FPI Update: House Passes Competition in Contracting Act; Battle Moves to Senate

By Jackie Rosselli

When you think of the top federal contractors, Exxon-Mobil and Halliburton quickly come to mind. But did you know that Federal Prison Industries (FPI) is also high on the list, ranking 32 nd among the top 100 businesses?

FPI’s days on that list may be numbered. Last month, the House passed the Federal Prison Industries Competition in Contracting Act (H.R. 2965). If passed in the Senate and signed by the President, the legislation will phase out over five years a requirement that the U.S. military purchase uniform articles produced by FPI without competition and open up business contracting opportunities for U.S. companies.

As most readers are aware, FPI enjoys competitive advantages such as compensating its workers at wages of between 23 cents and $1.15 an hour, paying no local, state or federal taxes and not being subject to OSHA regulations. Moreover, federal agencies are forced to buy from FPI, even if the costs are higher or the product inferior to what can be found on the open market. That’s because under its 1934 authorizing statute, if a federal agency requires a product offered by FPI, it must make the award to FPI or obtain FPI’s permission to solicit offers from the private sector. It is this so-called super preference the bill seeks to eliminate.

By eliminating FPI’s mandatory source status in competing for federal contracts, private sector firms will be able to bid on more than a half-billion dollars in business opportunities. “Fundamental reform of FPI is simply an issue of fairness,” said Rep. Peter Hoekstra in a press statement. “Private sector firms and their law-abiding workers should have the opportunity to compete for contracts they fund with their tax dollars.” Hoekstra, a Michigan Republication, has led the fight for reform and is a main sponsor of H.R. 2965. Other primary supporters include Barney Frank (D-MA), Carolyn Maloney (D-NY), James Sensenbrenner (R-WI), John Conyers (D-MI), and Howard Coble (R-NC).

Temporary relief from FPI's mandatory source power was achieved in an Omnibus Appropriations Bill signed by the President on January 23, 2004 that included a section freeing federal agencies to shop for the products they require in that fiscal year. This is the same right won previously by the Department of Defense to make their own determinations about what products meet their needs. Because appropriations bills are annual, the FPI language needs to be included every year until permanent reform, like the passage of H.R. 2965, occurs.

The battle to reduce FPI’s unfair labor practices has been waged for decades. Much of the reform has been resisted, however, due to the country’s thirst for inmate punishment and a government reluctant to oppose public opinion. The Competition in Contracting Act illustrates this point; it passed the House in 2003, but languished in the Senate’s Judiciary Committee, forcing Hoekstra and others to reintroduce it. This time around, the bill enjoyed overwhelming bi-partisan support, passing by a vote of 362 to 57.

FPI has convincingly argued that providing work opportunities for inmates combats idleness and bolster’s institutional safety, the last being an important consideration for the nation’s corrections officers. Providing work opportunities is also cited as a way to reduce recidivism, offering parolees a fast-track to mainstream in a community.

Critics argue that much of the above can be achieved without breaking the economic backs of America’s businesses. No one has ever argued that inmates shouldn’t work. The sentiment is, however, that convicts should not take jobs away from individuals or industries already decimated by globalization, imports and a changing economy.

The Competition in Contracting Act seeks to address these concerns by ensuring greater transparency and oversight of FPI's operations, while ensuring wider and more meaningful work and vocational training opportunities for inmates than under current law. The bill provides alternative rehabilitative opportunities for prisoners, including work in support of nonprofit and public service organizations, to better prepare inmates for a successful return to society.

There have been numerous modifications made to this bill to accommodate the various concerns of interested parties, including business, labor, prisoner welfare groups, and the Department of Justice which has resulted in the groundswell of support by the House. But the bill is not without its foes. “Our sincere thanks go to all members that spoke on the House floor against amendments that would have greatly weakened the bill,” said Kevin Burke, president & CFO of the American Apparel and Footwear Association (AAFA). In a press statement, Burke urged the Senate to take up H.R. 2965 promptly, noting that “legislative days in the 109 th Congress are quickly dwindling.” The AAFA was one of many association that supported the legislation. The business community and organized labor, too, support passage.

On September 21, H.R. 2965 was referred to the Senate’s Committee on the Judiciary. If the bill makes it out of Committee, Senator Carl Levin (D-MI), a longtime supporter, will take up the fight in the Senate with his companion bill, S. 749.

While passage of the Competition in Contracting Act would eliminate FPI’s stranglehold on the federal level, the bill would do little to loosen the ties of state prison industries. For many, this is the greater problem and threat to the uniform industry, particularly in the private security and law enforcement markets. Currently, the pants and shirts for prison guards are manufactured by convict labor in Pennsylvania, Florida, Michigan and New York. Oregon, too, will soon follow suit, costing a local dealer thousands of dollars in lost business. And the list continues to grow. As of now, there is no unified, comprehensive campaign on the state level to eliminate the super preference enjoyed by these agencies. Until there is, businesses around the country will continue to feel the heat. In effect, these companies have become the convict’s latest victim, even though jail time should have ended the crime spree.

UniformMarket will update this story as developments warrant.