
American seal of approval on other countries' saying, hey, if 
we can make it in our prisons, we're not buying it from 
America, and the bill already allows for situations where there 
are no domestic contractors. So I would hope that the amendment 
would be defeated.
    Mr. Goodlatte. Would the gentleman yield?
    Mr. Frank. Yes.
    Mr. Goodlatte. I share some of the gentleman's concerns 
about the amendment, particularly as it relates to reciprocal 
nature of foreign trade. But what if--is there some middle 
ground here? What if the only competition is a Chinese prison?
    Mr. Frank. I would say to the gentleman--if I could get one 
more minute, Mr. Chairman?
    Chairman Sensenbrenner. Without objection, the gentleman is 
recognized.
    Mr. Frank. In those very limited cases, I would be prepared 
to give preference to American prisoners over Chinese 
prisoners. But I would say it would be kind of hard to work 
that out right now. I would certainly agree to try to work that 
out between now and going to the floor. Again, the bill does 
deal with situations where it's only available from Federal 
Prison Industries. It does not deal with this--that particular 
situation, and I think we could clarify that so if the 
amendment were withdrawn, we could work out that at the--
between now and going to the floor.
    Mr. Goodlatte. I wonder if the gentleman----
    Mr. Frank. I yield further.
    Mr. Goodlatte.--to direct that to the Chairman and ask if 
there is an opportunity--I would oppose this amendment, but 
work with you on----
    Mr. Frank. I would yield to----
    Mr. Goodlatte.--whether there are some ways to deal with 
competition issues----
    Chairman Sensenbrenner. I certainly think the gentleman 
from California raises a point. I don't think his amendment is 
properly drafted to do what needs to be done, you know, in a 
fair manner without putting FPI back into mandatory sourcing 
through the back door. So if the gentleman from California 
would forbear a bit and work with us, you might be able to get 
something.
    The time of the gentleman from Massachusetts has expired. 
For what purpose does the gentleman from Wisconsin seek 
recognition?
    Mr. Green. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman. I'll speak very 
briefly. Then I'll turn it back over to Mr. Issa for his 
comments and action.
    Just as a reminder, we began the debate last week on this 
legislation with Members from both sides of the aisle praising 
the inherent worth of FPI. There was a lot of discussion about 
how the core values of FPI, providing opportunities for 
training, on-the-job training, skills training for inmates who 
will 1 day be back out in the work market. It was praised, both 
sides. And the view of many of us has been that, despite those 
good intentions, the legislation, the base legislation, 
unfortunately will end FPI.
    And so as we've looked at a number of the amendments, they 
have been efforts to preserve some sliver of opportunity for 
the program to continue. And I think what Mr. Issa has 
attempted to do with this amendment is, again, taking a look at 
a very small set of circumstances, tried to allow FPI some 
ability to continue, to provide those very opportunities, that 
very experience that we've all been praising.
    Unfortunately, the efforts haven't been successful. I think 
it's unfortunate because I think this effort to preserve 
aspects of FPI is an important one. And I hope that we'll have 
an opportunity in a future venue to do just that.
    And with that, Mr. Chairman, I'll yield the balance of my 
time to Mr. Issa.
    Mr. Issa. Thank you, Mr. Green. And, Mr. Chairman I want to 
thank you for having this markup in a way in which we were able 
to express some of our concerns, and I very much appreciate the 
gentleman from Massachusetts and the gentleman from Virginia 
suggestions. And, Mr. Chairman, with your willingness to try to 
incorporate some of the principles that could remain from this 
amendment, I ask unanimous consent to withdraw it.
    Chairman Sensenbrenner. And it is withdrawn.
    Are there further amendments? If not, the Chair notes the 
presence--the gentleman from Virginia?
    Mr. Scott. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 1577, offered by Mr. Scott. Page 10, insert 
after Line 17 the following language: ``(D) The board of 
directors may approve a proposal to authorize the production of 
a specific product or the furnishing of a specific service in 
excess of a reasonable share of the market, if specifically 
requested by the agency to--''
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. The gentleman from Virginia is 
recognized for 5 minutes.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Chairman, this amendment would change the restriction 
in the bill on how much Federal share FPI could have of a 
particular product for which it has competed. Under the bill, 
the FPI is restricted to no more than 20 percent of a 
particular Federal market share with respect to products and 5 
percent with respect to services, even after it is no longer 
entitled to the mandatory source and FPI has won a competitive 
bid.
    Now, while a 20 percent share limitation may seem 
reasonable if your goal is simply to eliminate FPI from all 
potential contract activity, this restriction would put Federal 
agencies as well as FPI in a difficult situation. For example, 
the Postal Service's contracts with FPI to make and mend its 
mailbags for internal use, prior to contracting with FPI, it 
was an in-house operation of the Postal Service's, and as I 
understand it, the Postal Services approached FPI and asked if 
they could do the work, it could, and so now FPI has 100 
percent of that business, and there is little sense in such--
any other business getting into the business. We got 100 
percent of the postal business. That's 95 percent market share 
of the bag making and mending business with the Federal 
Government.
    Now, the definition in this amendment would allow some 
flexibility, but only if FPI gets the business through a 
competitive bid and the customer wants FPI to do more than 20 
percent. The service restriction, which is not under mandatory 
source, reflects the promotion--promoting competition on which 
some have justified their support for the bill, but that's not 
really what the bill is about. FPI gets service contracts now 
only competitively. This restriction suggests that the fear is 
that FPI will actually outcompete, so we want to make sure they 
don't get more than they can actually win in competition.
    Now, one point we need to make is that the lost--that it's 
difficult for FPI to compete. The cost of production or 
services in FPI is much higher than in the private sector, in 
part because the goal in FPI is to try to employ as many 
inmates as possible. There are generally about four inmates 
doing what one person could do in the private sector in an 
efficient operation. But because you're trying to involve so 
many people, it's better to have four people doing the one job 
than just one. So $1.25 an hour actually costs $6 in 
competitive pricing.
    So I would hope, Mr. Chairman, that my colleagues would 
support this amendment, just simply make sure that FPI does not 
lose control of the matter by requiring that the board has to 
specifically--make sure that FPI does not have any control in 
the matter by requiring that the board has to specifically 
approve the contract and the agency customer.
    So, Mr. Chairman, I would hope that we would have this 
small exception to the 20 percent and the 5 percent rule so in 
those few circumstances FPI can continue doing what it's doing 
now.
    Chairman Sensenbrenner. I recognize myself for 5 minutes in 
opposition to the amendment. The amendment that Mr. Frank and I 
have offered provides that after the phase-out of mandatory 
source, FPI cannot exceed a reasonable share of the market, 
which is defined as a share of the total purchases by Federal 
departments and agencies that does not exceed 20 percent of the 
Federal market for the specific product or 5 percent of the 
Federal market for the specific service.
    The Scott amendment would allow the board of directors to 
approve a proposal offering FPI to go above the 20 and 5 
percent limitations if it is specifically requested by the 
agency and the contract award is used as competitive 
procedures. And this puts the wolf in sheep's clothing because 
the amendment allows FPI to use its advantages of low wages, no 
benefits, no taxes, and a free facility to focus on a 
particular market and to monopolize that market, thus driving 
competitors out of that market.
    FPI's original authorizing statute made it clear that FPI 
was not intended to focus its attention on one particular 
industry and that the board should do everything in its power 
to prevent that. The concern was then, as it is now, that FPI 
would use its advantages to drive weaker, smaller businesses 
out of a particular industry area.
    These concerns remain that even with board approval this 
amendment could drive competition out of business. Although the 
legislation provides for a new board, the requirement of board 
approval has not helped prevent this in the past. The 
legislation already provides for sole-source contracting if FPI 
is the only manufacturer or service provider in the market. 
This allows them to exceed the market share at the request of 
the agency.
    I would urge the rejection of this amendment and yield back 
the balance of my time.
    Mr. Green. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Wisconsin, Mr. 
Green?
    Mr. Green. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognize for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman. I'll be brief.
    FPI as it exists now could conceivably have the opportunity 
or the potential or the power to force businesses or to drive a 
monopoly, but let's not forget that what we are talking about 
here is FPI as reconstituted and restricted by this 
legislation. FPI has restricted by this legislation will hardly 
be the monopolistic organization which the Chairman warns of.
    Again, I would argue that what we are attempting to do here 
is to hang onto some threads of operation for FPI. Lord knows 
that after this legislation passes there will be very little 
left for it. We're trying to preserve at least some 
opportunities on a limited scale. In this case, after an award 
has already been made using competitive procedures, we're 
trying to preserve at least something that will allow FPI to 
continue to promote, to preserve those values which we have all 
said are positive, are good, to keep that roll going which 
everyone here on both sides of the aisle has said is important 
for societal reasons.
    So I think the amendment is modest, and I think it would 
hardly do any harm. It might help at least a little bit. And I 
would yield back my time.
    Chairman Sensenbrenner. The gentleman from Massachusetts, 
Mr. Frank?
    Mr. Frank. Mr. Chairman, I join you in opposing this 
amendment. The problem I have is that there are no objective 
standards here. It's just if the agency wants to do it. I 
believe many agencies--we've heard from many agencies that 
don't want to be put in a way--a restricted kind of position, 
but agencies may for reasons of comfort want to continue with 
the status quo or they've got one relationship, maybe they want 
to keep it. You also have an administration in power or a 
particular Cabinet Secretary that may have some particular 
ideological predisposition in this direction.
    I think the bill as we have presented it, as amended, as I 
noted, by the gentleman from Michigan and perhaps that 
amendment to be even made more explicit, which provides for 
charitable donations, which authorizes them to get aggressive 
in finding places to make charitable donations, to deal with 
the humanitarian and disaster situations that the gentleman 
from California raised and to make that explicit if necessary, 
that this is sufficient. And to give any particular agency the 
power essentially to kind of deviate from the overall patter I 
think is unwise, and so I hope the amendment is defeated.
    Chairman Sensenbrenner. The gentleman from California, Mr. 
Issa?
    Mr. Issa. Thank you, Mr. Chairman. I move to strike the 
last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Issa. I support this amendment, and I support it 
because of basic fairness. Nowhere in the language now or in 
the future, I'm sure, will there be a similar restriction for 
EDS, IBM, steel case. None of them are going to be limited to 
20 percent of the product or 5 percent of the services. Why in 
the world, if we really are not trying to simply close down and 
kill Prison Industries, would we, in fact, put a limitation 
which is purely artificial against them? If what we want to do 
is eliminate shoddy goods being delivered at high prices when 
there are better companies able to deliver better products at 
better value, then legislation need not fear if the best 
product at the best price, more than 20 percent of it, were to 
come from Prison Industries.
    Mr. Frank. Would the gentleman yield?
    Mr. Issa. Yes, I would.
    Mr. Frank. The gentleman makes a fair point and let me 
respond. It's something we're familiar with in antitrust. It's 
one thing if you are dealing with a competitive situation which 
everyone starts evenly. In situations where there has been a 
monopoly shown, then you get into the remedy situation. And we 
are talking about a situation where FPI had been given 
statutorily a monopoly. So in that situation, where a monopoly 
has been in existence for some time, the kind of restrictions 
the gentleman is talking about are often imposed, and that's 
the reason. They don't all start even, all those other private 
sectors.
    If 10 or 15 years from now we have done away with a 
monopoly situation, it might very well be that doing away with 
the 20 percent would be reasonable. But when you are in a long-
time monopoly situation, adopting these kind of remedial 
restrictions is common practice.
    Mr. Issa. Reclaiming my time, if I could ask the gentleman 
from Virginia, if, in fact, this amendment were to specifically 
envision that we only take away this limitation when there was 
not 100 percent--when Prison Industries was not an exclusive 
vendor, that might solve the gentleman from Massachusetts' 
problem. And if I heard correctly, he would be supportive, if 
we were bidding on a brand-new contract, the Prison Industries 
is able to bid and get 100 percent of something they've never 
even gotten before.
    Mr. Scott. Well, if the gentleman would yield?
    Mr. Issa. I'd yield.
    Mr. Scott. One of the situations I mentioned was the bag 
making, bag mending contract with the Postal Service. They were 
doing it in-house. It was never bid before. The Prison 
Industries has started doing it. They're doing it all.
    Now, I don't know if there's ever going to be any 
contract--there's not enough work to start a business. Prison 
Industries is doing it, and limiting that to 20 percent would 
probably have it revert back to the Postal Service trying to do 
it in-house again. That's what they were doing for years.
    Mr. Issa. I'd yield to the gentlelady from California.
    Ms. Waters. Thank you. On this example that has been given 
by Mr. Scott, I would dare say that just thinking about the 
number of bags that are needed in the Postal Service all over 
this country, that there is enough there for an industry. It 
seems to me that, again, if you're saying the only place that 
these bags are being made are with the Prison Industries, this 
training that you're talking about is not going to do them any 
good when they get out. Where are they going to mend postal 
bags and make postal bags when they get out if they've got a 
monopoly on it in the prison system?
    Again, I keep bringing you back to this because I want us 
to get real, and this may be a tough lesson. If, in fact, we 
don't have cheap labor and no rehabilitation and felons are 
getting out----
    Mr. Issa. Reclaiming my time.
    Ms. Waters. Yes.
    Mr. Issa. If the Chairman would entertain changing the 20 
and 5 to 50 percent, I think we could solve the gentlelady's 
problem and ensure that in the example that there would be at 
least one other source outside of Prison Industries at all 
time. I don't know if the Chairman would consider that----
    Ms. Waters. Would the gentleman yield?
    Mr. Issa.--management amendment.
    Ms. Waters. Would the gentleman----
    Mr. Issa. Yes.
    Ms. Waters. That would not solve my problem.
    Mr. Issa. I realize the gentlelady--but I was--I was 
still--Maxine, I was really trying to get to the essence of--I 
agree that we do not want to have an absence of a market after 
someone leaves, but to Mr. Scott's point, we also don't want to 
limit it so small that many markets would simply not be worth--
--
    Mr. Frank. Would the gentleman yield?
    Mr. Issa. I would yield to the gentleman from 
Massachusetts.
    Mr. Frank. Thank you. First, I would point out in the 
situation which is nobody else making it, I would remind people 
again the bill does say on page 4, ``if the product or service 
is only available from FPI.'' So that would be taken care of.
    Beyond that, I would say to the gentleman, I'd be willing 
to talk about some further refinements, but it's kind of hard 
to do it here. Again, if we could do this with a real safety 
valve between now and the floor, I'd participate.
    Chairman Sensenbrenner. The gentleman's time has expired. 
The question is on the amendment offered by the gentleman from 
Virginia, Mr. Scott. Those in favor will say aye? Opposed, no?
    The noes appear to have it. The noes have it, and the 
amendment is not agreed to.
    Are there further amendments? If there are not, the 
question is on the amendment in the nature of a substitute 
offered by the Chairman and the gentleman from Massachusetts, 
Mr. Frank. Those in favor will say aye? Opposed, no?
    The ayes appear to have it. The ayes have it, and the 
amendment in the nature of a substitute is agreed to. The Chair 
notes the presence of a reporting quorum.
    The question now occurs on the motion to report the bill 
H.R. 1577 favorably as amended. Those in favor will say aye? 
Opposed, no?
    The ayes appear to have it. The ayes have it and the bill 
is favorably reported.
    Without objection, the bill will be reported favorably to 
the House in the form of a single amendment in the nature of a 
substitute incorporating the amendments adopted. Without 
objection, the Chairman is authorized to move to go to 
conference pursuant to House rules. Without objection, the 
staff is directed to make any technical and conforming changes, 
and all Members will be given 2 days, as provided by House 
rules, in which to submit additional dissenting, supplemental, 
or minority views.
                            Dissenting Views

    These views dissent from the Committee Report on H.R. 1577. 
The bill would phase out the ``mandatory source'' authority 
under which Federal Prison Industries (FPI) sells products to 
Federal agencies (mandatory source has never applied to 
services) and require that FPI compete for Federal business. 
The bill also imposes severe Federal market share restrictions 
which impede FPI's ability to compete. A promising alternative 
currently employed by FPI to reduce its reliance on both 
mandatory source and the Federal market, performing services 
for companies which are currently being performed in foreign 
countries, is prohibited under the bill.
    In acknowledgment of the anticipated decline in inmate work 
opportunities, the bill provides authority for increased 
vocational training programs and for FPI to make products and 
donate them to non-profit organizations. Funding for these two 
initiatives is authorized from the Department of Justice Asset 
Forfeiture Fund and/or from appropriated funds. Given the 
improbability of funding being available from these two 
sources, these new authorities will not likely offset 
reductions in inmate employment. While vocational education is 
important and ought to be available to all inmates, no amount 
of educational course work can substitute the real world 
workplace experience of a job. This is true for several 
reasons.
    Few offenders enter prison with marketable work skills. The 
vast majority do not have even credible work habits such as 
showing up for work on time each day, and working cooperatively 
and productively with others. Such habits are required to 
maintain an FPI job.
    A vocational education program typically runs for 2 years 
or less and is generally thought better to be provided toward 
the end of the sentence. The average sentence for prisoners in 
the Federal system is 8 years. Whenever the vocational training 
is provided, the question becomes what to do with other 6 years 
of the sentence prior to or after completion of what is 
considered a beneficial period of vocational education.
    With the elimination of parole, good conduct credits, Pell 
grants, and other such incentives, the Federal prison system 
has little to offer as an incentive for self development. The 
one shining exception is FPI. Non-FPI jobs pay from about $.12 
an hour to about $.30 cents an hour while FPI jobs pay up to 
$1.25 per hour. 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 already in an FPI job, but also for 
those on the waiting list for a job, as well as those seeking 
to establish eligibility to be placed on the waiting list
    These contributions to inmate development are important, 
but the least important of FPI's contributions. Research has 
shown that inmates employed in Federal Prison Industries are 
less likely to engage in prison misconduct while in custody and 
more likely to be employed and to refrain from criminal 
behavior upon return to society. These benefits of inmate work 
to inmate families and crime victims (support and restitution 
payments), to prison staff (reduced inmate idleness and a safer 
work environment) and to the taxpayers (reduced cost of 
incarceration and reduced recidivism) are far more compelling. 
While there are certainly problems in FPI's operations, 
reforming the manner in which FPI operates should be done in a 
way which does not result in the aforementioned societal 
benefits being substantially reduced or eliminated.

                               BACKGROUND

    On April 18 and 24, 2002, the House Judiciary Committee 
marked up H.R. 1577 and voted to report the bill. During the 
markup, several amendments were offered by Reps. Scott, Hyde, 
Green and Issa to address serious concerns about the effects of 
this bill on the future viability of Federal Prison Industries. 
The amendments would have either mitigated some of the adverse 
effects of the bill or provided realistic alternative work 
opportunities for Federal inmates. None of the amendments were 
approved.
    Two other bills have been introduced on FPI this session, 
H.R. 1535 (Wolf, Scott et al) and H.R. 2754 (Green, Scott et 
al). Both provide new authorities for FPI which offset the 
effects of mandatory source elimination.

                      CONCERNS RAISED BY H.R. 1577

    1. To comply with the definition of ``reasonable share of 
the market'', FPI will have to close factories and reduce 
several thousand inmate jobs, as well as several hundred staff 
jobs.
    Section 16 of the bill defines several terms, including 
``reasonable share of the market''. The definition limits FPI's 
share of the Federal Government market to no more than 20 
percent in products and 5 percent in services. It should be 
noted that these market share ceilings are separate and apart 
from the elimination of FPI's mandatory source authority. It is 
also ironic that the proponents of the bill suggest that they 
want FPI to compete for its business without mandatory source 
and then insist that the share of the Federal market which FPI 
can acquire be statutorily restricted.
    Rep. Scott offered an amendment which would define 
``reasonable share'' as ``that share which is acquired 
competitively by FPI without reliance on mandatory source, is 
requested by the Federal customer and is approved by the FPI 
Board of Directors''. That amendment was defeated by rollcall 
vote. Mr. Scott also used an example to illustrate the impact 
this language would have. FPI currently repairs mail bags for 
the U.S. Postal Service and has done so for decades. As a 
service, mandatory source has never applied. FPI is the 
principal source for these services and thus FPI currently 
provides 94 percent of the Federal market for the ``Bag 
Repair'' services category. To support the needs of the Postal 
Service, FPI employs nearly 500 inmates in four factories, 
three of which are in high security penitentiaries, where the 
need for productive work is most critical. Under the definition 
contained in the bill, FPI would have to reduce its production 
to no more than 5 percent of the market, which would employ so 
few inmates that the costs of operating the factories would 
exceed the revenue. Further, the production output would be so 
low that the customer would likely refuse to give any business 
at all to FPI. The net result would be that FPI would have to 
close all four factories, laying off nearly 500 inmates and 
over 25 staff.
    ``Bag repair'' is only one example of the adverse effects 
the definition of reasonable market share will have. Several 
dozen other categories of products and services will also be 
restricted, resulting in several thousand inmates being 
displaced, as well as several hundred staff.
    2. FPI's ability to compete for business will be crippled 
by the bill.
    It has been expected by all parties that some of FPI's 
sales would decline when mandatory source is eliminated. If 
FPI's sales are first constricted by the market share ceilings, 
its costs will go up and its efficiencies will go down. Thus, 
its ability to compete for business will be dramatically 
diminished.
    3. The safe operation of the 24 additional Federal prisons 
under development will be jeopardized.
    If FPI is unable to maintain its current levels of inmate 
employment (see #1) and is crippled in its ability to compete 
for business (see #2) it will not be able to justify opening 
new factories in the additional prisons already authorized by 
the Congress. All these new prisons are high and medium 
security, which house the two most difficult to manage inmate 
groups. Each new prison is planned to have a factory which 
employs about 350 inmates. Without these new factories, Wardens 
will have to manage their new prisons without meaningful 
employment for 8,400 inmates, a dangerous prison management 
proposition.
    4. Most of the adverse impact of this bill will fall on 
private sector companies and their workers.
    FPI would not exist, and certainly could not offer quality 
products and services without the direct support of private 
sector companies. Each of these companies responded to 
solicitations issued by FPI (as a Federal agency, FPI follows 
all the Federal procurement regulations) and were awarded the 
contracts through competitive procedures. In order to fulfill 
their contractual obligations, these companies have hired law-
abiding citizens as staff, added equipment, and some have even 
opened entire new plants. Many of these companies have FPI 
contracts which extend 5-10 years.
    In fiscal year 2001, FPI spent 73 percent of all its 
revenue on purchases of raw materials, equipment, supplies, and 
services from private sector companies. These expenditures 
totaled $426 million. The private sector companies involved 
have played by the rules, competing fair and square for the 
contracts. They and their employees do not deserve to be on the 
receiving end of an unjustified animus toward inmates or FPI.
    5. The bill will have an unintended discriminatory effect.
    Unfortunately, racial and ethnic minorities are 
disproportionately represented among the inmate population. 
Their representation in FPI jobs, however, mirrors their 
overall representation. Importantly, research on the value to 
inmates of working in prison industries jobs demonstrates that 
these minority inmates benefit more than majority group members 
regarding their likelihood of remaining crime-free and being 
successfully employed upon release. Thus, job reductions in FPI 
of the magnitude certain to occur under the bill, will fall 
hardest on racial and ethnic minorities.
    Of all the purchases made by FPI in fiscal year 2001, 66 
percent were made from small, women and minority owned and 
disadvantaged businesses. This is one of the highest rates 
among all Federal agencies. It is well established that small 
businesses create more jobs per dollar of revenue than large 
businesses. As mentioned in #4 above, any downturn in FPI sales 
will be felt mostly by its private sector vendors. To the 
extent that FPI's sales decline, the hardest hit will be the 
socio-economically disadvantaged businesses which are 
deliberately targeted to provide them Federal procurement 
opportunities.
    6. The bill precludes both the Federal and State prison 
industries programs from continuing the most promising inmate 
job creation option.
    Current Federal statute (18 U.S.C. 1761(a)) restricts 
interstate commerce of inmate made products. The law, circa 
1935, does not discuss inmate performed services. Legal 
opinions from the U.S. Department of Justice and at least a 
half dozen State attorneys general conclude that inmate 
performed services are not precluded by law.
    Utilizing these opinions, both State and Federal prison 
industries programs have pursued opportunities to create inmate 
jobs by focusing predominantly on performing services for 
private companies which are otherwise being performed in 
foreign countries. Currently there are 2600 State inmates 
performing service work. FPI has initiated several pilots under 
this authority which are expected to employ several hundred 
inmates. The private sector companies have made resource 
investments and have diverted work from overseas to support 
inmate job creation.
    The principal virtue of these work opportunities is that, 
by definition, the work is not currently being performed by 
domestic employees. Therefore, repatriating this work for 
inmates to perform achieves one of the highest priorities for 
inmate work: avoiding adverse impact on law-abiding American 
workers.
    Notwithstanding the virtues of these work opportunities, 
sections 7 and 8 of the bill completely preclude State or 
Federal inmates from performing such services.
    7. The bill provides no practical alternatives to provide 
for meaningful inmate employment.
    Despite the obvious and irrefutable adverse impact on FPI, 
the bill offers no practical, realistic alternatives to keep 
inmates from being idle and to teach work skills.
    An amendment offered by Reps. Conyers and Frank, and 
adopted by the Committee by voice vote, would provide authority 
for more vocational training programs and for FPI to 
manufacture items for donation to non-profit recipients. While 
such alternatives are laudable in intent, they are impractical 
for several reasons. First, they both specifically rely on 
additional funds being appropriated or on funds being allocated 
from the Department of Justice's Asset Forfeiture Fund. The 
probability of funds being made available for these purposes 
from either source is extremely low. Second, vocational 
training programs are typically 18-24 months in duration, while 
the average Federal inmate sentence is 8 years. Thus, work 
programs are still necessary for \3/4\ of the typical inmate's 
sentence. Both authorities are commendable and should be part 
of a comprehensive reform strategy for FPI. In and of 
themselves, however, they do not serve to offset the 
significant inmate job losses which will occur under the bill.
    8. An amendment that is critical to the future of FPI will 
be considered by the House during floor debate on the bill.
    An amendment was offered by Rep. Scott to provide two 
additional authorities for FPI. The authorities are similar to 
those provided in H.R. 1535 and H.R. 2754.
    The first would authorize FPI to produce items for private 
sector companies which they are otherwise having produced by 
foreign labor outside the country. Contrary to the arguments 
advanced during mark-up against this idea, it is consistent 
with our trade treaties, with Federal statute and with 
international labor standards.
    Neither the NAFTA nor GATT agreements preclude the U.S. 
from having American inmates produce items for domestic 
consumption while still prohibiting items made in foreign 
prisons from being imported into the U.S. In fact, according to 
research done by Professor Ursulla Smartt of England, trading 
partner countries such as Japan, Canada, Mexico, England, 
France, Germany, Spain and Sweden allow their own inmates to 
produce products for their domestic commercial market but 
preclude imported prison made products. Further, International 
Labor Organization Conventions 29 and 105 specifically allow 
inmate labor to be used to produce items for domestic 
consumption within a country's economy.
    For decades, Federal statute has permitted inmates to 
produce items for the commercial market. 18 U.S.C. 1761(b) 
provides that agricultural products and products sold to non-
profits may be made with inmate labor, regardless of wage paid.
    This same section of statute also provides authority for 
the State prison industries programs which is virtually 
identical to the second authority proposed by Rep. Scott. Under 
18 U.S.C. 1761(c), referred to as the Prison Industries 
Enhancement Program, State prison inmates may product items for 
the commercial market provided: (a) they are paid market wages 
as approved by the State employment security office; (b) 
organized labor is consulted; (c) non-inmate workers are not 
displaced as a result; (d) the work is not done in labor 
surplus areas; and (e) the program is certified by the 
Department of Justice. This program was adopted into law in 
1979 and there are currently 4,000 inmates performing such work 
in conjunction with 150 private sector companies. Mr. Scott's 
amendment would have extended similar authority to FPI.
    It is clear that our country's concerns about the 
importation of ``Chinese prison made goods'' revolve around 
human rights abuses, and our inability to determine the 
conditions under which these products were made. These concerns 
certainly do not apply to United States operated prisons or 
prison industries programs.
    The amendment by Rep. Scott which would have provided FPI 
these new authorities was withdrawn during mark-up with the 
expressed intention to have it ruled in order for consideration 
by the full House. Chairman Sensenbrenner and Reps. Conyers and 
Frank indicated they would support such a proposal to the Rules 
Committee.

                                   Robert C. Scott.
                                   Mark Green.

                                  
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