[House Report 109-591]
[From the U.S. Government Publishing Office]
109th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 109-591
======================================================================
FEDERAL PRISON INDUSTRIES COMPETITION IN CONTRACTING ACT OF 2006
_______
July 21, 2006.--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. 2965]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 2965) to amend title 18, United States Code, to require
Federal Prison Industries to compete for its contracts
minimizing its unfair competition with private sector firms and
their non-inmate workers and empowering Federal agencies to get
the best value for taxpayers' dollars, to provide a five-year
period during which Federal Prison Industries adjusts to
obtaining inmate work opportunities through other than its
mandatory source status, to enhance inmate access to remedial
and vocational opportunities and other rehabilitative
opportunities to better prepare inmates for a successful return
to society, to authorize alternative inmate work opportunities
in support of non-profit organizations and other public service
programs, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Federal Prison
Industries Competition in Contracting Act of 2006''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1 Short title; table of contents.
Sec. 2. Governmentwide procurement policy relating to purchases from
Federal Prison Industries.
Sec. 3. Public participation regarding expansion proposals by Federal
Prison Industries.
Sec. 4. Transitional mandatory source authority.
Sec. 5. Authority to perform as a Federal subcontractor.
Sec. 6. Inmate wages and deductions.
Sec. 7. Clarifying amendment relating to services.
Sec. 8. Conforming amendment.
Sec. 9. Rules of construction relating to chapter 307.
Sec. 10. Providing additional rehabilitative opportunities for inmates.
Sec. 11. Re-entry employment preparation through work-based training
and apprenticeship.
Sec. 12. Restructuring the Board of Directors.
Sec. 13. Providing additional management flexibility to Federal Prison
Industries operations.
Sec. 14. Transitional personnel management authority.
Sec. 15. Federal Prison Industries report to Congress.
Sec. 16. Definitions.
Sec. 17. Implementing regulations and procedures.
Sec. 18. Rules of construction.
Sec. 19. Effective date and applicability.
Sec. 20. Clerical amendments.
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)(A) 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))).
``(B) The requirements of subparagraph (A) shall also apply to a
procurement that a Federal department or agency intends to meet by
placing an order against a contract maintained by the General Services
Administration under the Multiple Award Schedule Contracts Program.
``(C) Federal Prison Industries, upon its request, shall be listed on
any Schedule, referred to in subparagraph (B), as offering products or
services which Federal Prison Industries believes to be comparable to
those products and services being offered by commercial contractors
through the Multiple Award Schedule Contracts Program.
``(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. 253(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.
``(8) A contract award may be made to Federal Prison Industries using
other than competitive procedures by the Federal Bureau of Prisons.
``(9) A solicitation for a contract shall first be made to Federal
Prison Industries using other than competitive procedures if the
product or service to be acquired would otherwise be furnished by a
contractor performing the work outside of the United States.
``(c) Offers From Federal Prison Industries.--(1) 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, unless the
contract opportunity has been reserved for competition exclusively
among small business concerns pursuant to section 15(a) of the Small
Business Act (15 U.S.C. 644(a)) and its implementing regulations.
``(2) Any offer made by Federal Prison Industries to furnish a
product or service may exclude from the offer the price of the
following:
``(A) The costs related to security of the facilities at
which the contract will be performed.
``(B) The costs of educating and training the prison work
force performing the contract.
``(C) Excess capital costs of machinery and excess
inventories used within a prison environment that are the
result of the unique environment of prison life.
``(D) Other costs of performing the contract resulting from
the unique environment of prison facilities.
``(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)(A) The Chief Operating Officer of Federal Prison Industries may
protest a decision by a contracting officer not to award a contract to
Federal Prison Industries pursuant to subsection (b)(4), in accordance
with section 33.103, (Protests to the agency) of the Federal
Acquisition Regulation (48 C.F.R. part 33.103).
``(B) In the event of an adverse decision of a protest filed pursuant
to subparagraph (A), the Assistant Attorney General for Administration
may request a reconsideration of such adverse decision by the head of
the Federal agency or department, which shall be considered de novo and
the decision issued by such agency head on a non-delegable basis. Such
decision upon reconsideration by the agency head 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 be
subject to 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 (13); and
(2) by striking paragraphs (4) and (5) and inserting the
following new paragraphs:
``(4)(A) Federal Prison Industries is authorized to offer a new
specific product or furnish a new specific service in response to a
competitive solicitation or other purchase request issued by a Federal
department or agency. No subsequent offering of such product or service
may be made by Federal Prison Industries until the board of directors
has approved the offering for sale of such new specific product or new
specific service, in conformance with the requirements of paragraphs
(5) through (9).
``(B) Federal Prison Industries may produce a product or furnish a
service in excess of the authorized level of production for such
product or service, in response to an order placed pursuant to an
existing contract with a Federal department or agency, if the agency's
need for the product or service is of such an urgency that it would
justify the use of procedures other than competitive procedures
pursuant to section 2304(c)(2) of title 10 or section 303(c)(2) of the
Federal Property and Administrative Services Act of 1949 (41 U.S.C.
253(c)(2)), as may be applicable.
``(5) 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 for sale to the Federal Government 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.
``(6)(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 non-inmate 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 sale 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 C.F.R. part 2.101), as in effect on June 1, 2004,
including the repair, alteration, or maintenance of real property in
being.
``(7) 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 (6) and shall
solicit comment on the analysis;
``(B) solicit comments on the analysis required by paragraph
(6) 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.
``(8) The board of directors shall be provided copies of all comments
received on the expansion proposal.
``(9) 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 (6)(C) and be
subject to the public comment requirements of paragraph (7).
``(10) 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.
``(11) In conformance with the requirements of paragraph (10) 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;
``(B) authorize the production of a new specific product or
the furnishing of a new specific service for donation; or
``(C) authorize a proposal to expand production of a
currently authorized specific product or specific service in an
amount in excess of a reasonable share of the market for such
product or service, if--
``(i) a Federal agency or department, purchasing such
product or service, has requested that Federal Prison
Industries be authorized to furnish such product or
service in amounts that are needed by such agency or
department; or
``(ii) the proposal is justified for other good cause
and supported by at least two-thirds of the appointed
members of the board.''.
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 or in accordance with section 2410n of title 10, United States
Code, or section 318 of title III of the Federal Property and
Administrative Services Act of 1949 (as added by subsection (i)).
(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 2007;
(B) 85 percent in fiscal year 2008;
(C) 70 percent in fiscal year 2009;
(D) 55 percent in fiscal year 2010; and
(E) 40 percent in fiscal year 2011.
(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.--If a buying agency
directs a change to the design specification for a specific
product, the costs associated with the implementation of such
specification change by Federal Prison Industries shall not be
considered for the purposes of computing sales by Federal
Prison Industries for the purposes of paragraphs (2) and (3).
(f) Additional Authority to Sustain Inmate Employment.--During the
period specified in subsection (g), the authority of section
4122(b)(11)(C)(ii) of title 18, United States Code (as added by section
3), may be used by the Board to sustain inmate employment.
(g) Duration of Authority.--The preferential contracting authorities
authorized by subsection (b) may not be used on or after October 1,
2011, and become effective on the effective date of the final
regulations issued pursuant to section 17.
(h) 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, 2003, and
September 30, 2004 (Fiscal Year 2004);
(2) the term ``business sectors'' means the seven product/
service business groups identified in the 2004 Federal Prison
Industries annual report as the Clothing and Textiles Business
Group, the Electronics Business Group, the Fleet Management and
Vehicular Components Business Group, the Industrial Products
Business Group, the Office Furniture Business Group, the
Recycling Activities 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).
(i) 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.
(j) Procedural Requirements for Civilian Agencies Relating to
Products of Federal Prison Industries.--Title III of the Federal
Property and Administrative Services Act of 1949 (41 U.S.C. 251 et
seq.) is amended by adding at the end the following new section:
``SEC. 318. PRODUCTS OF FEDERAL PRISON INDUSTRIES: PROCEDURAL
REQUIREMENTS.
``(a) Market Research.--Before purchasing a product listed in the
latest edition of the Federal Prison Industries catalog under section
4124(g) of title 18, United States Code, the head of an executive
agency shall conduct market research to determine whether the Federal
Prison Industries product is comparable to products available from the
private sector that best meet the executive agency's needs in terms of
price, quality, and time of delivery.
``(b) Competition Requirement.--If the head of the executive agency
determines that a Federal Prison Industries product is not comparable
in price, quality, or time of delivery to products available from the
private sector that best meet the executive agency's needs in terms of
price, quality, and time of delivery, the agency head shall use
competitive procedures for the procurement of the product or shall make
an individual purchase under a multiple award contract. In conducting
such a competition or making such a purchase, the agency head shall
consider a timely offer from Federal Prison Industries.
``(c) Implementation by Head of Executive Agency.--The head of an
executive agency shall ensure that--
``(1) the executive agency does not purchase a Federal Prison
Industries product or service unless a contracting officer of
the agency determines that the product or service is comparable
to products or services available from the private sector that
best meet the agency's needs in terms of price, quality, and
time of delivery; and
``(2) Federal Prison Industries performs its contractual
obligations to the same extent as any other contractor for the
executive agency.
``(d) Market Research Determination Not Subject to Review.--A
determination by a contracting officer regarding whether a product or
service offered by Federal Prison Industries is comparable to products
or services available from the private sector that best meet an
executive agency's needs in terms of price, quality, and time of
delivery shall not be subject to review pursuant to section 4124(b) of
title 18.
``(e) Performance as a Subcontractor.--(1) A contractor or potential
contractor of an executive agency may not be required to use Federal
Prison Industries as a subcontractor or supplier of products or
provider of services for the performance of a contract of the executive
agency by any means, including means such as--
``(A) a contract solicitation provision requiring a
contractor to offer to make use of products or services of
Federal Prison Industries in the performance of the contract;
``(B) a contract specification 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; or
``(C) any contract modification directing the use of products
or services of Federal Prison Industries in the performance of
the contract.
``(2) In this subsection, the term `contractor', with respect to a
contract, includes a subcontractor at any tier under the contract.
``(f) Protection of Classified and Sensitive Information.--The head
of an executive agency may not enter into any contract with Federal
Prison Industries under which an inmate worker would have access to--
``(1) any data that is classified;
``(2) any geographic data regarding the location of--
``(A) surface and subsurface infrastructure providing
communications or water or electrical power
distribution;
``(B) pipelines for the distribution of natural gas,
bulk petroleum products, or other commodities; or
``(C) other utilities; or
``(3) any personal or financial information about any
individual private citizen, including information relating to
such person's real property however described, without the
prior consent of the individual.
``(g) Definitions.--In this section:
``(1) The term `competitive procedures' has the meaning given
such term in section 4(5) of the Office of Federal Procurement
Policy Act (41 U.S.C. 403(5)).
``(2) The term `market research' means obtaining specific
information about the price, quality, and time of delivery of
products available in the private sector through a variety of
means, which may include--
``(A) contacting knowledgeable individuals in
government and industry;
``(B) interactive communication among industry,
acquisition personnel, and customers; and
``(C) interchange meetings or pre-solicitation
conferences with potential offerors.''.
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) Limitations on Use.--Federal Prison Industries is prohibited from
being a subcontractor or supplier at any tier if--
(1) the product or service is to be acquired by a Federal
department or agency pursuant to section 3 of the Javits-
Wagner-O'Day Act (41 U.S.C. 48); or
(2) the product to be acquired by the Federal department or
agency is subject to section 2533a of title 10, United States
Code.
(c) 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 1761(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.
(d) 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 after paragraph
(11) a new paragraph (12) as follows:
``(12)(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.
In the case of an inmate whose term of imprisonment is to expire in not
more than 2 years, wages shall be earned at an hourly rate of not less
than $2.50, but paid at the same rate and in the same manner as to any
other inmate, and any amount earned but not paid shall be held in trust
and paid only upon the actual expiration of the term of imprisonment.
``(B) The various inmate wage rates shall be reviewed and considered
for increase on not less than a biannual basis.
``(C) The Board of Directors of Federal Prison Industries shall--
``(i) not later than September 30, 2008, increase the maximum
wage rate for inmates performing work for or through Federal
Prison Industries to an amount equal to 50 percent of the
minimum wage prescribed by section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)); and
``(ii) not later than September 30, 2013, increase such
maximum wage rate to an amount equal to such minimum wage.
``(D) 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.
``(E) 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) and (c) by striking ``goods, wares, or
merchandise manufactured, produced, or mined'' each place it appears
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, 2004, 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, 2004, or
(2) until September 30, 2010, 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 by a correctional institution operated by a 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.
(d) Existing Work Opportunities for Federal Inmates.--Any private
for-profit business entity having an agreement with Federal Prison
Industries in effect on the date of enactment of this Act, under which
Federal inmates are furnishing services that are being introduced into
the commercial market, may continue to furnish such services for the
duration of the term of such agreement.
(e) Additional Amendment.--Section 1761 of title 18, United States
Code, is further amended--
(1) by redesignating subsection (d) as subsection (e); and
(2) by inserting after subsection (c) the following new
subsection:
``(d) This section shall not apply to services performed as part of
an inmate work program conducted by a State or local government to
disassemble, scrap, and recycle products, other than electronic
products, that would otherwise be disposed of in a landfill. Recovered
scrap from such program may be sold.''.
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 at the end the following:
``Sec. 4130. Construction of provisions
``Nothing in this chapter shall be construed--
``(1) to establish an entitlement of any inmate to--
``(A) employment in a Federal Prison Industries
facility; or
``(B) any particular wage, compensation, or benefit
on demand, 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 REHABILITATIVE OPPORTUNITIES FOR INMATES.
(a) Additional Educational, Training, and Release-Preparation
Opportunities.--
(1) Program established.--There is hereby established the
Enhanced In-Prison Educational and Vocational Assessment and
Training Program within the Federal Bureau of Prisons.
(2) Comprehensive program.--In addition to such other
components as the Director of the Bureau of Prisons deems
appropriate to reduce inmate idleness and better prepare
inmates for a successful reentry into the community upon
release, the program shall provide--
(A) in-prison assessments of inmates' needs and
aptitudes;
(B) a full range of educational opportunities;
(C) vocational training and apprenticeships; and
(D) comprehensive release-readiness preparation.
(3) Authorization of appropriations.--For the purposes of
carrying out the program established by paragraph (1),
$75,000,000 is authorized for each fiscal year after fiscal
year 2008, to remain available until expended. It is the sense
of Congress that Federal Prison Industries should use some of
its net earnings to accomplish the purposes of the program.
(4) Schedule for implementation.--All components of the
program shall be established--
(A) in at least 25 percent of all Federal prisons not
later than 2 years after the date of the enactment of
this Act;
(B) in at least 50 percent of all Federal prisons not
later than 4 years after such date of enactment;
(C) in at least 75 percent of all Federal prisons not
later than 6 years after such date of enactment; and
(D) in all Federal prisons not later than 8 years
after such date of enactment.
(b) Additional Inmate Work Opportunities Through Public Service
Activities.--
(1) In general.--Chapter 307 of title 18, United States Code,
is further amended by inserting after section 4124 the
following new section:
``Sec. 4124a. Additional inmate work opportunities through public
service activities
``(a) In General.--Inmates with work assignments within Federal
Prison Industries may perform work for an eligible entity pursuant to
an agreement between such entity and the Inmate Work Training
Administrator in accordance with the requirements of this section.
``(b) Definition of Eligible Entities.--For the purposes of this
section, the term `eligible entity' means an entity--
``(1) that is an organization described in section 501(c)(3)
of the Internal Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code and that has been such an
organization for a period of not less than 36 months prior to
inclusion in an agreement under this section;
``(2) that is a religious organization described in section
501(d) of such Code and exempt from taxation under section
501(a) of such Code; or
``(3) that is a unit of local government, a school district,
or another special purpose district.
``(c) Inmate Work Training Administrator.--There is hereby
established the position of Inmate Work Training Administrator, who
shall be responsible for fostering the creation of alternative inmate
work opportunities authorized by this section. The Administrator shall
be designated by the Chief Executive Officer of Federal Prison
Industries, with the approval of the Board of Directors, and be under
the supervision of the Chief Operating Officer, but may directly report
to the Board.
``(d) Proposed Agreements.--An eligible entity seeking to enter into
an agreement pursuant to subsection (a) shall submit a detailed
proposal to the Inmate Work Training Administrator. Each such agreement
shall specify--
``(1) types of work to be performed;
``(2) the proposed duration of the agreement, specified in
terms of a base year and number of option years;
``(3) the number of inmate workers expected to be employed in
the specified types of work during the various phases of the
agreement;
``(4) the wage rates proposed to be paid to various classes
of inmate workers; and
``(5) the facilities, services and personnel (other than
correctional personnel dedicated to the security of the inmate
workers) to be furnished by Federal Prison Industries or the
Bureau of Prisons and the rates of reimbursement, if any, for
such facilities, services, and personnel.
``(e) Representations.--
``(1) Eleemosynary work activities.--Each proposed agreement
shall be accompanied by a written certification by the chief
executive officer of the eligible entity that--
``(A) the work to be performed by the inmate workers
will be limited to the eleemosynary work of such entity
in the case of an entity described in paragraph (1) or
(2) of subsection (b);
``(B) the work would not be performed in the United
States but for the availability of the inmate workers;
and
``(C) the work performed by the inmate workers will
not result, either directly or indirectly, in the
production of a new product or the furnishing of a
service that is to be offered for other than resale or
donation by the eligible entity or any affiliate of the
such entity.
``(2) Protections for non-inmate workers.--Each proposed
agreement shall also be accompanied by a written certification
by the chief executive officer of the eligible entity that--
``(A) no non-inmate employee (including any person
performing work activities for such governmental entity
pursuant to section 607 of subchapter IV of the Social
Security Act (42 U.S.C. 607)) of the eligible entity
(or any affiliate of the entity) working in the United
States will have his or her job abolished or work hours
reduced as a result of the entity being authorized to
utilize inmate workers; and
``(B) the work to be performed by the inmate workers
will not supplant work currently being performed in the
United States by a contractor of the eligible entity.
``(f) Approval by Board of Directors.--
``(1) In general.--Each such proposed agreement shall be
presented to the Board of Directors, be subject to the same
opportunities for public comment, and be publicly considered
and acted upon by the Board in a manner comparable to that
required by paragraphs (7) and (8) of section 4122(b).
``(2) Matters to be considered.--In determining whether to
approve a proposed agreement, the Board shall--
``(A) give priority to an agreement that provides
inmate work opportunities that will provide
participating inmates with the best prospects of
obtaining employment paying a livable wage upon
release;
``(B) give priority to an agreement that provides for
maximum reimbursement for inmate wages and for the
costs of supplies and equipment needed to perform the
types of work to be performed;
``(C) not approve an agreement that will result in
the displacement of non-inmate workers contrary to the
representations required by subsection (e)(2) as
determined by the Board or by the Secretary of Labor
(pursuant to subsection (i)); and
``(D) not approve an agreement that will result,
either directly or indirectly, in the production of a
new product or the furnishing of a service for other
than resale by an eligible entity described in
paragraph (1) or (2) of subsection (b) or donation.
``(g) Wage Rates and Deductions From Inmate Wages.--
``(1) In general.--Inmate workers shall be paid wages for
work under the agreement at a basic hourly rate to be
negotiated between the eligible entity and Federal Prison
Industries and specified in the agreement. The wage rates set
by the Director of the Federal Bureau of Prisons to be paid
inmates for various institutional work assignments are
specifically authorized.
``(2) Payment to inmate worker and authorized deductions.--
Wages shall be paid and deductions taken pursuant to section
4122(b)(12)(D).
``(3) Voluntary participation by inmate.--Each inmate worker
to be utilized by an eligible entity shall indicate in writing
that such person--
``(A) is participating voluntarily; and
``(B) understands and agrees to the wages to be paid
and deductions to be taken from such wages.
``(h) Assignment to Work Opportunities.--Assignment of inmates to
work under an approved agreement with an eligible entity shall be
subject to the Bureau of Prisons Program Statement Number 1040.10 (Non-
Discrimination Toward Inmates), as contained in section 551.90 of title
28 of the Code of Federal Regulations (or any successor document).
``(i) Enforcement of Protections for Non-Inmate Workers.--
``(1) Prior to board consideration.--Upon request of any
interested person, the Secretary of Labor may promptly verify a
certification made pursuant subsection (e)(2) with respect to
the displacement of non-inmate workers so as to make the
results of such inquiry available to the Board of Directors
prior to the Board's consideration of the proposed agreement.
The Secretary and the person requesting the inquiry may make
recommendations to the Board regarding modifications to the
proposed agreement.
``(2) During performance.--
``(A) In general.--Whenever the Secretary deems
appropriate, upon request or otherwise, the Secretary
may verify whether the actual performance of the
agreement is resulting in the displacement of non-
inmate workers or the use of inmate workers in a work
activity not authorized under the approved agreement.
``(B) Sanctions.--Whenever the Secretary determines
that performance of the agreement has resulted in the
displacement of non-inmate workers or employment of an
inmate worker in an unauthorized work activity, the
Secretary may--
``(i) direct the Inmate Work Training
Administrator to terminate the agreement for
default, subject to the processes and appeals
available to a Federal contractor whose
procurement contract has been terminated for
default; and
``(ii) initiate proceedings to impose upon
the person furnishing the certification
regarding non-displacement of non-inmate
workers required by subsection (d)(2)(B) any
administrative, civil, and criminal sanctions
as may be available.''.
(2) Authorization of appropriation.--There is authorized to
be appropriated $5,000,000 for each of the fiscal years 2008
through 2012 for the purposes of paying the wages of inmates
and otherwise undertaking the maximum number of agreements with
eligible entities pursuant to section 4124a of title 18, United
States Code, as added by paragraph (1).
(3) Sense of congress.--For purposes of sections 4124a and
4124b of title 18, United States Code, as added by sections
10(b) and 11, respectively, it is the sense of Congress that an
inmate training wage that is at least 50 percent of the minimum
wage prescribed pursuant to section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) will facilitate
successful achievement of the goals of the work-based training
and apprenticeship program authorized under such section 4124a.
(c) Inmate Work Opportunities in Support of Not-for-Profit
Entities.--
(1) Proposals for donation programs.--The Chief Operating
Officer of Federal Prison Industries shall develop and present
to the Board of Directors of Federal Prison Industries
proposals to have Federal Prison Industries donate products and
services to eligible entities that provide goods or services to
low-income individuals who would likely otherwise have
difficulty purchasing such products or services in the
commercial market.
(2) Schedule for submission and consideration of donation
programs.--
(A) Initial proposals.--The Chief Operating Officer
shall submit the initial group of proposals for
programs of the type described in paragraph (1) within
180 days after the date of the enactment of this Act.
The Board of Directors of Federal Prison Industries
shall consider such proposals from the Chief Operating
Officer not later than the date that is 270 days after
the date of the enactment of this Act.
(B) Annual operating plan.--The Board of Directors of
Federal Prison Industries shall consider proposals by
the Chief Operating Officer for programs of the type
described in paragraph (1) as part of the annual
operating plan for Federal Prison Industries.
(C) Other proposals.--In addition to proposals
submitted by the Chief Operating Officer, the Board of
Directors may, from time to time, consider proposals
presented by prospective eligible entities.
(3) Definition of eligible entities.--For the purposes of
this subsection, the term ``eligible entity'' means an entity--
(A) that is an organization described in section
501(c)(3) of the Internal Revenue Code of 1986 and
exempt from taxation under section 501(a) of such Code
and that has been such an organization for a period of
not less than 36 months prior to inclusion in a
proposal of the type described in paragraph (1), or
(B) that is a religious organization described in
section 501(d) of such Code and exempt from taxation
under section 501(a) of such Code.
(4) Authorization of appropriations.--There are authorized to
be appropriated $7,000,000 for each of the fiscal years 2008
through 2012 for the purposes of paying the wages of inmates
and otherwise carrying out programs of the type described in
paragraph (1).
(d) Maximizing Inmate Rehabilitative Opportunities Through Cognitive
Abilities Assessments.--
(1) Demonstration program authorized.--
(A) In general.--There is hereby established within
the Federal Bureau of Prisons a program to be known as
the ``Cognitive Abilities Assessment Demonstration
Program''. The purpose of the demonstration program is
to determine the effectiveness of a program that
assesses the cognitive abilities and perceptual skills
of Federal inmates to maximize the benefits of various
rehabilitative opportunities designed to prepare each
inmate for a successful return to society and reduce
recidivism. The demonstration program shall be
undertaken by a contractor with a demonstrated record
of enabling the behavioral and academic improvement of
adults through the use of research-based systems that
maximize the development of both the cognitive and
perceptual capabilities of a participating individual,
including adults in a correctional setting.
(B) Scope of demonstration program.--The
demonstration program shall to the maximum extent
practicable, be--
(i) conducted during a period of three
consecutive fiscal years, commencing during
fiscal year 2008;
(ii) conducted at 12 Federal correctional
institutions; and
(iii) offered to 6,000 inmates, who are
categorized as minimum security or less, and
are within five years of release.
(C) Report on results of program.--Not later than 60
days after completion of the demonstration program, the
Director shall submit to Congress a report on the
results of the program. At a minimum, the report shall
include an analysis of employment stability, stability
of residence, and rates of recidivism among inmates who
participated in the program after 18 months of release.
(2) Authorization of appropriations.--There is authorized to
be appropriated $3,000,000 in each of the three fiscal years
after fiscal year 2007, to remain available until expended, for
the purposes of conducting the demonstration program authorized
by subsection (a).
(e) Prerelease Employment Assistance.--
(1) In general.--The Director of the Federal 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.
(2) Prerelease employment placement assistance.--Such
prerelease employment placement assistance required by
subsection (a) shall include--
(A) training in the preparation of resumes and job
applications;
(B) training in interviewing skills;
(C) training and assistance in job search techniques;
(D) conduct of job fairs; and
(E) such other methods deemed appropriate by the
Director.
(3) 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 24 months of release from
incarceration.
SEC. 11. RE-ENTRY EMPLOYMENT PREPARATION THROUGH WORK-BASED TRAINING
AND APPRENTICESHIP.
(a) In General.--Chapter 307 of title 18, United States Code, is
further amended by inserting after section 4124a, as added by section
10(b), the following new section:
``Sec. 4124b. Re-entry employment preparation through work-based
training and apprenticeship.
``(a) Participation Authorized.--A private for-profit business entity
shall be an eligible entity for participation in the program authorized
by section 4124a of this title, if such participation conforms with the
requirements and limitations of this section.
``(b) Requirements Relating to Products and Services.--A private for-
profit business entity is eligible for such participation if such
business entity proposes to train participating inmates, pursuant to
subsection (c), by producing a product or performing a service, if such
product or service is of a type for which there is no production or
performance within the United States by noninmate workers.
``(c) Requirements Relating to Training.--
``(1) In general.--For purposes of this section, the training
of participating inmates shall be work-based training that
provides to a participating inmate apprenticeship training or a
functionally equivalent structured program that combines hands-
on work experience with conceptual understanding of the work
being performed. Other inmates with regular work assignments
within Federal Prison Industries may be assigned to support the
program.
``(2) Documentation of program participation.--
``(A) Each inmate who successfully completes
participation in training undertaken pursuant to this
section shall be provided a certificate or other
written document memorializing such successful
completion, providing a marketable summary of the
skills learned and an overall assessment of
performance.
``(B) Copies of such documents shall be furnished to
perspective employers upon the request of the
participant for a period of not less than 24 months
from the date of such participant's release from
incarceration.
``(3) Documents required for employment.--The Federal Bureau
of Prisons, in cooperation with a business entity providing an
inmate work-based training at the time of his or her scheduled
release, shall make every reasonable effort to help the inmate
timely obtain such documentation (including a State government-
issued photo identification card) as a person may be required
to provide to a prospective employer, after such person
completes an Employment Eligibility Verification (ICE Form I-
9).
``(d) Wage Rates.--
``(1) In general.--Business entities participating in the
program authorized by subsection (a) shall propose wages for
inmates participating in the program at rates not less than the
inmate training wage promulgated pursuant to section 17(c) of
the Federal Prison Industries Competition in Contracting Act of
2006.
``(2) Inmate training wage.--Not more than 30 days after the
date of enactment of this section, the Board of Directors of
Federal Prison Industries shall request the Secretary of Labor
to promulgate an inmate training wage pursuant to section 14(a)
of the Fair Labor Standards Act of 1938 (29 U.S.C. 214(a)).
``(e) Support for Other Release Preparation Programs.--In addition to
the matters listed in section 4124a(d) of this title, a proposal for an
agreement referred to in such section submitted by an eligible business
entity shall specify an amount of any supplemental funding, specified
as a per-capita amount for each inmate participating pursuant to the
agreement, that the business entity will provide for the purpose of
supporting remedial, vocational, and other release preparation programs
for other nonparticipating inmates.
``(f) Additional Standards Applicable.--In considering a proposed
agreement pursuant to section 4124a(f)(1) of this title, the Board of
Directors shall--
``(1) give preference to an agreement that proposes--
``(A) work-based training opportunities that provide
the participating inmate the best prospects for
obtaining employment paying a livable wage upon
release;
``(B) the highest per-capita amount pursuant to
subsection (e) relating to providing financial support
for release preparation for other inmates; and
``(C) the highest inmate wage rates;
``(2) not approve any agreement with respect to furnishing
services of the type described in section 4122(b)(6)(D)(iii) of
this title;
``(3) not approve any agreement with respect to furnishing
construction services described in section 4122(b)(6)(D)(iv) of
this title, unless to be performed within a Federal
correctional institution;
``(4) not approve an agreement that does not meet the
standards of subsection (b); and
``(5) request a determination from the International Trade
Commission (and such other executive branch entities as may be
appropriate), regarding whether a product or service is of the
type being produced or performed in the United States by
noninmate workers, whenever the Board determines that such an
additional assessment is warranted, including upon a request
from an interested party presenting information that the Board
deems to warrant such additional assessment prior to the
Board's consideration of the proposed agreement.
``(g) Limitations on the Use of the Authority.--
``(1) No sales by federal prison industries.--Federal Prison
Industries is prohibited from directly offering for commercial
sale products produced or services furnished by Federal
inmates, including through any form of electronic commerce.
``(2) Duration.--
``(A) No proposed agreement pursuant to this
subsection may be approved by the Board of Directors
after September 30, 2016.
``(B) Performance of all such agreements shall be
concluded prior to October 1, 2021.''.
(b) Review and Reporting by the Attorney General.--Not less than
biannually, beginning in fiscal year 2008, the Attorney General shall
meet in person jointly with the Chairman of the Board of Directors and
the Chief Executive Officer of Federal Prison Industries to review the
progress that Federal Prison Industries is making in maximizing the use
of the authority provided by sections 4124a and 4124b of title 18,
United States Code. The Attorney General shall provide annually a
written report to the Committees on the Judiciary and Appropriations of
the House of Representatives and the Senate addressing such progress by
Federal Prison Industries.
(c) GAO Assessment of Work-Based Training Program.--
(1) In general.--The Comptroller General of the United States
shall undertake an on-going assessment of the authority granted
by section 4124b of title 18, United States Code, as added by
subsection (a).
(2) Matters to be assessed.--In addition to such other
matters as the Comptroller General deems appropriate, the
assessment shall include--
(A) efforts to recruit private for-profit business
entities to participate;
(B) the quality of training provided to inmates;
(C) the amounts and types of products and services
that have been produced incident to the work-based
training programs;
(D) the types of worksite arrangement that encourage
business concerns to voluntarily enter into such
partnerships;
(E) the extent and manner of the participation of
supervisory, quality assurance, and other management
employees of the participating business entity in
worksites within correctional facilities of various
levels of security;
(F) the extent of the facilities, utilities,
equipment, and personnel (other than security
personnel) provided by the host correctional agency,
and extent to which such resources are provided on a
nonreimbursable basis;
(G) the rates of wages paid to inmate workers and the
effect that such wage rates have on willingness of
business entities to participate;
(H) any complaints filed regarding the displacement
of noninmate workers or of inmate workers being paid
less than required wages and the disposition of those
complaints;
(I) any sanctions recommended relating to
displacement of noninmate workers or payment of less
than the required wages, and the disposition of such
proposed sanctions;
(J) the extent to which the new authority provided
additional inmate work opportunities assisting the
Bureau of Prisons in attaining its objective of
providing 25 percent of the work-eligible inmates with
work opportunities within Federal Prison Industries;
(K) measures of any adverse impacts of implementation
of the new authority on business concerns using
noninmate workers that are engaged in providing similar
types of products and services in direct competition;
and
(L) a compilation of data relating work opportunities
for Federal inmates with work assignments with Federal
Prison Industries provided by--
(i) sales to Federal agencies pursuant to the
status of Federal Prison Industries as a
mandatory source of supply during the period
fiscal year 1990 through fiscal year 2007;
(ii) sales to Federal agencies of services,
both through non-competitive interagency
transfers and as a result of direct competition
from private-sector offerors during the period
fiscal year 1990 though fiscal year 2007;
(iii) performance as a subcontrator to a
Federal prime contractor or Federal
subcontractor at a higher tier beginning in
fiscal year 1990;
(iv) introduction of inmate-furnished
services into the commercial market, beginning
in the second quarter of fiscal year 1998;
(v) alternative inmate work opportunities,
beginning in fiscal year 2007, provided by
agreements with--
(I) non-profit organizations,
pursuant to section 4124a(b)(1) of
title 18, United States Code, as added
by section 10(b), and section 10(c);
(II) religious organizations,
pursuant to section 4124a(b)(2) of
title 18, United States Code;
(III) units of local governments,
school districts, or other special
purpose districts, pursuant to section
4124a(b)(3) of title 18, United States
Code;
(IV) work-based Employment
Preparation Programs for Federal
inmates, pursuant to section 4124b of
title 18, United States Code, as added
by section 11; or
(V) other means.
(3) Opportunity for public comment.--The Comptroller General
shall provide an opportunity for public comment on the proposed
scope and methodology for the assessment required by paragraph
(1), making such modifications in response to such comments as
he deems appropriate.
(4) Reports and recommendations.--
(A) In general.--The Comptroller General shall submit
to the Congress in accordance with this subsection two
interim reports and a final report of the assessment of
implementation of the new authority, including such
recommendations as the Comptroller General may deem
appropriate.
(B) Interim reports.--The two interim reports shall
encompass the assessment of the implementation of the
new authority--
(i) from the effective date of the authority
through the end of fiscal year 2007; and
(ii) from the effective date of the authority
through the end of fiscal year 2010.
(C) Final report.--The final report shall assess the
implementation of the new authority from the effective
date of the authority through the end of fiscal year
2013.
(D) Submission to congress.--The Comptroller General
shall submit the reports required by this paragraph
within 6 months after the end of the fiscal years
referred to in subparagraphs (B) and (C).
(d) Conforming Amendment.--Section 1761 of title 18, United States
Code, as amended by section 7, is further amended--
(1) by redesignating subsection (e) as subsection (f); and
(2) inserting after subsection (d) the following new
subsection:
``(e) This section shall not apply to products produced or services
furnished with inmate labor incidental to the work-based training
program authorized pursuant to section 4124b of this title.''.
SEC. 12. RESTRUCTURING THE BOARD OF DIRECTORS.
(a) In General.--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 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.''.
(b) Continued Governance.--The members of the Board of Directors
serving on the date of enactment of this Act, and the person selected
by them as Chairman, shall continue to exercise the duties and
responsibilities of the Board until the earlier of--
(1) the date on which the President has appointed at least 6
members of the Board and designated a new Chairman, pursuant to
section 4121 of title 18, United States Code (as added by
section 12(a) of this Act); or
(2) the date that is 365 days after the date of enactment of
this Act.
SEC. 13. PROVIDING ADDITIONAL MANAGEMENT FLEXIBILITY TO FEDERAL PRISON
INDUSTRIES 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. 14. TRANSITIONAL PERSONNEL MANAGEMENT AUTHORITY.
Any correctional officer or other employee of Federal Prison
Industries being paid with nonappropriated funds who would be separated
from service because of a reduction in the net income of Federal Prison
Industries during any fiscal year specified in section 4(e)(1) shall
be--
(1) eligible for appointment (or reappointment) in the
competitive service pursuant to title 5, United States Code;
(2) registered on a Bureau of Prisons reemployment priority
list; and
(3) given priority for any other position within the Bureau
of Prisons for which such employee is qualified.
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 allocation of the profits of the corporation, both
gross and net, to--
``(A) educational, training, release-preparation
opportunities for inmates;
``(B) opening new factories; and
``(C) improving the productivity and competitiveness
of existing factories;
``(5) 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
``(6) 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, 2004.''.
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.
(c) Secretary of Labor.--
(1) Schedule for regulatory action.--Upon receipt of a
request from the Federal Prison Industries Board of Directors,
pursuant to section 11(d)(2), to establish an inmate training
wage pursuant to section 14(a) of the Fair Labor Standards Act
of 1938 (29 U.S.C. 214(a)), the Secretary of Labor, in
consultation with the Attorney General, shall issue--
(A) an advanced notice of proposed rulemaking within
60 days;
(B) an interim regulation with concurrent request for
public comments within 180 days; and
(C) a final regulation within 365 days.
(2) Alternative to timely issuance.--In the event that the
Secretary of Labor fails to issue an interim inmate training
wage by the date required by paragraph (1)(B), the Federal
Prison Industries Board of Directors may prescribe an interim
inmate training wage, which shall be in an amount not less than
50 percent of the amount of the minimum wage prescribed
pursuant to section 6(a)(1) of such Act (29 U.S.C. 206(a)(1)).
(3) Continued use of interim inmate training wage.--
(A) The interim inmate training wage issued pursuant
to paragraph (1)(B) or prescribed under paragraph (2)
shall remain in effect until the effective date of a
final regulation, issued pursuant to paragraph (1)(C).
(B) An eligible entity having an approved agreement
with Federal Prison Industries pursuant to section
4124b of title 18, United States Code, may continue to
pay participating inmates at the wages prescribed in
the agreement for the duration of the agreement, if
those wages comply with the standards of the interim
inmate training wage issued pursuant to paragraph
(1)(B) or prescribed under paragraph (2).
(4) Existing agreements with nonconforming wages.--Any for-
profit business concern having an agreement with Federal Prison
Industries in effect on the date of enactment of this Act,
under which Federal inmates are furnishing services that are
being introduced into the commercial market, may continue to
pay wages at rates specified in the agreement for the duration
of the term of such agreement.
SEC. 18. RULES OF CONSTRUCTION.
(a) Agency Bid Protests.--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.
(b) Javits-Wagner-O'Day Act.--Nothing in this Act is intended to
modify the Javits-Wagner-O'Day Act (41 U.S.C. 46 et seq.).
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 17(a)(2), or after September 30, 2007,
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 inserting after the item relating to section 4124 the
following new items:
``4124a. Additional inmate work opportunities through public service
activities.
``4124b. Re-entry employment preparation through work-based training
and apprenticeship.''.
(4) by amending the item relating to section 4127 to read as
follows:
``4127. Federal Prison Industries report to Congress.'';
and
(5) by adding at the end the following new items:
``4130. Construction of provisions.
``4131. Definitions.''.
Purpose and Summary
H.R. 2965, the ``Federal Prison Industries Competition in
Contracting Act of 2006,'' amends title 18 to require Federal
Prison Industries Inc. (FPI) to compete for its contracts with
private sector firms and provides a five-year transition period
during which FPI adjusts to obtaining inmate work opportunities
through other than its mandatory source status. Additionally,
the legislation provides for inmate access to remedial and
other rehabilitative opportunities to better prepare inmates
for a successful return to society, including authorizing
alternative inmate work opportunities in support of non-profit
organizations and other public service programs.
H.R. 2965 incorporates H.R. 1829, the ``Federal Prison
Industries Competition in Contracting Act of 2003,'' which was
reported by the Committee by voice vote on July 25, 2003 and
passed the House on November 6, 2003 by a vote of 350-65. H.R.
1829 was similar to H.R. 1577, the ``Federal Prison Industries
Competition in Contracting Act of 2002,'' which was reported by
the Committee by voice vote on April 24, 2002.
As reported by the Committee, H.R. 2965, contains
additional provisions to ensure successful transition by FPI by
authorizing a new Work-Based Employment Preparation Program for
Federal inmates. Under this program, private-sector firms can
enter into agreements with FPI for the production of products
or the furnishing of services to be sold in the commercial
market, for which there is no domestic production. H.R. 2965 is
designed to facilitate a successful transition by FPI from
simply taking contracts pursuant to its status as a mandatory
source and winning contracts competitively. The bill includes a
provision that would allow FPI to be listed as providing goods
and services comparable to private-sector firms holding
contracts under the Multiple Award Schedules (MAS) Program
administered by the General Services Administration, although
Government corporations are ineligble to be MAS Program
contract holders.
During the five-year period of transition to competition,
H.R. 2965, permits the FPI Board of Directors to allow FPI to
take more than a reasonable share of the market for an
authorized product or service, if needed to maintain inmate
employment. To avoid a displacement of current inmate workers,
H.R. 2965 ``grandfathers'' all of FPI's current agreements with
private-sector firms that result in the introduction of inmate-
furnished services in the commercial market. H.R. 2965 also
grandfathers State or local prison industry programs to
complete their existing agreements.
H.R. 2965 reflects improvements adopted by the Committee
and by the House during the 107th and 108th Congresses. It
retains the extensive provisions of the Conyers-Frank Amendment
to H.R. 1577, which increases access to educational
opportunities, including remedial and modern ``hands-on''
vocational programs, which have been shown to be more effective
in reducing recidivism (33 percent) than traditional prison
inmate work programs (24 percent). The bill provides statutory
authorization for an inmate's ``gate fund'' to facilitate a
successful reentry into society. H.R. 2965 also reflects a
House Floor amendment to H.R. 1829 approved during the 108th
Congress, offered by Representative Waters and Representative
Millender-McDonald, that would increase the wages paid to FPI
workers, especially those within 24 months of release.
H.R. 2965 provides alternative inmate work opportunities,
and authorizes the production of products or the furnishing of
services for donation to community service organizations. It
authorizes FPI workers to perform work in support of non-profit
entities. In several States, State inmates construct components
for Habitat for Humanity using donated materials and
components, while learning the building trades. The opportunity
for alternative rehabilitative inmate work opportunities was
further expanded through a Floor amendment to H.R. 1829, during
the 108th Congress, which provided a structured program through
which Federal inmate workers may also perform public service
work for units of local government or special purpose districts
such as school districts. The Ohio Department of Corrections
has been able to use such public service work opportunities to
create more inmate jobs than is provided by its traditional
prison industries program. The new authorities contain
enforceable protections to avoid unfair competition with the
private sector or public employees.
During a legislative hearing on S. 346, the Senate
companion to H.R. 1829,\1\ Harley G. Lappin, Director of the
Federal Bureau of Prisons and FPI's Chief Executive Officer, in
response to a question from Senator Carl Levin, the sponsor of
S. 346, stated: ``We are in favor of relying less on mandatory
source, if not elimination * * * as long as we can pursue
products and services in other areas that allow us to keep
inmates productively occupied.'' H.R. 2965 provides those
alternative rehabilitative inmate work opportunities.
---------------------------------------------------------------------------
\1\ Hearing held on April 7, 2004 before the Subcommittee on
Financial Management, the Budget, and International Security of the
Senate Committee on Governmental Affairs.
---------------------------------------------------------------------------
Background and Need for the Legislation
A. HISTORY
The Federal Bureau of Prisons (BOP) is responsible for the
custody and care of more than 181,000 Federal offenders.
Approximately 85 percent of these inmates are confined in BOP
correctional facilities or detention centers. Prisoners who are
physically able to work must labor in some capacity five days a
week. The Federal Prison Industries (FPI), a government
corporation that operates the BOP's correctional program,
employs inmates in the Federal prison population to manufacture
goods for and provide services to Federal agencies. About 20
percent of inmates work in FPI factories. They generally work
in factory operations, such as metals, furniture, electronics,
textiles, and graphic arts. FPI work assignments pay from
23 cents to $1.15 per hour.
Although FPI is precluded from selling its goods in the
commercial market under 18 U.S.C. section 1761, the 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
businesses 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.
In fiscal year (FY) 2004, FPI operated 102 factories in 71
correctional facilities producing products and services in
approximately 150 broad classes under the trade name UNICOR. In
FY 1998, FPI had total sales of $534.2 million and employed
20,200 inmates (18.3 percent). In FY 2004, FPI employed 19,337
inmates, with a total sales of $802.7 million and a profit of
$120.4 million. Federal agencies are required by law, under 18
U.S.C. section 4124, to purchase FPI products if a product is
available that meets the agencies' requirements and does not
exceed current market prices. 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 source preference'' given FPI is viewed as
an exception to the Federal Acquisition Regulation standards
established for a ``fair and reasonable price.'' Thus, 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. Recent
amendments to Federal law allow agency contracting officers to
determine if a product offered by FPI is ``comparable to
products available from the private sector that best meet the
Department's needs in terms of price, quality, and time of
delivery.'' \2\ If a contracting officer finds that FPI's
offered product is not comparable, then the purchase is to be
made using competitive procedures. There is no need to obtain a
so-called ``waiver'' from FPI prior to making the purchase.
Section 2410n only requires that FPI be accorded the same right
to compete as any other eligible offeror, but does not grant to
FPI any preferential status in the competitive process.
---------------------------------------------------------------------------
\2\ 10 U.S.C. Sec. 2410(n).
---------------------------------------------------------------------------
FPI's 2004 Annual Report states that ``the number of
inmates participating in the FPI program has decreased by more
than 3,000 in the last three years.'' It has been asserted that
this is the result of the enactment and implementation of 10
U.S.C. Sec. 2410(n) and the extension of the effect of section
2410n to the Civilian Agencies of the Government.\3\ Under the
provision, Civilian Agency contracting officers can exercise
the same authorities in dealing with FPI and its mandatory
source status that DOD contracting officers have had available
since Section 2410(n) was added to the Title X of the United
States Code by Section 811 of Public Law 107-107, the National
Defense Authorization Act for Fiscal Year 2002.
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\3\ Section 637 of Title VI (General Provisions--Departments,
Agencies, and Corporations) of Division F (Transportation, Treasury,
and Independent Agencies Appropriations, 2004) of P.L. 108-7, the
Consolidated Appropriations Act, 2004.
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However, the question remains how FPI could have lost
inmate work opportunities when FPI's total sales and its
operating profits have increased substantially over the same
three fiscal years. FPI's sales were $678.7 million for Fiscal
Year 2002 and increased to $802.7 million in FY 2004.
Similarly, FPI profits increased from $71.4 million in FY 2002
to $120.4 million in FY 2004. Only one of the eight Business
Groups showed a decrease in revenues during the three years
cited. Due to purchases made by the Department of Defense, on a
non-competitive basis, in support of ongoing military
operations, two of FPI's Business Groups showed very
substantial increases. The sales of the Electronics Business
Group increased from $152.4 million in FY 2003 to $255.2
million in FY 2004. The sales of FPI Clothing and Textile
Business Group increased from $158.4 million in FY 2003 to
$184.5 million in FY 2004. Such expansions should have
generated substantial inmate jobs sufficient to offset any loss
of inmate work assignments associated with decrease in sales of
FPI's Office Furniture Business Group from $151.9 million in FY
2003 to $140.9 million in FY 2004. Historical data regarding
FPI sales, profits, and inmate employment suggest an
inconsistent correlation. For example, in FY 1998, FPI had
total sales of $534.2 million, with a loss of $2.4 million, and
yet was able to employ 20,200 inmates (18.3%), while it could
only employ 19,337 inmates in FY 2004 with total sales of
$802.7 million and a profit of $120.4 million.
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 owed to their
victims.
B. DETAILED SUMMARY
H.R. 2965 would fundamentally alter the 1934 authorizing
statute of Federal Prison Industries (``FPI''), requiring that
FPI compete for its business opportunities and no longer be
able to take them on a sole-source basis. Currently, all
Federal agencies must purchase products offered by FPI, which
is commonly referred to as FPI's ``mandatory source'' status.
FPI, rather than the buying agency, determines if FPI's offered
product, price, and delivery schedule meets the mission needs
of the buying agency.
This bill gradually phases out the exclusive right of FPI,
deemed ``mandatory source,'' to sell goods on an exclusively
non-competitive basis to federal agencies by October 1, 2011.
The bill also 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), a federal manager must obtain
FPI's unilateral permission to even solicit competitive offers
from the private sector in an effort to obtain ``best value''
for the taxpayer dollars entrusted to such manager's care.
To enable FPI to adjust to the requirement that it obtain
contracts on a competitive basis, H.R. 2965 provides FPI with a
five-year transitional period to adjust from its sole-source
dealings with its currently captive Federal agency customers.
Under this phase-out authority, Federal agencies could continue
to contract with FPI on a noncompetitive basis through October
1, 2011, subject to annually declining caps on the use of the
preferential contracting authority. During the first
transitional year, FY 2007, Federal agencies could make
noncompetitive awards to FPI in an amount not to exceed 90
percent of FPI's sales in FY 2002. The percentage decreases to
85 percent in FY 2008, 70 percent in FY 2009, 55 percent in FY
2010, and 40 percent in the final transitional year FY 2011.
During the phase-out period, FPI would be required to provide a
buying agency with a product that meets the buying agency's
needs, when needed, at a ``fair and reasonable price.''
To assure that the loss of a contract by FPI does not
endanger the safety of a Federal Correctional Institution
(FCI), H.R. 2965 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 FPI 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. 2965 does not alter a broad array of competitive
advantages that FPI enjoys with respect to private sector
firms. The great majority of inmates working for FPI will
continue to be paid at rates below the minimum wage. 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 compete for its Federal
agency sales, H.R. 2965 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's 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 the
Board has direct access to those comments. For the first time,
it extends the public participation and Board approval
procedures to expansion proposals relating to services as well
as expansion proposals relating to products.
The legislation also 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. 2965 replaces the current Board with an eleven member
Board: 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 importantly, H.R. 2965 requires
that the Board deliberate and make decisions in public rather
than in closed session as they do today.
The legislation includes provisions, added through the
Conyers-Frank Amendment adopted during the Committee's
consideration of H.R. 1577 during the 107th Congress, that
substantially expands alternative rehabilitative opportunities
for more Federal inmates to better prepare them for a
successful return to society. These provisions were included in
the bill that passed the House of Representatives in the 108th
Congress as well.
The legislation also seeks to provide increased
opportunities to participate in programs providing fundamental
remedial education as well as modern hands-on vocational and
apprenticeship training. Additionally, the legislation
authorizes alternative inmate work opportunities in support of
non-profit, community service organizations. For example, FPI
workers can provide services to build or recondition for
donation to nonprofit organizations to assist low income
individuals who would have difficulty purchasing these products
on their own. H.R. 2965 also includes a demonstration project
to test the cognitive abilities and perceptual skills of
Federal inmates to maximize rehabilitation efforts and reduce
recidivism. Additionally, the bill clarifies that no more than
$75 million will be authorized for additional educational,
training and release preparation opportunities. Finally, H.R.
2965 adds a new Section 13 ``Transitional Personnel Management
Authority'' to provide some relief to correctional officers,
whose staff positions are no longer funded from appropriations
to the Federal Bureau of Prisons, but through non-appropriated
funds, completely dependent upon revenue from FPI ``sales.''
This legislation includes provisions, which were developed
over a six-month period with representatives of the Attorney
General. These provisions are broadly supported by an array of
business organizations and labor unions participating in the
Federal Prison Industries Competition in Contracting Coalition.
H.R. 2965 creates a new Work-Based Employment Preparation
Program under which private-sector firms can enter into
agreements with FPI to prepare inmates for re-entry through
real-world work coupled with structured apprenticeship-like
training. The byproducts of this work-based training program,
including the production of products and the furnishing of
services, may then be sold in the commercial market. To avoid
unfair competition with non-inmate workers, and the firms that
employ them, the legislation restricts products of the Work-
Based Employment Training Program to products or services for
which there is no domestic production. To make the re-entry
preparation program more viable, the Secretary of Labor, in
consultation with the Attorney General, is directed to issue an
inmate training wage under the authority of the Fair Labor
Standards Act, which along with other similar special wage
rates would be less than the Federal Minimum Wage. H.R. 2965
includes a sense of Congress that the wage set by the Secretary
should be no less than 50 percent of the Federal minimum wage
under the Federal Labor Standards Act.
In addition to the re-entry preparation provided by the
Program, the Work-Based Employment Preparation Program would
benefit inmates in a number of ways. A participating firm would
be required to issue a reference for inmate successfully
completing the Program for a period of 24 months after release.
In addition, a participating inmate would be assured to be
provided with the documents, include a state-issued
identification card, needed to complete an Employment
Eligibility Verification (ICE Form I-9) required to get
private-sector employment. Inmates not participating in the
Program would benefit because funds from private-sector firms
participating in the Work-Based Employment Preparaton Program
would be allocated to other release preparation programs
authorized by H.R. 2965.
H.R. 2965, is designed to further facilitate a successful
transition by FPI from simply taking contracts pursuant to its
status as a mandatory source and winning contracts
competitively. The legislation includes a provision that would
allow FPI to be listed as providing goods and services
comparable to private-sector firms holding contracts under
Multiple Award Schedules (MAS) Program administered by the
General Services Administration, although Government
corporations are ineligible to be MAS Program contract holders.
This will enable FPI to keep its offering clearly in the view
of the Federal buyer.
H.R. 2965 requires Federal buyers to solicit offers from
FPI, an advantage not enjoyed by private-sector firms who must
find their Federal contract opportunities. The legislation also
requires that a solicitation shall be made to FPI first if the
product or service to be acquired would otherwise be furnished
by a contractor outside the United States. This provision was
added to the legislation at the request of Representative
Debbie Wasserman-Schultz (FL-20th).
The legislation, as amended, also gives FPI authority to
file agency bid protests, if FPI feels the Federal buyer has
not evaluated fairly FPI's offer. No other Government
corporation has this authority. FPI is authorized to perform a
Government contract won competitively although the FPI Board of
Directors has not authorized FPI to produce such a new product
or service. In addition the legislation provides for the
consideration of the unique costs of dealing with an inmate
population in offers for cost-reimbursement contracts by FPI.
Hearings
H.R. 2965 was introduced on June 17, 2005, and referred to
the Committee on the Judiciary Subcommittee on Crime,
Terrorism, and Homeland Security. A hearing on the legislation
was held by the Subcommittee on July 1, 2005. Testimony was
received from the following witnesses: The Honorable Peter
Hoekstra, Member of Congress, 2nd District, Michigan; Paul A.
Miller, Director of Governmental Affairs, Independent Office
Products and Furniture Dealers; Dr. Reginald A. Wilkinson, Ohio
Department of Rehabilitation and Corrections; and Phillip
Glover, President of Council of Prison Locals, American
Federation of Government Employees.
Committee Consideration
On July 12, 2006, the Committee met in open session and
ordered favorably reported the bill H.R. 2965, with an
amendment, by voice vote, a quorum being present.
Votes of the Committee
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee notes that the
following rollcall votes occurred during the committee's
consideration of H.R. 2965.
Representative Chabot offered an amendment in the nature of
a substitute, which would have replaced the text of the bill
with the establishment of a Commission to study the issue of
mandatory source and make recommendations with regard to
mandatory source and inmate work opportunities and
rehabilitative opportunities. This amendment was defeated by a
rollcall vote of 9-28.
Rollcall No. 1, Date: 7-12-06
Committee on the Judiciary
U.S. House of Representatives
109th Congress, 2nd Session
Subject: Chabot Amendment in the Nature of a Substitute to
H.R. 2965, which was not agreed to by a rollcall vote of 9 ayes
to 28 nays.
------------------------------------------------------------------------
Ayes Nays
------------------------------------------------------------------------
MR. HYDE.................................... X ............
MR. COBLE................................... ............ X
MR. SMITH................................... ............ X
MR. GALLEGLY................................ X ............
MR. GOODLATTE............................... X ............
MR. CHABOT.................................. X ............
MR. LUNGREN................................. X ............
MR. JENKINS................................. ............ X
MR. CANNON.................................. ............ X
MR. BACHUS.................................. X ............
MR. INGLIS.................................. ............ X
MR. HOSTETTLER.............................. ............ X
MR. GREEN................................... X ............
MR. KELLER.................................. ............ X
MR. ISSA.................................... ............ X
MR. FLAKE................................... ............ ............
MR. PENCE................................... ............ X
MR. FORBES.................................. ............ X
MR. KING.................................... ............ X
MR. FEENEY.................................. ............ X
MR. FRANKS.................................. ............ X
MR. GOHMERT................................. ............ X
MR. CONYERS................................. ............ X
MR. BERMAN.................................. ............ X
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.................................. ............ X
MR. WEINER.................................. ............ X
MR. SCHIFF.................................. ............ X
MS. SANCHEZ................................. ............ X
MR. VAN HOLLEN.............................. ............ X
MRS. WASSERMAN SCHULTZ...................... ............ X
MR. SENSENBRENNER, CHAIRMAN................. ............ X
---------------------------
TOTAL................................. 9 28
------------------------------------------------------------------------
Representative Scott offered an amendment which sought to
strike the section of the bill that prohibits Federal Prison
Industries and state prison industries from contracting for
work to provide services. This amendment was not agreed to by a
rollcall vote of 9-28.
Rollcall No. 2
Committee on the Judiciary
U.S. House of Representatives
109th Congress, 2nd Session
Subject: Scott Amendment (#2) to the Sensenbrenner
Amendment in the Nature of a Substitute to H.R. 2965, which was
not agreed to by a rollcall vote of 9 ayes to 28 nays.
------------------------------------------------------------------------
Ayes Nays
------------------------------------------------------------------------
MR. HYDE.................................... X ............
MR. COBLE................................... ............ X
MR. SMITH................................... ............ X
MR. GALLEGLY................................ X ............
MR. GOODLATTE............................... X ............
MR. CHABOT.................................. X ............
MR. LUNGREN................................. X ............
MR. JENKINS................................. ............ X
MR. CANNON.................................. X ............
MR. BACHUS.................................. ............ ............
MR. INGLIS.................................. ............ X
MR. HOSTETTLER.............................. ............ X
MR. GREEN................................... X ............
MR. KELLER.................................. ............ X
MR. ISSA.................................... ............ X
MR. FLAKE................................... ............ X
MR. PENCE................................... ............ X
MR. FORBES.................................. X ............
MR. KING.................................... ............ X
MR. FEENEY.................................. ............ X
MR. FRANKS.................................. ............ X
MR. GOHMERT................................. ............ X
MR. CONYERS................................. ............ X
MR. BERMAN.................................. ............ X
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.................................. ............ X
MR. WEINER.................................. ............ X
MR. SCHIFF.................................. ............ X
MS. SANCHEZ................................. ............ X
MR. VAN HOLLEN.............................. ............ X
MRS. WASSERMAN SCHULTZ...................... ............ X
MR. SENSENBRENNER, CHAIRMAN................. ............ X
---------------------------
TOTAL................................. 9 28
------------------------------------------------------------------------
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.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Committee Cost Estimate
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the Committee believes that
the bill will have no cost for fiscal year (FY) 2007, and that
the cost incurred in carrying out H.R. 2965 would be $444
million for FY 2008 to FY 2012. The Committee estimate of these
costs is as follows:
H.R. 2965 will require that Federal agencies make their
purchases from FPI on a competitive basis, when fully
implemented. It provides FPI a five-year transition period to
adjust to obtaining its contracts on a competitive basis rather
than simply taking them on a sole-source basis pursuant to its
current status as a mandatory source of supply. Most
importantly, the legislation provides alternative
rehabilitative and work opportunities for Federal inmates, as
fully described in the Committee's report.
H.R. 2965 contains the same levels of authorizations of
appropriations for the alternative rehabilitative programs and
alternative inmate work opportunities as those specified in
H.R. 1829, the bill in the 108th Congress. The Committee's cost
estimate is derived from the cost estimate by CBO relating to
those new programs and their associated authorizations of
appropriations.
The Committee estimates that implementing H.R. 2965 would
cost $444 million over the 2008-2012 period, subject to
appropriation of the necessary amounts. The bill does not
affect direct spending by FPI.
The legislation establishes a program that would authorize
inmates with FPI work assignments to produce products or
furnish services in support of the public service activities of
non-profit organizations and units of local government and
special purpose districts of such units of local government.
Further, it would authorize such inmate workers to produce
products or furnish services for donation by non-profit
organizations. It would authorize the appropriation of $5
million per fiscal year for fiscal years 2008 through 2012 for
implementing the new public service program and $7 million a
year for fiscal years 2008 through 2012 to carry out the new
donation program. Assuming the appropriation of the authorized
amounts, the Committee estimates that implementing these
programs would cost about $25 million and $35 million
respectively over the 2008-2012 period. All costs of the
donation program would be subject to appropriation action.
Section 10 would authorize the Attorney General to establish a
Federal Enhanced In-Prison Vocational Assessment and Training
Program in Federal institutions and would authorize the
appropriation of $75 million each year beginning in 2008 for
such program. Assuming the appropriation of the specified
amounts, the Committee estimates that implementing this new
program would cost $375 million over the 2008-2012 period.
Finally, the legislation provides $3 million per fiscal year
for fiscal year 2008 through 2010 to conduct a demonstration
program to assess cognitive abilities of Federal inmates to
maximize the effectiveness of remedial and vocational programs
made available to such inmates.
Due to the many safeguards that have been included in this
bill to help FPI make the five-year transition to competition,
FPI's many on-going multi-year requirments-type contracts with
Department of Defense contracts, and the ability of FPI to
partner with not-for-profits and private sector companies to
sell products and services not being domestically provided, the
Committee does not believe that the elimination of mandatory
source will result in a decline in inmate work opportunities
available through FPI. The Committee believes that the
additional vocational programs and the other opportunities
provided to train inmates and prevent ``inmate idleness'' will
prevent the asserted need to hire additional correctional
officers.
The Committee does not believe that H.R. 2965 contains an
intergovernmental mandate as defined in the Unfunded Mandates
Reform Act (UMRA). Section 7 of the legislation does have an
effect on State and local government operations of prison
industry programs. However, the Committee believes for the
reasons described below that this section does not create an
unfunded mandate.
Section 1761(a) of Title 18, United States Code, prohibits
the results of inmate labor from being sold in interstate or
foreign commerce. This prohibition applies equally to inmates
incarcerated by State and local governments and the Federal
Bureau of Prisons. Section 1761(c) of Title 18, first enacted
in 1979, provides the principal exception to the general
prohibition on the commercial sale of the results of inmate
labor contained in 18 U.S.C. 1761(a). It authorizes the Prison
Industry Enhancement (PIE) Program under which a State-
sponsored prison industry program may be authorized to sell in
the commercial market, either directly or through a private-
sector partner, products produced, or services furnished, by
inmates incarcerated by the State or one of its units of local
government. Each proposed PIE project must apply for PIE
certification from the Bureau of Justice Assistance (BJA) at
the Department of Justice.
Section 7 (Clarifying Amendment Relating to Services) of
H.R. 2965 makes explicit that the statutory prohibition on the
sale of the results of inmate labor in interstate commerce or
foreign commerce contained in 18 U.S.C. 1761(a) applies equally
to services as well as products. For 65 years, this statute was
consistently interpreted to prohibit the commercial sale of
inmate-furnished services as well as inmate-produced products-
only recently was it reinterpreted by the Office of Enforcement
Operations in DOJ's Criminal Division, which provides legal
services to FPI and the Bureau of Prisons. This ``new''
interpretation provided FPI and the prison industries of the
States and their local governments, authority to sell inmate
furnished services, either directly or in partnerships with
private sector firms, without meeting the standards for PIE
certification.
Section 7 merely clarifies that the statute's prohibition
against displacement of non-inmate workers to provide jobs for
inmate workers and the requirement to pay inmate workers
providing products or services to the commercial market creates
comparable to wages being paid non-inmate workers of private
firms providing the same types of products or services shall
apply and not the unilateral decision of the attorneys for the
Bureau of Prisons. Section 7 contains a ``grandfathering''
provision, which permits the completion of any existing
agreement with a private sector partner or gives a state
program making direct sales a 2-year grace period. The
provision makes explicit that after the expiration of the
specified ``grace periods,'' a State-sponsored prison industry
must comply with the requirements of the Prison Industry
Enhancement Act.
This bill contains no new private-sector mandates as
defined in the Unfunded Mandates Reform Act.
The Committee would finally note with substantial emphasis
that the use of competitive procurement techniques to obtain
goods and services, rather than relying on non-competitive
contract awards to a sole-source supplier, have consistently
been shown to result in procurement savings, through
expenditure avoidance, in the range between 10 and 30 percent.
This standard was first established through the substantial
work done by the U.S. General Accounting Office (GAO) during
the mid-1980s in response to the case of egregious spare-parts
overpricing confronted by the Department of Defense. The
benefits of competitive acquisition techniques have been
consistently validated through subsequent work by GAO and the
various Inspectors General (IG), most notably the Department of
Defense Inspector General. Some of this subsequent work
suggests that savings at the higher end of the range.
In FY 2004, FPI had sales of $802.7 million, up from $666.8
million in FY 2003. Such sales make FPI the 49th largest
contractor to the Federal Government. All of FPI sales to the
Federal agencies are on a basis other than full and open
competition.
The use of competitive procurement procedures by FPI's
currently captive Federal agency customers, required by the
bill, rather than sole-source contracting procedures Federal
agencies are now compelled to use when purchasing from FPI
pursuant to its mandatory source authority, should result in
savings. Based on FPI's sales in FY 2004 that means that
potential savings in acquisition costs in the range of $80
million to $240 million are possible.
Further, competitive procurement techniques have been
consistently shown to improve the quality of the products being
offered. H.R. 2965 provides agency acquisition managers with
the tools currently available to them in their dealings with
private-sector suppliers of products and services.
Competitive procurement techniques also improve the
timeliness of deliveries by vendors who know that their past
performance records will have a significant impact on the
likelihood of winning future business. Timely deliveries can
result in savings through cost avoidance. If a Federal agency
does not have to extend on a month-to-month basis the lease on
its current space because late deliveries preclude the
occupancy of its new leased space, the agency avoids wasting
taxpayer money for space that cannot be occupied.
Under the competitive contracting procedures required by
H.R. 2965, FPI cannot avoid the standard that must met by all
others to the Federal Government: the unambiguous obligation to
offer a product or service that the buying agency finds to
represent the ``best value'' for the taxpayer dollars being
spent and then to fully and timely perform its contractual
obligations.
The amount of FPI's sales to the various Federal agencies,
like the sales volume of any private sector contractor, will be
determined by the extent that FPI is able to provide a high
quality product, when needed, at the best price, all tested in
the crucible of competition.
If FPI's sales fall, it confirms that FPI's captive Federal
agency customers have been forced by FPI's mandatory source
status to accept products and contract performance at prices
that are not even an approximation of ``best value''. In
essence, these currently captive Federal agencies have been
involuntarily subsidizing FPI's operations with the taxpayer
dollars appropriated for the conduct of their missions on
behalf of the public.
Lastly, the Committee observes that some suggest that the
enactment of H.R. 2965 will result in reduced opportunities for
inmate employment, raising the specter of mass idleness within
Federal correctional institutions. In fact, the vast majority
of inmates have work assignments helping to maintain the
institutions in which they are incarcerated. They help prepare
meals, run laundries, maintain grounds, and help do electrical,
plumbing, carpentry repairs and other similar institutional
support work. Only the balance of inmate workers have work
assignments with FPI. Based upon FPI employment figures for FY
2004, approximately 85 percent of Federal inmates had
institutional work assignments. Approximately 15 percent of
Federal inmates had FPI work assignments. Only these inmates
could be affected by the enactment of H.R. 2965. Rather than
reducing the potential for inmate work assignments, H.R. 2965
authorizes additional types of alternative inmate work
opportunities, seeking to change the future direction of FPI's
attainment of its self-specified goal of trying to provide
employment for 25 percent of the inmate population. The
alternative inmate work opportunities authorized by H.R. 2965
will not subject non-inmate workers, and the firms that employ
them, to the unfair competition in the Federal procurement
market that now flows from each annual FPI expansion.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
2965 is intended to reform the Federal Prison Industries to
require FPI to compete for its contracts with private sector
firms and provide a five-year period during which FPI adjusts
to obtaining inmate work opportunities through other than its
mandatory source status. Additionally, the legislation is
intended to provide for inmate access to remedial and
vocational opportunities and other rehabilitative opportunities
to better prepare inmates for a successful return to society.
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, clause 18 of the
Constitution.
Section-by-Section Analysis and Discussion
Sec. 1. Short Title; Table of Contents
Subsection (a) of this section establishes the bill's
citation as the ``Federal Prison Industries Competition in
Contracting Act of 2006''.
Subsection (b) sets forth a table of contents of headings
of the various sections of the bill.
Sec. 2. Government-wide procurement policy relating to purchases from
Federal Prison Industries
Subsection (a) of revised section 4124 of title 18, United
States Code, makes explicit that a purchase of a product or
service from Federal Prison Industries, Inc. (FPI) by a Federal
agency shall be purchased through a procurement transaction
awarded pursuant to section 4124, as amended. Such procurements
shall be made on a competitive basis, except to the extent that
an other than competitive award is expressly authorized by
revised section 4124.
Under current section 4124(a), FPI has been accorded the
status of a mandatory source of supply under the Government-
wide Federal Acquisition Regulation (FAR) in FAR Subpart 8.6
(Acquisition from Federal Prison Industries, Inc.) (48 CFR
8.6). A Federal agency is required to acquire from FPI, on a
sole-source basis, any product of the type listed in FPI's
Schedule of Products published by FPI, which has adopted and
uses the trade name ``UNICOR.''
On March 26, 2004, FAR Subpart 8.6 was modified to reflect
the enactment of Section 637 of division F of the Consolidated
Appropriations Act of 2004 (Public Law 108-199), which required
that, for Fiscal Year 2004, the procedures of section 2410n of
title, United States Code, be given government-wide application
through the FAR. Section 637 of division H of the Consolidated
Appropriations Act of 2005 (Public Law 108-447) extended to all
government agencies procedures of Section 2410n for Fiscal Year
2005, and each subsequent fiscal year. In response, FAR Part
8.6 was again modified by an Interim Rule on April 5, 2005,
which extended the earlier modifications for Fiscal Year 2005,
and subsequent fiscal years. On January 3, 2006, a Final Rule
was issued, which left substantively unchanged the prior
Interim Rules.
FAR Part 8.6, as modified, requires a Federal agency buyer,
before making a purchase a product from FPI, which is listed in
FPI's Schedule of Products, to conduct appropriate market
research to determine if the product offered by FPI is
comparable in quality, timeliness of delivery, and price with
products available from private sector firms. If the agency
buyer determines that FPI's offered product is comparable, then
a purchase must be made from FPI or, pursuant to FAR 8.605
(Clearances), FPI's authorization, referred to by FPI as a
``waiver,'' must be obtained pursuant to FPI's procedures.
Under FPI' s current waiver procedures, the decision to grant a
waiver is made unilaterally by FPI.
If the agency buyer determines that FPI's product is not
comparable then the purchase must be made on a competitive
basis. An offer must be solicited from FPI. The requirement to
solicit an offer from FPI applies only to products which FPI
has been authorized to offer for sale by its Board of Directors
and which are listed in FPI's Schedule of Products. The
requirement to solicit an offer from FPI does not apply to any
service offered by FPI. FPI's authorizing statute does not
provide any explicit statutory authority to offer services to
any Federal agency. FPI, however, has for many years done so.
It follows that there is procurement preference accorded to
services offered by FPI. FPI, however, has asserted a
preferential status for the services it offers and agencies
have acquired them through interagency transfers, foreclosing
any opportunity for private sector firms to make an offer on
such agency needs for such services.
FAR Part 8.603 (Purchase priorities) states in paragraph
8.603(b)(2) that Federal buying agencies are to give FPI a
priority with respect to services needed by the buying. Such
direction to the Federal agency buyer is, in the Committee's
opinion, without basis under current law, and would be
expressly contrary to Section 4124, as amended. The
determination by the agency buyer regarding the comparability
of a product offered by FPI is a unilateral determination by
the contracting officer, not subject to appeal by FPI. Section
2410n specifically forecloses FPI from invoking the disputes
mechanism of current section 4124(c) of title 18, United States
Code. Prior to the modification of FAR 8.6, in response to the
previously cited statutory provisions, FPI, rather than the
buying agency, determined whether the FPI-offered product met
the mission needs of the buying agency. Similarly, FPI, rather
than the buying agency, determined if FPI's proposed delivery
schedule met the mission needs of the buying agency. Finally,
FPI, rather than the buying agency, determined the
reasonableness of FPI's price.
Revised section 4124 is intended to fundamentally change
the business relationship between a Federal agency and FPI and
realign that relationship to mirror the business relationship
that exists between a Federal agency and a private sector
supplier. The revised section 4124 eliminates any statutory
basis for either the ``clearance'' process of current FAR Part
8.6 or FPI's so-called ``waiver' process. As previously
mentioned, FPI's authorizing statute currently does not provide
explicit authority for FPI to sell services to the various
Federal agencies. The statute has been interpreted to authorize
FPI to offer services to Federal agencies. FPI's mandatory
source status does not apply, but it is clear that Federal
agencies typically obtain services from FPI after a non-
competitive negotiation on the basis that a purchase from FPI
is an interagency transfer rather than a procurement, and thus,
is not subject to the statutory and regulatory procedures for
the solicitation, award, and administration of procurement
contracts. The revised section 4124 makes explicit that
services as well as products obtained from FPI by a Federal
agency should be obtained through procurement contracts.
Subsection (b) of revised section 4124 addresses the
solicitation of offers from FPI by the various Federal agencies
and the subsequent award of a contract to FPI on either a
competitive or sole-source basis. Paragraph (1)(A) of
subsection (b) places a general affirmative responsibility on
the various Federal agencies to solicit an offer from FPI when
making a purchase, above the Micro-purchase Threshold, for any
product or service authorized by FPI's Board of Directors to be
offered for sale by FPI and listed in the UNICOR (FPI's trade
name) Schedule of Products. Subsection (c) contains a
limitation relating to solicitations that have been reserved
for competition among small business concerns. The Micro-
purchase Threshold is established in Section 32(g) of the
Office of Federal Procurement Policy Act (41 U.S.C. 428(g)) by
Section 4001 of Public Law 104-355, the ``Federal Acquisition
Streamlining Act of 1994''. It is currently set at $2,500.
Prospective contractors, whether the smallest of small
businesses, or a multinational corporation, are responsible for
identifying Federal contracting opportunities. New paragraph
(1)(A) is one of several reflected in revised section 4124, and
elsewhere in the bill, that accord FPI a limited preference
status in the procurement designed to facilitate FPI's ability
to compete for Federal Contracts. Paragraph (1)(B) of
subsection (b) makes explicit that the requirements of
subparagraph (A) apply when the Federal agency is intending to
acquire a product or service to meet the agency's need by
placing an order against one or more of the contracts
maintained by the General Services Administration (GSA) under
its Multiple Award Schedule (MAS) Program. Under the MAS
Program, GSA negotiates the terms and conditions of an array of
contracts to provide the Federal agencies with existing
contractual vehicles through with such agencies may obtain
easier access to commercial products and services offered by
commercial firms. As with any procurement, the buying agency
determines which offeror represents the ``best value'' for the
taxpayer dollars being expended.
Paragraph (1)(C) authorizes FPI, upon its request, to have
notices placed in the lists maintained by GSA of firms holding
MAS contracts, stating that FPI offers products or services
which FPI believes are comparable to the products or services
being offered by Schedule contract holders. The provision is
not intended to affect FPI's ineligibility to be evaluated for
award of a MAS Schedule contract, given its status as a wholly-
owned Government corporation, specifically prohibited from
making sales of products or services in the commercial market.
Although not a Schedule contract holder, the provision grants
FPI the preference of having its offerings listed in the same
manner and with the same frequency as a holder of a Schedule
contract. For example, if FPI is authorized to offer
institutional seating, FPI's notice would appear along with the
listing of the firms actually holding Schedule contracts. If
the category of institutional seating is further subdivided
within the listing, FPI should also be listed with the firms
holding a Schedule contract. GSA would be responsible for
monitoring the text of FPI's proposed notice to make certain
that FPI's notice does not, in any way, convey to Federal
agency buyers that FPI enjoys any preference for award over
commercial firms holding MAS contracts. FPI' s placement within
the list of Schedule contract holders would similarly be
determined by GSA. Such listings must be requested by FPI. The
provision places no affirmative responsibility on GSA to place
a listing in any Schedule without a request from FPI.
The authority to be listed, granted by paragraph (2)(C),
like the underlying solicitation requirement of Subparagraph
(A), only applies to a product or a service which FPI has been
authorized to offer for sale by its Board of Directors,
pursuant to 4122 of title 18, United States Code, as amended by
Section 3 (Public Participation Regarding Expansion Proposals
by Federal Prison Industries) of the bill. Paragraph (2) of
subsection (b) requires the use of competitive procedures for
the solicitation and award of a contract to FPI, unless the use
of other than competitive procedures is authorized pursuant to
Paragraph (3), Paragraph (7) of revised section 4124(b), or is
authorized pursuant to section 303(c)(7) of the Federal
Property and Administrative Services Act of 1949 (41 U.S.C.
253(c)(7)). The contract shall be awarded to FPI, only if the
contracting officer determines that FPI's offer represents the
``best value.'' Paragraph (3) of subsection (b) requires the
non-competitive negotiation of a contract award to FPI, if the
Attorney General makes a determination that: (i) there is no
reasonable expectation that FPI will win the contract award
competitively, and (ii) the inmate work opportunities provided
by the contract are necessary ``to prevent circumstances that
could reasonably be expected to significantly endanger the safe
and effective administration'' of the correctional facility at
which the contract is to be performed. Paragraph (4) of
subsection (b) makes explicit the authority of the contracting
officer to evaluate FPI's offer with respect to whether: (i)
FPI's offered product or service will meet the agency's
requirements; (ii) timely performance by FPI can reasonably be
expected; and (iii) the price offered by FPI represents a
current market price. These authorities of the contracting
officer apply equally whether the contract is for a product or
a service, or is to be awarded after a competition or on a
sole-source basis, unless the award is made pursuant to new
paragraph (3) of subsection (b).
Subsection (b)(4) is intended to make explicit that any
product or service offered by FPI must comply with the full
range of performance and design specifications that would be
demanded of a product or service furnished by a private sector
offeror. For example, FPI or its product or service would have
to comply with any pre-qualification requirements, such as a
QML (Qualified Manufacturers List) or QPL (Qualified Products
List). Similarly, design specifications (relating to quality of
materials used or manner of manufacture) or performance
specifications (relating to durability, serviceability, or
interoperability) would have to be met. Further, products
furnished by FPI should be required to conform to the same
commercial or governmental standards and pass the same tests
required of products furnished by private sector vendors. FPI's
status as a government corporation operating within the Federal
correctional system should not diminish, in any degree, its
responsibility to furnish to a Federal agency a quality product
or service that meets the agency's mission or program needs to
the same extent as a product or service furnished by a private
sector supplier.
Subsection (b)(4) is also intended to make explicit the
contracting officer's authority regarding the time of
performance being offered by FPI. Timely performance is
frequently as important as the quality of the product or
service being furnished. Under the new provision the
contracting officer may independently evaluate promises of
timely performance being made by FPI. Pursuant to Section 1091
of Public Law 103-355, the ``Federal Acquisition Streamlining
Act of 1994'', and implementing FAR coverage, a contracting
officer is now required to accord substantial weight to each
offeror's history of timely performance with respect to prior
contracts, especially for the product or service being offered,
when making the decision to award a new contract. Such an
evaluation on the basis of ``past performance'' will now fully
apply to FPI.
Subsection (b)(4) is further intended to make explicit the
contracting officer's authority to make an independent
determination as to whether the price being offered by FPI
represents a current market price. This applies equally with
regard to whether FPI is offering a product or service.
Currently, the term ``current market price'' is not defined in
FPI's authorizing statute or in the government-wide Federal
Acquisition Regulation (FAR) provisions pertaining to purchases
from FPI. Section 16(2) of the bill adds such a definition. The
proposed definition includes explicit recognition of the
contracting officer's authority to employ generally available
price analysis or cost analysis techniques to determine whether
FPI's offered price meets the standard.
The provisions of new section 4124, making explicit a
contracting officer's authority in dealing with FPI, are
intended to overturn a sweeping legal opinion by the Assistant
Attorney General for the Office of Legal Counsel, issued on
September 13, 1993. The opinion, Application of the Federal
Acquisition Regulations to Procurement from Federal Prison
Industries, unequivocally holds that FPI is not subject to the
Federal Acquisition Regulation (FAR), except the FAR provisions
relating to FPI as a mandatory source of supply. A federal
agency cannot compel FPI, like a private contractor, to meet
the agency's contractual terms and conditions regarding: (i)
quality of product delivered or services furnished; (ii) the
reasonableness of offered prices (or require the justification
of any price increases); or the delivery schedule for products
(or a schedule of performance relating to a service).
The legal opinion was issued at FPI's request to respond to
a 1991 report by the Inspector General of the Department of
Defense (DOD). In DOD Procurements from Federal Prison
Industries, (Audit Report No. 92-005; October 11, 1991),
overpricing, averaging 15 percent, was identified in 48 of 54
contracts (89 percent) awarded to FPI by various DOD buying
centers for electronic components and electrical cables during
a seven-year period, FY 1984 through FY 1990. Although the
contracts were awarded on a non-competitive basis, FPI did not
provide the current, accurate, and complete cost data or
pricing data needed by the contracting officer to determine
whether the Government is being charged a fair and reasonable
price. Further, FPI was found to lack the accounting systems to
generate reliable cost or pricing data. The DOD Inspector
General recommended that FPI refund the amounts found to be
over-pricing.
The legal opinion specifically held that ``DOD lacks the
necessary contracting freedom to make FPI accept the FAR's
constraints.'' ``* * * as a matter of law, it [FPI] retains
ultimate statutory authority to set its own prices, subject to
arbitration'' by a statutorily-specified board composed of the
President (delegated to the Director of the Office of
Management and Budget), the Attorney General, and the
Administrator of General Services, which according to the GAO
last met in the 1930s to arbitrate a performance dispute.
This subsection is also necessary because of FPI's current
unique pricing standard. Under current 4124(a) of FPI's
authorizing statute the price FPI charges its Federal agency
customers cannot exceed a ``current market price,'' however,
the statute does not define current market price. Rather FPI
operates on the basis of a 1931 Arbitration Board decision that
says that FPI's price meets the statutory ``current market
price'' standard, if the price FPI intends to charge its
Federal agency customer does not exceed the highest price at
which a comparable product was offered to the Government (not
actually purchased).
Those opposing modification to the FPI program frequently
assert that FPI is self-sustaining. It is true that FPI
receives little direct appropriations. It is not true, however,
that FPI is self-sustaining. Its status as a mandatory source
of supply, permit it to take the appropriations of its captive
Federal agency customers to the extent that FPI' s products do
not represent the best value for the taxpayer dollars being
spent with FPI by a Federal busying agency.
With regard to over-pricing, corroboration is provided by a
1991 report by the DOD Inspector General (IG) and GAO reports
in 1993 and 1998. On October 11, 1991, the DOD IG issued Audit
Report No. 92-005, DOD Procurements from Federal Prison
Industries, in response to a DOD IG HOTLINE allegation. The DOD
IG reviewed a sample of FPI contracts, over a seven-year period
(FY1984 to FY1990), to supply electronic and electrical cables
to DOD. The audit report found overpricing in 89 percent of the
contracts that averaged 15 percent. On October 5, 1998, the DOD
IG issued Audit Report No. 99-001, Defense Logistics Agency
Procurements from Federal Prison Industries, Inc. The DOD IG
reviewed 1,786 contracts awarded during FY96 and FY97 for
items, 87 percent of the textiles, for which DLA made purchases
from FPI and commercial sources. Even for textiles, items for
which FPI is especially competitive due to its lower labor
costs, FPI's prices were higher than commercial vendors in 42
percent of the contracts reviewed.
On July 7, 1993, GAO issued Report No. GGD 93-51R, entitled
FPI Systems Furniture. In accessing FPI pricing for systems
furniture, the GAO compared FPI's pricing with the prices
available from commercial vendors through the GSA's Multiple
Award Schedule (MAS) Program. FPI's prices were higher than the
offered prices of 9 of the 11 commercial systems furniture
vendors under the MAS Program. FPI's prices averaged 15 percent
higher than the prices of the three commercial vendors whose
sales in 1992 aggregated to 60 percent of the systems furniture
sales under the GSA MAS Program. Further, the three most
successful commercial suppliers were not simply ``low-end
product'' vendors. Similar findings regarding furniture
products as well as other products are reported in Federal
Prison Industries: Information on Product Pricing: (GAO/GGD-98-
151; August 24, 1998).
Paragraph (5) of Subsection (b) requires that the Attorney
General's determination made pursuant to subsection (b)(3) of
revised section 4124 must be supported by two specific
findings. First, the warden of the correctional institution
containing the factory scheduled to perform the work required
by the contract must determine that without the work the ``safe
and effective administration of such facility'' would be
``significantly endangered''. Second, FPI's chief operating
officer must provide substantiated findings regarding why FPI
``does not expect to win the contract on a competitive basis''.
The standard for the determination by the warden does not
even suggest, must less require, that the warden find that loss
of the contract at issue will result in loss of control of the
institution, as some have asserted. The enunciated standard is,
on its face, substantially lower. The warden's determination is
fully recognized as concurrently judgmental and prospective in
nature. The specific supporting findings contemplated by the
provision relate to the number of inmates with FPI work
assignments that would be affected by the loss of the contract
as a percentage of the total number of inmates with FPI work
assignments, and other factors affecting the good order of the
institution, such as the degree to which the institution is
overcrowded.
The requirements proposed in new Section 4124(b)(5) mirrors
the current requirements applicable to the Department of
Justice in order to make a sole-source purchase under the
authority of Section 303(c)(7) of the Federal Property and
Administrative Services Act of 1947 (41 U.S.C. 253(c)(7)),
which requires the Attorney General to make a personal
determination that a contract award cannot be made
competitively, but is ``necessary in the public interest''. A
sole-source purchase, pursuant to Section 303(c)(7), can only
be made by the Attorney General, on a non-delegable basis and
require a 30-day wait period after making the report to
Congress. The new authority is unencumbered by any delay
requirement and the responsibility may be delegated. The
Committee expects that, if the Attorney General's
responsibilities are delegated, they not be delegated to anyone
with FPI or the Federal Bureau of Prisons, or below the level
of an Assistant Deputy Attorney General.
Paragraph (6) of subsection (b) provides that the buying
activity may resume its generally applicable contract
solicitation and award procedures, if the Attorney General has
not authorized a sole source negotiation pursuant to new
Section 4124(b)(3) within 30 days. It is anticipated that any
notice of a contracting opportunity published prior to the
release of a solicitation for competitive offers will specify
that an offer is required to be solicited from FPI and that the
Attorney General is empowered to determine that the contracting
opportunity will be negotiated with FPI on a sole-source basis.
Paragraph (7) of subsection (b) recognizes a Federal agency is
authorized to make a purchase from FPI on a sole-source basis
if the buying agency determines that the needed product or
service is currently only available from FPI. Paragraph (8) of
subsection (b) authorizes the Federal Bureau of Prisons (BOP)
to make purchases from FPI on a non-competitive basis. This
recognizes a long-standing tradition of having inmates produce
as many of the products that they use daily. For example, FPI
produces uniforms worn by the inmates, eyeglasses, industrial
safety as well as prescription, plastic service with which the
inmates eat their meals, and the mattresses and bed linens upon
which they sleep.
The Committee considered, and soundly rejected, a proposal
to grant the Attorney General new blanket authority to make
sole-source purchases from FPI to meet any need of any element
of the Department of Justice. The various operating elements of
the Department of Justice represent a very substantial amount
of Federal business opportunities, which should not be randomly
foreclosed from bidding by private-sector firms, and their non-
inmate workers, whose tax dollars the Attorney General is
spending. According the most recent data available from the
Federal Procurement Data Center, the Department of Justice made
purchases of $ 4.047 billion in Fiscal Year 2004, making DOJ
the 6th largest purchaser among the Federal departments and
agencies.
Paragraph (9) of subsection (b) requires the various buying
agencies to first solicit an offer from FPI on a non-
competitive basis with respect to a product or service that
would otherwise likely be furnished by a contractor performing
work outside of the United States. There is no requirement that
the product or service has already been authorized for sale by
the FPI Board of Director and be listed in FPI's Schedule of
Products.
Subsection (c) of revised Section 4124 makes explicit that
a competitive offer timely received from FPI will always be
considered, unless the competition is restricted to small
businesses, a so-called ``small business set-aside'', conducted
pursuant to Section 15(a) of the Small Business Act (15 U.S.C.
644(a)). Subsection (c) of revised Section 4124 of title 18,
United States Code, was further amended by an amendment offered
by Rep. Darrel Issa (CA-49), which added a new paragraph (2) to
Subsection (c). New subsection (c)(2) would authorize FPI to
exclude from its offered price the costs specifically related
to producing the product or furnishing the service in a
correctional setting. This provision contemplates that FPI will
have developed and implemented, prior the utilization of this
authority, a cost accounting system that enable FPI to reliably
and accurately capture such costs and to allocate them to FPI'
s offered price in a consistent manner. This provision would
seem to be intended to make allowable the costs of contract
performance in a correctional setting. If such new cost
accounting system meets the standards of the Federal
Acquisition Regulation and the associated Cost Accounting
Standards, such system should also permit FPI to be able to
compete for Federal contracting opportunities that provide for
the reimbursement of the successful offeror's costs of
performance, rather than only those awarded on a unit price
basis.
Subsection (d) of revised Section 4124 codifies the
fundamental principal that FPI is required to perform its
contractual obligations to the same extent as any private
sector contractor. Attainment of FPI's prison management and
inmate-rehabilitation objectives do not authorize FPI to
furnish non-conforming products or services, perform late, or
unilaterally increase prices to the detriment of a Federal
agency customer who requires timely performance of the services
or delivery of products to perform its functions on behalf of
the public and to be good stewards of the taxpayers' money.
It is intended that the implementation of this provision
through the government-wide Federal Acquisition Regulation
(FAR) will afford to an agency contracting officer
administering a contract with FPI the same array of contract
administration techniques, authorities, and remedies available
when administering a contract with a private contractor.
Disputes between the administrative contracting officer and FPI
regarding whether FPI's performance conforms to the terms of
the contract would be subject only to appeal rights granted to
FPI pursuant to new subsection (e) of revised Section 4124.
FPI's Federal agency customers have had to bear the
additional costs of late deliveries by FPI as well as problems
with FPI furnishing to them products that failed to meet the
buying agency's stated requirements and FPI's promised
performance. Various studies have led credence to those
complaints. For example, on July 31, 1998, GAO issued Federal
Prison Industries: Delivery Performance Improving but Problems
Remain (GAO/GGD-98-118; June 30, 1998).
Further support for the need to empower the contracting
officer to require full contractual performance was included in
a particularly thorough 1992 report by the DOD Inspector
General, Quality Assurance Actions Resulting from Electronic
Component Screening, Report No. 92-099. During a review of DOD
quality assurance programs for accessing the quality of
electronic components and cables furnished to DOD during
FY1988-90, the DOD Inspector General found that among the top-
20 suppliers of electronic components, FPI ranked 8th in terms
of sales, but first in number of Product Quality Deficiency
Reports (PQDRs) identified, 106 out of 170. Among all the
contractors furnishing electronic components and cables to DOD
during the review period, the DOD IG identified the contractors
with most PQDRs. Three FPI factories were among the top-15 poor
performers, with 100 PQDRs out of 245, or 40.1% of the total.
The seriousness of these quality deficiencies found by the DOD
Inspector General is amplified when it is recognized that many
contracting officers don't even bother to cite FPI for quality
deficiencies, since, in practical terms, FPI determines the
validity of any quality delinquency report made against any FPI
product.
Subsection (e) of revised Section 4124 is intended to
eliminate the existing bias in favor of FPI in the resolution
of disputes arising during the negotiation of a sole-source
contract award to FPI pursuant to its mandatory source status
or during FPI's subsequent performance of the contract. Under
current 18 U.S.C Section 4124(b), and the FAR provisions
implementing the statute, any dispute relating to the ``price,
quality, character, or suitability of such [FPI] products''
shall be arbitrated by a board consisting of the President
(delegated to the Director of the Office of Management and
Budget), the Attorney General, and the Administrator of General
Services. ``Their decision shall be final and binding upon all
parties.'' This statutory disputes resolution provision
currently gives FPI total dominance over its Federal agency
customers, in practical business terms.
Prior to the statutorily-mandated modifications to FAR Part
8.6, previously described, a contracting officer had to obtain
FPI's permission through its ``waiver'' process, if the
contracting officer wanted to purchase an FPI-offered product
from an alternative source. To obtain a waiver from FPI, the
contracting officer had to prove to FPI's satisfaction that:
(i) the FPI-offered product does not meet the agency's
requirements; (ii) FPI's delivery schedule will not meet the
agency's mission requirements, or (iii) FPI's price does not
represent a ``current market price''. FPI's ``waiver process''
has no statutory basis. However, it discouraged contracting
officers from scrutinizing FPI's offers, since disagreements
were settled by FPI.
FPI is still accorded the similar superior position with
respect to disputes arising during the performance of the
contract. FPI's decision regarding the adequacy of its own
performance prevails, unless overturned by a decision of the
statutorily-specified arbitration board. Like the ``waiver
process'' during the contract-award phase, FPI's statutorily-
sanctioned dominance makes a contracting officer's demand for
timely performance or fully conforming products or services
futile. Except with respect to FPI, a contracting officer's
final decision regarding contract performance is otherwise
binding with respect to a private sector contractor.
Paragraph (1) of subsection (e) specifies that the decision
of a contracting officer regarding the award of a contract to
FPI or relating to the performance of a contract awarded to FPI
shall be final, unless the decision is overturned pursuant to
the procedures specified regarding the disposition of an appeal
made by FPI. The provision requires that any appeal by FPI
shall be through the appeal processes specified in Paragraphs
(2) and (3) of revised Section 4124(e). Paragraph (2) of
subsection (e) authorizes the FPI's Chief Operating Officer to
file an agency protest relating to the award of a contract to
FPI pursuant FAR Part 33.103 (Protests to the agency). In the
event of an adverse decision regard an agency bid protest, the
Assistant Attorney General for Administration may request a
reconsideration, de novo, by the head of the buying agency. The
decision on reconsideration shall be personally made by the
agency head. The decision on reconsideration by the agency head
is final.
As a Government-owned corporation, FPI does not have a
right to file a protest with the buying agency, with the bid
protest forum operated by the Government Accountability Office
(GAO), or with the Court of Federal Claims. To facilitate FPI's
ability to compete for its Federal contracts, a major
concession was made to FPI by granting it access to agency bid
protest forums established pursuant to FAR Part 33.103.
Requests that FPI be granted access to either the GAO or the
court were considered and rejected. Paragraph (3) of subsection
(e) gives FPI the right to an independent review of an adverse
decision by the agency contracting officer regarding the
adequacy of FPI's contract performance. FPI can have an adverse
decision decided through one of the various forms of
alternative disputes resolution provided in Subchapter IV of
Title V, United States Code, such as mediation or binding
arbitration by an independent neutral party. To assure the
impartiality, both parties must agree to the use of an
alternative disputes resolution technique.
Despite FPI's status as a Government-owned corporation, FPI
is also granted the right to appeal an adverse contracting
officer's decision relating to FPI's performance of a contract.
The Contract Disputes Act of 1978 (41 U.S.C. 601, et seq.) was
enacted to provide private-sector contractors with access to
impartial forums to resolve disputes relating to the
performance of a Federal contract. The Act authorizes the
creation of Boards of Contract Appeals. Certain departments and
agencies with very substantial procurement activities, such as
the Department of Defense and the General Services
Administration, maintain their own boards. Other agencies, with
very limited procurement activities, have entered into
agreements to have their contract performance disputes handled
by another agency's board. Given the intra-governmental
character of the dispute between FPI and one of its agency
customers, an appeal to the Court of Federal Claims is
expressly not made available to FPI. The decision of the
independent board of contract appeals is final, without further
right of appeal.
New subsection (f) of revised Section 4124 requires each
Federal agency and department reporting to the government-wide
Federal Procurement Data System (FPDS) to report all
acquisitions from FPI in the same manner it reports purchases
from private sector vendors in excess of the Simplified
Acquisition Threshold as defined in Section 4(11) of the Office
of Federal Procurement Policy Act (41 U.S.C. 403(11), currently
$100,000. Section 2901 of the ``Crime Control Act of 1990'',
Public Law 101-647, amended 18 U.S.C. 4124 to provide for the
reporting of all purchases from FPI. This provision is intended
to make explicit the reporting format and level of detail.
Until the 1990 amendment, there was no requirement that
purchases from FPI be reported to the FPDS by the various
Executive agencies because the purchases are considered to be
non-reportable ``interagency transfers'' rather than contracts.
The absence of full FPDS data on federal agency purchases from
FPI has made it virtually unworkable to make market-share
determinations relating to the FPI Board of Directors'
consideration of proposals to approve new products to be
offered for sale by FPI or to expand production of currently
approved products, pursuant to current Section 4122(b). The
validity of the market share analyses prepared by FPI staff are
generally questioned by the private vendor community because of
the inability to make reliable comparisons of agency purchases
from private-sector sources and those made from FPI.
Subsection (g) of revised Section 4124 requires FPI to
publish and keep current its UNICOR Schedule of Products, which
lists both the products and services it has been authorized by
its Board of Directors to offer for sale. FPI maintains an
extensive electronic bulletin board accessible through the
Internet which provides interactive information about its full
line of products and services. The bulletin board, like its
Schedule of Products and other paper-based promotional
materials, makes it explicit that the statutes require FPI be a
mandatory source for federal agencies needing any product which
FPI offers. It also explains the new procedures required by the
statutorily-mandated modifications to FAR Part 8.6.
Subsection (h) makes explicit that FPI's industrial
operations are subject to the same Federal occupational,
health, and safety standards as private-sector suppliers to the
Federal Government. It is the expectation of the Committee that
Federal Prison Industries will provide an appropriately safe
and environmentally compliant workplace for both its staff and
its inmate workers. To do less would be a major disservice to
both. The Committee is aware of recent reports concluding that
employees as well as inmate workers in one or more of the
recycling factories operated by Federal Prison Industries were
exposed to toxic or hazardous substances. The Committee is
advised that, due to a dispute in the findings of the initial
investigation, the Office of the Inspector General in the
Department of Justice is undertaking a separate, independent
investigation into FPI's electronics recycling program. Since
this facility in question was, according to FPI management,
adhering to standard FPI procedures relating to electronics
recycling, it is not unreasonable to be concerned that similar
problems might exist at FPI electronic recycling factories at
other correctional institutions. The Committee requests that
the Attorney General provide the Committee a briefing on the
scope and methodology of the planned inquiry by the Inspector
General, and periodic briefings on the status of the
investigation while it is being undertaken.
Sec. 3. Public Participation Regarding Expansion Proposals by Federal
Prison Industries
This section amends Section 4122(b) of title 18, United
States Code, relating to the procedures for approving the
addition of a new product or service offered for sale by
Federal Prison Industries (FPI) or expanded production or
performance of a currently approved product or service. The
amendments will: (i) conform the public participation processes
used by FPI's Board of Directors with those currently used by a
very similar federal preference program for purchases from
rehabilitative work centers employing the blind and severely
handicapped; (ii) clarify the analytical process to determine
if an adverse private-sector impact will result from the
approval of a proposal to add a new product or service to FPI's
product line or expand production or performance of a currently
authorized product or service; and (iii) distinguish more
clearly between the analytical and advisory responsibilities of
FPI's career staff and the decision-making authorities of the
Presidentially-appointed FPI Board of Directors.
Paragraph (4) of amended Section 4122(b) authorizes two
exceptions under which FPI may sell a new product or sell
quantities in excess of its authorized level without obtaining
prior approval from the FPI Board of Directors. They are two
further examples of modifications to H.R. 2965, as introduced,
designed to help FPI make a successful adjustment to obtaining
Federal contracts on a competitive basis.
Paragraph (4)(A) authorizes FPI to offer an new specific
product or a new specific service in order to respond to a
Federal agency's contract solicitation. If FPI is successful in
winning the contract, it must seek Board approval before being
able to respond to a subsequent solicitation. During the
pendency of the public and Board review process pursuant to
subparagraphs (5) through (9), FPI may perform any delivery
orders, work assignments, or any option affecting the contract
term, under, and within the scope, of the competitively awarded
contract. If the Board does not authorize the new specific
service or new specific item, FPI may only perform further
delivery orders work assignments, or option quantities during
the contract term in effect at the time the Board made its
decision.
Paragraph (4)(B) authorizes FPI to produce a specific
product or furnish a specific service in excess of the Board
authorized level of production for such product or service to
respond to an order under an existing contract, if the buying
agency has an exigent need for the products or service. In
determining whether exigent circumstances exist, the buying
agency must determine whether the circumstances would be
sufficient to justify the initial award of the contract
pursuant to law and Federal Acquisition Regulations, using
other than competitive procedures due to urgent and compelling
circumstances. Paragraph (5) of amended Section 4122(b) would
apply the public notice and comment requirements of the
Administrative Procedure Act (APA) (5 U.S.C. 533) to the
procedures used by FPI's Board of Directors when considering a
proposal to authorize FPI to produce a new specific product or
specific service or significantly expand the production or
performance of a currently approved product or service. These
APA requirements, the ``standard'' for public participation,
currently apply to an almost identical decision made by the
Committee for Purchase from the Blind and Other Severely
Handicapped, under a very similar procurement preference
program authorized by the Javits-Wagner-O'Day Act (41 U.S.C.
46-48c).
Paragraph (6) of amended Section 4122(b) specifies the
analytical requirements that must accompany an expansion
proposal from FPI's career management staff. Rather than being
conducted by FPI as is presently done, new section (b)(6) would
require that the impact analysis be conducted by an independent
entity, either an interagency team or a private contractor. The
interagency team would consist of representatives of the
Department of Labor, the Department of Commerce, and the
Federal Procurement Data Center, led by a representative of the
Small Business Administration. If the impact analysis is to be
conducted by a private contractor, the selection of the
contractor and the administration of the contract is to be
handled by one of the statutorily designated Federal agencies,
operating as an independent executive agent of the FPI Board of
Directors. To maintain independence, the participation of FPI
staff would be limited to submitting to the buying agency's
contracting officer a proposed statement of work for the
contractor.
Subparagraph (C) of revised Section 4122(b)(5) specifies
the matters to be considered in conducting the impact analysis
relating to the expansion proposed by FPI staff. Subparagraph
(D) of revised Section 4122(b)(5) sets forth limitations on the
authority of the FPI Board of Directors to authorize the
production of a new specific product or specific service (or
expand production of a currently approved product or service).
First, the provision would preclude the Board from
approving a proposal for a new specific product (or the
continued sale of a previously authorized product) unless the
product is a ``prison-made product''. Prison industry programs
are justified, in part, on the basis that they keep inmates
occupied through labor-intensive work and provide skills
training for inmates.
Second, the provision would preclude the Board from
approving a proposal for a new specific product (or to expand
production of a currently authorized product) with respect to
products that are ``import-sensitive products'' or which are
produced by an industry with chronic high unemployment.
``Import-sensitive products'' are designated by the Department
of Commerce for other statutory purposes. The Department of
Labor currently identifies such industries with chronic high
unemployment for other statutory purposes.
Third, the provision would preclude the Board from
approving a proposal to authorize inmates to perform a service
if such work would provide inmate workers with access to
personal or financial information about individual private
citizens. It would also preclude inmates from performing a
service that would give them access to 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, as well as
other utilities.
Fourth, the provision would preclude the Board from
authorizing FPI from furnishing construction services to
Federal agencies. The provision adopts the definition of
``construction'' that has been a part of the Government-wide
Federal Acquisition Regulation for more than two decades.
Construction services, almost always provided on the owner's
property, are manifestly unsuitable for performance by prison
labor. The provision would not preclude Federal prisoners from
continuing to provide maintenance, repair, or even minor
alteration of the prison facilities in which they are
incarcerated. Such work opportunities, when coupled with access
to apprenticeship-type training programs, can provide inmates
with greatly increased prospects for finding good-paying jobs
in the building trades, which is currently suffering from a
severe shortage of skilled workers.
Paragraph (7) of amended Section 4122(b) places in a
separate paragraph the ``outreach'' mechanisms specified in
Section 4122(b)(4) of current law, to emphasize that they are
``supplemental'' techniques to broaden participation by known
interested parties. Paragraph (8) of amended Section 4122(b)
requires the Board of Directors be furnished actual copies of
all of the comments received regarding a proposed expansion, in
addition to any summaries prepared by FPI's career management
staff. Paragraph (9) of amended Section 4122(b) specifies in a
separate paragraph the requirement in Section 4122(b)(4) of
current law that the FPI staff's final recommendation to FPI's
Board of Directors specify how the staff's initial production
proposal was modified in response to public comments received
and the supporting analysis for those modifications.
Paragraph (10) of amended Section 4122(b) requires the FPI
Board of Directors to consider and act upon a recommendation to
authorize new specific product or specific service, or increase
production of currently authorized products or services, or
take other actions relating to the governance of the
corporation at a meeting open to the public. Such meeting may
be closed if specified statutory standards can be met.
Paragraph (11) of amended Section 4122(b) empowers the FPI
Board of Directors to authorize the donation of products or
services. Given that such donation does not potentially subject
private sector firms to unfair competition. The Board need only
make a such a decision during an open meeting. A schedule
relating to the implementation of this authority is specified
in Section 10(b) of the bill. Paragraph (11)(C) empowers the
Board to authorize an expansion that could be expected to
result in FPI's share of the Federal market exceeding a
``reasonable share of the market,'' as that term is defined in
Section 17(6) of the bill. Such authority could be used if such
an expansion was specifically requested by the Federal agency
having a need for the product or service or is justified for
``other good cause.'' Two-thirds of the appointed members of
FPI's new eleven-member Board would have to support an
expansion above a reasonable share of the market justified on
the basis of ``other good cause.''
Sec. 4. Transitional mandatory source authority
Subsection (a) provides authority to the various Executive
agencies to make purchases from FPI on a non-competitive basis
during a five-year transition period. This transitional period
is intended to provide a period during which FPI adjusts to the
requirement that it obtain its business opportunities on a
competitive basis rather than a non-competitive basis through
its status as a mandatory source. Subsequent subsections
provide direction to the buying agencies regarding the use of
this special authority.
Subsection (b) makes clear that the buying agency, rather
than FPI, is empowered to determine that the product offered by
FPI meets the needs of the buying agency. The FPI-offered
product is expected to meet the same standards and
specifications as the buying agency would apply to a product
being offered by a private sector supplier. Similarly, the
buying agency is empowered to determine if timely performance
by FPI can be reasonably expected before entering into a sole-
source negotiation with FPI. Finally, the buying agency need
not make a sole-source award to FPI if the buying agency
determines that the award price will exceed a ``fair and
reasonable price.''
Subsection (c) makes it explicit that Subpart 15.4
(Contract Pricing) of the Government-wide Federal Acquisition
Regulation (FAR) shall guide the buying agency's determination
of ``fair and reasonable price.''
Subsection (d) makes it explicit that, despite the award of
the contract pursuant to the special sole-source authority, FPI
remains responsible for fully performing its contractual
obligations. Performance disputes between the buying agency and
FPI are to be resolved pursuant to 18 U.S.C. 4124(e)(3), as
added by section 2 of the bill.
Subsection (e) imposes a number of limitations on the
buying agencies' use of the transitional sole-source authority
during the five-year ``phase-out'' of FPI's mandatory source
status. In general, these limitations are intended to assure
that FPI's sales expand on the basis of competitive awards and
by taking only necessary advantage of the transitional sole-
source authority.
First, contract awards to FPI through use of the
transitional sole-source authority cannot exceed a specified
percentage of FPI's total sales during the base year of fiscal
year 2004. During the first year of the five-year transitional
period, fiscal year 2007, use of the special sole source
contracting authority cannot aggregate to more than 90 percent
of FPI's total sales during the base year. The percentage
decreases to 85 percent in fiscal year 2008, to 70 percent in
fiscal year 2009, to 55 percent in fiscal year 2010, and to 40
percent during the final transition year, fiscal year 2011.
Second, use of the special transitional sole-source
contract authority cannot result in sales by any of FPI's seven
business groups that are in excess of the total sales for each
such business group during the base year. Similarly, the use of
the transitional authority is prohibited from increasing FPI's
sales for a specific product over its total sales of such
product during the base year. Since FPI, rather than the buying
agency, will have access to information regarding the dollar
value of various awards made to FPI pursuant to the
transitional authority, the implementing FAR provision relating
to this provision should empower the buying agency's
contracting officer to obtain an appropriate compliance
certification from FPI prior to contract award.
In the event of change in the design specification for a
specific product, the costs associated with the implementation
of such specification change by FPI shall not be considered for
the purposes of computing FPI sales with respect to the
specific product or for the business group selling such
product. FPI's compliance certification, specified in the
implementing FAR provisions, should require FPI to identify the
source of the design specification change and its calculation
of the associated costs.
Subsection (g) specifies this special five-year transition
sole-source authority may not be used by a buying agency on or
after October 1, 2011. The provision also makes clear that its
use is contingent upon issuance of the essential implementing
FAR provisions, pursuant to section 18 of the bill.
Subsection (h) defines terms relating to this section.
Subsection (i) requires the Attorney General to monitor
FPI's transition from obtaining work through sole-source awards
pursuant to its mandatory source status to obtaining them on a
competitive basis. Specifically, the subsection requires the
Attorney General to make a determination regarding whether the
limitations on the use of the special transitional sole-source
authority has resulted, or is likely to result, in a
substantial reduction in inmate work opportunities with FPI and
``whether such reductions, if any, present a significant risk
of adverse effects on safe prison operations or public
safety.'' Such determination and finding is to be made
annually, 60 days prior to the end of each of the five fiscal
years of the transition period. For the purposes of this
section, the term ``public safety'' means the anticipated
impact that any identified inmate idleness may be reasonably
expected to have on the safety of the immediate community in
which the affected federal correctional institution is located.
If the Attorney General finds a significant risk of adverse
effects on either safe prison management or public safety, the
Attorney General is required to advise Congress. In advising
Congress, the Attorney General is required to make
recommendations for additional funding to provide additional
alternative inmate rehabilitative opportunities and additional
correctional staffing, as may be appropriate.
Subsection (j) adds a new section, Products of Federal
Prison Industries: Procedural Requirements, to the Title III of
the Federal Property and Administrative Services Act of 1949
that mirrors the provision of the same name appearing at
Section 2410n of title 10, United States Code. The objective is
to provide conformity in both primary sources of statutory
direction relating to contracting.
Sec. 5. Authority to perform as a Federal subcontractor
Subsection (a) of this section provides, for the first
time, explicit statutory authority for FPI to perform as a
subcontractor or a supplier to a private-sector firm performing
a Federal contract as a prime contractor or a subcontractor at
any tier. This provision was included to provide FPI a clear
path to the inmate work opportunities that are available from
producing products for the Federal subcontract market.
FPI's authorizing statute is silent with respect to its
authority to act as a subcontractor or supplier. At various
times during the 1990s, proposals were advanced to grant FPI
specific statutory authority to operate as a subcontractor.
Section 4122(a) only authorizes FPI ``to produce commodities
for consumption in such institutions or for sale to the
departments of agencies of the United States, but not for sale
to the public in competition with private enterprise.''
FPI currently acts as a subcontractor to a number of major
prime contractors (or major subsystem subcontractors)
furnishing major systems and other equipment to the Department
of Defense. FPI also provides inmate-furnished services to
these firms.
At various times, FPI has claimed an inherent authority to
operate as a subcontractor derived from 18 U.S.C. 4124(a). When
challenged by the Department of Justice Inspector General, FPI
cited the authority granted by a World War II-era Attorney
General's opinion (40 Op. Atty Gen. 207 (1942)). Entitled
``Procurement of War Materials from Federal and State
Prisons.'' The opinion was issued on May 6, 1942 by Attorney
General Francis Biddle in response to an inquiry from President
Franklin D. Roosevelt regarding ``whether industrial facilities
at the prisons of the United States can be utilized in the
production of essential war materials.'' The opinion was issued
despite the prohibition of the Hawes-Cooper Act of 1920,
relating to selling convict-made goods in interstate or foreign
commerce. The Hawes-Cooper Act is now codified at Sections 1761
and 1762 of Title 18, United States Code. Given the critical
need to maximize the Nation's total productive capacity for the
War effort, Attorney General Biddle found that FPI, and the
various States prison industry programs, could operate as a
subcontractor. Subsequently, on June 20, 1942, Assistant
Solicitor General Oscar Cox wrote to the Chairman of the War
Production Board further clarifying the authority granted by
the opinion of the Attorney General. In pertinent part, Mr. Cox
found that a prison industry program could function as a
subcontractor or supplier only if ``there is no other source of
supply readily available to him [the Government prime
contractor] on the open [commercial] market.
Given long-prevailing competitive market conditions among
subcontractors on Federal contracts, it is highly unlikely that
this explicit limitation on the World War II authority could be
met today. Further, the authority cited by FPI was based on the
Nation's exigent productions needs during World War II and
conditions have changed since.
Subsection (b) imposes two limitations on FPI's authority
to perform as a subcontractor. Under the first limitation, FPI
may not perform as a subcontractor or supplier at any tier if
the product or service is to be acquired by a Federal agency
from a workshop for the blind or other severely handicapped
pursuant to the Javits-Wagner-O'Day (JWOD) Act. Under section 3
of the JWOD Act, non-profit organizations operating workshops
employing the blind or other severely handicapped are accorded
a preferential status in selling products and furnishing
services to the various Federal agencies. The Committee is
concerned that FPI could use subcontracting with these non-
profit organizations to expand its sales, while transferring
work opportunities from the blind and handicapped workshops to
FPI's factories.
This concern is substantially compounded by the fact that
the Chairman of the Committee for the Purchase from the Blind
and Severely Handicapped, which administers the program
authorized by the JWOD Act, is currently the Chief Operating
Officer of Federal Prison Industries. An amendment to make such
an arrangement unlawful was contemplated, but jurisdiction over
the JWOD Act is with the Committee on Government Reform.
Under the second limitation, FPI may not perform as a
subcontractor or supplier at any tier if the product to be
acquired by the Federal agency is subject to Section 2533a of
title 10, United States Code. Section 2533a is the codification
of the so-called ``Berry Amendment,'' a provision annually
appearing in the appropriations bill for the Department of
Defense. The Berry Amendment requires that certain items of
procured by the Department of Defense (DOD) must be made in
America. This provision of H.R. 2965, as amended, affects
military clothing and textiles.
The requirements of the Berry Amendment preserve the
remaining American companies, the majority of which are small
businesses, that comprise the industrial base available to meet
DOD requirements for a broad array of military clothing and
textile-based equipment. Military clothing and textiles remains
among the one of the largest ``business groups'' within FPI. In
FY 2004, it was the second largest business group. FPI is among
the major suppliers to DOD, with sales larger than the next
five largest suppliers, combined.
The concern is that subcontracting by FPI in the military
clothing and textile market will further erode the domestic
industrial base outside of Federal prisons. A recent incident
confirmed these concerns regarding FPI acting as a
subcontractor within the military clothing and textiles supply
base. FPI urged an American company with no production
facilities within the United States to bid on a DOD requirement
and then subcontract 100 percent of the work to FPI.
Technically, this arrangement met the requirements of the Berry
Amendment. The arrangement, however, resulting in the closing
of a Pennsylvania production facility of an Ohio firm who had
been supplying uniforms to the Government since the Civil War.
To expand work opportunities for Federal inmates, FPI's scheme
diminished further the industrial base for military clothing
and textiles and caused 120 experienced military clothing
workers to lose their jobs, in a region in Pennsylvania where
few other available job existed.
Subsection (c) makes explicit that the exercise of the
authority to perform as a subcontractor or supplier on a
Federal contract 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 18 U.S.C. 1761(a). A Federal contractor or
subcontractor using FPI in performance of a Federal contract to
furnish a commercial product is required to have in place
management procedures to prevent introducing an inmate-produced
product into the commercial market.
Subsection (d) makes explicit that the use of FPI as a
subcontractor or supplier is to be a voluntary business
decision of the Federal prime contractor or subcontractor. It
explicitly prohibits imposing on a Federal prime contractor or
subcontractor, directly or indirectly, by solicitation
requirements, contract modifications, or other means, a
requirement to make use of FPI, or its products or services in
the performance of the Government contract.
Sec. 6. Inmate Wages and Deductions
This section adds a new paragraph (12) to Section 4122(b)
of Title 18, United States Code. New Section 4122(b)(12)(A)
provides explicit statutory authority for the FPI Board of
Directors to prescribe the rates of hourly wages to be paid
inmates with FPI work assignments. Similarly, it makes explicit
the authority of the Director of the Federal Bureau of Prisons
to specify the hourly wages for inmates with institutional and
other work assignments other than with FPI.
New Section 4122(b)(12)(A) also requires that inmates with
work assignments in FPI be paid at the rate of $2.50 per hour
during the inmate's final 24 months of incarceration. This
provision was added to the bill during the House consideration
of H.R 1829 (108th Cong.) by an amendment offered by Rep.
Maxine Waters (CA-35), which was combined with a related
amendment offered by Rep. Juanita Millender-McDonald (CA-37).
New Section 4122(b)(12)(B) requires that the wage rates for
inmates with work assignments in FPI be reviewed and considered
for increase on not less than a biannual basis.
New Section 4122(b)(12)(C) requires the FPI Board of
Directors to increase, by September 30, 2008, the maximum wage
payable to an inmate with a work assignment in FPI to 50
percent of the Federal Minimum Wage, and to increase that
maximum wage to 100 percent of the Federal Minimum Wage by
September 30, 2013. The purpose in increasing the maximum FPI
inmate wage is to motivate the inmate work to be a quality
performer, just as higher wages are designed to motivate
workers in non-correctional work environments.
New Section 4122(b)(12)(D) requires that inmate wages be
paid in the name of the inmate and establishes a statutory
priority for deductions that are to be taken from wages earned.
Enhanced priority is given to deductions taken for the payment
of restitution to the victims of the inmate's crime. An
increased allocation rate for this purpose is specified in
furtherance of the concepts of restorative justice.
The provision also grants explicit statutory authority to
establish a savings account, often referred to as a ``gate
fund'', payable to the inmate upon release. Finally, the
provision also contemplates that the inmate may have deductions
from wages taken for the purpose of maintaining contact with
the inmate's family during the term of incarceration. Travel
and even telephone costs can be substantial, especially if the
inmate is incarcerated a long distance from where the inmate's
family resides.
Sec. 7. Clarifying Amendment Relating to Services
Subsection (a) of this section makes it explicit that the
statutory prohibition on the sale of the results of inmate
labor in interstate commerce or foreign commerce, codified at
18 U.S.C. 1761(a), applies equally to services as well as
products. For 65 years, this statute was consistently
interpreted to prohibit the commercial sale of the results of
inmate labor, including both products and services. Section
1761(a) does not include the word ``service'', which is not
surprising given that a broad service economy did not exist at
the time of enactment in the 1930s. However, it seems
implausible that a provision, enacted during the Great
Depression, to protect workers against unfair competition from
low-cost prison labor would have been consciously intended to
afford no protection to workers providing services in the
commercial market.
A statutory exception to the broad statutory prohibition
was provided in 1979 when Congress established the Prison
Industry Enhancement (PIE) Program, codified at 18 U.S.C.
1761(c). Under the PIE Program, a state and local prison
industry program may be authorized to sell prison-made products
and inmate-furnished services, after receiving approval,
commonly referred to as ``certification,'' from the Bureau of
Justice Assistance within the Department of Justice (DOJ), for
each individual PIE project.
FPI sought and obtained a new interpretation of 18 U.S.C.
1761(a) in February 1998. Reversing more than 65 years of
practice, it found no statutory prohibition on the commercial
sale of inmate-furnished services. It is important to note that
the new interpretation did not come in the usual form of a
legal opinion from DOJ's Office of Legal Counsel. Rather, it
was made in the form of a legal memorandum from a special
counsel in the Office of Enforcement Operations in DOJ's
Criminal Division, which provides legal services to FPI and its
parent, the Federal Bureau of Prisons.
This interpretation provided FPI, and the prison industries
of the States and their local governments, authority to sell
inmate-furnished services in the commercial market, either
directly or in partnerships with private sector firms, without
meeting the standards for PIE certification. Among the
restrictions associated with the PIE Program, that could now be
bypassed, was the prohibition against displacement of non-
inmate workers to provide jobs for inmate workers. Similarly,
there would no longer be any requirement to pay inmate workers
providing services to the commercial market at rates comparable
to wages being paid non-inmate workers of private firms
providing the same types of services. Without the protection of
a comparable wage requirement, with a floor of the Minimum Wage
set pursuant to the Fair Labor Standards Act, private sector
firms using non-inmate workers who are paid at market driven
wages faced unfair competition from firms using inmate workers
who are paid inmate wages.
Subsection (b) of this section provides a
``grandfathering'' provision, to provide relief to State prison
industry programs that reasonably relied upon the new
interpretation of 18 U.S.C. 1761(a) by DOJ and began offering
inmate-furnished services to the commercial market, either
directly or in partnership with a private firm. First, the
provision permits the completion of an agreement between a
private sector firm and a state or local prison industry
program, for whatever term of years is specified in their
agreement as of October 1, 2004. Similarly, it permits a state
program making direct sales to continue until September 30,
2008, after which the activity can only be operated pursuant to
a PIE Program certification.
Subsection (d) of this section permits the completion of
any agreement, in effect on the date of enactment, between a
private for-profit business and FPI under which Federal inmates
are furnishing services which are being introduced into the
commercial market.
Subsection (e) of this section further amends Section 1761
by adding a new subsection. This subsection would explicitly
permit the recovered scrap, which is recovered by certain
recycling programs operated by state or local departments of
correction, to be sold in the commercial market. BIFMA, the
Business and Institutional Furniture Manufacturers Association,
has a program with the Michigan Department of Corrections in
which inmates disassemble, scrap, and recycle office furniture
products for landfill avoidance. BIFMA is seeking to foster
similar programs in other States. This provision will help with
that effort.
The Committee believes that recycling programs such as
those operated by Federal Prison Industries can simultaneously
teach marketable skills to Federal inmates and provide the
environmentally desired outcome of reducing the disposal in
landfills of hazardous materials. Nothing in H.R. 2965, as
amended, is intended to restrict the continuation of FPI's
recycling activities for Federal agencies. Subsection (e)
guarantees that any inmate work program operated by a State or
local jurisdiction of a State may continue to provide inmate
labor to furnish services for sale in the commercial market, if
such program has obtained certification pursuant to the PIE
Program.
Sec. 8. Conforming Amendment
This section 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.
Sec. 9. Rules of Construction Relating to Chapter 307
This section adds a new Section 4130 to Chapter 307
(Employment, Prisons and Prisoners), which establishes a series
of rules of construction for such chapter. First, it would make
it clear that no inmate has a right to a work assignment with
FPI or the payment of any particular wage, except as provided
by law or regulation. Next, the provision makes explicit that
no inmate worker has the status of an employee for the purposes
of any law or regulation. Finally, the new section 18 U.S.C.
4130 makes explicit that nothing in Chapter 307 establishes any
cause of action against the United States by or on behalf of
any inmate.
Sec. 10. Providing Additional Rehabilitative Opportunities for Inmates
Subsection (a)(1) of this section reflects the important
Enhanced in-Prison Educational and Vocational Assessment and
Training Program for Federal inmates, which were added by an
amendment offered by Rep. Conyers of Michigan and Rep. Frank of
Massachusetts during the Committee's consideration of H.R. 1577
during the 107th Congress. It affords improved inmate access to
educational opportunities, both remedial and modern ``hands-
on'' vocational programs, and other release-preparation
programs, which will improve inmates prospects of making a
successful return to society. This Conyers-Frank amendment
began the process of modifying the bill to expand Federal
inmates' access to alternative rehabilitative opportunities and
alternative work opportunities.
The value of such programs in reducing recidivism has been
demonstrated by a Department of Justice study. In fact, it
shows that participation in such educational program reduces
recidivism more than participation in prison work programs.
Beginning in 1983, BOP has conducted a on-going study of the
effects of vocational training and inmate work experiences on
post-release success. The most recent analysis of the Post
Release Employment Project (PREP) shows that work experiences
have a positive effect on post-release employment success,
resulting in a 24% reduction in recidivism. What is
infrequently cited is that same PREP data showed that
vocational and remedial education programs have even a more
positive effect on reducing recidivism, resulting in a 33
percent reduction in recidivism.
H.R. 2965, tries to provide more opportunities that are
better able to reduce recidivism.
Subsection (a)(2) requires a comprehensive program
encompassing all of the following: (i) in-prison assessments of
an inmates needs and aptitudes; (ii) a broad range of
educational opportunities; (iii) vocational and apprenticeship
training; and (iv) comprehensive release-readiness preparation.
Subsection (a)(3) authorizes $75 million per fiscal year to
administer the program. It expresses a sense of Congress that
FPI should also use profits toward the support of such
programs.
Section 10 of the Sensenbrenner-Conyers amendment in the
nature of a substitute to H.R. 2965, as introduced, was further
amended by adding a new subsection (a)(4), which was added by
an amendment offered by Rep. Maxine Waters (CA-35). New Section
10(a)(4) expresses a sense of the Congress that in promulgating
the rate for a special inmate training wage under section 14(a)
of the Fair Labor Standards Act, pursuant to paragraph (a)(1),
the Secretary of Labor should promulgate such special inmate
training wage at a rate that is not less than 50 percent of the
minimum wage required by section 6(a) of such Act.
Subsection (b)(1) of this section adds a new section 4124a
to Chapter 307 of title 18, United States Code, authorizing a
program providing additional inmate work opportunities through
public service activities.
Subsection (a) of new Section 4124a authorizes inmates with
assignments within the prisons to perform work in support of
the public service activities of non-profit organizations,
including religious organizations, and units of local
government and special purpose districts of such governments,
such as school districts.
The program is based upon a program currently being
conducted by the Ohio Department of Corrections. An assessment
of that program conducted by the Enterprise Prison Institute
showed that the Ohio Department of Corrections was able to
double its inmate work opportunities through such a program.
The Enterprise Prison Institute is a group dedicated to
bringing alternative work opportunities to Federal, State, and
local correctional systems through partnerships with private-
sector companies. The Institute's Board Chairman is former
Attorney General Edwin Meese.
Subsection (b) of new Section 4124a specifies the types of
entities eligible to make use of the labor of Federal inmates
in furtherance of their public service activities.
Subsection (c) of new Section 4124a creates the new
position of the Inmate Work Training Administrator. The
function of this new position is to identify alternative inmate
work opportunities by facilitating the types of programs
authorized by new Section 4124a and by new Section 4124b of
title 18, United States Code, which is subsequently added by
Section 11 of the bill. At the request of the Department of
Justice, the FPI's Chief Executive Officer will designate the
Inmate Work Training Administrator, with the approval of the
FPI Board of Directors. FPI's Chief Operating Officer will
provide day-to-day supervision of the Inmate Work Training
Administrator.
H.R. 2965, as introduced, contemplated much greater
autonomy for the Inmate Work Training Administrator. Such
autonomy was strongly recommended by the Enterprise Prison
Institute. By giving the Administrator the authority derived
from direct appointment by the FPI Board of Directors and
working with, rather than for, FPI's Chief Operating Officer,
the Enterprise Prison Project believed that the selected Inmate
Work Training Administrator would be better equipped and more
motivated to pursue, with greater entrepreneurial spirit, the
contemplated alternative inmate work opportunities. Today, the
FPI Program is essentially managed at all levels by individuals
drawn from the ranks of correctional officers, too frequently
lacking any business background.
Subsection (d) of new Section 4124a prescribes the matters
that must be addressed a proposed agreement to conduct an
alternative inmate work program under the new authority.
Subsection (e) of new Section 4124a prescribes the
representations that must accompany any proposed agreement. The
representations are in the form of written certifications from
the chief executive officer of the entity that will be making
use of the inmate workers.
Subsection (e)(1) of new Section 4124 relates to
representations regarding the type of work the inmates will be
performing for the non-profit organization, local government or
special purpose district. The work must be limited to providing
direct support to the public service activities of the entity.
The subsection specifically prohibits inmates from performing
work for a for-profit business subsidiary of a non-profit
organization, since this would likely result in the
introduction of inmate-furnished services into the commercial
market. It is specifically contemplated that inmates would do
work, such as refurbishing items donated to a non-profit
organization, for example, furniture or automobiles, which the
non-profit organization would then sell to raise funds to
support its public service activities. With respect to the two
cited examples, inmates could learn skills that would strongly
enhance their prospects for post-release employment, if such
work for a non-profit organization were coupled with a
structured apprenticeship-like training program.
A broad array of alternative inmate work opportunities
similarly exist with units of local government or their special
purpose districts, such as school districts. Inmates can be
used to fabricate training aids or displays, which now divert
teachers from their primary instructional functions. Similar
opportunities exist with local government entities such as
police, fire, and EMS organizations.
Subsection (e)(2) of new Section 4124a explicitly prohibits
the displacement of non-inmate workers of the non-profit
organization, local government, or special purpose district. At
the suggestion of American Federation of State, County, and
Municipal Employees (AFSCME), the provision against
displacement was modified to provide protection to individuals
performing work for a local government under the work
requirements of TANF, who may not have the status of being an
``employee.''
Subsection (f) of new Section 4124a requires that each
proposed agreement presented to the FPI Board of Directors be
subject to a public comment process comparable to that required
when the Board is considering a proposal to permit FPI to
expand its sales of products or services to Federal agencies.
The subsection also specifies the issues to be considered by
the Board in evaluating a proposed agreement and states the
circumstances under which a proposed agreement cannot be
approved.
Subsection (g) of new Section 4124a specifies the wages to
be paid to participating Federal inmates and the deductions
that may be taken from those wages. It also requires that each
participating inmate confirm in writing that he or she is
participating voluntarily and she understands the wages to be
paid and the deductions to be taken from those wages.
Subsection (h) of new Section 4124a makes explicit the
application of the Bureau of Prisons Program Statement Number
1040.10 (Non-Discrimination Toward Inmates) with respect to any
agreement pursuant to new Section 4124a or new Section 4124b of
title 18, United States Code, which is subsequently added by
Section 11 of the bill.
Subsection (i) of new Section 4124a specifies the
enforceable protections provided to non-inmate workers with
respect to any agreement pursuant to new Section 4124a or new
Section 4124b of title 18, United States Code, which is
subsequently added by Section 11 of the bill.
Subsection (i)(1) of new Section 4124a permits any
interested party to request verification by the Secretary of
Labor that a proposed agreement will not result in the
displacement of non-inmate workers. Both the Secretary of Labor
and the interested party may suggest modifications to the Board
to effect any needed corrective modification to the proposed
agreement.
Subsection (i)(2) of new Section 4124a empowers the
Secretary of Labor, upon her own initiative or upon request, to
determine if the actual performance of any approved agreement
is resulting in the displacement of non-inmate workers or
permitting participating inmates to be performing unauthorized
work activities. The subsection provides to the Secretary of
Labor an array of sanctions that can be applied if the
Secretary finds such displacement of non-inmate workers or
unauthorized work activity by the participating Federal
inmates.
Subsection (c) requires the development of an action plan
and implementation schedule for having Federal Prison
Industries donate products and services to non-profit
organizations that assist low-income individuals, who would
likely be unable to purchase such products or services in the
commercial market. The provision authorizes the appropriation
of $7 million in each of fiscal years 2008 through 2012 for the
purposes of paying inmate wages and otherwise administering the
program.
Subsection (d) authorizes a ``Cognitive Abilities
Assessment Demonstration Program'' within the Federal Bureau of
Prisons. Use of such assessment techniques in the special adult
education setting have shown important results in matching
education and training programs with the needs of the
individual. Some limited application to the local government
correctional setting warrants authorization of the three-year
demonstration program proposed by the bill.
Subsection (3) requires the establishment of Pre-Release
Employment Assistance program, first added to H.R. 1577 at the
suggestion of the AFL-CIO. Priority for participation is
accorded to inmates in the final 24 months of incarceration.
Sec 11. Re-entry employment preparation through work-based training and
apprenticeship
Subsection (a) of this section adds a new section 4124b to
Chapter 307 of title 18, United States Code, authorizing a
Work-based Employment Preparation Program for Federal inmates.
Subsection (a) of new Section 4124b authorizes a private
for-profit business to sponsor a Work-based Employment
Preparation Program for Federal Inmates. In contrast to FPI,
such businesses will be able to expose participating inmates to
work situations more akin to that the inmates will find upon
release. The byproducts of the program are authorized by
another provision to be sold in the commercial market. Inmates
participating in the Program must be paid wages at a rate not
less than an inmate training wage promulgated by the Secretary
of Labor pursuant to Section 14(a) of the Fair Labor Standards
Act. Such inmate training wage will be less than the Federal
Minimum Wage. In the past, special wages promulgated pursuant
to Section 14(a) have typically been around 50 percent of the
Federal Minimum Wage.
Subsection (b) of new Section 4124b limits the subject
matter of the Work-based Employment Preparation Program to
products or services that are no long produced or furnished
within the United States by non-inmate workers. This limitation
avoids subjecting other private sector businesses, with
employees being paid market-driven wages, from unfair
competition in the commercial market by products produced or
services furnished by inmates participating in the program
being paid an Inmate Training Wage.
The Committee has been informed by the Department of
Justice that it is the practice of other countries with whom
the United States trades to permit, under various terms and
conditions, the introduction into those countries's commercial
markets of products and services produced or performed by
prison inmates in those countries. The Committee believes that
H.R. 2965, as amended, would authorize a practice within the
United States that is consistent with existing laws and
treaties, and the practices of our trading partners, as
described by the Department of Justice.
Subsection (c) of new Section 4124b specifies the
requirements of an acceptable proposal to conduct a Work-based
Employment Preparation Program. Subsection (c)(1) requires the
program afford participating inmates apprenticeship training,
or its functional equivalent. The objective is to combine
hands-on work experience with a conceptual understanding of the
work being performed.
Subsection (c)(2) requires the for-profit business
sponsoring the program to furnish each participating inmate who
successfully completes the program with a certificate
memorializing such successful completion. The firm must commit
to furnishing copies of such documents to the participant for
24 months after release. A reference from a business will be
substantially more valuable than one issued by FPI. This
provision also requires that an inmate successfully completing
a program be provided, at the time of release, all of the
documents, including a State government-issued photo
identification card that a person would be required to present
to a prospective employer in order to complete an Employment
Eligibility Verification (ICE Form I-9).
Subsection (d) of new Section 4124b requires that an inmate
participating in a Work-based Employment Preparation Program be
paid not less than the inmate training wage to be promulgated
by the Secretary of Labor. The provision directs the FPI Board
of Directors to request the Secretary of Labor to request the
promulgation of such an inmate training wage.
Subsection (e) of new Section 4124b allocates funding
received from the firm participating in the program to support
remedial, vocational, and other release preparation program for
non-participating inmates.
Subsection (f) of new Section 4124b specifies issues that
the Board of Directors shall consider in evaluating proposals
from a private for-profit applying to sponsor a Work-based
Employment Preparation Program.
Subsection (g) of new Section 4124b specifies the duration
of the Work-based Employment Preparation Program. No proposed
Program agreement may be approved by the FPI Board of Directors
after September 30, 2016. Performance under all program
agreements must be concluded prior to October 1, 2021.
Subsection (b) of this section imposes certain review and
reporting requirement on the Attorney General regarding the
Departments implementation of the alternative inmate work
opportunities provided by new section 4124a and section 4124b.
Subsection (c) of this section provides for long-term
monitoring of the implementation of the Work-based Employment
Training Program by the Government Accountability Office (GAO).
The subsection specifies the matters to be assessed and directs
the Comptroller General to seek public comment on the scope and
methodology he intends to use to conduct the assessment.
Additionally, it provides a schedule for the submission of an
interim and a final report to the Congress.
Subsection (d) makes a further amendment to Section 1761 of
Title 18, United States Code, to permit the commercial sale of
the byproducts of the Work-based Employment Preparation Program
established in Subsection (a).
Sec. 12. Restructuring the Board of Directors
This section fundamentally restructures FPI's governing
Board of Directors. It replaces the current 6 member Board,
unchanged since 1934, with an eleven member Board. The Board's
members would continue to be appointed by the President, but
would not be subject to Senate confirmation.
Currently, the six-member Board has two public members and
four private sector members. One of the public members
represents the Attorney General and the other represents 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).
Under this section, the new 11-member Board would be
comprised of 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 provision establishes procedures for the initial
appointment of each of the eleven members, with staggered
terms, and provides authority regarding their reappointment. It
also provides for the filling of any Board vacancies that may
occur. The section empowers the President to designate a
Chairperson, who in turn is empowered to designate the Vice
Chairperson.
To provide the Board with needed staff support, in addition
to the staff of the corporation, the provision authorizes the
Chairperson to procure temporary and intermittent personal
services and to utilize Federal detailees on a non-reimbursable
basis.
The provision recognizes the Director of the Bureau of
Prisons as the Chief Executive Officer of the corporation, and
empowers the Director to designate a person as the Chief
Operating Officer of the corporation. The Chief Operating
Officer need not necessarily be the incumbent Assistant
Director of the Federal Bureau of Prisons for Industries,
Education, and Vocational Training, which has been the past
practice.
Sec. 13. Providing additional management flexibility to Federal Prison
Industries operations
This section makes explicit FPI's authority to locate more
than one factory (workshop) at a single Federal correctional
institution. It also provides statutory authority for FPI to
operate a factory (workshop) outside of a correctional
institution if all of its inmate workers are classified as
minimum security inmates.
Sec. 14. Transitional personnel management authority
This section provides some relief to correctional officers
and other staff whose salaries are paid from the revenues of
the corporation and who might be separated from service due to
a reduction in the income derived from FPI activities. Such
reductions may arise if there is an unexpectedly rapid shift to
alternative rehabilitative work opportunities with non-profit
entities, which may maintain inmate work opportunities but
result in reduced corporate income. Under the provision, such
correctional officers and other staff would be eligible for
appointment or reappointment in the competitive services and
given priority for placement for available positions within the
Federal Bureau of Prisons through a priority placement list.
Sec. 15. Federal Prison Industries report to Congress
This section amends Section 4127 of title 18, United States
Code, to enhance the existing requirement for FPI's Annual
Report to the Congress. It adds specificity to the information
required to be reported regarding FPI sales of products and
services and FPI's resulting share of the total Federal
Government market. For the first time, it requires FPI to
report some data regarding the inmates in rehabilitative work
opportunities with FPI and their post-release employment.
Finally, the provision seeks to maintain the guarantee of
public access to the annual report.
Sec. 16. Definitions
This section amends Chapter 307 of title 18, United States
Code, by adding a new Section 4130 specifying definitions for
key terms used in Sections 4122 and 4124.
Paragraph (1) of Section 4130 adds a definition of the term
``assembly'' derived from Department of Labor regulations
implementing the Walsh-Healey Public Contracts Act (41 U.S.C.
35).
Paragraph (2) of Section 4130 adds a definition of the term
``current market price''. The definition equates the term
``current market price'' to the term ``fair market price'' as
defined in the Small Business Act (15 U.S.C. 644(a)), which is
the standard that must be met by small businesses selling to
the Government.
Paragraph (3) of Section 4130 adds a definition of the term
``import-sensitive product'' derived from a standard used by
the Office of the United States Trade Representative.
Paragraph (4) of Section 4130 adds a definition of the term
``labor-intensive manufacture'' derived from a standard used by
the Bureau of Economic Analysis at the Department of Commerce.
Paragraph (5) of Section 4130 adds a definition of the term
``manufacture'' derived from Department of Labor regulations
implementing the Walsh-Healey Public Contracts Act (41 U.S.C.
35).
Paragraph (7) of Section 4130 adds a definition of the term
``reasonable share of the market''. FPI's share of the Federal
market for a specific product would be recognized as a
``reasonable share of the market'', if FPI's share of the total
Federal purchases for a specific product, averaged over a
three-year period, does not exceed 20 percent. It should be
noted that new Section 4122(b)(10)(C), added by Section 3 of
the H.R. 1829, provides the FPI Board of Directors with limited
authority to approve, on a case-by-case basis, a proposed FPI
expansion that would result in FPI sales in excess of the
percentages specified.
Paragraph (8) of Section 4130 adds a definition of the term
``services'' through a cross-reference to the Government-wide
Federal Acquisition Regulation (FAR).
Sec. 17. Implementation regulations and procedures
Subsection (a) of this section requires regulatory
implementation through the Government-wide Federal Acquisition
Regulation (FAR), specifying a schedule for the publication of
proposed and final regulations and their effective date. The
provision provides for 60 days for public comment on the
proposed regulations, which was the standard set in Section 22
of the Office of Federal Procurement Policy Act (41 U.S.C.
418b).
Subsection (b) directs the FPI Board of Directors to use
notice and comment rulemaking conducted pursuant to the
Administrative Procedure Act (APA), to issue definitions
relating to four terms: (a) ``prison-made product;'' (b)
``prison-furnished service;'' (c) ``specific product;'' and
``specific service.'' The public is accorded 60 days to comment
on the Board's proposals.
Subsection (b)(4)(C) also set forth a provision regarding
the manner in which the Board operates by requiring that Board
act on the basis of deliberations and a recorded vote conducted
during a public meeting, unless the meeting is closed pursuant
to the standards of the APA. This requirement applies to the
full range of regulations, procedures, and guidelines relating
to the governance of the corporation.
Subsection (c) of this section specifies the timetable for
various actions by the Secretary of Labor in promulgating a
special inmate training wage under the authority of Section
14(a) of the Fair Labor Standards Act, and related matters.
Subsection (c)(1) directs the Secretary of Labor, in
consultation with the Attorney General, to promulgate an
``inmate training wage'' under the authority of Section 14(a)
of the Fair Labor Standards Act, upon receipt of a request by
the FPI Board of Directors to issue such wages. It prescribes
deadlines for each step in the regulatory process and provides
a sense of Congress that such wage should be not less than 50%
of the minimum wage issued pursuant to the Fair Labor Standards
Act.
Subsection (c)(2) authorizes the FPI Board of Directors to
issue an interim inmate training wage in the event that the
Secretary of Labor fails to issue an interim inmate training
wage by the deadline specified in paragraph (1). The interim
inmate training wage issued by the Board may not be less than
50 percent of the Federal Minimum Wage.
Subsection (c)(3) provides that the interim inmate training
wage issued by the FPI Board of Directors or the Secretary of
Labor remains valid until the effective date of the final
inmate training wage promulgated by the Secretary. Section
(c)(3)(B) permits a firm conducting a Work-based Employment
Preparation Program to continue paying the wages specified in
the agreement for the duration of the agreement, if those wages
are not less than the interim inmate training wage issued by
the FPI Board of Directors or the Secretary of Labor.
Subsection (c)(4) permits a for-profit business that has an
agreement with FPI in effect on the date of enactment of the
Act, under which Federal inmates are furnishing services that
are being introduced into the commercial market, to continue to
pay inmates at wage rates specified in the agreement for the
duration of the agreement.
Sec. 18. Rule of construction
This section sets forth a rule of construction relating to
Section 4124(e)(2), added by Section 2 of the bill. New Section
4124(e)(2) specifies FPI's right to appeal an adverse decision
by an agency contracting officer regarding an agency decision
not to make a contract award to FPI. This provision applies
exclusively to FPI. There is no intention to alter the existing
bid protest processes available to private sector vendors with
the agency making the purchase, before the Government
Accountability Office, or within the Federal courts.
Sec. 19. Effective date and applicability
This section establishes the effective dates for the
various provisions of the ``Federal Prison Industries
Competition in Contracting Act of 2006''.
Sec. 20. Clerical amendments
This section makes clerical amendments to the table of
sections for chapter 307 of title 18, United States Code.
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 italic, 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.
* * * * * * *
(c) In addition to the exceptions set forth in subsection (b)
of this section, this chapter shall not apply to [goods, wares,
or merchandise manufactured, produced, or mined] products
manufactured, services furnished, or minerals mined by convicts
or prisoners who--
(1) * * *
* * * * * * *
(d) This section shall not apply to services performed as
part of an inmate work program conducted by a State or local
government to disassemble, scrap, and recycle products, other
than electronic products, that would otherwise be disposed of
in a landfill. Recovered scrap from such program may be sold.
(e) This section shall not apply to products produced or
services furnished with inmate labor incidental to the work-
based training program authorized pursuant to section 4124b of
this title.
[(d)] (f) For the purposes of this section, the term
``State'' means a State of the United States and any
commonwealth, territory, or possession of the United States.
* * * * * * *
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.
4124a. Additional inmate work opportunities through public service
activities.
4124b. Re-entry employment preparation through work-based training and
apprenticeship.
* * * * * * *
[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 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) Federal Prison Industries is authorized to offer a new
specific product or furnish a new specific service in response
to a competitive solicitation or other purchase request issued
by a Federal department or agency. No subsequent offering of
such product or service may be made by Federal Prison
Industries until the board of directors has approved the
offering for sale of such new specific product or new specific
service, in conformance with the requirements of paragraphs (5)
through (9).
(B) Federal Prison Industries may produce a product or
furnish a service in excess of the authorized level of
production for such product or service, in response to an order
placed pursuant to an existing contract with a Federal
department or agency, if the agency's need for the product or
service is of such an urgency that it would justify the use of
procedures other than competitive procedures pursuant to
section 2304(c)(2) of title 10 or section 303(c)(2) of the
Federal Property and Administrative Services Act of 1949 (41
U.S.C. 253(c)(2)), as may be applicable.
(5) 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 for sale to
the Federal Government 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.
(6)(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 non-inmate
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 sale 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 C.F.R. part 2.101), as in effect on
June 1, 2004, including the repair, alteration, or maintenance
of real property in being.
(7) 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 (6) and
shall solicit comment on the analysis;
(B) solicit comments on the analysis required by
paragraph (6) 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.
(8) The board of directors shall be provided copies of all
comments received on the expansion proposal.
(9) 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 (6)(C) and be
subject to the public comment requirements of paragraph (7).
(10) 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.
(11) In conformance with the requirements of paragraph (10)
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;
(B) authorize the production of a new specific
product or the furnishing of a new specific service for
donation; or
(C) authorize a proposal to expand production of a
currently authorized specific product or specific
service in an amount in excess of a reasonable share of
the market for such product or service, if--
(i) a Federal agency or department,
purchasing such product or service, has
requested that Federal Prison Industries be
authorized to furnish such product or service
in amounts that are needed by such agency or
department; or
(ii) the proposal is justified for other good
cause and supported by at least two-thirds of
the appointed members of the board.
(12)(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. In the case of an
inmate whose term of imprisonment is to expire in not more than
2 years, wages shall be earned at an hourly rate of not less
than $2.50, but paid at the same rate and in the same manner as
to any other inmate, and any amount earned but not paid shall
be held in trust and paid only upon the actual expiration of
the term of imprisonment.
(B) The various inmate wage rates shall be reviewed and
considered for increase on not less than a biannual basis.
(C) The Board of Directors of Federal Prison Industries
shall--
(i) not later than September 30, 2008, increase the
maximum wage rate for inmates performing work for or
through Federal Prison Industries to an amount equal to
50 percent of the minimum wage prescribed by section
6(a)(1) of the Fair Labor Standards Act of 1938 (29
U.S.C. 206(a)(1)); and
(ii) not later than September 30, 2013, increase such
maximum wage rate to an amount equal to such minimum
wage.
(D) 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.
(E) 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)] (13) 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)(A) 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))).
(B) The requirements of subparagraph (A) shall also apply to
a procurement that a Federal department or agency intends to
meet by placing an order against a contract maintained by the
General Services Administration under the Multiple Award
Schedule Contracts Program.
(C) Federal Prison Industries, upon its request, shall be
listed on any Schedule, referred to in subparagraph (B), as
offering products or services which Federal Prison Industries
believes to be comparable to those products and services being
offered by commercial contractors through the Multiple Award
Schedule Contracts Program.
(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.
253(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.
(8) A contract award may be made to Federal Prison Industries
using other than competitive procedures by the Federal Bureau
of Prisons.
(9) A solicitation for a contract shall first be made to
Federal Prison Industries using other than competitive
procedures if the product or service to be acquired would
otherwise be furnished by a contractor performing the work
outside of the United States.
(c) Offers From Federal Prison Industries.--(1) 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, unless the contract opportunity has
been reserved for competition exclusively among small business
concerns pursuant to section 15(a) of the Small Business Act
(15 U.S.C. 644(a)) and its implementing regulations.
(2) Any offer made by Federal Prison Industries to furnish a
product or service may exclude from the offer the price of the
following:
(A) The costs related to security of the facilities
at which the contract will be performed.
(B) The costs of educating and training the prison
work force performing the contract.
(C) Excess capital costs of machinery and excess
inventories used within a prison environment that are
the result of the unique environment of prison life.
(D) Other costs of performing the contract resulting
from the unique environment of prison facilities.
(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)(A) The Chief Operating Officer of Federal Prison
Industries may protest a decision by a contracting officer not
to award a contract to Federal Prison Industries pursuant to
subsection (b)(4), in accordance with section 33.103, (Protests
to the agency) of the Federal Acquisition Regulation (48 C.F.R.
part 33.103).
(B) In the event of an adverse decision of a protest filed
pursuant to subparagraph (A), the Assistant Attorney General
for Administration may request a reconsideration of such
adverse decision by the head of the Federal agency or
department, which shall be considered de novo and the decision
issued by such agency head on a non-delegable basis. Such
decision upon reconsideration by the agency head 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 be subject to Federal occupational, health, and safety
standards with respect to the operation of its industrial
operations.
Sec. 4124a. Additional inmate work opportunities through public service
activities
(a) In General.--Inmates with work assignments within Federal
Prison Industries may perform work for an eligible entity
pursuant to an agreement between such entity and the Inmate
Work Training Administrator in accordance with the requirements
of this section.
(b) Definition of Eligible Entities.--For the purposes of
this section, the term ``eligible entity'' means an entity--
(1) that is an organization described in section
501(c)(3) of the Internal Revenue Code of 1986 and
exempt from taxation under section 501(a) of such Code
and that has been such an organization for a period of
not less than 36 months prior to inclusion in an
agreement under this section;
(2) that is a religious organization described in
section 501(d) of such Code and exempt from taxation
under section 501(a) of such Code; or
(3) that is a unit of local government, a school
district, or another special purpose district.
(c) Inmate Work Training Administrator.--There is hereby
established the position of Inmate Work Training Administrator,
who shall be responsible for fostering the creation of
alternative inmate work opportunities authorized by this
section. The Administrator shall be designated by the Chief
Executive Officer of Federal Prison Industries, with the
approval of the Board of Directors, and be under the
supervision of the Chief Operating Officer, but may directly
report to the Board.
(d) Proposed Agreements.--An eligible entity seeking to enter
into an agreement pursuant to subsection (a) shall submit a
detailed proposal to the Inmate Work Training Administrator.
Each such agreement shall specify--
(1) types of work to be performed;
(2) the proposed duration of the agreement, specified
in terms of a base year and number of option years;
(3) the number of inmate workers expected to be
employed in the specified types of work during the
various phases of the agreement;
(4) the wage rates proposed to be paid to various
classes of inmate workers; and
(5) the facilities, services and personnel (other
than correctional personnel dedicated to the security
of the inmate workers) to be furnished by Federal
Prison Industries or the Bureau of Prisons and the
rates of reimbursement, if any, for such facilities,
services, and personnel.
(e) Representations.--
(1) Eleemosynary work activities.--Each proposed
agreement shall be accompanied by a written
certification by the chief executive officer of the
eligible entity that--
(A) the work to be performed by the inmate
workers will be limited to the eleemosynary
work of such entity in the case of an entity
described in paragraph (1) or (2) of subsection
(b);
(B) the work would not be performed in the
United States but for the availability of the
inmate workers; and
(C) the work performed by the inmate workers
will not result, either directly or indirectly,
in the production of a new product or the
furnishing of a service that is to be offered
for other than resale or donation by the
eligible entity or any affiliate of the such
entity.
(2) Protections for non-inmate workers.--Each
proposed agreement shall also be accompanied by a
written certification by the chief executive officer of
the eligible entity that--
(A) no non-inmate employee (including any
person performing work activities for such
governmental entity pursuant to section 607 of
subchapter IV of the Social Security Act (42
U.S.C. 607)) of the eligible entity (or any
affiliate of the entity) working in the United
States will have his or her job abolished or
work hours reduced as a result of the entity
being authorized to utilize inmate workers; and
(B) the work to be performed by the inmate
workers will not supplant work currently being
performed in the United States by a contractor
of the eligible entity.
(f) Approval by Board of Directors.--
(1) In general.--Each such proposed agreement shall
be presented to the Board of Directors, be subject to
the same opportunities for public comment, and be
publicly considered and acted upon by the Board in a
manner comparable to that required by paragraphs (7)
and (8) of section 4122(b).
(2) Matters to be considered.--In determining whether
to approve a proposed agreement, the Board shall--
(A) give priority to an agreement that
provides inmate work opportunities that will
provide participating inmates with the best
prospects of obtaining employment paying a
livable wage upon release;
(B) give priority to an agreement that
provides for maximum reimbursement for inmate
wages and for the costs of supplies and
equipment needed to perform the types of work
to be performed;
(C) not approve an agreement that will result
in the displacement of non-inmate workers
contrary to the representations required by
subsection (e)(2) as determined by the Board or
by the Secretary of Labor (pursuant to
subsection (i)); and
(D) not approve an agreement that will
result, either directly or indirectly, in the
production of a new product or the furnishing
of a service for other than resale by an
eligible entity described in paragraph (1) or
(2) of subsection (b) or donation.
(g) Wage Rates and Deductions From Inmate Wages.--
(1) In general.--Inmate workers shall be paid wages
for work under the agreement at a basic hourly rate to
be negotiated between the eligible entity and Federal
Prison Industries and specified in the agreement. The
wage rates set by the Director of the Federal Bureau of
Prisons to be paid inmates for various institutional
work assignments are specifically authorized.
(2) Payment to inmate worker and authorized
deductions.--Wages shall be paid and deductions taken
pursuant to section 4122(b)(12)(D).
(3) Voluntary participation by inmate.--Each inmate
worker to be utilized by an eligible entity shall
indicate in writing that such person--
(A) is participating voluntarily; and
(B) understands and agrees to the wages to be
paid and deductions to be taken from such
wages.
(h) Assignment to Work Opportunities.--Assignment of inmates
to work under an approved agreement with an eligible entity
shall be subject to the Bureau of Prisons Program Statement
Number 1040.10 (Non-Discrimination Toward Inmates), as
contained in section 551.90 of title 28 of the Code of Federal
Regulations (or any successor document).
(i) Enforcement of Protections for Non-Inmate Workers.--
(1) Prior to board consideration.--Upon request of
any interested person, the Secretary of Labor may
promptly verify a certification made pursuant
subsection (e)(2) with respect to the displacement of
non-inmate workers so as to make the results of such
inquiry available to the Board of Directors prior to
the Board's consideration of the proposed agreement.
The Secretary and the person requesting the inquiry may
make recommendations to the Board regarding
modifications to the proposed agreement.
(2) During performance.--
(A) In general.--Whenever the Secretary deems
appropriate, upon request or otherwise, the
Secretary may verify whether the actual
performance of the agreement is resulting in
the displacement of non-inmate workers or the
use of inmate workers in a work activity not
authorized under the approved agreement.
(B) Sanctions.--Whenever the Secretary
determines that performance of the agreement
has resulted in the displacement of non-inmate
workers or employment of an inmate worker in an
unauthorized work activity, the Secretary may--
(i) direct the Inmate Work Training
Administrator to terminate the
agreement for default, subject to the
processes and appeals available to a
Federal contractor whose procurement
contract has been terminated for
default; and
(ii) initiate proceedings to impose
upon the person furnishing the
certification regarding non-
displacement of non-inmate workers
required by subsection (d)(2)(B) any
administrative, civil, and criminal
sanctions as may be available.
Sec. 4124b. Re-entry employment preparation through work-based training
and apprenticeship.
(a) Participation Authorized.--A private for-profit business
entity shall be an eligible entity for participation in the
program authorized by section 4124a of this title, if such
participation conforms with the requirements and limitations of
this section.
(b) Requirements Relating to Products and Services.--A
private for-profit business entity is eligible for such
participation if such business entity proposes to train
participating inmates, pursuant to subsection (c), by producing
a product or performing a service, if such product or service
is of a type for which there is no production or performance
within the United States by noninmate workers.
(c) Requirements Relating to Training.--
(1) In general.--For purposes of this section, the
training of participating inmates shall be work-based
training that provides to a participating inmate
apprenticeship training or a functionally equivalent
structured program that combines hands-on work
experience with conceptual understanding of the work
being performed. Other inmates with regular work
assignments within Federal Prison Industries may be
assigned to support the program.
(2) Documentation of program participation.--
(A) Each inmate who successfully completes
participation in training undertaken pursuant
to this section shall be provided a certificate
or other written document memorializing such
successful completion, providing a marketable
summary of the skills learned and an overall
assessment of performance.
(B) Copies of such documents shall be
furnished to perspective employers upon the
request of the participant for a period of not
less than 24 months from the date of such
participant's release from incarceration.
(3) Documents required for employment.--The Federal
Bureau of Prisons, in cooperation with a business
entity providing an inmate work-based training at the
time of his or her scheduled release, shall make every
reasonable effort to help the inmate timely obtain such
documentation (including a State government-issued
photo identification card) as a person may be required
to provide to a prospective employer, after such person
completes an Employment Eligibility Verification (ICE
Form I-9).
(d) Wage Rates.--
(1) In general.--Business entities participating in
the program authorized by subsection (a) shall propose
wages for inmates participating in the program at rates
not less than the inmate training wage promulgated
pursuant to section 17(c) of the Federal Prison
Industries Competition in Contracting Act of 2006.
(2) Inmate training wage.--Not more than 30 days
after the date of enactment of this section, the Board
of Directors of Federal Prison Industries shall request
the Secretary of Labor to promulgate an inmate training
wage pursuant to section 14(a) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 214(a)).
(e) Support for Other Release Preparation Programs.--In
addition to the matters listed in section 4124a(d) of this
title, a proposal for an agreement referred to in such section
submitted by an eligible business entity shall specify an
amount of any supplemental funding, specified as a per-capita
amount for each inmate participating pursuant to the agreement,
that the business entity will provide for the purpose of
supporting remedial, vocational, and other release preparation
programs for other nonparticipating inmates.
(f) Additional Standards Applicable.--In considering a
proposed agreement pursuant to section 4124a(f)(1) of this
title, the Board of Directors shall--
(1) give preference to an agreement that proposes--
(A) work-based training opportunities that
provide the participating inmate the best
prospects for obtaining employment paying a
livable wage upon release;
(B) the highest per-capita amount pursuant to
subsection (e) relating to providing financial
support for release preparation for other
inmates; and
(C) the highest inmate wage rates;
(2) not approve any agreement with respect to
furnishing services of the type described in section
4122(b)(6)(D)(iii) of this title;
(3) not approve any agreement with respect to
furnishing construction services described in section
4122(b)(6)(D)(iv) of this title, unless to be performed
within a Federal correctional institution;
(4) not approve an agreement that does not meet the
standards of subsection (b); and
(5) request a determination from the International
Trade Commission (and such other executive branch
entities as may be appropriate), regarding whether a
product or service is of the type being produced or
performed in the United States by noninmate workers,
whenever the Board determines that such an additional
assessment is warranted, including upon a request from
an interested party presenting information that the
Board deems to warrant such additional assessment prior
to the Board's consideration of the proposed agreement.
(g) Limitations on the Use of the Authority.--
(1) No sales by federal prison industries.--Federal
Prison Industries is prohibited from directly offering
for commercial sale products produced or services
furnished by Federal inmates, including through any
form of electronic commerce.
(2) Duration.--
(A) No proposed agreement pursuant to this
subsection may be approved by the Board of
Directors after September 30, 2016.
(B) Performance of all such agreements shall
be concluded prior to October 1, 2021.
* * * * * * *
[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 allocation of the profits of the corporation,
both gross and net, to--
(A) educational, training, release-
preparation opportunities for inmates;
(B) opening new factories; and
(C) improving the productivity and
competitiveness of existing factories;
(5) 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
(6) 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, 2004.
* * * * * * *
----------
SECTION 318 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF
1949
SEC. 318. PRODUCTS OF FEDERAL PRISON INDUSTRIES: PROCEDURAL
REQUIREMENTS.
(a) Market Research.--Before purchasing a product listed in
the latest edition of the Federal Prison Industries catalog
under section 4124(g) of title 18, United States Code, the head
of an executive agency shall conduct market research to
determine whether the Federal Prison Industries product is
comparable to products available from the private sector that
best meet the executive agency's needs in terms of price,
quality, and time of delivery.
(b) Competition Requirement.--If the head of the executive
agency determines that a Federal Prison Industries product is
not comparable in price, quality, or time of delivery to
products available from the private sector that best meet the
executive agency's needs in terms of price, quality, and time
of delivery, the agency head shall use competitive procedures
for the procurement of the product or shall make an individual
purchase under a multiple award contract. In conducting such a
competition or making such a purchase, the agency head shall
consider a timely offer from Federal Prison Industries.
(c) Implementation by Head of Executive Agency.--The head of
an executive agency shall ensure that--
(1) the executive agency does not purchase a Federal
Prison Industries product or service unless a
contracting officer of the agency determines that the
product or service is comparable to products or
services available from the private sector that best
meet the agency's needs in terms of price, quality, and
time of delivery; and
(2) Federal Prison Industries performs its
contractual obligations to the same extent as any other
contractor for the executive agency.
(d) Market Research Determination Not Subject to Review.--A
determination by a contracting officer regarding whether a
product or service offered by Federal Prison Industries is
comparable to products or services available from the private
sector that best meet an executive agency's needs in terms of
price, quality, and time of delivery shall not be subject to
review pursuant to section 4124(b) of title 18.
(e) Performance as a Subcontractor.--(1) A contractor or
potential contractor of an executive agency may not be required
to use Federal Prison Industries as a subcontractor or supplier
of products or provider of services for the performance of a
contract of the executive agency by any means, including means
such as--
(A) a contract solicitation provision requiring a
contractor to offer to make use of products or services
of Federal Prison Industries in the performance of the
contract;
(B) a contract specification 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; or
(C) any contract modification directing the use of
products or services of Federal Prison Industries in
the performance of the contract.
(2) In this subsection, the term ``contractor'', with respect
to a contract, includes a subcontractor at any tier under the
contract.
(f) Protection of Classified and Sensitive Information.--The
head of an executive agency may not enter into any contract
with Federal Prison Industries under which an inmate worker
would have access to--
(1) any data that is classified;
(2) any geographic data regarding the location of--
(A) surface and subsurface infrastructure
providing communications or water or electrical
power distribution;
(B) pipelines for the distribution of natural
gas, bulk petroleum products, or other
commodities; or
(C) other utilities; or
(3) any personal or financial information about any
individual private citizen, including information
relating to such person's real property however
described, without the prior consent of the individual.
(g) Definitions.--In this section:
(1) The term ``competitive procedures'' has the
meaning given such term in section 4(5) of the Office
of Federal Procurement Policy Act (41 U.S.C. 403(5)).
(2) The term ``market research'' means obtaining
specific information about the price, quality, and time
of delivery of products available in the private sector
through a variety of means, which may include--
(A) contacting knowledgeable individuals in
government and industry;
(B) interactive communication among industry,
acquisition personnel, and customers; and
(C) interchange meetings or pre-solicitation
conferences with potential offerors.
DISSENTING VIEWS
These views dissent from the Committee Report on H.R. 2965.
Introduction
The Federal Prison Industries program is not only the
Department of Justice's most important correctional management
tool, it is also one of the Department's most effective means
of rehabilitating inmates, thereby reducing recidivism. Federal
Prison Industries, Inc., or FPI was signed into law by
President Roosevelt in 1934, in the midst of the Great
Depression, as a way to protect the public by teaching
prisoners real work habits and skills so that when they were
released they would be better able to find and hold jobs to
support themselves and their families, and be less likely to
commit additional crimes. It is clear that the FPI program
works to do just that. Follow-up studies covering as much as 16
years of data have shown that inmates who work in FPI are less
likely to return to a life of crime after they are released.
Research shows that inmates in FPI are 24% less likely to
recidivate than similar inmates who didn't participate in FPI.
Also, inmates in FPI are 14% more likely to find and maintain a
job than those without FPI experience. Working in FPI has an
even greater positive impact on minority offenders who are at
the greatest statistical risk of recidivism. While the program
certainly benefits offenders and their families, that is not
the primary benefit of FPI 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.
What the Bill Does
H.R. 2965 would immediately eliminate the current
``mandatory source'' procurement authority for federal agency
purchases from (FPI). While the bill provides for an agency
option to purchase goods from FPI on a non-competitive basis
which is phased out over a 5-year period, there should be no
mistake-- the mandatory source rule in effect today would be
eliminated immediately upon the effective date of this bill
becoming law. The 1934 law required purchases by federal
agencies to ensure work opportunities for inmates. The law
recognizes that prison work operations are necessarily less
efficient, less productive and more costly to run when compared
to private work conditions. This is due in large measure to the
high level of security and control that must be maintained in a
prison factory, no or very low beginning work skills among the
inmate workforce, and the objective of labor intensive
activities to maximize the number of inmates employed. It is
estimated that it takes four inmates to equate to the
production of one private worker.
Ironically, 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
that provide the raw materials and services FPI needs to
produce its products. 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. FPI estimates that
approximately 5,000 U.S. jobs, of which many are unionized, are
sustained by the program.
Last year, FPI spent 74% of its sales revenue on purchases
of raw materials, equipment, supplies, and services from
private sector companies, 66% of which were purchased from
small businesses including women, minorities and those who are
disadvantaged. These expenditures exceeded $500 million last
year. The private sector companies selling their goods to FPI
have played by the rules, competing fair and square for the
contracts. These companies and their employees do not deserve
to be on the receiving end of an unjustified animus toward
inmates or FPI.
The bill amends the current requirement in the law for
agencies to purchase goods from FPI and establishes a
competitive bid process for agency purchases of goods and
services, unless the Attorney General, Bureau of Prisons BOP
and FPI officials certify that they cannot safely run a prison
without the particular contract award. It is unlikely that any
of these officials will publicly admit such a level of
incompetence in order to obtain an inmate work contract.
The bill makes a halfhearted effort to replace mandatory
source and service contract jobs by providing a transition
preference program for agencies using FPI, by authorizing new
options such as providing products or services to charitable
and non-profit organizations contingent on appropriations, by
allowing FPI to provide services and products to federal
agencies on a non-competitive basis if they would otherwise be
provided from offshore, and by authorizing a work training
program for FPI to produce goods and services for private
companies if the goods and services are not produced anywhere
in the U.S. However, there is no basis for concluding that
these authorities would generate any significant inmate job
opportunities, and certainly not replace the loss of current
inmate jobs now performed by FPI under mandatory source and
legally sanctioned commercial services.
In addition to restrictions on FPI's ability to produce
products for federal agencies, the bill severely restricts the
ability of FPI to obtain commercial service contracts. An
alternative currently employed by FPI to decrease its federal
market share for products, thus reducing its reliance on
mandatory source, is performing services for companies which
are currently being performed in foreign countries. These
contracts are competitively obtained by FPI. Because of the
restrictions in the bill, current FPI service contracts
employing over 2,000 inmates, which involve no competition with
domestic workers, will be eliminated. This work will then go
back offshore.
The bill, which is purportedly designed to reform federal
prison industries, also prohibits state prison industries from
performing commercial service contracts. These restrictions
will also have significant negative impact on numerous state
correctional systems, hurt private sector businesses as well as
prisoners and bring about increased numbers of crime victims as
a result of inmates that do not have the rehabilitative and job
skills training benefits of prison industries. Remy
International (formerly, Delco Remy) advised that for its
service contracts with Virginia prison enterprises, for
example, the restriction on state services in the bill would
mean the following:
If section 7 passes, the bottom line is that we will
ABSOLUTELY close our correctional facility factory in
Virginia and every single one of those 230 inmate jobs
and 25 civilian jobs will go to Mexico and China--no
hyperbole here. Moreover, we recently sent 55 jobs to
Mexico which we are considering returning to a
correctional facility in West Virginia. Until we have a
greater sense of security that Section 7 will be
deleted, those jobs will remain in Mexico.
The same thing will occur regarding similar Remy
International operations in other states, as well. The combined
impact of the federal and state prohibitions on service
contracts with private businesses will have the effect of
eliminating a substantial number of federal and state prison
industries service contracts where hundreds of civilian workers
and thousands of inmate workers will lose their jobs.
Further, the bill will have an unintended discriminatory
effect upon small, minority and women-owned businesses. As
noted above, roughly two thirds of FPI purchases are made from
small, women and minority owned and disadvantaged businesses.
This is three times higher than the Small Business
Administration goal, and 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.
Accordingly, 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.
Of course, the adverse effects of reducing the FPI program
will also disproportionately affect minority inmates since
racial and ethnic minorities are disproportionately represented
among the inmate population. Their representation in FPI jobs,
however, mirrors this overrepresentation in the prison
population. Important research on the value to inmates of
working in prison industries jobs demonstrates that these
minority inmates benefit at a higher rate 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.
We have already seen the effects of what eliminating
mandatory source will do the FPI program. Since 2001, as a
result of the ``Levin Amendment'', other similar legislative
restrictions added to appropriations bills, and FPI Board
restrictions, FPI's inmate employment level has fallen from 25%
of the eligible inmate workforce to approximately 18% today. In
the same time frame, 13 FPI factories have closed and the
overall number of inmates employed has fallen from
approximately 22,000 to approximately 20,000, while the overall
prison population has increased by more than 23,000 inmates.
Further, as a result of these restrictions, only about half of
FPI's work results from use of mandatory source, with the vast
majority of it resulting from activities supporting the
Nation's war effort. When the war effort declines as
anticipated, inmate employment levels are expected to also
decline, precipitously, from current levels. Moreover, as
mentioned above, over 2,000 inmates employed in FPI performing
services for private sector entities will all lose their jobs
as a result of this bill.
Some supporters of the bill suggest that vocational
education is a good substitute for FPI work experience. The
bill provides authority for increased vocational training
programs. A vocational education program typically runs for two
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 eight years. Whenever the
vocational training is provided, the question becomes what to
do with the other six years of the sentence prior to or after
completion of what is considered a beneficial period of
vocational education. Furthermore, unlike FPI which is
completely selfsustaining, such vocational programs would
require significant appropriated funding. Of course, the
prospects of getting significant appropriations authorized by
this bill approved for vocational education for inmates are
virtually non-existent.
The bill also provides an authorization for FPI to make
products and donate them to non-profit organizations as a way
to maintain work opportunities for inmates. Producing products
to give to charitable organizations would generate very limited
work for inmates. Because the products would be donated, by
definition the work would not be self-sustaining, transferring
to the tax payer costs for a program that is currently wholly
self-supporting. It is completely improbable that any funding
will be made available for these work alternatives, and even
with funding, the programs would not make up for many of the
jobs that will be lost due to elimination of the mandatory
source program and commercial service contracts.
Over the past decade, many offers have been made by
defenders of the FPI program for viable alternatives to the
mandatory source program opponents are dead-set on eliminating.
Rep. Frank Wolf, Rep. Mark Green and Rep. Bobby Scott have all
made proposals for viable inmate work alternatives to mandatory
source. All such efforts have been rejected by members
representing the business/labor coalition that opposes FPI. And
defenders of FPI have been open to any and all alternatives for
jobs suggested by opponents, with the simple proviso that
mandatory source be phased down over an agreed period of time
as those alternatives are brought on line. Recently, the
Department of Justice (DOJ) entered the tray in an effort to
work with the business/labor coalition in coming up with viable
inmate work alternatives to mandatory source, but, after eight
months of attempted negotiations, DOJ was also unsuccessful. In
the final analysis, the coalition rejected its own proposal in
order to, once again, arrive at the inevitable conclusion that
it could prevail without compromises on anything that would
allow FPI to attain and maintain its traditional goal of
providing job skills training to 25% of the inmate population.
As a result, the Department of Justice has gone on record as
being unable to support H.R. 2965.
FPI Operations
The total revenues of FPI represent a very small portion
(about \1/4\ of 1%) of total federal agency procurement dollars
and only 2.5% of the overall federal market in the
approximately 80 products and services it provides. The
furniture and apparel industries are two of the industries in
which FPI produces the highest volume of work. When asked,
representatives of these industries conceded that FPI sales
represent an ``insignificant'' and ``negligible'' portion of
their industries, respectively. If such industries are having
problems, it is clearly not due to the impact of FPI. In
textiles, for example, it is said that over 600,000 jobs were
lost during the past 10 years. There are roughly 6,600 inmates
working in textiles in FPI. Clearly, the blame for the loss of
600,000 jobs cannot be a few thousand prisoners. The same is
true of revenue reductions and job loss due to economic
downturns in the office furniture business. FPI's office
furniture sales total $140 million. This represents just 1% of
the $13.4 billion domestic office furniture market.
In the period between 1990 and 2004, the federal inmate
population increased from approximately 58,500 to almost
180,000, more than 207%. By 2011, the population is projected
to reach approximately 225,000. All able-bodied inmates in the
federal system are required, by law to work. Yet, 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
just as they are required to obtain and maintain a job in the
free world. While vocational education is important and ought
to be available to all inmates, no amount of educational course
work can substitute for the real world workplace experience of
a meaningful job.
With the elimination of parole, good conduct credits, Pell
grants, and other positive incentive programs, the federal
prison system has little to offer as ongoing incentives for
self development. The one shining exception is the FPI program.
Non-FPI inmate jobs pay from $.12 an hour to $.44 cents an
hour. The average non-FPI inmate job pays $.23 an hour. FPI
jobs pay from $.23 to $1.15 per hour with the average pay being
$.93 per hour. Only 18% of inmates currently have access to a
FPI job. The remaining 80% work in non-FPI jobs. In addition to
work training and benefits, FPI also serves as an effective
institutional management tool by requiring good conduct to
remain in the program and it serves as an excellent education
development incentive. To hold down an FPI job, an inmate must
have completed high school or be making steady progress toward
obtaining a GED. 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. Contributions to inmate development and
prison management are important, but the least important of
FPI's contributions. Reductions in crime, restitution payments
to crime victims and support payments to inmate dependants are
far more compelling reasons for the program. Last year, inmate
workers paid almost $3 million toward these obligations.
It is readily conceded that there are problems with the FPI
program which should be fixed. When a small business making a
single product depends upon a government contract for its
operations, FPI should not be able to take that business away.
But this bill should be fixing the program--not gutting it by
taking away all of its primary business sources all at once.
While the bill suggests that the lack of competition is the
problem, the bill seeks to strangle-hold 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 FPI's problems, but we should do so in ways that
assure the viability of this vital crime reducing program. With
additional prisons scheduled to come on line over the next few
years, we can ill afford to diminish the FPI program's
beneficial effects. About 98% of prisoners serving time will
eventually return to society and our oversight focus should be
on their rehabilitation and productive return as a matter of
public safety. We can do better than this bill, and we should.
Steve Chabot.
Robert C. Scott.
Henry Hyde.
Zoe Lofgren.
Daniel E. Lungren.
Statement of Remy International, Inc., July 12, 2006
We appreciate the opportunity to submit a written statement
for the record regarding Remy International's correctional
industries program as it pertains to Section 7 of House Bill
2965, Federal Prison Industries Competition in Contracting Act
of 2005.
Remy International, Inc. (formerly ``Delco Remy
International'') is one of the leading manufacturers and
refurbishers of automotive components in the world. Integrating
correctional industries along with a variety of lean industrial
engineering initiatives has enabled Remy to survive in a highly
competitive global marketplace--a marketplace that has forced a
reduction in product prices to the point of causing insolvency
for many of Remy's competitors during the past decade.
Remy respectfully submits that Section 7 of H.R. 2965
pertaining to the prohibition of service agreements should be
deleted. If service agreements were prohibited, Remy--which
currently has such an agreement in Virginia--would be forced to
pay offenders the higher of minimum wage or the prevailing wage
for the area in which such jobs are located. This is tantamount
to compelling Remy to move these operations abroad. In today's
global economy, there simply is no way in which Remy can
competitively price its products without the use of low-cost
labor. Many major companies are in the process of moving a
portion of their operations abroad; some have moved their
entire operations to foreign countries.
correctional industries preserves civilian jobs
We live and work in a different world now, and it has
forced us to look to countries with lower labor costs, as we
are continually pressured by our customer base to reduce costs
in the products that we produce and refurbish. Through the use
of correctional services, Remy has been able to preserve 600
civilian jobs in Virginia. (A former Remy subsidiary, Williams
Technologies preserved 500 civilian jobs in South Carolina by
entering into a Services Agreement with the State of South
Carolina) With a total of nearly 3,000 civilian employees in
the United States, Remy continues to maintain a strong presence
in this country; correctional industries is one of many
initiatives exercised to maintain this presence and to ensure
the company survives intense competition from abroad.
As presently composed, H.R. 2965 will result in the loss of
600 civilian jobs in Virginia. This is because the operations
that employ these workers are dependent upon the refurbishment
of automotive components produced in the correctional
facilities that would be closed through the passage of this
Bill. If these correctional facility operations were to be
closed, this work would NOT be placed in the United States.
Rather, it would be relocated to existing factories in Xiamen,
China and San Luis Potosi, Mexico. We respectfully urge you to
consider deleting Section 7 of H.R. 2965 to preserve not only
the 230 offender jobs in Virginia but also the 600 civilian
jobs that are supported by our correctional industries
operations.
Remy is committed to employing American workers. Using
service agreements with correctional institutions helps ensure
that Remy can keep both civilian and inmate jobs here in the
United States, and provides significant work experience to
participating inmates that helps reduce recidivism once they
are released from confinement.
remy's virginia correctional industries program
Remy's agreement with the Virginia Department of
Corrections has provided 230 lobs for inmates in Virginia. The
Commonwealth of Virginia receives $1,732,224 annually in Remy
payments.
Since opening a factory in Leiber Correctional Facility in
South Carolina, Remy has opened a refurbishment factory in a
state correctional facility in Culpeper, Virginia. The Culpeper
operation is a worthy substitute for our traditional production
model of having low-variety, high-volume production capacity in
countries with low-labor costs while maintaining high-variety,
low-volume production in the United States. Again, these
operations were initiated with the understanding that civilian
workers would not be displaced by such operations. For the
Culpeper operation, Remy pays $3.47 per offender hour to
Virginia, and Virginia pays either 65 cents or $1.25 (depending
on length of service) per hour to the offender workers. (The
difference between what we pay and the amount the offenders
receive is used to help fund a program for victim restitution
as well as help pay the cost of operating the correctional
institution).
why a sub-minimum wage?
The services agreement with the Commonwealth of Virginia
ensures that we can keep both civilian and offender jobs within
the United States. Because of challenges unique to operating a
factory in correctional facility (versus a civilian factory),
Remy utilizes more offenders for jobs in the correctional
facility operations than it would ordinarily require in its
civilian factories and, therefore, to ensure financial
viability of the program, the offenders are paid a sub-minimum
wage. It is not uncommon to have ``lockdowns'' within the
entire correctional facility, causing us to lose productivity
for several days at a time. If there is a heavy fog, offenders
are not released from their dormitories to work. Offenders are
frequently transferred from our correctional facility to other
correctional facilities with little or no notice, causing a
disruption to our operations. Many of the offenders suffer
medical problems that require special accommodation through
frequent medical treatment. Moving products in and out of the
correctional facility is a very time-consuming procedure with
costly delays. Contractors charge us a premium to service our
equipment and machinery because of delays to enter and exit the
factory within the walls of the correctional institution. With
the significant inefficiencies inherent in a correctional
industries environment, it is most difficult for a company to
develop a business case for operating a factory within a
correctional facility. A sub-minimum wage, as afforded by
service agreements, enables correctional industries to be
competitive with foreign labor and, as such, Remy has
repatriated work from China and Malaysia to the United States.
If service agreements were to be prohibited, we would be
required to close our correctional facility operation in
Virginia, and these jobs would be relocated to existing
operations in San Luis Potosi, Mexico and/or Xiamen, China,
resulting in the loss of 230 offender jobs in Virginia.
why remy's correctional institutional progams work
1. Service agreements with correctional facilities add jobs
for American civilian citizens, and prevent the relocation of
these jobs to other countries.
As described above, our correctional facility operations
actually add jobs, rather than displace American workers. Our
contract with the Commonwealth of Virginia states that civilian
workers shall not be displaced by the activities we operate in
the correctional facility. In addition, we usually use U.S.-
based vendors for most of the component parts required in
correctional facility operations. Since beginning our
correctional industries programs, we have added 65 civilian
jobs in Virginia. (Our former transmission division in South
Carolina added 30 civilian jobs following the opening of its
correctional industry program.)
The location of these jobs in the United States helps
ensure that related parts and support services stay rooted in
our local and national economy. The competitive realities of
today's automotive parts manufacturing and refurbishment world,
both for ourselves and our competitors, is that most of this
type of work is done in Mexico and Asia. When the product
servicing process is located in Mexico or China, most of the
required components are also procured from vendors in these
countries. Therefore, servicing our products in U.S.
correctional facilities is much better for the U.S. economy and
the U.S. job market than servicing them in Mexico or China. If
H.R. 2965 becomes law without deletion of Section 7, it will
most certainly result in the loss of U.S. jobs.
2. Since any of Remy's competitors can enter into service
agreements with correctional facilities, these agreements are
well within the realm of fair competition.
U.S. companies, including our competitors, are flocking to
develop operations in Mexico and Asia. Some of them also have
operations in correctional facilities. Both small and large
businesses can participate in correctional industries with
service agreements and, in fact, most companies that have
operations within correctional facilities are small businesses.
In Virginia, there are over 30,000 offenders incarcerated
at anyone time and there are over 2,000,000 people incarcerated
nationwide. Remy employs a total of 230 offenders in its state
correctional operations, leaving hundreds of thousands of
offenders seeking gainful work. Any of our competitors who are
not currently using offender labor have the same opportunity to
use it as we do. (Recently, one competitor ceased using
correctional industries labor because they secured lower costs
by relocating to Mexico.) Such global examples demonstrate that
using offender employment programs are not only fair
competition, but also require as strong a business case
regarding wages as any other factory site decision.
3. Remy's program of employing offenders provides them with
valuable work experience and reduces recidivism.
Since 94% of all those incarcerated will eventually be
released into society, work experience assists our correctional
institutions and society at large in preparing offenders for a
stable transition into society. According to some studies, work
experience can reduce recidivism by up to 60%, according to
Pride Enterprises of Florida. Most offenders learn what it
means to ``get up each morning and go to a job'' for the first
time in their lives. This would not be possible if service
agreements were to be prohibited.
It is important to note that all of the workers in our
correctional facility operations are working because they
desire to work. No one is required to work for us and any
offender may resign at any time without providing notice to us.
Offenders consider Remy jobs very desirable because they
provide:
real-life work experience (the first
``real'' job for many offenders);
hand-tool skills amenable to various trade
jobs;
compensation that is significantly more than
traditional correctional work programs such as floor
sweeping, food preparation, and litter collection.
As a matter of policy, Remy offers civilian jobs to
successful ex-offenders after they complete their sentences,
and such offenders have come to work for Remy following their
release from incarceration.
Remy provides a safe working environment for all of its
offenders, as our correctional industry factories must adhere
to the same high standards for safety and cleanliness as our
civilian factories. Offenders receive the same mandatory safety
training programs that are provided to our civilian employees.
The environmental regulations in our correctional facility
operations are just as strict as in our civilian operations.
Moreover, because Remy's staff within the correctional facility
must work in an OSHA-compliant environment, the correctional
facility factories adhere to OSHA rules and regulations.
We are very proud of our correctional industry programs and
we strongly encourage those who are interested to tour these
operations. Remy is a U.S.-owned company with a 110-year
history, but the truth is that we have struggled to survive in
the new global economy and have been forced to develop capacity
abroad. Our correctional industries program has enabled us to
slow down, hopefully on a long-term basis, the exodus of many
jobs leaving U.S. soil for Mexico and Asia.
Gary P. Held,
Remy International,
Vice President, Strategy & Development.