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76–483 2012

UNLOCKING OPPORTUNITIES: RECIDIVISM VERSUS 

FAIR COMPETITION IN FEDERAL CONTRACTING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONTRACTING AND 

WORKFORCE 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JUNE 28, 2012 

Small Business Committee Document Number 112–076 

Available via GPO Website: www.fdsys.gov 


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HOUSE COMMITTEE ON SMALL BUSINESS 

SAM GRAVES, Missouri, Chairman 

ROSCOE BARTLETT, Maryland 

STEVE CHABOT, Ohio 

STEVE KING, Iowa 

MIKE COFFMAN, Colorado 

MICK MULVANEY, South Carolina 

SCOTT TIPTON, Colorado 

JEFF LANDRY, Louisiana 

JAIME HERRERA BEUTLER, Washington 

ALLEN WEST, Florida 

RENEE ELLMERS, North Corolina 

JOE WALSH, Illinois 

LOU BARLETTA, Pennsylvania 

RICHARD HANNA, New York 

ROBERT T. SCHILLING, Illinois 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

KURT SCHRADER, Oregon 

MARK CRITZ, Pennsylvania 

YVETTE CLARKE, New York 

JUDY CHU, California 

DAVID CICILLINE, Rhode Island 

CEDRIC RICHMOND, Louisiana 

JANICE HAHN, California 

GARY PETERS, Michigan 

BILL OWENS, New York 

BILL KEATING, Massachusetts 

LORI SALLEY, Staff Director 

PAUL SASS, Deputy Staff Director 

BARRY PINELES, General Counsel 

MICHAEL DAY, Minority Staff Director 


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C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Mick Mulvaney ............................................................................................... 1 

Hon. Judy Chu ......................................................................................................... 2 

WITNESSES 

Phil Sibal, Deputy Assistant Director, UNICOR, Federal Prison Industries, 

Washington, DC ................................................................................................... 4 

The Honorable Bill Huizenga (MI–02), U.S. House of Representatives, Washington, DC ............................................................................................................. 12 

Michael Mansh, President, Pennsylvania Apparel, LLC, Fort Washington, 

PA .......................................................................................................................... 17

John M. Palatiello, President, Business Coalition for Fair Competition, Reston, VA .................................................................................................................. 19 

Rebecca Elizabeth Boenigk, CEO, Neutral Posture, Bryan, TX .......................... 20 

APPENDIX 

Prepared Statements: 

Phil Sibal, Deputy Assistant Director, UNICOR, Federal Prison Industries, Washington, DC .................................................................................. 33 

The Honorable Bill Huizenga (MI–02), U.S. House of Representatives, 

Washington, DC ............................................................................................ 38 

Michael Mansh, President, Pennsylvania Apparel, LLC, Fort Washington, 

PA ................................................................................................................... 42 

John M. Palatiello, President, Business Coalition for Fair Competition, 

Reston, VA ..................................................................................................... 45 

Rebecca Elizabeth Boenigk, CEO, Neutral Posture, Bryan, TX ................... 51 

Additional Materials for the Record: 

Andrew Linder, President and Owner of Power Connector, Inc. Statement 

for the Record ................................................................................................ 55 

Letter for the Record to Chairman Buck McKeon, House Armed Services 

Committee ..................................................................................................... 60 

Woolrich Letter for the Record ........................................................................ 63 

Dale Deshotel Statement for the Record ........................................................ 64 

UNICOR Office Furniture Group Products .................................................... 79 


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UNLOCKING OPPORTUNITIES: RECIDIVISM 

VERSUS FAIR COMPETITION IN FEDERAL 

CONTRACTING 

THURSDAY, JUNE 28, 2012 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

SUBCOMMITTEE ON CONTRACTING AND WORKFORCE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10 a.m., in room 

2360, Rayburn House Office Building. Hon. Mick Mulvaney (chairman of the subcommittee) presiding. 

Present: Representatives Mulvaney, and Chu. 

Also present: Representative Flores. 

Chairman MULVANEY. I call this meeting to order and thank everybody for coming. 

Instead of the ordinary introduction, I am going to tell you what 

is going to happen here because it is going to be an unusual day 

as you can probably imagine. I think both Republican and Democrat conferences have emergency meetings at 10:30 to discuss what 

is happening across the street and what is getting ready to happen 

across the street. So what we are going to try and do is get through 

the opening statements and the testimony from the first witness, 

Mr. Sibal, and then we are going to adjourn until 2:30 this afternoon. And as inconvenient as that is, and I know that it is and I 

apologize to everybody. There is simply nothing we can do about 

the Supreme Court schedule. It was actually easier on everybody 

to that then it was to cancel this hearing once again and reschedule it. So we are going to do our best to sort of slog through it in 

two pieces today. 

So very briefly, I will read my opening statement and then turn 

it over to Ms. Chu. We call this Committee to order on Unlocking 

Opportunities: Recidivism versus Fair Competition in Federal Contracting. 

The existence of Prison Labor Industries has been a contentious 

issue in the United States for over a hundred years, particular due 

to the effect on the private sector. In today’s touch economy, tension surrounding this issue has intensified as Federal Prison Industries (FPI), or UNICOR, contracts with the government in industries that face declining growth and small businesses’ fight to 

survive in this tough economy. 

While the Federal Bureau of Prisons highlights UNICOR’s benefits to society by reducing recidivism rates, small firms attest to the 

difficulties in competing on contracts with an organization that 


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does not need to account for healthcare, taxes, and minimum wage 

upon submitting a bid. Further, despite previous efforts to move 

UNICOR from being strictly a mandatory source to an entity that 

competes for contracts, small businesses are still concerned that 

UNICOR is allowed to compete for set aside contracts. These include contracts set aside for small businesses, as well as contracts 

aside for socially and economically disadvantaged firms, service-disabled veterans, women, and HUBZones. Additionally, remaining 

mandatory source provisions requiring that the government contact 

with UNICOR reduces opportunities for small businesses and 

growth. 

In light of this, it is no surprise that over the past 20 years, Congress has been active in enacting legislation to reduce unfair competition and mitigate the effects of UNICOR on small business. 

Today, this trend is continuing in Congress with bipartisan support 

and we are fortunate to have later today Representative Bill 

Huizenga from Michigan testifying on our second panel about H.R. 

3634, the Federal Prison Industries Competition in Contracting Act 

of 2011. 

In addition to Representative Huizenga’s testimony, we will also 

examine several other small business concerns with the UNICOR 

program. The first panel will feature Mr. Phil Sibal, the deputy assistant director of UNICORN, excuse me, UNICOR, and the third 

panel will include small business owners and representatives from 

associations affected by Federal Prison Industries. We are fortunate today to have Representative Bill Flores later on from Texas, 

who will join us to introduce Ms. Boenigk, who hails from his district. 

I would like to thank all of our witnesses for being here and for 

making the special accommodation given the schedule. 

As small firms struggle to overcome the tough economy, this Subcommittee has been active in ensuring small business contractors 

receive equitable contracting opportunities. It is imperative that 

the government does not unfairly compete at the expense of small 

businesses. While reducing recidivism is certainly a worthy goal, it 

must be achieved without negatively affecting small business. And 

it is my hope that today’s examination will provide insight into this 

particular topic. 

With that, I will yield to Ms. Chu for her opening statement. 

Ms. CHU. Thank you, Chairman Mulvaney. Thank you for calling 

the hearing today on Federal Prison Industries. And I thank our 

witnesses for making the time to join us. 

As a buyer of a half trillion dollars worth of goods and services 

annually, the Federal government is a substantial economic engine 

for the country. As we have seen in this Committee time and time 

again, Federal government contracting has been a vital source of 

business for small firms, often allowing them to grow and thrive. 

Since 1934, Federal government contracting has also been a vehicle 

for one of the Federal Bureau of Prisons’ most successful and important programs aimed at reducing inmate recidivism, the Federal 

Prison Industries or UNICOR. 

All able-bodied inmates in our federal prison system are required 

to work, which helps maintain prison security by reducing inmate 

idleness. However, FPI’s model is unique and highly affected. It is 


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a federal chartered corporation whose mandate is to employ and 

provide job skill training to the greatest number of inmates in a 

self-sustaining manner. And FPI accomplishes this by producing 

market-priced quality goods and services that it is authorized to 

sell to federal government agencies. 

The goal of FPI is not to be a business; it is to rehabilitate and 

train inmates for greater success on their re-entry to the civilian 

workforce. This mandate has many positive social benefits in addition to reducing recidivism rates. Since it does not receive appropriations, it does not cost taxpayers any money and actually helps 

save taxpayer dollars by reducing future criminal justice costs. In 

fact, every dollar spent on correctional industry programs saves 

$6.70. 

FPI also increases the safety of our nation’s correctional workers 

and almost 80 percent of FPI’s revenues go back into the program 

toward purchases of raw materials from the private sector, providing opportunities to work with small businesses through prime 

contractors, subcontracts, and innovative public-private partnerships. I have heard from small businesses for which this has been 

a critical lifeline. 

However, another part of FPI’s mandate is to minimize its negative impact on private business and labor. Therefore, it is important to make sure that as economic conditions change, FPI is still 

fulfilling all parts of its mandate. That is why we are here today. 

We must ensure the right balance between the positive contributions of FPI with the concerns of parts of the small business community so that both are able to continue their operations and continue to benefit America. 

Given its mission, FPI has some unique advantages over the private sector. Mandatory sourcing gives FPI first rights to sell its 

products to agencies. At the same time, FPI is an important role 

in supporting the private sector and spurring the development and 

growth of small businesses. In fact, in 2011, it purchased more 

than $640 million in raw materials, supplies, equipment, and services with 40 percent of its purchases made from small businesses. 

However, unlike small firms, there is no limit to the amount of 

a contracts that FPI can subcontract to other entities. This means 

that FPI is often a catalyst for business development. 

Balancing the larger social mission of FPI against the needs of 

small businesses is no easy task. Over the last decade, several 

measures have been put in place to help mitigate FPI’s negative 

impact on the private sector. 

I look forward to hearing from our witnesses in exploring what 

more we can do to work constructively on this issue. Thank you, 

and I yield back the balance of my time. 

Chairman MULVANEY. Thank you, Ms. Chu. 

Our first witness today is Mr. Philip Sibal, the senior deputy assistant director for the Industries, Education, and Vocational 

Training Division of the Federal Bureau of Prisons, and in this capacity, responsible for each of the seven business groups within 

Federal Prison Industries, as well as overseeing the corporate quality and information system branches. 

Now, ordinarily, for those of you familiar with this Committee, 

we let the small businesses go first so they have the opportunity 


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to ask questions of the administration witnesses that typically go 

second. Mr. Sibal has some important time constraints today so we 

have agreed in this circumstance to let him go first. But he has 

also agreed afterwards that if a question is raised by the private 

business panels, he will answer those questions in writing after the 

hearing. 

So Mr. Sibal, thank you for making that accommodation. If you 

would please go ahead and present your testimony. 

STATEMENT OF PHILIP SIBAL, SENIOR DEPUTY ASSISTANT 

DIRECTOR, UNICOR, FEDERAL PRISON INDUSTRIES 

Mr. SIBAL. Good morning, Chairman Mulvaney, Ranking Member Chu, and members of the Subcommittee. I appreciate the opportunity to appear before you today. I serve as the Senior Deputy 

Assistant Director of Federal Prison Industries, also known as FPI 

or UNICOR, a government corporation and a component of the Department of Justice, Federal Bureau of Prisons. 

Today there are over 200,000 inmates in federal prisons, housed 

in 117 institutions and privately-operated facilities under contract 

with the Bureau. The mission of the Bureau is to protect society 

by confining offenders in facilities that are safe, secure, and cost efficient, and to provide opportunities to inmates for self-improvement necessary for a successful re-entry into society. FPI is one of 

the Bureau’s most important correctional programs. While it operates like a business, the real output is inmates who are trained in 

marketable job skills so they can return to the community as productive members of society upon release. 

FPI was established by statute and executive order to provide 

training and work experience to federal inmates without the need 

for Congressional appropriations. The statute also recognized this 

training should not place an undue burden on any specific industry. The year was 1934, when unemployment in this country was 

at 22 percent. Nevertheless, Congress recognized the importance of 

creating a real-world environment in which inmates would learn 

the valuable skills needed to become productive members of society. 

The enabling statute created a procurement preference for FPI, 

known as the ‘‘mandatory source’’ to ensure sufficient work opportunities would exist for the inmate population. More than 75 years 

later, FPI continues to operate without any Congressional appropriation, although it has become increasingly difficult in recent 

years. 

The Bureau of Prisons releases approximately 45,000 inmates 

per year back to communities around the country. FPI is critical 

to the Bureau’s efforts to prepare these inmates to successfully reenter society. Inmates who work in FPI are 24 percent less likely 

to reoffend and 14 percent more likely to be employed upon release 

than their nonparticipating peers. FPI provides the greatest benefit 

to minorities, inmates who are often at a greater risk for recidivism. FPI is also critical to the Bureau’s efforts to manage safe and 

orderly prisons. Inmates who work in FPI are substantially less 

likely to violate prison rules as compared to nonparticipating inmates. This is particularly important in high and medium security 

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age holding more than 150 percent of the offenders they were designed to house. 

Inmates who work in FPI are required to use half of their wages 

to satisfy financial obligations, including assessments, fines, and 

restitutions to directly and positively impact crime victims, the 

courts, and inmate family members. In fiscal year 2011, inmates 

who worked in FPI contributed more than $1.6 million of their 

earnings towards these financial obligations. 

The overwhelming majority of FPI’s expenses, approximately 78 

percent, go to purchases from private vendors with more than a 

half a billion dollars spent on raw materials, equipment, and services from private sector businesses. Year-to-date in fiscal year 2012, 

approximately 54 percent of these purchases are from small businesses, including businesses owned by women, minorities, and 

those who are disadvantaged. But the economic downturn and 

changes to procurement laws and policies have significantly challenged FPI’s ability to continue to operate as a self-sustaining inmate program in recent years. We are actively pursuing new business opportunities consistent with new legislative authorities regarding products made outside the United States. Today the FPI 

program serves less than 13,000 inmates; 7 percent of the inmate 

population in Bureau institutions, down from more than 23,000 inmates just five years ago. Over the same time period, the federal 

inmate population has increased by more than 25,000 offenders. 

The loss of work opportunities within FPI translates into more 

than 15,000 inmates who are released back to our communities 

without having the benefit of the skills, training, and work experience that has proven to be effective in reducing recidivism. 

Chairman Mulvaney, Ranking Member Chu, and members of the 

Subcommittee, I thank you for the opportunity to testify today 

about Federal Prison Industries, one of the Bureau’s most important re-entry and recidivism programs, and certainly, a critical 

piece of the Bureau’s public safety mission. This concludes my remarks. I would be pleased to answer any questions you or members 

of the Subcommittee may have. 

Chairman MULVANEY. Thank you, Mr. Sibal. 

I recognize Ms. Chu for such time as she may consume. 

Ms. CHU. Mr. Sibal, can you explain what would happen to FPI 

if it could not get the federal contracts that allows FPI to sustain 

itself? Do you have any other avenue besides federal contracts in 

order to keep this program whole? 

Mr. SIBAL. Until December of 2011, FPI was restricted to selling 

its products to the federal government. In 2011, in December, we 

received authority to bring work back from overseas by repatriating 

products for the—selling products to the commercial market that 

are currently or would otherwise be made offshore. We are actively 

pursuing opportunities to take advantage of that new authority. 

Within weeks after receiving it, we had several pilots approved by 

our Board of Directors. 

However, it is important to recognize that we see that as an opportunity to replace some of the 10,000 jobs that we have lost in 

the last five years, rather than as a replacement for the 13,000 jobs 

we have remaining. The reason for that is we rely on the existing 

work we have to cover the fixed expenses of our operations. The 


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challenges with repatriated work is the wage rates offshore are so 

low, substantially lower even than prison wages, that unless we 

have that foundation of work for the federal government to cover 

our fixed costs, like building depreciation, staff salaries, et cetera, 

and can treat the repatriated work as just incremental work to 

where the only costs we have to apply to it are the raw materials 

and what we call the variable overhead specifically for that product. That is the only way economically those projects we believe are 

going to be viable. 

We also faced some significant challenges with those projects in 

other avenues. We have had several projects already where we 

were going full speed ahead and ran into issues with corporate policy and corporate perception. There are cases where corporate executives simply do not want to be associated with prison industries, 

and there are cases where corporate policies specifically prohibit 

companies from buying from any vendor that uses prison labor. 

So this is not a panacea. We are certainly excited about the opportunity, grateful to Congress for providing it. We think it does 

absolutely provide us the opportunity to increase work, but it is not 

without obstacles. 

Ms. CHU. We have heard about FPI’s benefits to the inmates and 

the issue of recidivism, in fact, that it combats against it. But can 

you describe FPI’s benefits to the taxpayers? 

Mr. SIBAL. Certainly. You mentioned one of the important benefits, and that is the fact that more than any other program in the 

prison system, Federal Prison Industries has a return of $6.70 per 

dollar spent on Prison Industries. So that is a significant benefit 

to the taxpayers. Because of the reduced recidivism, costs for the 

entire justice system from law enforcement through prosecution, 

through incarceration, through and including the cost to the victims of crime are greatly reduced by a ratio of $6.70 to 1. 

Another important impact that Prison Industries has is the financial responsibility program, the money that is turned back from 

the inmate wages to victims of crime, to the special assessments, 

to child care obligations, et cetera. And again, that was $1.6 million 

last year. A significant part of the benefit in addition to providing 

the inmates with skills that they need to get a job when they get 

out is the impact on operating the prison. I spent most of my career 

managing prison industries’ operations inside federal institutions. 

The jobs that the inmates have in those institutions are very critical in their adapting to the prison environment and inmates that 

work in Prison Industries are known to be much less involved in 

violence, in disruptive behavior inside the prison. So it is a very 

important tool inside the prison for helping to manage the population. 

Ms. CHU. FPI was created in 1934, during the Great Depression, 

when the U.S. was suffering its highest level of unemployment and 

economic stagnation. And it grew to be a successful program that 

has long enjoyed bipartisan support. What kind of economic impact 

do you believe FPI can have during this recession? 

Mr. SIBAL. I think our support of small business is a very strong 

impact that we can have. As I mentioned in my opening remarks, 

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work as a partner with small business and open our doors to them, 

the opportunities to work with us either as a supplier or as a partner where the private sector company may have expertise in one 

area. We have expertise in another. Working together we can be 

competitive sometimes even with offshore. So I think the partnership and the synergism we can have with businesses, large and 

small, can really help the economy. 

Ms. CHU. I would like to ask about your relationship with the 

private sector and this mandate to mitigate the negative impact on 

them. What steps has FPI taken to accomplish this requirement 

and to ensure that the private sector, especially small businesses, 

are not hurt by FPI’s operations? 

Mr. SIBAL. We are certainly very sensitive to our impact on private industry, small business and large. We have a very stringent 

new guidelines—new product guidelines process that requires for 

every new product that we come out with or even a significant expansion of existing product. It has to go through a rigorous process 

of public vetting where we announce to the public our interest in 

entering into a new product area or expanding an existing product. 

Companies that are concerned then have the opportunity to either 

write to our Board of Directors or visit the Board in person and express their concerns. The Board of Directors then has the ultimate 

decision as to whether or not we are going to enter into a new 

product area. 

We also have other restrictions imposed by our Board of Directors on our market share and recent rules restricting our market 

share with contracts for the Department of Defense. 

Ms. CHU. And there have been some alternatives proposed such 

as increasing the set-asides for small businesses in the industrial 

areas in which FPI operates. What are your views on those alternatives? 

Mr. SIBAL. I think there is a misperception that FPI—that it is 

an either-or. Either Federal Prison Industries or small business, 

when in fact we have been working hand-in-hand with small business and peacefully coexisting since we were first created. And I 

think as I mentioned, the opportunities for subcontracting and for 

partnering present a lot of opportunities for small business to grow. 

We are a relatively small part of private industry, and including 

our impact on small business. I believe one of the most sensitive 

areas seems to be the military apparel business whereby the statistics directly from the Department of Defense—these are not FPI 

statistics—we represent on average just five to seven percent of the 

pie of the apparel work that Defense Logistics Agency Troop Support in Philadelphia buys from the federal government. Small business represents a 45 percent piece of that pie. And again, I would 

emphasize that that is the piece of the federal pie to which FPI is 

restricted with the exception of the new authority that we are beginning to explore whereas the private sector companies have access to commercial markets, global markets, and we are only allowed to sell to the federal government. 

I think there is room for us to coexist. We have shared these 

markets ever since we came into being. What is different now is 

that these contracts, where before we achieved our balance with 

small business through the mandatory source, now we are bidding 


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on those contracts. So I think that is something that has changed 

in recent years. 

Ms. CHU. In fact, talking about the mandatory source, you have 

the ability to grant waivers to it, to its ‘‘mandatory source’’ clause 

in order to mitigate the negative impact on businesses. I have 

heard from businesses that say that the waivers are too rare. 

Under what circumstances and how often are these waivers requested by agencies and granted by FPI? 

Mr. SIBAL. In fiscal year 2011, we received requests for $165 mil- lion in waivers. We granted $156 million in waivers. On average, 

we have been averaging 95+ percent of the waivers requested that 

we grant. 

Ms. CHU. And how have the waivers affected FPI’s ability to operate, employ, and train inmates, as well as fulfill your mandate? 

Mr. SIBAL. Business waived is inmate jobs that we do not have. 

But it speaks to our commitment to business that we are going to 

minimize the impact on small business and try to reach a balance, 

both with the customers and with private business to coexist and 

to allow businesses to participate where the customer wants a specific product that we do not make or they want a specific feature 

that perhaps we do not provide. I think it just speaks to the balance we have been trying to strike since we were born. 

Ms. CHU. Okay. 

Chairman MULVANEY. Thank you, Ms. Chu. 

I want to talk about that balance because I struggle with this as 

a small businessperson. I see clearly both sides of it. I have seen 

small businesses benefit from this because they buy from you all. 

I have seen small business suffer from it because they compete 

with you all. And it strikes me that the one thing that is sort of, 

if anything justifies the program, it is the recidivism. It is that social cost entailed in teaching folks jobs; they can get out of jail and 

stay out of jail. 

So let us talk about that for a second. Does it work? And tell me 

how you all measure it. 

Mr. SIBAL. Absolutely. 

Chairman MULVANEY. Give me some information on why you 

think it is successful in that particular mission. 

Mr. SIBAL. Certainly. There was a study called a PREP study 

which is the Post-Release Employment Project that evaluated inmates over a number of years, a very rigorous study. And that 

study concluded that inmates working in prison industries were 24 

percent less likely to come back to prison; 14 percent more likely 

to get a job upon release. That study has been rigorously analyzed 

by other institutions. One in particular, the Washington State Institute for Public Policy, who uses only the most rigorous research, 

actually used that PREP study as a basis for their subsequent 

studies looking at the cost benefits of the Prison Industries’ program. 

Chairman MULVANEY. Right. But getting a job upon discharge 

from prison is not recidivism. Recidivism is not going or going back 

to prison. So tell me specifically about that. I understand that now 

they have a skill. They are more likely to be employed than folks 

who do not learn a skill in prison. I understand that. But tell me 

about the rate at which they go back to jail. 


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Mr. SIBAL. And that is the recidivism figure that I used at 24 

percent. That is not an employment figure; that is the rate, the 

lower of the rate at which they come back to prison. And we define 

recidivism as being reincarcerated in the BOP within three years 

after release. 

Chairman MULVANEY. So you are 24 percent less likely to go 

back to jail within three years if you go through this program? 

Mr. SIBAL. That is correct. And right now every inmate costs us taxpayers $30,000 a year to house. So that is a significant savings. 

Chairman MULVANEY. Now, there are other programs designed 

to reduce recidivism rates outside of job training and prison labor. 

How does this program compare to those? 

Mr. SIBAL. In the Washington State Institute for Public Policy 

Study, Prison Industries was the most valuable in terms of the dollar ratio of savings to the program. The Bureau of Prisons offers 

a variety of really valuable programs to give inmates the opportunity to take advantage of their time in prison. Adult basic education, vocational training, drug abuse treatment, for example. The 

one program that was shown to have a higher impact on reducing 

recidivism was vocational training. So it is frequently asked, well, 

why do we not put inmates through vocational training which does 

not impact small business. 

The problem with vocational training alone is two-fold. One, it 

costs taxpayer dollars. Vocational training is not cheap. The second 

issue is one of timing. Would it really make sense, for example, to 

have someone go through automotive training and get his certification as a certified auto mechanic 10 years before he is going to 

be released? Vocational training is really only effective within 18 

months to two years of release. Imagine an inmate that receives 

training as an auto mechanic 10, 12 years ago and now he is released into a society where what is a hybrid and electric car, et 

cetera, et cetera. So there is an issue of the skills staying current, 

because once an inmate has completed a vocational training program, he does not get to hang around and continue to hone those 

skills. He has completed the program. So those skills would get 

very rusty. 

Chairman MULVANEY. Could not the same thing be said about 

Prison Industries though? I mean, why would you put somebody in 

the business of making boxes if they are not going to be out for 15 

or 20 years? 

Mr. SIBAL. That is a question we often hear, and that speaks to 

the question of what we call the soft skills versus the technical 

skills. There was a study by the National Association of Manufacturers back in 2005, I believe, in which private sector manufacturers were asked about the problems with retaining and hiring their 

workforce. The problems they had with hiring and retaining production workers was not that that they did not know how to run 

Microsoft Excel. Not that they did not know how to run a computer-controlled machine. They lacked the soft skills as we call 

them. Show up for work on time. Do what the boss says. Wear your 

safety shoes. Get along with the other guys in the shop. Those are 

the skills that we teach the federal inmates, and that is first and 

foremost what we are shooting for. By design, we are designed by 

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ously, we could employ a lot of robots and unemploy a lot of inmates by doing that, and thereby, expose them to more marketable 

skills. But we focus on teaching them the soft skills. We certainly 

have examples where inmates are learning very valuable and very 

current skills, whether it be in computer-aided drafting, working in 

a call center. We use a system called SAP as far as our production 

financial system. That is the global market share leader in those 

types of systems. Inmates are on that system every day. So they 

are learning valuable skills. 

Chairman MULVANEY. Can you quantify for me, Mr. Sibal, if you 

believe that Prison Industries were more effective in preventing recidivism, then vocational training, can you quantify that for me? 

Mr. SIBAL. The statistic I would cite, and again, vocational training program is proven to be more effective in reducing recidivism 

but the drawbacks to that are the facts that it requires appropriations and we have the issues of the timing of that program versus 

the timing of the inmate’s sentence. 

Chairman MULVANEY. And I appreciate that. I think at the end 

of the day it will cost all taxpayers money one way or the other. 

Whether or not we do an actual appropriation or we compete with 

business and take business away from small business and they pay 

less taxes, sooner or later we have got to pay for it one way or the 

other but that is a bigger story for another day. 

I want to talk about where you all work. Because one of the 

things in doing the research for this hearing, one of the things I 

was excited to see was the previous law change from several years 

ago that allowed you, encouraged you to go into the businesses that 

did not compete with domestic producers, that had you focus on 

things that were no longer made here, have never been made here 

and go into that industry and compete with folks who are overseas. 

Tell me more about that program. You mentioned a little bit in 

your answer to Ms. Chu. Tell me what you are doing with that. 

Tell me about the growth rates in there and how you are focusing 

on that. And then I want to have some follow-ups as to why I like 

that program so much. 

Mr. SIBAL. Certainly. We are very excited about that program as 

well, and again, we are grateful to Congress for granting that authority. We just received it in December of 2011. 

We had a Board Meeting in January, the following month, and 

by that time we already had four pilots that we asked for approval 

by the Board of Directors. Some of them were apparel, solar panels, 

tents, baseball caps, the textile bags that you take to the grocery 

store. And energy efficient lighting was another one. So we are aggressively pursuing those. But as I mentioned earlier, we have encountered a lot of obstacles in trying to actually make that happen. 

We are actually producing some LED lighting at one of our factories in New Jersey. The other programs we are still trying to 

work through the contract negotiations. 

Chairman MULVANEY. And these are all items that are not made 

here? 

Mr. SIBAL. Yes. These are all items that are not made here. Now, 

they may be made here to some extent, but one of the things that 

we have to evaluate in the information we have to provide to our 

Board is what we refer to as the import penetration ratio. There 


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is probably nothing that is 100 percent made somewhere else in 

this country. But what we have to look at is what would—again, 

what would our impact be on those businesses that do remain? 

Chairman MULVANEY. Mr. Sibal, our time is running short and 

I am not going to get a chance to ask my line of questions about 

specific industries but I want to make a comment for the record, 

which is that you mentioned specifically apparel, military apparel. 

I am from a textile area, and it is one of those places where we 

have more labor now than we have demand for that labor. And it 

strikes me as somewhat against the purposes to be—having prison 

labor competing in areas where folks are having difficulty finding 

jobs in the private sector, and to encourage you I am going to ask 

some follow-up questions in writing on whether or not your program can instead focus on areas where there is a shortage of labor. 

And I am speaking specifically in my district of agriculture. They 

cannot find people to do these jobs. And it strikes me that that 

might be an area where you all can grow your base without going 

into direct competition with the private sector because we need 

that labor. We are not able to get that labor. Immigration is preventing us from getting particular folks to work that. Domestic 

workers do not want to do the job so we have ended up losing entire industries in my state because they cannot find the people. 

And maybe that should be something the federal prison programs 

can focus on that would still allow you to accomplish what you 

want to accomplish without competing with folks who are out there 

trying to make shirts and pants for the military. 

But again, I am going to be respectful of everybody’s time. My 

phone is blowing up. I do not if anybody else’s is. I have got 15 different answers on what happened across the street. We are not 

really sure what the deal is yet so we are going to go find out. 

What we will do now is we will adjourn until 2:30. I thank Mr. 

Sibal, I thank everybody else for the accommodation, understanding that it is a very special day. We are going to adjourn now 

until 2:30. 

[Recess.] 

Chairman MULVANEY. On that cheerful note we will call the 

meeting back to order. And again, I thank everybody for the special 

accommodations today. I cannot apologize enough. I know how difficult it is to work these things into your schedule to begin with, 

but there was really obviously no way around it today. So thank 

you for coming back. 

Panel number two is Mr. Huizenga, who is going to talk to us 

about a bill that he is working on. Where is my introduction? Good. 

And I am pleased to welcome you, Mr. Huizenga. And I have a nice 

little phonetic spelling of your last name which is cool. 

He represents the Second District of Michigan. He is a small 

business owner himself and he understands the issues that this 

Committee seeks to address, and his introduction of H.R. 3634, the 

Federal Prison Industries Competition and Contracting Act of 2011 

is especially relevant to what we are doing today. 

So with that, welcome to Mr. Huizenga and I will give you as 

much time as you need, Bill. 


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STATEMENT OF THE HONORABLE BILL HUIZENGA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. HUIZENGA. Mr. Chairman, I appreciate the opportunity to be 

in front of you, and Ranking Member Chu, thank you for your time 

and your attention. This is something that is very important and 

on a very, very busy day I am glad we could get together and have 

this conversation because competition with the private sector by 

Federal Prison Industries is an issue that is important not only to 

those of us on the West Side of Michigan or in Michigan in particular, but really across the nation. 

When I was district director for Congressman Pete Hoekstra, my 

predecessor, we had an interesting experience when the Social Security Administration opened up a brand new office building in 

town. And when they did so, they were—obviously needed to put 

new furniture into it. Unfortunately, the hometown that I am from, 

two of the world’s largest of the three largest office furniture makers in the world are located in the Holland area. The third one, 

Steel Case, is about 20–25 miles away. They were actually not even 

allowed to compete for that contract. And what happened is the 

opening of the office was delayed because the office furniture was 

not actually delivered on time and the irony was we were literally 

a rifle shot away from one of those office furniture makers who 

could have had that there in literally, if not the same day, by the 

next day, and we could have had that office opened. And it was not 

because of the mandatory sourcing that UNICOR has and that the 

Federal Prison Industries put forward on this. 

So the impact of it hits communities all over. Our colleague, 

Carolyn Maloney, has been a long-time supporter of this initiative 

and worked with Congressman Hoekstra at the time. I want to 

make sure I get the name right. It was the Glamour Glove Company on Long Island that had its existence threatened by FPI. 

Many of Ms. Maloney’s constituents were employees of the company, and they lost 80 percent of its glove business before a compromise was negotiated with FPI. 

Ace Electronics of Bel Air, Maryland, and Troy, Michigan, manufacturers wiring and cable assemblies, fiber optics, connectors, and 

other products. Ace will likely lose out to FPI on a $300 million 

contract because of the rule that allows FPI to capture up to five 

percent of the market share in a particular area. 

General Linen Service of New Hampshire was forced to compete 

for a contract against the prison system that they had previously 

serviced without incident. The Textile Rental Services Association 

member was informed that their service contract was being terminated and awarded to the prison system without any reasons given. 

While the company eventually won the contract back, the cost of 

having to recomplete and restructure the contract was a significant 

burden on the business. 

UNICOR has been sort of argued in some hands and some quarters as not really being a significant operation. That is not the case 

at all. They occupy more than four million square feet of manufacturing and service space. FPI is far from a small business. This bureaucratically-run corporation competes with private business job 

creators in over 300 individual products and services. It is comVerDate Mar 15 2010 23:42 Dec 22, 2012 Jkt 076483 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 E:\HR\OC\A483.XXX A483

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prised of seven divisions including clothing and textiles, electronics, 

fleet management, office furniture, industrial products, recycling, 

and services, including call centers and data and document conversion as well. 

Revenues range from $745 to $885 million annually. FPI is the 

36th largest federal contractor when measured by gross sales to 

federal agencies. Prisoners working in UNICOR factories are paid 

somewhere between 23 cents to $1.15 per hour. Can you imagine 

the uproar in the public or in Congress if we were importing goods 

manufactured from China and using prison labor there? It is no 

wonder American-grown companies cannot even compete with a 

Goliath like that that is paying literally pennies on the dollar 

where our companies are forced to pay obviously at least minimum 

wage. 

In addition to low wages, FPI does not have to pay employees Social Security, nor the employer’s share. It does not pay unemployment compensation, workers’ compensation insurance, Federal, 

State, and local income taxes, gross receipts taxes, excise taxes, 

and sales taxes. It is not subject to Federal Trade Commission 

oversight, Securities and Exchange Commission oversight, or Department of Justice review. It even has a special statutory allowance for a line of credit through the Department of Treasury for up 

to $20 million at zero percent interest. 

On a very bipartisan basis, I introduced H.R. 3634, the Federal 

Prison Industries Competition and Contracting Act. It was a wide 

range of support, including lead Democratic sponsors Barney Frank 

of Massachusetts and Carolyn Maloney of New York, as well as 

former Judiciary Committee Chairman Jim Sensenbrenner of Wisconsin and former Small Business Committee Chairman Don Manzullo of Illinois. The bill is nearly identical to previous versions 

that had passed the House by votes of 350 to 65. That was in 2003. 

And then again in 2006, when a bill passed 362–57. 

We must pass, I believe, my bill, and work with our Senate colleagues to pass it in the other body as well. That had been where 

the holdup had been previous years. I am pleased to report that in 

the coming days, Senator John Thune of South Dakota and others 

will be introducing a bipartisan FPI reform bill there. 

My narrowly written bill would establish market-based, government-wide procurement policies for purchases that are based on 

competitive procedures. It establishes competition as the standard 

for the Federal agencies when they do their purchasing. 

Currently FPI, not the buying agency, determines if the product 

FPI offers and the delivery schedule that it offers meets the needs. 

That is pretty much backwards from any other procurement that 

happens. Our bill puts the purchasing decisions in the hands of the 

buying agencies requiring them to research which products are 

available on the market, not just to flip through an FPI catalogue 

and know that they have to take what is being offered. Specifically, 

our bill requires FPI to compete for business opportunities by removing the mandatory source status that UNICOR enjoys. It requires FPI to complete a probability impact study on private industry before entering into a brand new market. So at this point they 

are able to just basically say, hey, that sounds like a good idea. We 

will start expanding into this new area or that other area, and this 


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would require them to do an impact study. It forces UNICOR to 

gradually pay competitive hourly wages for prisoners performing 

the work and makes OSHA standards mandatory at prison factories. And it also prevents UNICOR from selling products in commercial settings and from entering new interstate or foreign commerce contracts. 

So H.R. 3634 is mindful of idleness of prisoners as well. I do not 

think anybody wants to see these guys or these women sitting 

around not learning a skill or not being kept active, and it does actually address recidivism. It creates new opportunities for prison 

workers that do not result in unfair competition with private business, particularly small business, and the employees in companies 

that lose out to FPI, but it allows prisoners within FPI to work for 

a tax-exempt charity, religious organization, or even local units of 

government. And I know in Michigan, when I served in the state 

legislature there, we had kind of a similar situation where there 

was a bit of a state version of this. And we went in, changed the 

law, and I was aware of it because having prior—immediately prior 

to being in the state legislature I had worked as the district director for Congressman Hoekstra, and so I was aware, very much 

aware of our efforts on the federal level with FPI, so I went into 

the state legislature looking at if we did anything like that and discovered that we were. So one of the things that we did is we said, 

okay. We worked with Habitat for Humanity and we now have 

state prisoners building modules and components of homes for 

Habitat for Humanity. And then as those would then get shipped 

off to those building sites it was saving a tremendous amount of 

time and cost while we were giving prisoners skills that hopefully 

they will be able to use on the outside, but it also authorizes private businesses to participate in work training and apprenticeship 

programs for prisoners as well. 

It establishes an Enhanced In-Prison Educational and Vocational 

Assessment and Training Program to help people with release 

readiness preparation. The Bureau of Prisons’ own studies have 

shown that vocational training programs have historically been the 

most successful in decreasing recidivism. By giving prisoners the 

training they need to find and maintain a job once released, we are 

providing them, their families, and our communities, with the 

greatest of services, I believe. Taking jobs away from honest, hardworking Americans in the process though, is not how we accomplish this goal. 

So again, I thank you very much for the invitation and the opportunity to be with you this afternoon. And we are looking for all 

the support that we can get for H.R. 3634, and would love to have 

your participation as we move forward on that. Thank you, Mr. 

Chairman. 

Chairman MULVANEY. Thank you, Mr. Huizenga. 

Ms. Chu, I recognize you for as much time as you would consume. 

I have just a couple, Bill. Thanks very much. 

Oh, I want to recognize Mr. Flores who is here. I will tell you 

what, as I was getting ready for this hearing I was not really 

aware of the scope of the Federal prison program. I knew it existed, 

and I had folks who had used it and competed with it, both back 


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home, but that number you threw out today, that stuns me that 

it is, you know, $750, $800 million a year. That is a big, big company. Are you telling me, by the way, that story about Michigan, 

that we actually bought the furniture for the Social Security Administration building in your district from Prison Industries? 

Mr. HUIZENGA. Correct. Yeah. We all make it locally. Yeah. And 

all the Aeron chairs that people sit in are literally made in my district. And I am not saying we necessarily want to have Social Security Administration flooded with Aeron chairs, but that is the scope 

of it. I mean, all of the system’s furniture is centered—the biggest 

three but also probably out of the top 10 office furniture makers, 

seven of them are located within the West Michigan area. 

Chairman MULVANEY. I had no idea. As you go forward on the 

bill, something came up in the first panel today I would encourage 

you to consider, which is—and I think you have in this impact 

study that you are requiring them to make as they go into new industries, you know, I have got industries in my district that cannot 

get people. They cannot find labor, specifically agriculture. And it 

would make sense, it would seem to encourage the Prison Industries to go where there is a shortage of labor, not where there is 

a surplus of labor, like in textiles or in your circumstance, furniture. So if that is contemplated in your bill, I commend you on 

that. If not, I would encourage you to consider adding something 

like that. The competitive wages, by the way, I thought was interesting as well. 

What is the pushback on the bill? Have you heard anything yet 

or not? 

Mr. HUIZENGA. Well, other than UNICOR, they are obviously not 

real interested in moving in that direction. They would like to have 

as much flexibility and freedom as they possibly can. I can tell you 

that when we explain it, especially for a number of the freshmen 

that are coming in who have not dealt with this in the past, you 

kind of get that same reaction where it is like, really? I mean, we 

have got three-quarters of a billion dollar industry that is getting 

run through our Federal prisons. 

Chairman MULVANEY. At $1.15 an hour or something like that. 

Mr. HUIZENGA. Yeah. Yeah, 23 cents to $1.15 an hour. And we 

ought to maybe take a closer look. So we have gotten very positive 

feedback on that. And obviously, by those votes, it is rare to see 

350+ votes for anything, but you know, this was a culmination of 

many, many years of work. That 2003 vote, Congressman Hoekstra 

had started working on this back in the mid-90s, about ’97, ’96. 

And where it came from frankly, you know, the office furniture industry is a multi-billion dollar entity. And the dotcoms were going 

on. When you had a good idea but it was all based on Internet, 

what did you do? You went and rented some of the most cool office 

space and bought the most expensive furniture you could find. 

Right? And so the office furniture industry was just going nuts. 

And when that dot bomb happened, the dotcom bubble burst, suddenly they were looking for business. They had ramped up to a tremendous amount of output, and they were looking for new areas 

where they could go. 

Well, at that point, UNICOR was doing about $100 to $125 million a year in office furniture. Not insignificant, but when you are 


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a multi-billion dollar industry, it was kind of like, okay, we knew 

it was sort of happening over here and they were playing some 

games. They would import parts from certain manufacturers and 

then they would assemble them in the prisons and they would, you 

know, they would call it Prison Industries or they would try to 

come up with some of these partnerships. But when they started 

looking around for new areas and new avenues to expand their 

business, a $100 million target was significant. So that was really 

what prompted Congressman Hoekstra and Congressman Frank 

and Ms. Maloney and others to sort of get engaged. And my understanding, I believe it was also textile-related when Mr. Frank and 

Mr. Hoekstra came together on this. They were sort of coming at 

it from different industries but with the same outcome, which was 

seeing private sector jobs disappearing because of mandatory 

sourcing through UNICOR. 

Chairman MULVANEY. I have to ask you one last question I did 

not get a chance to ask the previous gentleman who was here on 

our first panel, would your bill ban UNICOR from receiving future 

stimulus money? 

Mr. HUIZENGA. From future stimulus money? That is one of the 

questions that we have, is whether it has or not. And I need to go 

back because I am not sure I can answer that accurately. So if I 

can double-check on that for you and we will get back to you, Mr. 

Chairman. 

Chairman MULVANEY. Thanks, Mr. Huizenga. Unless there are 

further questions, thank you very much for your testimony today. 

And we will go ahead and panel the third group. Thanks. 

Mr. HUIZENGA. Thank you. I appreciate it. 

Chairman MULVANEY. All right. Thanks to the final panel that 

is making its way up. 

In this third group we are going to have Michael Mansh, president of Pennsylvania Apparel, LLC, a small business based in Fort 

Washington, Pennsylvania with factories in Olive Hill, Kentucky; 

Macon, Georgia; and Buckhannon, West Virginia. He is also the 

chairman of the American Apparel and Footwear Association’s Government Contractors Committee. 

Mr. Mansh, are you here, sir? 

Mr. MANSH. Yes, sir. 

Chairman MULVANEY. Come on up, please. 

I would also like to welcome John Palatiello. John is the president of the Business Coalition for Fair Competition, an organization comprised of trade associations, businesses, and organizations 

dedicated to free enterprise, relief from unfair government-sponsored competition, and maximum government reliance on the private sector. They are also the organizer of the Federal Prison Industries Competition in Contracting Act Coalition, a group of firms 

and associations seeking a full and open competitive procurement 

market with a level playing field between the private sector, especially small business and Prison Industries. 

And our third witness is going to be introduced by my good 

friend from Texas, Mr. Flores. 

Mr. FLORES. Thank you, Chairman Mulvaney. I would like to 

thank you for the opportunity to join your committee today. And 

I would like to take the opportunity to introduce one of my conVerDate Mar 15 2010 23:42 Dec 22, 2012 Jkt 076483 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 E:\HR\OC\A483.XXX A483

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stituents from College Station, Texas. Rebecca Boenigk serves as 

the chairman and CEO of Neutral Posture, Inc. She has over 23 

years of experience in research development, design, and the manufacturing of ergonomic seating. Ms. Boenigk has grown Neutral 

Posture to an international company with numerous award-winning patented products. Together, Rebecca and her mother have led 

Neutral Posture, Inc., from the startup to becoming a publicly held 

company of nine years. In 1997, Neutral Posture, Inc. completed an 

initial public offering, becoming the first certified women-owned 

business to be traded on the NASDAQ. In 2006, Rebecca was appointed to serve on the National Women’s Business Council, which 

serves as advisors to the president, to Congress, and to the U.S. 

Small Business Association. Rebecca is the immediate past president of the Business and Institutional Furniture Manufacturers 

Association. She is a past member of the Board of Directors for the 

Women’s Business Enterprise National Council. She is a national 

founding partner for the Women Impacting Public Policy, and she 

served on the Board of Directors of the Institute for Economic Empowerment of Women. And I have known Rebecca personally for a 

long time, and I know she will add value and insight to this conversation today. Thank you, Mr. Chairman. 

Chairman MULVANEY. Mr. Flores, thank you for your time. 

We will start with Mr. Mansh. 

STATEMENTS OF MICHAEL MANSH, PRESIDENT, PENNSYLVANIA APPAREL, LLC, TESTIFYING ON BEHALF OF THE 

AMERICAN APPAREL AND FOOTWEAR ASSOCIATION; JOHN 

M. PALATIELLO, PRESIDENT, BUSINESS COALITION FOR 

FAIR COMPETITION; REBECCA ELIZABETH BOENIGK, CEO, 

NEUTRAL POSTURE, TESTIFYING ON BEHALF OF WOMEN IMPACTING PUBLIC POLICY 

STATEMENT OF MICHAEL MANSH 

Mr. MANSH. Thank you. Thank you, Chairman Mulvaney, Ranking Member Chu, and members of the Subcommittee for affording 

me this opportunity to speak today on the adverse impact that Federal Prison Industries has had and continues to have on our business and our industry. 

I am Michael Mansh, president of Pennsylvania Apparel, LLC, a 

company based in Fort Washington, Pennsylvania, with factories 

operating in Olive Hill, Kentucky; Macon, Georgia; and 

Buckhannon, West Virginia. I am also a member of the American 

Apparel and Footwear Association, where I serve as chairman of its 

Government Contracts Committee, which represents the domestic 

manufacturing base of clothing, footwear, and textile producers for 

the U.S. Military. 

In November 2002, I appeared before the House Small Business 

Committee and explained the deleterious impact of Federal Prison 

Industries on my company and the industry at large. In the last 

10 years, I can tell you that things have only gotten worse. 

Pennsylvania Apparel has been both a prime contractor and a 

subcontractor for the Department of Defense for the last 50 years. 

My company’s survival against the unfair and unjust competition 

from FPI would not have been made possible if it were not for the 


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efforts of Senators McConnell and Paul and the effective representation of our industry by the American Apparel and Footwear Association. 

We are in support of two pieces of legislation that seek to reform 

the program—H.R. 3634, the Federal Prison Industries Competition and Contracting Act introduced by Congressman Huizenga and 

H.R. 2312, the DOD Textile and Apparel Procurement Fairness Act 

introduced by Congressman Walter Jones. One of the most important features of both pieces of legislation is the restriction that they 

place on FPI from being able to take any contract specifically reserved for small businesses. 

When I last appeared, I testified that my company’s main product was the Utility Jacket for the U.S. Navy, which was made in 

Olive Hill from 1987 through 1997. Olive Hill is a small town of 

1,600 people located in a HUBZone with high unemployment where 

my factory alone employs more than 10 percent of the eligible 

workforce. FPI took that product and I had no ability to fight the 

decision. 

I was able to keep my Olive Hill plant open by securing a contract for the Air Force Lightweight Windbreaker, an item worn by 

each member of the U.S. Air Force. This item is well-known to 

many Americans as it is worn by the President of the United 

States on Air Force One, as well as the Air Force One flight crew. 

My company and its workers have been successfully and proudly 

making this jacket for the last 15 years. 

In December 2011, I learned that FPI was planning to steal this 

jacket away from my company when the contract expires at the end 

of 2012. The law does not require FPI to give me any formal notice 

of this action or allow me to submit any protest to FPI’s legalized 

theft of this product from my company and its workers. Fortunately, my appearance on FOX and Friends television program allowed me to publicly explain the real and direct impact the FPI 

program has on American manufacturing jobs, which put pressure 

on FPI to exercise a waiver of its mandatory source preference the 

very next day. 

While this version of the same story I told 10 years ago ended 

positively for my company and its employees this time, there are 

Olive Hill, Kentuckys all across this country who face the threat 

of FPI every day. Unlike other products procured by DoD, our industry is predominantly one fueled by small business interests. 

These companies are women-owned, veteran-owned, minorityowned, operate in areas of high unemployment like Olive Hill, and 

even employ blind and disabled workers under the AbilityOne program. None are immune from FPI’s preference. 

While we understand the goals of the FPI program, we do not 

understand the logic behind a federal policy that requires the government to take jobs away from law abiding, taxpaying American 

citizens as the only way to accomplish the goals of the FPI program. In 2011, FPI reported $745 million in total sales of which 

$238 million was in their clothing and textiles business segment, 

accounting for 32 percent of their total corporate sales. Moreover, 

these numbers show that FPI is not following its statutorily mandated responsibility to diversify its business among its seven segments. If that were so, FPI’s sales in clothing textiles should have 


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only been approximately $100 million in FY11. Can you imagine 

how many jobs $138 million could create in the time when unemployment is in excess of eight percent? 

In 2002, I stated in my testimony and I quote, ‘‘The time for FPI 

reform is now.’’ In 2012, I submit that the time for FPI reform is 

long overdue. 

In closing, I urge this Committee and this Congress to work with 

your colleagues in the House Judiciary Committee and the Senate 

to undertake and pass reform legislation to correct the imbalance 

that FPI has caused as soon as possible. 

I thank you for your invitation to appear before you today and 

look forward to answering any questions. 

Chairman MULVANEY. Thank you, Mr. Mansh. Mr. Palatiello. 

STATEMENT OF JOHN M. PALATIELLO 

Mr. PALATIELLO. Good afternoon. Thank you, Mr. Chairman. I 

appreciate the opportunity before you. Ms. Chu, Mr. Flores. 

I am John Palatiello, president of the Business Coalition for Fair 

Competition. I also have the privilege of being the executive director of maps, a trade association of private mapping and geographic 

information or systems or GIS firms. 

Mr. Chairman, you said you have become much more familiar 

with FPI. What you probably do not realize is yes, the prisoners 

are even in the mapping and GIS business. BCFC standards behind what we call the Yellow Pages test, and that is if the government is doing something that you can find private businesses in 

the Yellow Pages are doing the same thing, we really ought to examine whether the government should be doing that in the first 

place. This is a classic example of where the Yellow Pages test is 

being violated. 

Mr. Chairman, let me expand upon some of the comments that 

Congressman Huizenga made and put it this way. If Congress were 

considering a new procurement system today, does anyone believe 

it would approve a system where the provider can preempt all 

other competition in providing products? Or it can be a sole source 

preferred provider of services, even if services are not even mentioned in their authorizing statute. 

Where the provider and not the procuring agencies gets the grant 

waivers to these preferences, where the customer must buy from 

the provider, even if the product is inferior in quality, does not 

meet the buyer’s requirements, is higher priced, and cannot deliver 

on time. Would Congress create an entity to sell services in the 

commercial market in direct competition with small business? 

Would Congress permit a contractor to the government to pay significantly less than the minimum wage, let alone the prevailing 

wage which all other government contractors must pay? Would 

Congress permit this organization to not pay the employee benefits, 

like Social Security, unemployment or workers’ compensation insurance? Would Congress exempt this entity from federal and state 

income taxes, gross receipt taxes, excise taxes, and state and local 

sales taxes? Pay little or nothing for their space, the original construction of their space or have subsidized utilities? Have a special 

statutory line of credit from the Treasury Department at zero percent interest? Would you exempt them from standards, inspections, 


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or fines from various federal, state, and local agencies, such as 

OSHA? Would you exempt them from the Federal Trade Commission or anti-trust laws? Be able to pre-empt local zoning laws? 

Force contractors to use the entity’s products or service or evaluate 

one federal contractor’s qualifications based on their experience in 

specifying this entity’s products and services, such as the way government agencies now require architects and engineers working for 

the government to specify FPI furniture or to evaluate an architect 

engineer based on their experience in specifying these products and 

services? 

I do not think Congress would create such a system today, but 

that is exactly the system that we have in place. So I join with my 

colleague and say that it is time for reform. 

Every year FPI continues to expand in the line of products and 

services that they provide. Their growth through noncompetitive 

contracts is formidable. As Mr. Huizenga mentioned, their revenues in recent years have ranged between $745 and $885 million. 

Their annual sales have grown by over $100 million in the past 

decade alone. 

When Federal and State prisons naively fail to recognize that 

when their work goes to a prison rather than to a profit-making, 

taxpaying company, Federal, State, and local government loses tax 

revenue, there is an increase in unemployment, and the market is 

reduced. FPI’s expansion and encroachment on the private sector, 

particularly small businesses, forces a reduction in production 

lines, lays off employees, and some firms even have to close for 

good. 

We believe that H.R. 3634 is a balanced and reasonable solution. 

We commend you for this hearing and we respectfully recommend 

that Congress promptly enact FPI reforms. 

Thank you for the opportunity. 

Chairman MULVANEY. Thank you, sir. 

Ms. Boenigk. 

STATEMENT OF REBECCA ELIZABETH BOENIGK 

Ms. BOENIGK. Good afternoon, Mr. Chairman, members of the 

Committee. Thank you for having me. Congressman Flores, thank 

you for the very kind introduction. My mother and I started our 

company in 1989. We are located in Texas. We have 85 employees 

in Bryan, Texas, and six more in Cambridge, Ontario, just outside 

of Toronto. 

I am here today on behalf of Women Impacting Public Policy. 

WIPP is a national nonpartisan public policy organization that is 

advocating on behalf of nearly one million women business owners 

and representing 61 different business organizations. 

Women-owned businesses represent one of the fastest growing 

contributors to our national economy with an impact of $1.2 trillion 

annually, a number that would be much higher without the impediments like competing with Federal Prison Industries, also known 

as UNICOR. I commend the Subcommittee for bringing light to 

this issue and looking at what is really happening with FPI. And 

the fact that they are allowed to compete for small business set 

asides, the Committee has often said that small businesses getting 


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awards is actually a triple win. For government, the economy, and 

the taxpayer. 

Approximately 25 percent of my business actually comes from 

federal contracting. We have had a GSA contract for 21 years, and 

we manufacture ergonomic and multipurpose chairs, which if you 

were sitting in them you would be much more comfortable than 

what you are sitting in now. 

About 50 percent of our income comes from the Neutral Posture 

Series, which is the series that was actually our main line when 

we first started the company, and that is our highest end, most 

task-intensive chairs, provide the most adjustability. UNICOR’s 

best product is called the ‘‘Freedom Chair,’’ and it does not even 

come close to competing with our chair. The UNICOR price on a 

Freedom chair is $729. Our price to the GSA government offices is 

$690. And that is one of my most expensive chairs. So when you 

compare our products to the UNICOR products, almost all of our 

products come in substantially less from a dollar standpoint, better 

quality, more features, more benefits, and the fact they cost less 

and we deliver on time. Our company has to follow all of the issues 

that have already been said with the OSHA workers’ comp, all the 

things that we have to pay for that UNICOR does not have to pay 

for. 

Mandatory preferences for Federal Prison Industries is not only 

limited to federal agencies but it is also applicable in some of the 

states. By using our chairs, the state of Washington actually reduced their injury rate by 60 percent and their workers’ compensation costs by 90 percent. Those are pretty significant numbers 

when you look at what the bottom-line would be to different agencies by using a better, more ergonomic chair. 

There are a lot of really senseless regulations out there, and 

what happened to us with the state of Washington is that the state 

of Washington decided that they were only going to buy through 

the prisons but they wanted us to still have the contract. So we 

were required to sell our chairs to the prisons instead of Washington so that they could then put them together, mark them up 

substantially, and sell them to the state so the state is getting the 

exact same product but they are paying about a 25 percent markup 

for it so that they can run it through the prisons. And that is just 

complete inefficiency and a waste of money to me. 

We are eligible for the women-owned small business program. 

We were one of the first companies certified through the WSB program. We worked on that for about 11 years to get it in place. If 

you are familiar with the women-owned small business program, it 

was actually signed into law under President Clinton. It went into 

effect last February. 

So it is something we have worked on a long time and the fact 

that now there can be a woman-owned set aside and Federal Prison Industries can actually swoop in and take that away and it does 

not have to go Small Business. It does not have to go womanowned. It does not have to go HUBZone or minority-owned. 

Also, some of the chairs that are on UNICOR’s price list are not 

even manufactured there. Just like what we do with the state of 

Washington, those chairs are actually made in large manufacturing 

companies and then they ship them to UNICOR. They put in a couVerDate Mar 15 2010 23:42 Dec 22, 2012 Jkt 076483 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 E:\HR\OC\A483.XXX A483

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ple of screws and bolts, put the casters in, and then they say that 

that is their product. So there is not a lot of manufacturing that 

is going on in these facilities. 

Another issue that we have just learned recently is that there 

are chairs that cannot get on the GSA schedule because they are 

made in China. And because they are made in China, they are not 

allowed to be on schedule. So the work around for that is now they 

ship those chairs in a box from China to the prison. The prison 

puts the chair together, and now all of a sudden it does not have 

to pass the same rule that I have to do. I cannot bring that chair 

in, assemble it in my facility, and sell it to the government. But 

the prisons are allowed to do that. 

If the agency wants to buy from us, sometimes they have to get 

a waiver. I heard earlier that FPI says that they grant a lot of 

waivers. The biggest issue that we have is that most of the time 

the agencies do not even know that they can get a waiver. They 

just understand that UNICOR is first and that is who they have 

to go to. And if UNICOR does not have it they can look somewhere 

else, but they get the preference. 

Now UNICOR is also trying to compete in the commercial market. So this is their new brochure that they put out under the 

name of Office Furniture Group. So they are not telling people that 

these are made in prisons. They are out there, in my biggest trade 

show last month with a 30 x 30 booth that they probably paid over 

$100,000 for, competing for commercial business. So now not only 

am I competing with them for government business; I am now competing with them in the commercial market. We estimate in the last 10 years we have lost about $10 million to FPI. That $10 million would be about—when you think about 

what we could have done with that reinvesting in our company, reinvesting in jobs. We just lost an order last month, a $250,000 

order, that went to UNICOR. I understand that they say they are 

trying to train these people to go out and get jobs but there are not 

going to be any small furniture manufacturers left if they continue 

to grow the way that they are growing right now. 

I understand the Committee has put together and successfully 

passed a series of procurement reform bills which can best be described as small contracting wish lists. WIPP really applauds your 

efforts and increase in facilitating government partnerships with 

small firms. This is one area that really needs to be reformed. 

On behalf of the Women Impacting Public Policy, Neutral Posture, and all the small businesses that are impeded by FPI, I want 

to thank you for the opportunity to appear today, and I am happy 

to take any questions that you may have. 

Chairman MULVANEY. Thank you, Ms. Boenigk. 

For questions we will start with Ms. Chu. 

Ms. CHU. This is for anybody on the panel. One of the FPI reforms that was implemented by Congress was a private program 

to allow private businesses to use prison workers to make products 

that could be for sale on the open market. What do you think about 

this program? Is this also a problem or is there a way to improve 

those types of partnerships? 

Mr. PALATIELLO. I will go first, Ms. Chu. I think there are two 

problems with that. First of all, I think commercial market venVerDate Mar 15 2010 23:42 Dec 22, 2012 Jkt 076483 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 E:\HR\OC\A483.XXX A483

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turing is a slippery slope. I mean, once you open that door you 

have seen what they have done in the federal market and the way 

they have been able to grow. You allow them into the commercial 

market and I think all bets are off. 

Secondly, I think from a management standpoint this may look 

like a very attractive solution, but from a labor, from an employee 

standpoint, you are still displacing workers. And particularly in a 

time of high unemployment, I do not think that is a route we 

should be going today. We should be putting law abiding, taxpaying, hard-working Americans back to work before we start creating further work programs through commercial market entry. 

Mr. MANSH. I guess the only comment I could make is as a small 

domestic manufacturer in the apparel industry, the core of the DoD 

marketplace, people like myself that manufacture clothing and textile products, primarily depend on DoD for their work. We do not 

have commercial businesses. Most of us do not compete in the commercial world. If FPI were allowed to do that, that would be in my 

view okay, and I understand John’s concerns. What I do hear 

though, and I heard them say this this morning, FPI commented 

this morning, that their employee levels have decreased. So any 

commercial business they have, their intention is to only grow their 

sales back to what it was, not to give the work back to us. So I 

really do not see an advantage in what is being offered with that 

concept, how it is somehow going to benefit small manufacturers 

like myself and the nice lady down at the end of the table that 

makes furniture. 

Ms. CHU. Well, how about the idea of bringing back manufacturing jobs for the types of products that have been lost to overseas 

competitors? Would that be a better route to go? What is your opinion on that? 

Mr. MANSH. The same for a commercial manufacturing company 

like me. I think the goal that I have had certainly for the last 10 

years and the AAFA, American Apparel and Footwear Association 

has had all this time is to get the work that we have all focused 

on away from FPI and not have them be my competitor. If they 

have other ways to keep their workforce occupied, that would be 

good. As Congressman Mulvaney said, I think it is a great idea 

that they work in agricultural jobs where the jobs are wanting, 

rather than take jobs in an industry that is already in decline and 

impacted by foreign competition, particularly from China in terms 

of apparel manufacturing. 

Mr. PALATIELLO. Ms. Chu, I have given that question a lot of 

thought over the years and I am not terribly comfortable with it 

for this reason. As I outlined and my colleagues have outlined, the 

process today is that FPI gets to be basically judge, jury, and prosecutor in deciding what lines of business they enter into. If you 

allow them to determine what is offshore and is to be repatriated 

and they get to make that decision, my concern is it is going to further exacerbate problems here in the United States. If we were to 

enter any kind of repatriation program, I would want to see some 

independent certification by SBA, by the Commerce Department, 

by the Labor Department that indeed no U.S. worker or firm would 

be adversely affected. But if you give FPI the carte blanche authorVerDate Mar 15 2010 23:42 Dec 22, 2012 Jkt 076483 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 E:\HR\OC\A483.XXX A483

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ity to repatriate, I think their track record is that they are not 

going to be very sympathetic to the impact on U.S. business. 

Finally, I do not see the logic to look at Mr. Mulvaney’s district, 

for example. We have lost so much of our domestic textile capability so now we are going to say we are going to give textile work 

to prisoners instead of trying to rebuild that industry in South 

Carolina? I do not think that makes a lot of sense either. So the 

repatriation sounds good. I have great difficulty on how it would 

actually work. 

Ms. BOENIGK. On the part with the products coming in from 

China, I mean, this is already happening. So when you say that 

you are trying to repatriate the jobs, you are actually putting more 

jobs in Asia. The particular chairs that I am talking about, I mean, 

I was in the factory in China in March. I watched them go in a 

box. I watched them get shipped out the door. They went supposedly to a Canadian company who then shipped them to the prisons, which means those dollars did not touch a U.S. job anywhere. 

They went from Prison Industries to a Canadian company that was 

the pass-through, straight to China. So this is just going to make 

it worse that now we are allowing them to bring in China product. 

It is going to be even harder for American companies to compete. 

Ms. CHU. You heard this morning about the positive aspects of 

the program which is that it prevents recidivism. At what kind of 

industries do you think the FPI program could go into then? 

Ms. BOENIGK. You know, when you look at the jobs that cannot 

get outsourced, the jobs that cannot get outsourced are jobs like 

being a plumber or learning how to do HVAC. I understand that 

those jobs cost a little bit more to train them how to do these 

things, how to work a lathe, how to learn Microsoft Office so that 

when you leave you understand how to go and work a computer. 

Those are much better ways to train these people. They are not 

getting real skills by inserting some casters and some screws into 

a chair. 

Mr. PALATIELLO. Ms. Chu, I would remind you of what was discussed this morning, and I want to commend the Committee staff 

for the memo that they prepared for the members on this hearing. 

And look at the chart in that memo. This is from FPI’s own study, 

the prep study. What it showed is there are programs that have 

a much better record with reducing recidivism than FPI. That is 

where we ought to be focusing our attention because number one, 

they are more successful; and number two, they do not adversely 

impact the private sector. 

So if we have a program that works and has a minimum adverse 

impact, that is where we ought to be going. That is addressed in 

Mr. Huizenga’s bill. Mr. Huizenga’s bill is not just about small 

business and procurement; it is balanced in that it does provide 

other opportunities for training, rehabilitation, and education of 

the inmates. So I think it is cognizant of the societal issues that 

we have to address but I think there are better ways to do it than 

FPI. 

Ms. CHU. Thank you. I yield back. 

Chairman MULVANEY. Thank you. I now recognize Mr. Flores 

from Texas for five minutes. 


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Mr. FLORES. Thank you, Mr. Chairman. And thank each of you 

for appearing today. And as Mr. Mulvaney said earlier, this is 

something new to me. I am learning more about it and I do not like 

what I hear. So. 

I have questions for each of you and I will try to get through it 

fairly quickly. Each of you, Mr. Palatiello, you are part of an organization and Ms. Boenigk, you are actually here representing an 

organization. Mr. Mansh, you are here to represent your company. 

Is that right? 

Mr. MANSH. As well as the American Apparel and Footwear—— 

Mr. FLORES. Okay. I am sorry. I missed that earlier. On behalf 

of each of your associations I want to ask you, can you tell me what 

each of your associations has come up with as far as the overall 

potential revenue damage that has happened to each of your industries or the impact on jobs because of FPI’s growth into each of 

your business spaces? I can start with whoever wants to go first. 

Mr. MANSH. In my testimony I believe I commented, and I think 

it was $238 million in sales that UNICOR had in 2011. 2010. 2011, 

$238 million. So from our perspective, as the apparel industry goes, 

that is $238 million in lost opportunities. 

Clothing and textiles for DoD, at least the part that we can 

measure, and again, the core business that we all do is bought out 

of DLA, Defense Logistics Agency Troop Support’s location in Philadelphia. They are approximately a $2 billion a year business. So if 

they did $238 million, they represented somewhere in the range of 

10 percent of the work. From a job standpoint, thousands would be 

what I would say. Thousands. 

Mr. FLORES. Mr. Palatiello. 

Mr. PALATIELLO. Mr. Flores, I would love to be able to answer 

your question with some specific data but unfortunately, we cannot. And the reason why is Federal Prison Industries, unlike all 

other government contracts, their sales by contract is not reported 

through the Federal Procurement Data System. So if I want to go 

in and say, for example, how much mapping work has FPI done for 

the federal government, what agencies, what kinds of services have 

they done, I cannot get that information. It is not public information. 

I will give you another example to follow up on a question. 

Mr. FLORES. Let me interrupt for just a minute. And remember 

your example but what I was thinking about, if you come at it from 

the other side, do your members have a feel for what they have lost 

versus what FPI is doing? Do you have a feel for that? 

Mr. PALATIELLO. I think they are one in the same. 

Mr. FLORES. Well, sometimes they are. I mean, anyway, keep 

going. You have another example. 

Mr. PALATIELLO. Well, another example of the lack of transparency. There was a national public radio story a couple of years 

ago about, you know, a lot of the big signs that you saw that said 

this project was funded by the ARA Stimulus Bill. NPR did a story 

about a Corps of Engineers project. That sign was made by Prison 

Industries. So Congress passed the bill to put Americans back to 

work to stimulate the economy. That work, we know of some work 

that went to Prison Industries. We tried to find out how much. My 

staff did an inquiry with the recovery transparency board. What 


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they said was because that is an agency-to-agency transfer, they 

did not capture that data. Mr. Huizenga’s staff tried to get that information. They could not get it either. So those are lost opportunities where the intent of the money was to put Americans back to 

work. We know of some examples where it went to the prisons. 

The testimony this morning was that FPI discussed how many 

waivers they granted. I need to check. I am on shaky ground here. 

I do not believe the waiver process is actually spelled out in the 

federal acquisition regulations. I think your counsel probably 

knows that better than I. So when Mr. Mansh mentioned that or 

Ms. Boenigk mentioned that the agencies that are buying are not 

aware of the waiver process, FPI does not really inform them that 

they can grant that waiver. 

So what we would like to know is, for example, during the time 

that the stimulus money was being spent, when an agency was 

placing an order with FPI, did FPI stop and say to the agency, is 

this contract being funded with stimulus money? Because if it is, 

we will grant a waiver because what Congress really intended for 

that money to go to the private sector, to reduce unemployment, 

and put Americans back to work. I would venture to say that that 

disclaimer was not extended and those waivers were not granted. 

Mr. FLORES. Ms. Boenigk, on behalf of WIPP, do you have a feel 

for what your association’s revenue and job loss are? 

Ms. BOENIGK. I do not, and I just asked and we do not have that 

information today. I can tell you that for our industry, from a furniture standpoint, the last numbers I got, and again, they are a little bit difficult to get, but put FPI at about $250 million in their 

furniture division. So they are ten times bigger than my company, 

so I would say that is roughly 1,000 jobs that we do not have in 

the furniture industry because those products are being made by 

prisoners. 

Mr. FLORES. Okay. What stimulated this is that you said you felt 

like the value of lost business to you over the last 10 years was 

roughly $10 million if I heard correctly. And so I was just trying 

to get a macro feel for what this has done. 

Another question or another comment that was raised had to do 

with the sourcing of products overseas, bringing them to here, repackaging them as an FPI product. Is that happening in the services industry or just in the harder industries as far as you know? 

Mr. PALATIELLO. Well, to the best of my knowledge that is on the 

product side and not so much on the service end. 

Mr. FLORES. I just wanted to make sure they were not finding 

a way to do it on the service side. It is bad enough that it is happening on the product side. 

Mr. MANSH. Mr. Flores, let me just, if I may. 

Mr. FLORES. Sure. 

Mr. MANSH. Because I learned something from my colleagues 

here today. When Mr. Hoekstra was in Congress, I remember he 

and I were together at a meeting of the board of FPI and this probably goes back 8 or 10 years now. Their board passed a policy saying that they would no longer do pass-through work. And so to 

hear today that it is still going on, then FPI is violating its own 

Board of Directors’ policy. 


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Mr. FLORES. Which brings me to my next question. Mr. Mansh. 

Do you have a feel for what—let me ask it this way. Is some of 

your business—let me rephrase that. Is some of RPI’s product line 

coming from foreign sources in your line of business as far as you 

are aware? 

Mr. MANSH. That I am aware, because everything I sell goes to 

the Department of Defense. 

Mr. FLORES. Okay. All right. And Ms. Boenigk, what percentage 

of FPI’s furniture-related products do you think are coming from 

foreign sources? 

Ms. BOENIGK. This one chair in particular or one company that 

we know for sure is doing this, we figured last year just by looking 

on the usspending.gov website, saw around $11. And that was one 

company. So I think it is probably pretty high. 

Mr. FLORES. Okay. All right. Thanks. Ms. Boenigk, in your experience, how difficult is it for an agency to get a waiver? 

Ms. BOENIGK. The few times that agencies have told me that 

they tried to get a waiver they were denied. It is something that 

I do not have a lot of experience with. Most of the time when we 

go in we are just told, oh, FPI won because they had a mandatory 

source. We cannot go around that. But the fact that recently we 

have seen them come in and take away the small business set 

asides, that is what really got me going for this trip. 

Mr. FLORES. Okay. In terms of how often it occurs, is it fairly frequently it sounds like? 

Ms. ANDERSON. It is frequent in that we just lose because FPI 

just takes the award. Even if we have a specified product, they can 

come in and take it away. They go in and convince the agency that 

they do not have a choice; that they have to buy from them. 

Mr. FLORES. Okay. And the one last question for each of you. I 

think each of you talked about this or at least implied it in your 

testimony. You have to comply with sets of federal and state regulations that FPI does not have to. How does that affect your bottom 

line? I mean, you have a cost to comply with these regulations; FPI 

does not have to. So you are already at a competitive disadvantage. 

You are paying market wages but on the regulatory side, do you 

have a feel for how badly that hurts you vis-a`-vis where you would 

be if you were on the same playing field with FPI? Again, exclude 

labor, just talk about regulations. 

Ms. BOENIGK. All right. Some of the things that they did not talk 

about earlier is health care. I mean, we pay a tremendous amount 

for health care. And after today, I am assuming I am going to pay 

a tremendous amount more. 

Mr. FLORES. Not if I can help it. 

Ms. BOENIGK. So, I mean, that is one of the issues. Also, all of 

their printed materials, they have a federal printing shop that 

prints all of their marketing markets for them. So every aspect of 

how they run their company, industry, is they get it for pennies on 

the dollar from what we have to pay. We have to pay for product 

liability insurance. They do not pay any liability insurance. So 

there is a lot more than just what was mentioned earlier. 

Mr. FLORES. Well, I appreciate each of your testimony and I am 

going to yield back. 


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Chairman MULVANEY. And I appreciate, Ms. Chu, for allowing 

Mr. Flores to be here. He is always welcome, members, folks on the 

Committee. Thanks, Bill. 

I have got questions all over the place because this has been a 

tremendous learning experience for me so I will go in no particular 

order. Mr. Mansh, I do not want to ask you questions and Ms. 

Boenigk that are too personal and private to your company because 

I assume they are privately held. Right? Both of them are? 

Mr. MANSH. Private. 

Ms. BOENIGK. Yes. We are all private. We are private now. 

Chairman MULVANEY. Ballpark, profit margins? Bottom line. 

Mr. MANSH. Gross or net? 

Chairman MULVANEY. Gross. Before pre-tax. 

Mr. MANSH. I think everybody tries to start at seven to eight percent. 

Chairman MULVANEY. Ms. Boenigk. 

Ms. BOENIGK. That is a pretty good average. 

Chairman MULVANEY. I am sitting here looking—— 

Ms. BOENIGK. We are an S-Corp so all of the profits come 

through, you know, flow through to the shareholders. Basically, me 

and my mom. 

Chairman MULVANEY. You would be surprised how many folks in 

Congress do not understand how that works. But we actually do 

understand it. 

I am looking at UNICOR’s from last year and it was roughly 

eight or nine percent on a pre-tax basis, which I assume is the only 

basis they have because they do not actually pay any taxes. 

Ms. Boenigk, as sort of a back of the envelop analysis in response 

to Mr. Flores’s question, I will ask you the same question regarding 

the impact on jobs. In UNICOR’s participation in the apparel market, how big is your company in terms of revenue, Mr. Mansh? 

Mr. MANSH. Revenue. Currently? $10 million, $11 million. 

Chairman MULVANEY. And you employ how many people? 

Mr. MANSH. Approximately 250 right this minute. 

Chairman MULVANEY. So again, the same type of the back of the 

envelope analysis that led Ms. Boenigk to sort of calculate that 

maybe in her industry it is costing a thousand jobs. I do not know 

if I do the math on that. If you are doing $200 million worth of revenue within the apparel business and that is 20 times the size of 

your company, that is 5,000 jobs, I think. 

Mr. MANSH. Five thousand. 

Chairman MULVANEY. In Apparel. 

Mr. MANSH. That is not a bad estimate. 

Chairman MULVANEY. A couple different things. Oh, by the way, 

Mr. Palatiello, you mentioned something that staff was able to help 

me on about the waiver process, that it is not set out indeed as you 

mentioned in the FAR. You actually have to go to the UNICOR 

website to find out the process on how to get the waiver. 

And again, I do not want to beat up on UNICOR when they are 

not here. I want to make one thing perfectly clear that we ordinarily do this in the opposite order for exactly this reason. I do not 

like to beat up on people when they are not here, so usually let the 

private sector go first and then let the agency come up and defend 

themselves. I think that is a helpful back and forth and get some 


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balance in the thing. So I do not want to be perceived as beating 

up on somebody who is not present. It stunned me, the size of this company. The $750 million worth of revenue, $62 million in earnings, someplace between 10,000 and 

13,000 employees. I am wondering what they are doing competing 

with you all. They should be competing with General Dynamics 

and Boeing. They should not be competing with Ms. Boenigk and 

Mr. Mansh. They are in the GPS business now, Mr. Palatiello? Tell 

me about that. 

Mr. PALATIELLO. Both federal and a number of state prisons are 

actually doing geographic information systems. They are doing 

scanning. They are doing digitizing. They are doing data conversion, data entry, making maps, building geographic information 

systems. 

Chairman MULVANEY. Now, you mentioned that it was difficult, 

if not impossible, to get a feel for the size within that particular 

industry. Why is that? Why is that information not made public? 

Mr. PALATIELLO. If I have a contract with the Department of Defense, when that contract is awarded, the contracting officer fills 

out a standard form and it goes into a database, into something 

called the Federal Procurement Data System. So that when you 

and your staff want to look at or I want to look at a market and 

say what is going on in federal procurement in this area, the data 

is there. That same process does not occur in a transaction between 

the Department of Defense and Federal Prison Industries. It is not 

reported as a procurement transaction. So if I want to do market 

research to find out what share of the market in mapping or data 

services FPI has, that is not publicly available information. 

Chairman MULVANEY. You mentioned something, Mr. Palatiello 

about commercial market entries. Am I correct in assuming—and 

again, I am early in the learning curve on this process—that FPI 

UNICOR is not permitted to sell into the private sector right now? 

It is only to government contracting or is that not the case? 

Mr. PALATIELLO. When FPI was created in the ‘30s, there was a 

specific provision in federal law that says that prison-made products may not go into the commercial market. Now, think about 

this. What kind of economy did we have in the 1930s? We did not 

have a service-based economy. So during the Clinton administration, the Justice Department issued an opinion that said since Congress did not specifically say products and services, then that 

means that provision-provided services can go in the commercial 

market. This is not a partisan issue. This opinion was continued 

during the Bush administration. FPI did go through a public notice 

on their intent to enter the commercial market for services. They 

got a very adverse public comment reaction to that. And so they 

have backed off of that. But there is a valid Justice Department 

memorandum in the record that gives them the authority to enter 

the commercial market in services if they should wish to participate. 

Chairman MULVANEY. Ms. Boenigk, you had something you 

wanted to add to that. 

Ms. BOENIGK. Yes. They are doing it on the product side, too. If 

you go onto UNICOR’s website, actually, it asks you if you are eligible to buy from them. And of course, all government agencies are 


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eligible to buy from them, federal, state, local. But now they have 

a new thing. If you are a government contractor and you are going 

to use the product in the government contract—so in my case, if 

you are going to employ people for that contract that need chairs 

to sit in, you can buy those chairs from UNICOR. 

Chairman MULVANEY. Okay. 

Ms. BOENIGK. So they are able to sell it to the commercial market now. 

Chairman MULVANEY. That is what struck a chord with me because my limited experience exposure to this is actually in the private sector. I know folks in the private sector buying things from 

the prisons. And my guess is that is probably through that loophole. 

Is it possible, by the way, that the state prisons allow a different 

program? That state prisons allow sales into the private sector? 

Mr. PALATIELLO. Yes. There are state prisons that actually have 

retail stores where you can buy prison-made products from a staterun retail store. So yes, it is a different body of law. But again, 

with Ms. Boenigk’s example, there is a nexus still to government 

contracts. But again, you talk about a slippery slope. Between what 

they are doing in services and what they are doing now in extending themselves to a government contractor, it is sort of a camel’s 

nose under the tent—pardon me for mixing my metaphors—but 

that is commercial market entry. 

Chairman MULVANEY. And I hate to keep jumping around. Ms. 

Boenigk, you mentioned the story about the China chair story, that 

somehow because the product came from China, through Canada, 

through Prison Industries, it was allowed to be sold, but if you had 

done the same thing you would not have been allowed to sell that 

to the government. Why is that? 

Ms. BOENIGK. Because the Made in America Act, I am not allowed to sell any product to the government that is made in China. 

And if I had bought it from Taiwan or somewhere else, but if you 

buy it from Taiwan, it is better quality. If you buy it from China, 

the quality is not as good. So I cannot bring in that product and 

sell it, but somehow or another they are getting away with this. 

There is lighting that is coming in, and because these companies 

cannot get their lighting on GSA because it is made in China, they 

just make a deal with UNICOR so they can bring it in and sell it 

through UNICOR. 

Chairman MULVANEY. Is UNICOR explicitly, Mr. Palatiello, if 

you know, are they explicitly exempt from those Made in America 

rules or are they just doing it in violation of that particular—or allegedly doing it in violation of that provision? 

Mr. PALATIELLO. I honestly do not know. I would not want to 

hazard a guess. 

Chairman MULVANEY. You mentioned about the Board of Directors not enforcing their own rules. Who is the Board of this company? 

Mr. PALATIELLO. There are officials from the Justice Department 

and then there are individuals from the private sector that are appointed by the president to serve on the board. 

Chairman MULVANEY. I am fighting every urge not to make a 

reference to the Justice Department not enforcing the Justice rules 


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but I will leave that for another day. Yeah, I am not going to insert 

that. 

Mr. Mansh, very quickly—— 

Mr. PALATIELLO. I forgot to mention the attorney general or 

health care. 

Chairman MULVANEY. That is exactly right because I am trying 

to wrap up here because I see that Ms. Pelosi is speaking, which 

means we are getting close to voting. 

You mentioned 3634. Mr. Huizenga was very nice to come in and 

tell us about that. You also mentioned 2312. Briefly, can you tell 

me what that does and why you like it? 

Mr. MANSH. My staff member is back here and he has more detail than I do, the specifics of the bill. 

Chairman MULVANEY. If you would want to give it to us after the 

record, for the record, that would be great. 

Also, Ms. Boenigk, you brought something that I would like to 

have for the record, which is the printout of the UNICOR, I guess, 

brochure. 

Ms. BOENIGK. Right. 

Chairman MULVANEY. And you are telling us that is done on a 

government printing program? That the government gives them 

that? 

Ms. BOENIGK. That is my understanding. This is one you can actually print off their website. So I printed this off their website. 

But we did take pictures at NANCOM, which is our biggest 

tradeshow. They were there. And if you went into their booth, at 

no point did they tell you that they were Federal Prison Industries. 

Mr. HUIZENGA. Mr. Chairman, FPI has their own printing capability. That is one of the services that they provide to federal agencies, so I would imagine it is FPI that is printing their brochures 

and their marketing materials. 

Chairman MULVANEY. Finally, Mr. Palatiello, you were kind 

enough to mention the story that I had heard about as well, one 

of the few things I had been exposed to before this hearing was the 

story about the transportation signs being built by Prison Industries as opposed to being purchased from private sector as part of 

the Stimulus Program. Are you familiar also, sir, with the Motech 

Industries circumstance with the solar cells that are being purchased from Prison Industries? 

Mr. PALATIELLO. I am not as deeply versed in that but I understand similarly that there have been difficulties where, again, stimulus money, green technologies that we seem to have a national interest in developing and the issue is this. Whether you are talking 

about mapping or you are talking about solar, I have to give FPI 

credit. They have a very good ear to the ground on what is going 

on in the economy. Not to avoid your question but I will answer 

it with something I am very familiar with. The mapping and 

geospatial profession has been identified by the Labor Department 

as one of the 12 or 13 highest growth areas of our economy. As you 

know, Mr. Chairman, because we have had other conversations, the 

mapping profession suffers from overall government competition, 

whether it is NOAA or the Forest Service or Bureau of Land Management, there are agencies that do their own mapping. My association has worked hard to try to get that work contracted to the 


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private sector. When FPI entered the mapping and GIS business, 

the gentleman, Mr. Sibal said, well, we are more than willing to 

receive public comments, meet with people. We did that. And we 

met with the FPI staff and said you are getting into the mapping 

business. We are concerned about that. And their answer was, well, 

we want to congratulate your association. We see where you have 

been able to get a lot more federal work outsourced. We are going 

after that market since you guys have opened it up. 

So I give them credit. They are very aggressive marketers. They 

do a lot of market research. So whether it is solar or GIS or furniture or textiles, they are looking at market opportunities. And I 

think in a very predatory manner, they jump in to compete with 

the private sector. 

Chairman MULVANEY. Thank you, everybody, for coming today. 

I very much appreciate it. It strikes me that this is something that 

we will be doing more on, not less. I want to commend Mr. 

Huizenga for, especially for proceeding in as bipartisan a fashion 

as possible. It is nice to be able to find—one of the nice things 

about this Committee is that we do have the ability to put together 

some bipartisan initiatives and reforms and it seems like this 

might be an area that screams out for that type of attention. 

Again, no offense intended to the first witness today, but I had 

no idea some of this was going on, and I can assure you that with 

the permission of the chairman and the ranking member of the 

overall committee this will not be the last hearing that we do on 

this. 

With that, unless anybody has anything else, I will ask unanimous consent that we have five legislative days to submit the 

statements and supporting materials for the record. We may actually have some follow-up questions for you, and we also may go 

ahead and make available to you the written responses to our questions that we did not get to ask the first gentleman from UNICOR 

or from the Department earlier today. 

So with that, if nothing further, we are adjourned. And thank 

you everybody for coming. 

[Whereupon, at 3:39 p.m., the Subcommittee was adjourned.] 


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ilepat1ntent of lJu~tite 

STATEMENT OF 

PHILIP J. SlBAL 

SENIOR DEPUTY ASSISTANT DIRECTOR 

FEDERAL PRISON IN!)USTRIES, E!)UCATION, 

AN!) VOCATIONAL TRAINING DIVISION 

FE!)ERAL BUREAU OF PRISONS 

BEFORE THE 

SUBCOMMITTEE ON CONTRACTING AN!) WORKFORCE 

COMMITTEE ON SMALL BUSINESS 

U.S. HOUSE OF REPRESENTATIVES 

ENTITLE!) 

"UNLOCKING OPPORTUNITIES: RECmIVISM VERSUS FAIR COMPETITION IN 

FEDERAL CONTRACTING" 

JUNE 28, 2012 
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Philip J. Sibal 

Senior Deputy Assistant Director 

Federal Prison Industries, Education, and Vocational Training Division 

{<'ederal Bureau of Prisons 

Subcommittee on Contracting and Workforce 

Committee on Small Business 

U.S. House of Representatives 

"Unlocking Opportunities: Recidivism Versus Fair Competition in Federal Contracting" 

June 28, 2012 

Good Morning, Chairman Mulvaney, Ranking Member Chu, and Members of the 

Subcommittee. I appreciate the opportunity to appear before you today. My name is Philip 

Sibal, and I serve as the Senior Deputy Assistant Director of Federal Prison Industries (FPI or 

trade name UNICOR), a government corporation and a component of the Department of Justice. 

FPI is a part of the Bureau of Prisons (Bureau), in the Industries, Education and Vocational 

Training Division. 

Today there are almost 218,000 federal inmates housed in 117 federal prisons and 

privately operated facilities under contract with the Bureau. The mission of the Bureau is to 

protect society by confining offenders in facilities that are safe, secure, and cost efficient, and to 

provide opportunities to inmates for self-improvement necessary for a successful re-entry to 

society. FPI is the Bureau's most important correctional program-it supports reentry and 

reduces recidivism, and contributes significantly to safety and good order in federal prisons. 

While it operates as a business, the real output is inmates who are trained in marketable job skills 

so that they can return to the community as productive members of society. 
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FPJ was established by statute and executive order to provide opportunities for training 

and work experience for federal inmates without need for Congressional appropriations. The 

year was 1934, when unemployment in this country was at 22%. Nevertheless, Congress 

recognized the importance of creating a real-world environment in which inmates would learn 

the valuable skills needed to become productive members of society. This program produces 

goods sold to federal agencies, absorbing a small share of the federal market. The enabling 

statute created a procurement preference (deemed "mandatory source") for FPI, requiring federal 

agencies to purchase products on FPJ's "Schedule of Products." The mandatory source was 

necessary to ensure sufficient work opportunities would exist for the inmate population without 

the need for the corporation to expend resources marketing their goods to federal agencies. 

Congress wanted to ensure that this important government program would be financially selfsufficient. More than 75 years later, FPJ continues to operate without any congressional 

appropriation. Moreover, consistent with its statutory mandate, FPJ seeks to diversify its product 

lines to preclude an undue burden on any single industry. FPI is aggressively pursuing business 

opportunities consistent with the new legislative authorities regarding products made outside the 

U.S. 

FPI is, first and foremost, one of the federal government's leading evidence-based 

programs to reduce recidivism and promote the successful re-entry of offenders back into our 

communities. The Bureau releases approximately 45,000 inmates per year back to communities 

around the country. FPI is critical to the Bureau's efforts to prepare these inmates to 

successfully reenter society: inmates who work in FPJ are 24% less likely to reoffend and 14% 

more likely to be employed upon release when compared to similar inmates who did not work in 

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FPI. FPI provides the greatest benefit to inmates who are at the greatest risk of recidivism. 

Finally, FPI is also critical to the Bureau's efforts to manage safe and orderly prisons. Inmates 

who work in FPI are substantially less likely to violate prison rules as compared to similar nonparticipating inmates. This is particularly important in high and medium security institutions, as 

these institutions are extremely crowded. 

Part ofFPl's revenue is paid to inmates as wages for the time they spend working in the 

program. Inmates are required to use half of their wages to satisfY financial obligations, 

including assessments, fines, and restitution; the remainder can be used to provide support to 

their families or make purchases from the commissary. Thus, FPI inmate wages - wages that are 

not paid with appropriated funds or taxpayer dollars directly and positively impact crime 

victims, the courts, and inmate family members. Indeed, in FY 2011 inmates who worked in FPI 

contributed more than $1.6 million of their earnings toward meeting their financial obligations 

(e.g., court-ordered fines, child support, and/or restitution). 

Additionally, the overwhelming majority ofFPI's expenditures - approximately 78% - go 

to purchases from private vendors, with more than half a billion donars spent on raw materials, 

equipment, and services from private sector businesses. Approximately 40% of these purchases 

are from small businesses, including businesses owned by women, minorities, and those who are 

disadvantaged. In recent years, FPI has faced formidable challenges to its ability to continue to 

operate as a self-sustaining inmate program. The economic downturn in the country, coupled 

with the constrained budgets of many ofFPI's federal agency customers and changes to 

procurement laws and policies, have resulted in a significant decline in inmate jobs. As a result, 

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FPI has had to close or downsize 43 factories. Today the FPI program serves less than 13,000 

inmates, 7% of the inmate population in Bureau institutions, down from 23,000 inmates just 5 

years ago. Over the same time period the federal inmate population has increased by more than 

25,000 offenders. The loss of work opportunities within FPT translates into more than 15,000 

inmates who have been released back to our communities without having the benefit of the skills 

training and work experience that is proven to be effective in reducing recidivism. 

The federal inmate population continues to increase each year, with an average sentence 

length of more than nine years. Effective inmate programs are critical to our abil ity to operate 

safe and secure prisons and to reduce recidivism. Such programs are critical to reducing 

recidivism and protecting the public. 

Chairman Mulvaney, Ranking Member Chu, and Members of the Subcommittee, I thank 

you for the opportunity to testify today about Federal Prison Industries one of the Bureau's 

most important reentry and recidivism-reduction programs and a critical piece of the Bureau's 

public safety mission. This concludes my remarks. I would be pleased to answer any questions 

you or other Members of the Subcommittee may have. 

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STATEMENT OF REPRESENTATIVE BILL HUIZENGA 

Before the House Committee on Small Business 

Subcommittee on Contracting and Workforce 

Unlocking Opportunities: Recidivism versus Fair Competition in Federal 

Contracting 

June 28, 2012 

Chairman Mtl!vaney, Ranking Member Chu, and members of the Subcommittee, thank 

you for the invitation and opportunity to be with you this morning. 

Competition with the private sector by Federal Prison Industries is an issue that is 

important to the nation, and near and dear to the 2nd District of Michigan. 

As some of you may know, my predecessor in Congress, Pete Hoekstra, was a leader on 

the issue of Federal Prison Industry Reform. 

When I was District Director for Representative Hoekstra, a new Social Security 

Administration oftice opened in Holland, Michigan. The new oftice was literally a 

stone's throwaway from one of west Michigan's many oftice furniture manufactures. 

Despite this, the Social Security oftice was forced to purchase chairs and furniture 

manufactured by FPI, a government owned corporation, instead of our local 

manufacturers. In fact, the private companies in the district never even had a chance to 

bid on, or compete for, the contract to supply the furniture. 

The impact from FPI hits communities all over America. Our colleague Carolyn Maloney 

has been a long-time supporter of this initiative since the Glamour Glove Company on 

Long Island had its existence threatened by FPJ. Many of Ms. Maloney's constituents 

were employees of the company. Glamour Glove Company lost 80 percent of its glove 

business before a compromise was negotiated with FPI. 

Ace Electronics of Bel Air, Maryland, and Troy, Michigan, manufactures wiring and 

cable assemblies, fiber optics, connectors, and other products. Ace employs designers, 

engineers, and manufacturers. Ace willlikcly lose out to FPI on a $300 million contract 

because of the rule that allows FPI to capture up to 5% of market share. 

General Linen Service of New Hampshire was forced to compete for a contract against 

the prison system that they had previously serviced without incident. This Textile Rental 

Services Association member was informed that their service contract was being 

terminated and awarded to the prison system without any reason given. The company 

insisted on being allowed to compete with the prison system for the previously held 

contract, and eventually won the contract back. However, the costs of having to recompete and restructure a previously existing contract, as well as making any changes to 

the contract in order to keep the business, caused a considerable impact on this business. 

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Federal Prison Industries, or UNICOR, is not an insignificant operation. They occupy 

more than 4 million square feet of manufacturing and service space. FPI is far from a 

small business. This bureaucratically run corporation competes with private sector job 

creators in over 300 individual products and services. It is comprised of seven divisions 

including: clothing and textiles, electronics, fleet management, office furniture, industrial 

products, recycling, and services, including call centers and data and document 

conversion. 

FPI has revenues that have ranged from $745 million to more than $885 million annually 

in recent years! When you put FPI up against all other Federal contractors, they are the 

36th largest entity by rank, when measured by gross sales to Federal agencies. 

In fact, within a few hours drive of this committee hearing at the Capitol, UNICOR is 

producing awards and plaques, and even clothing for our members of the Armed 

Services, with labor being paid only 23 cents to $1.15 per hour! Can you imagine the 

uproar from the public if we were importing goods manufactured by prison labor in 

someplace like China? It's no wonder our American grown companies have difficulty 

competing against this goliath, government-owned corporation. 

Concerning the abnormally low wages paid to laborers, FPI is not even paying the 

standard minimum wage $7.25. Additionally, the private sector is required to pay the 

prevailing wage rate under Davis-Bacon or the Service Contract Act. 

In addition to the low wages, FPI does not have to pay employees Social Security, nor 

does it pay the employer's share. It doesn't pay unemployment compensation or workers' 

compensation insurance. FPI is exempt from all Federal, State, and local income taxes, 

gross receipts taxes, excise taxes, and sales tax. It is not subject to Federal Trade 

Commission oversight, Securities and Exchange Commission oversight, or Department 

of Justice oversight. FPI does not pay fair market value, or in some cases, pay for 

utilities. It even has a special statutory allowance of a line of credit from the U.S. 

Treasury for up to $20 million at zero percent interest. 

UNICOR is exempt from all standards, inspections, and fines of various local, State, and 

Federal enforcement agencies, such as OSHA. FPI does not have to comply with local 

zoning, and because it enjoys sovereign immunity, it is not required to pay taxes. FPI 

does not carry health insurance costs, nor does it have to comply with family and medical 

leave. I don't know of any small businesses that have this kind of advantage. 

While congress has attempted to create an even playing field on several occasions, this 

goliath company called UNICOR, continues to maintain unfair access to federal 

contracts. 

On a very bipartisan basis, I introduced H.R. 3634, the Federal Prison Industries 

Competition in Contracting Act. It has a wide range of support, including lead 

Democratic cosponsors Barney Frank of Massachusetts and Carolyn Maloney of New 

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York, as well as former Judiciary Committee Chairman Jim Sensenbrenner of Wisconsin 

and former Small Business Committee Chairman Don Manzullo of Illinois. The bill is 

nearly identical to previous versions that passed the House by a vote of350-65 in 2003 

and 362-57 in 2006. 

Unfortunately in both cases, the bill was not taken up by the full Senate, although a 

companion bill was approved by the Senate Homeland Security and Governmental 

Affairs Committee in 2004. We must pass my bill and work with our Senate colleagues to 

pass it in the other body. I am pleased to report that in the coming days, Senator John 

Thune of South Dakota and others will introduce a bipartisan FPI reform bill. 

Piecemeal reforms have been enacted in recent years on Appropriations and Defense 

Authorization bills, but in order for small businesses back home in our districts to 

compete on a level playing field, comprehensive prison industry reform must be enacted. 

Small businesses simply cannot go toe to toe against this large, government owned 

corporation. 

My narrowly written bill amends the laws relating to FP[ by establishing market-based, 

government-wide procurement policies for purchases that are based on competitive 

procedures. It establishes competition as the standard for Federal agency purchases. It 

only authorizes non-competitive contracts in FPI's favor ifthe Attorney General 

determines that FPJ cannot reasonably expect fair consideration to receive a contract 

award on a competitive basis, and if the contract award is necessary to maintain prisoner 

work opportunities. 

Currently, FPI, not the buying agency, determines ifthe product FPJ offers and the 

delivery schedule it promises meet the need ofthe buying agency. In other words, the 

seller, not the customer is determining if the price and terms are reasonable. That is not 

how small businesses operate. The bill requires FPI to compete for business opportunities 

by removing the "mandatory source" status. 

Our bill puts the purchasing decision in the hands of the buying agencies. IfFPJ has the 

lowest price, the best value, or is determined to be the most qualified, it gets the contract. 

In other words, it requires agencies to research which products are available on thc 

markct, not just flip through the FPJ catalog. In our current economic climate, this is the 

prudent thing to do for taxpayers, and it just makes common sense. 

H.R. 3634 also requires FPJ to complete a probability impact study on private industry 

before entering into a brand new market. The study then becomes public information. 

Our bill also forces UNICOR to start to pay competitive hourly wages for prisoners 

performing work, just like the hard working men and women back home in our districts. 

It forces FPI to operate its prison factories under OSHA standards, currently they are only 

voluntary. 

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In addition, our bill prevents UNICOR from selling products in commercial settings and 

from entcring interstate or foreign commerce, except for existing contracts. 

H.R. 3634 is mindful of idleness in prisons. It addresses recidivism. It creates new 

opportunities for prison workers that do not result in unfair competition with private 

business - particularly smal1 business - and the employees in companies that lose out to 

FPI. Suffice it to say that "fairness" should be modeled by the Correctional System ... or 

nothing is being corrected. 

Our bill allows prisoners within FPI to work for a tax-exempt charity or entity, religious 

organization, local government unit, or school district that forms an agreement with FPI. 

It also authorizes private businesses to participate in work training and apprenticeship 

programs for prisoners. 

Our bill also establishes an Enhanced In-Prison Educational and Vocational Assessment 

and Training Program to help people with release readiness preparation. The Bureau of 

Prisons' own studies have shown that vocational training programs have historically been 

the most successful in decreasing recidivism. By giving prisoners the training they need 

to find and maintain ajob once released, we are providing them, their families, and our 

communities, with the greatest service. Taking jobs away from honest, hardworking 

Americans in the process though, is not how we accomplish this goa\. 

H.R. 3634 also requires federal agencies to report purchases from FPI to the Federal 

Procurement Data System. Last year, my office inquired with the Recovery 

Accountability and Transparency Board because a news article had reported that stimulus 

money (American Recovery and Reinvestment Act of 2009) had purchased products 

from FPI. The Board told me that this was an unusual situation and since FPI is defined 

as a federal agency, it is not required to report on Recovery Act progress. 

Thank you again for the invitation and opportunity to be with you this morning. 

applaud the Subcommittee for taking an interest in this critical issue and encourage all of 

you to cosponsor H.R. 3634, the Federal Prison Industries Competition in Contracting 

Act. 

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Testimony of Michael Mansh, President 

Pennsylvania Apparel LLC 

Before the House Small Business Committee 

Subcommittee on Contracting and Workforce 

June 28, 2012 

Thank you, Chairman Mulvaney, Ranking Member Chu and members of the Subcommittee for 

affording me this opportunity to speak today on the adverse impact that Federal Prison Industries 

has had and continues to have on our business and the industry. 

I am Michael Mansh, President of Pennsylvania Apparel LLC, a company based in Ft. 

Washington, PA with factories operating in Olive Hill, KY, Macon, GA and Buckhanon, WV. 

also am a member of the American Apparel & Footwear Association (AAFA) where I serve as 

Chairman of its Government Contracts Committee, which represents the domestic manufacturing 

base of clothing, footwear and textile producers for the U.S. military. 

In November 2002, I appeared before the House Small Business Committee and explained the 

deleterious impact of Federal Prison Industries (FPI) on my company and the industry at large. In 

the last ten years, I can tell you that things have only gotten worse. 

Pennsylvania Apparel has been both a prime contractor and subcontractor for the Department of 

Defense for the last 50 years. My company's survival against the unfair and unjust competition 

from FPl would not have been made possible if it were not for the efforts of Senators McConnell 

and Paul and the effective representation of our industry by AAF A. 

When I last appeared, I testified that my company's main product was the Utility Jacket for the 

Navy, whieh was made in Olive Hill from 1987 through 1997. Olive Hill is a small town of 

1,600 people, located in a HUBZone with high unemployment, where my factory alone employs 

more than 10% of the eligible workforce. In February of 1995, we were informed that FPI had 

exercised its mandatory source preference and had taken 100 percent of the requirement for thc 

Utility Jackets. In 1997, FPI was awarded a long-term contract for the Utility Jackets, which 

effectively prevented me and everyone else in the industry from being able to bid, compete and 

produce this jacket. 

Shortly thereafter, I was able to keep my Olive Hill plant open by securing a contract for the Air 

Force Lightweight Windbreaker, an item made and procured for each member of the U.S. Air 

Force. This item is one well known to many Americans as it is worn by the President of the 

United States and the Air Force One flight crew. My company and its workers have been 

successfully and proudly making this jacket for the last fifteen years. 

In December of20 11, I learned that FPI was planning to steal this jacket away from my company 

when the contract expires at the end of2012. The law does not require FPI to give me any formal 

notice of this action or allow me to submit any protest to FPI's legalized theft of this product from 

my company and its workers. 
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Fortunately, J was afforded an opportunity to appear on the Fox & Friends television program and 

share the real and direct impact thc FPI program has on American manufacturing jobs. Senators 

McConnell and Paul also stood up for our workers and the great work they do. In light of the 

strong showing of support, FPI exercised a "waiver" of its mandatory source preference and 

opted to not take the contract. While this version of the same story J told ten years ago ended 

positively for my company and its employees this time, there are Olive Hill, Kentuckies all across 

this country who face the threat of FPJ every day. 

FPI's activities come at the expense of a strong and crucial manufacturing base that the 

Department of Defense desperately needs to provide for its military clothing needs and to ensure 

surge capabilities for emergency mobilization. Such quick action was needed in the aftennath of 

September II til that necessitated our military to quickly ramp up production for the campaigns in 

Iraq and Afghanistan that led to the capture of Saddam Hussein and Osama bin Laden. However, 

the continuing increase in FP!'s market share in Clothing & Textiles will continue to reduce the 

industrial base's capabilities to innovate new products and get our troops the equipment they need 

when they need it. 

Unlike other products procured by DOD, our industry is not one controlled by several large 

corporations with a few small businesses going after the scraps. By contrast, our industry is 

predominantly one fueled by small business interests. These small companies are Womenowned, Veteran-owned, Minority-owned, operate in areas of high unemployment like Olive lIill 

and even employ blind and disabled workers under the AbilityOne program and none of these 

entities are immune from FPJ's preference. 

As an industry, I can tell you that we not only understand the goals of the FPJ program, but 

wholeheartedly support its good intentions. However, we cannot in good conscience understand 

the logic behind a federal policy that requires the federal government to take jobs away from lawabiding, tax-paying American citizens as the only way to accomplish the goals of the FPI 

program. 

Currently, we are in support of two pieces oflegislation that seek to reform the program, HR 

3634, the Federal Prison Industries Competition in Contracting Act introduced by Congressman 

Huizenga and HR 2312, the DOD Textile and Apparel Procurement Fairness Act introduced by 

Congressman Walter Jones. One ofthe most important features of both pieces oflegislation is 

the restriction they place on FP[ from being able to take any contract specifically reserved for 

small businesses. In FY2011, FP! reported $745 million in total sales, of which $238 million was 

in their Clothing & Textiles business segment accounting for 32% of their total sales. These 

numbers are not the work of a small business. In fact, by their sales numbers, FPI is among the 

top fifty largest government contractors in the United States. Moreover, these numbers show that 

FPI is not following its statutorily mandated responsibility to diversify its business among its 

seven segments. If that were so, FPI sales in Clothing & Sales should have only been 

approximately $100 million in FYI!. Can you imagine how many jobs $138 million could create 

in a time when unemployment is in excess of 8%? 

Critics of these bills have claimed that we are working to end the FPI program. That is blatantly 

untme. We believe that as industry we can compete against FPI if given the opportunity to do so. 

Despite the fact that starting wage for an inmate is 23 cents per hour, the industry is looking for 

equity in the form of opportunities for industry to win contracts, hire employees and keep the 

domestic manufacturing base of textiles and apparel strong and vibrant so that we are prepared 

when the next crisis arises. 
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In 2002, I stated in my testimony, and I quote, "The time for FPI reform is now." In 2012, I 

submit that the time for FPI reform is long overdue. 

In closing, I urge this Committee and this Congress to work with your colleagues in the House 

Judiciary Committee and the Senate to undertake and pass reform legislation - to correct the 

imbalance that FPI has caused - as soon as possible. I thank you for your invitation to appear 

before you today and look forward to taking any questions. 
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BCFC 

for 

Business 

Fair Competition 

Coalition ~ ~ 

Testimony of John M. Palatiello 

Subcommittee on Contracting and Workforce 

House Committee on Small Business 

"Unlocking Opportunities: Recidivism Versus Fair Competition in Federal Contracting" 

June 28, 2012 

Mr. Chairman and Members of the Subcommittee, I am John Palatiello, President of the 

Business Coalition for Fair Competition, a coalition of businesses, associations, think tanks and 

taxpayer groups united in the proposition that government at all levels should utilize the private 

sector to the maximum extent possible and that government or government-sponsored entities 

should not duplicate or unfairly compete with private enterprise, particularly small business. 

I am also Executive Director of MAPPS, a national association of firms in the mapping, spatial 

data and geographic inJDrmation systems (GIS) field. 

We commend the Subcommittee for their intcrest in holding this hearing. We strongly support 

H.R. 3634, a bill that seeks to infuse competition in the federal procurement process with regard 

to purchases from Federal Prison Industries (FPI), while providing work, training and 

rehabilitation opportunities for prisoners in a manner that does not penalize small businesses and 

their law abiding employees. We would especially like to thank Representatives Huizenga, 

Frank, Maloney, Sensenbrcnner, former Small Business Committee chairman Manzullo, 

committee members Bartlett and CotTman, and so many others, for their bipartisan leadership 

and dedication to reforming the unfair competitive practices ofFPl. 

Since 1934, the federal prisons have operated industrial facilities to keep idle inmates occupied 

and provide training in occupations designed to provide prisoners marketable skills that will 

make them productive, responsible citizens when their incarceration is complete. Historically, 

UNICOR, the federal Prison Industries, has focused on a limited number of product areas, 

particularly those in which the goods produced in the prison can be consumed in the prison, such 

as furniture and paper products. In recent years, they have expanded dramatically, shifting to a 

wide array of products, and recently, to the services sector. 

1856 Old Reston Avenue, Suite 205, Reston, VA 20190, (703) 787-6665 

www.governmenteompetition.org 
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Almost every year, FPI expands to produce even more goods and services. FPJ's sales growth, 

all through non-competitive contracts, has been formidable. It has revenues that have ranged 

from $745 million to more than $885 million annually in recent years. Annual sales have grown 

by over $]00 million in the past decade alone. When you put FPI up against all other Federal 

contractors, they are the 36th ranked entity, when measured by gross sales to Federal agencies. 

This makes FPI a formidable competitor even for a large private sector enterprise, much less a 

small business. Evidence indicates that FPI will continue its expansionist behavior, by 

exploiting its mandatory source status and increasingly encroaching on private sector industries, 

forcing businesses to halt production lines, layoff employees and even close their doors for good. 

Ensuring a level playing field for the private sector in the federal procurement process by ending 

FPI's unfair advantage is a major priority for BCFC. We endorse the policy that the government 

should not perform the production of goods and services for itself or others if acceptable 

privately owned and operated services, firms found in the Yellow Pages of the phone book, are 

or can be made available for such purposes which we call the YeHow Pages test. The private 

sector should be allowed to compete fairly with FPI for federal contracts - plain and simple - by 

eliminating the mandatory source requirement that govcrnment agencies purchase products and 

services from FPI. 

Reform of FPI starts with the realization that FPI has exceeded its statutory authority. They are 

free to set any price they want within the range of market prices with no incentive to charge the 

lowest price. Until the recent enactment of reform measures, FPI, rather than federal agencies, 

determined whether FPl's products and services and delivery schedule meets the agency's needs. 

While these reform measures have provided some relief, permanent comprehensive reform is 

needed to reign in this organization. By granting FPI a monopoly, issues of price, quality and 

efficiency fall by the wayside at the expense oru.s. taxpayers. The General Accounting Office 

(GAO) reported in 1998 that FPI is neither a quality supplier to Federal agencies nor a provider 

of timely, quality products at low prices to meet their client-agency needs. No study has been 

conducted since that time to document improvement in FPJ's performance. Moreover, a study 

for the Bureau of Prisons found "inmates who worked in prison industries were 24 percent less 

likely to recidivate throughout the observation period while those who participated in either 

vocational or apprenticeship training were 33 percent less likely to recidivate throughout the 

observation period." (Post-Release Employment Project (PREP), Training Inmates through 

Industrial Work Participation, and Vocational and Apprenticeship Instruction, 1996). 

FPI is also limited to no more than a "reasonable share" of the government market for any 

product, but in over 100 military apparel items, they have determined that 100% of the market is 

reasonable. 

Recent expansion by FPI into the services arena has caused great concern in the business 

community. Even though FPIs authorizing statute does not specifically mention services, FPJ 

has interpreted that it is a "preferential source" for services and used this to enter into sole source 

contracts with Federal agencies for services. They are quickly expanding their services portfolio, 

which includes printing, environmental testing, recycling, mapping and imaging, distribution and 

mailing, laundry services, data conversion, and call center and help desk support. 
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This expansion is alarming not only because it adversely impacts the private sector but also 

because it is wholly inappropriate to allow inmates access to classified or infrastructure 

information used in mapping projects or the personal or financial information of private citizens 

used in call center operations. We should be extremely cautious with the information we arm 

our federal inmates with in preparation for life beyond bars. 

Not only is the mapping community confronted with prison competition at the Federal level, but 

state prison systems have entered the field as well. 

The Texas Department of Criminal Justice has established a map scanning and digitizing service 

at their Ferguson Unit in Midway, Texas. Authorized by the Prison Made Goods Act of 1963, the 

prison company has a slick brochure claiming that under their program "Everybody Wins" since 

inmates are trained in a skill that is marketable upon their release, use of the prison agency 

provides a "quality product at a reduced price", and a "double savings" for the taxpayer. This unit 

has taken work for the Texas Department of Transportation, Texas counties and other clients that 

would otherwise have gone to the private sector. 

Unigroup is the Oregon Department of Corrections' prison industry. It boasted that its 

"innovative CAD/CAM industry was conceived in early 1992 as a way to provide quality, 

inexpensive services to state and other governmental agencies. Private businesses are also 

welcome to use our services." Unigroup functioned as a conversion house, converting hard copy 

documents to digital files. The unit became productive in March, 1993 providing data in an 

Arc/Info format. It had a price list, brochure and standard cartography services agreement. This 

organization not only did work for Oregon State agencies and Oregon counties, but tor Federal 

agencies and private finns. MAPPS member firms had to shut down their efforts to market these 

services to State and county government, as they were unable to compete with the below market 

prices and labor rates charged by the prisons. Unigroup closed its GIS capability, as it had 

production difficulties and challenges maintaining a civilian management staff. 

PRIDE Enterprises, the Florida prison industry, is engaged in a variety of digital geographic 

information services, including converting hard copy maps to electronic files; plotting maps at 

various scales; creating databases with information on homeowners, property appraisal and tax 

assessment; digitizing, and other CADD and GIS scrvices. While PRIDE works as a 

subcontractor to private firms, their direct contracting authority is unfair competition and again, 

diverts work for tax-paying, law-abiding citizens. 

What the Federal prisons and these States naively fail to recognize is that when work goes to a 

prison rather than a profit-making, taxpaying company, the Federal and State government loses 

considerable corporate and individual tax revenues, and displaces law-abiding workers. 

Moreover, the pervasiveness of prison activity limits the private sector market, thus reducing the 

number of available jobs awaiting inmates upon release. Nobody wins when prison industries 

decimate the private sector and release inmates into a field where the only job market is in the 

prisons! 
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FPI's desire to expand into the commercial marketplace is an alarming development that is secn 

as a call to arms by industry. We oppose FPl's move into the commercial marketplace. The 

decision to expand into the commercial marketplace is in conflict with the clear language of 

FPl's enabling legislation and beyond the discretion of the Board. It is a reversal of more than 

nearly eighty years of public policy. This is authority that FPJ has claimed for itself without any 

specific legislative authority from Congress. Finally, the creation of a state run enterprise, 

competing with its own citizens, is a policy so at odds with the role of government in a free 

society that it is a decision best left to Congress. 

Title 18 U.S.C. section 4122(a) specifically states: "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 for consumption in such institutions 

or for sale to the departments or agencies of (he United States, but not for sale (0 the public in 

competition with private enterprise." 

Now, however, despite this seemingly clear prohibition on entering the commercial market found 

in the statute, recent evidence shows that FPI has engaged in expansionist practices. Nearly 

eighty years of public policy should not be overturned, especially without public debate. The 

United States should not be selling commercial services in competition with law-abiding 

taxpaying businesses, using prison labor that is paid no more than $1.25 an hour. FPI's expansion 

in the commercial market is a dramatic shift in policy, and in conflict with the clear language of 

18 U.S. C. 4122(a). We urge that no proposal to inject Federal inmate provided services in the 

commercial marketplace be entertained by Congress. 

Mr. Chairman, rehabilitation and retraining are commendable goals for prison programs, but at 

what price? "Penal" institution and "penitentiary" get their namc from the Latin "poenalis", 

meaning pertaining to punishment. Who is being punished here, the inmates who have 

committed a crime against society, or the employees of private firms who play by the rules? 

While we are sympathetic to FPI's goal to employ federal inmates to reduce recidivism by 

providing vocational and remedial opportunities while incarcerated, it should not be done at the 

expense of law-abiding, taxpaying businesses. It is unfortunate that in today's society we are 

faced with an increasing inmate population. However, we believe other sources of work 

opportunity, training, education and rehabilitation for inmates should be explored that do not 

infringe upon the private sector's opportunities to compete for government contracts, threatcn the 

general safety of our citizens, and provide for expansion in the commercial market. 

The original purpose of FPI was to reduce idleness in the prisons. Today, FPI is contributing to 

idleness in the private sector, especially small business, by taking jobs away and contributing to 

our unemployment. 

H.R. 3634, is nearly identical to legislation that that passed the House in 2003 by a 350-65 

margin, and in 2006 by a 362-57 vote. Unfortunately, in both cases, the bill was not taken up by 

the full Senatc, although a companion bill was approved by the Senate Homeland Security and 

Governmental Affairs Committee in 2004. 
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Piecemeal reforms have been enacted in recent years on Appropriations bills and on Defense 

Authorization bills. Recent language enacted in the FY02 and FY03 Defense Authorization bills, 

the FY04 Consolidated Appropriations Act, and the FYOS Omnibus Appropriations Act provided 

interim and selective relief from FPJ's monopoly by allowing federal agencies to decide how to 

best meet their procurement needs by examining existing marketplace opportunities and 

purchasing products on a competitive basis. 

But there is still a need for comprehensive Prison Industry reform. 

For many years, the broad-based FPI Competition in Contracting Act Coalition, comprised of the 

business, labor and federal manager communities have advocated comprehensive, fundamental 

reform of FPl. 

H.R. 3634 provides for fundamental reform while maintaining a process in which FPI can still 

sell to federal agencies but on a competitive, rather than a preferential sole-source basis. It 

requires federal agencies to llse competitive procedures for the purchase of products. H.R. 3634 

makes permanent the language included in the FY02 and FY03 Defense Authorization bill and 

the FY04 Consolidated Appropriations bill and FY05 Omnibus Appropriations bill. H.R. 3634 

would require FPI to be a more responsible supplier to Federal agencies and the taxpayer, and 

would allow the private sector to compete fairly with FPI for federal contracts by eliminating the 

requirement that government agencies purchase products from FPJ. Agency contract oJ1icers, 

not FPI, would determine if FPI's offered product best meets buying agencies' needs in terms of 

quality and time of delivery. Most importantly, H.R. 3634 provides new authorities tor FPI that 

do not infringe on the private sector and its law abiding employees. 

Even with reform, FPI would still have an enormous competitive advantage over the private 

sector. FPI pays its inmates significantly less than the minimum wage, let alone the prevailing 

wage, a requirement of private sector Federal contractors. It is not required to provide any 

employee benefits like Social Security, unemployment compensation or insurance. In addition, 

as a Government-owned corporation, FPI is exempt from Federal and state income taxes, gross 

receipts taxes, excise tax and stale and local sales taxes on purchases. FPJ does not have to pay 

for utilities or equipment and has a special statutory line-oj:'credit from the U.S. Treasury for $20 

million at 0% interest. FPI is also exempt from standards, inspections or fines by various Federal, 

state or local enforcement agencies, such as OSHA, that regulate all private sector suppliers to 

the Federal Government. 

H.R. 3634 includes language that would prohibit inmates from having access to classified data, 

critical infrastructure data, and personal or financial data under any Federal contracts. The 

American people would be outraged to know that prisoners can be given access to their credit 

card numbers, the address and value and tax assessments of homes, as well as location 

information on our underground gas pipelines and other critical infrastructure that, if in the 

wrong hands, threatens our security. Simply adequately stated, sensitive information of this 

nature should not be in the hands of convicted criminals. 

H.R. 3634 also protects Federal prime contractors and subcontractors at any tier from being 

forced to use products or services furnished by FPl. FPJ would no longer be able to force 
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contractors to use FPI as a mandatory source for products or to be specified as a mandatory 

source on contracts. We have seen this new, expansive authority, which was not enacted by 

Congress through legislation, but claimed by FPI through interpretation, used, for example, to 

force architects and engineers to include FPI products in their design specifications, even if those 

products are not the most efficient, cost effective or appropriate solution. 

To assure the safety ofthe prison guards and the inmates themselves, H.R. 3634 would allow the 

Attorney General to award a contract to Federal Prison Industries if he/she believes that the loss 

of such prison work would endanger the safe and effective administration of a prison facility. 

While this is a valid concern, it is important to note only a small percentage - roughly 17% - of 

inmates actually work in the FPI program. The remaining able bodied inmates are engaged in 

various tasks relating to the operation and maintenance of the correctional facility. These tasks 

reduce the operating costs of the facility and keep inmates occupied in daily work activities. 

Many concessions have been made on behalf of FPI reform supporters over the years and H.R. 

3634 provides additional safeguards in addition to a level playing field on which FPI and the 

private sector can compete. FPI asserts that comprehensive reform will cause inmate 

employment to decline, factories to be shut down, and sales to decrease. We argue that for 

decades businesses have suffered from declining employment rates and decreases in sales, and 

have been forced to shut down factories and production lines because of FPI's unfair competitive 

advantage and practices. Therefore, the time is now for balanced comprehensive reform. 

Thank you for the opportunity to appear before you today to seek an efficient, fair competitive 

process in providing the federal government with goods and services to maintain and grow small 

businesses. We appreciate the Subcommittee's examination of FPI's impact on small business 

and urge prompt consideration of H.R. 3634 by Congress. I'd be happy to answer any questions 

you might have. Thank you. 
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~~* 

WIPP 

Women Impacting Public Policy 

STATEMENT OF REBECCA BOENIGK, CEO AND CHAIRMAN OF THE BOARD, 

NEUTRAL POSTURE, INC., BRYAN, TX 

On Behalf of Women Impacting Puhlic Policy 

Before the U.S. House of Representatives 

Committee on Small Business 

Subcommittee on Contracting and the Workforce 

Unlocking Opportunities: Recidivism versus Fair Competition 

in Federal Contracting 

June 28, 2012 

1156 15th SI NW Suite 1100, Washington, DC 20005 - 888.488.wlPP - Fax: 202.872.8543 

1714 Stockton Street, Suite 200, San Francisco, CA 94133 - 415.4344314 - Fax: 4154344331 

Website. www.WIPP.org 
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Good afternoon, Mr. Chairman and Members of the Committee. My name is Rebecca Boenigk and 

I am the Chairman of the Board and CEO of Neutral Posture, located in the great state of Texas. 

My mother and I founded the company in 1989. We have 85 employees at our Texas facility, and 

we have another six employees at our facility just outside of Toronto in Cambridge. 

I am here today on behalf of Women Impacting Public Policy. WIPP is a national nonpartisan 

public policy organization, advocating on behalf of nearly one million women-owned businesses 

and representing 61 business organizations. 

Women owned businesses represent one of the fastest growing contributors to our national 

economy, with an impact of $1.2 trillion annually, a number that would be much larger without 

impediments like the competing Federal Prison Industries (FPI) system, also known as UNICOR. 

I want to commend the Subcommittee for shining a light on this very serious, and often 

overlooked issue. It is imperative that there be reform in the FPI system; not only are we forced 

to compete with them for small business set asides but UNICOR baSically has a monopoly on 

many contracts because they are automatically given top priority. 

Approximately 25% of my business comes from federal contracting. We have had a GSA schedule 

contract for over 21 years. We manufacture ergonomic and multi-purpose chairs, much more 

comfortable than the ones you are all sitting in right now. 

Fifty percent of our income comes from the Neutral Posture Series, which is the high end, task 

intensive ergonomic seating line. The chairs have contoured seats, which help reduce seated 

pressure. We have an inflatable air lumbar in the back rest. Our chairs have been proven to 

reduce injuries and to reduce workers' compensation costs. UNICOR does not produce any chair 

that can even come close to competing with our line of seating. 

Yet because of the FPI requirements the government is forced to solicit inferior products at a 

higher cost while encouraging comparatively insignificant job creation. For example UNICOR's 

"best" chair is called the Freedom chair. It sells to government agencies at around $729.00; the 

chair we offer has five more adjustments and sells for $690.00. A chair with similar features to 

the Freedom is our Right Chair and the GSA price is $522.90. Not only do we deliver a superior 

product for a better price, but because we are a nimble small business we can have our superior 

products available in much less time, usually five days. This committee has often said that small 

business contracting is a triple win- for the government, the economy and the tax payer. 

Our company has to follow federal and state labor laws, environmental laws, and comply with all 

aspects of federal contracting regulations - burdens that do not apply to UNICOR. Therefore, the 

fact that the private sector can still produce better products at a lower price is remarkable. 

Mandatory preference for prison industry contracts is not only limited to federal agencies, but is 

also applicable to states. By using our chairs, the State of Washington reduced their injury rate by 

60% and their workers' compensation costs by 90%. Clearly those are significant numbers, yet 

those savings cannot be passed on to many government agencies because they are required to 

buy from UNICOR. 

115615th 51 NW Suite 1100. Washington. DC 20005 - 888.488WIPP - Fax: 202.872.8543 

1714 Stockton Street. Suite 200. San FranciSCO, CA 94133 - 415.434.4314 - Fax: 415.434.4331 

Website: www,WIPP.org 
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While I do not have to tell you that there are many senseless regulations and requirements that 

are a part of any large government, this one is directly affecting small businesses in a very 

negative way. We are eligible for the Women Owned Small Business (WOSB) procurement 

program, for which we fought 11 long years, only to have UNICOR swoop in and compete with us. 

The government is effectively competing with the private sector here, and there seem to be more 

losers than winners in this competition. 

Furthermore the Subcommittee should know that in some cases UNICOR's chairs are not 

manufactured in the prisons at all. Some ofthem are manufactured in my larger competitor's 

facilities and some overseas, many in China. They send the chairs to the prisons, have a screw 

put in here or there, slap their label on them, and sell them with preference over my products. 

The chairs that come in a box from China do not qualify for the GSA schedule due to the Trade 

Agreements Act. By simply supplying them to the prisons these noncompliant chairs are being 

sold to the government. A Canadian company called Nightingale supplied UNICOR with $58 

million in Chinese chairs last year. These dollars were taken away from American small 

businesses. 

As I mentioned earlier the State of Washington has benefited from my products in the past. We 

held a contract with the state for over eight years when we were told that we would lose that 

contract unless we worked with the state prisons. In order to sell to the State of Washington, we 

have to make the chairs in Texas, put them in boxes and send them to the state prison. The 

prison then puts them together, marks them up and sells them back to the state. This is 

government inefficiency at its worst. 

Although government agencies would like to buy from us, they are told that they cannot. They 

are told that they have to go to UNICOR for products like ours. Even though we have better price, 

better quality and a lot of research to back up our product, we still do not have the opportunity 

to compete. 

If an agency that wants to buy from us, they have to get a waiver. Because the waiver comes from 

FPI, they are few and far between. I have been given the unenviable option to either work with 

the prison system or lose the business all together. 

We have estimated that over the last 10 years we have lost approximately $10 million in sales 

because of FPI preference. Ten million dollars, which we would have loved to use to reinvest and 

grow our company, but which instead has been used to subsidize government competition with 

the private sector. This is certainly no deal for the taxpayer. UNICOR's statute requires that it 

provide inmates with skills "in trades and occupations which will provide them with a means of 

earning a livelihood upon release." If these practices continue, there will be no small chair 

manufacturers left to hire them. 

I understand the Committee has put together and successfully passed a series of procurement 

reform bills, which can be best described as a small business contracting wish list. WIPP 

applauds your efforts to increase and facilitate government partnerships with small firms. Yet 

this is one more area of small business contracting that must be reformed. 

115615th st. NW Suite 1100. Washington. DC 20005 - 888.488WIPP - Fax: 202.872.8543 

1714 Stockton Street. Suite 200. San Francisco. CA 94133 - 415.434.4314 - Fax: 415.434.4331 

Website: WNW.WIPP.org 
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On behalf of Women Impacting Public Policy, Neutral Posture and all ofthe small businesses who 

are impeded by the FPI program preference, I want to thank you for the opportunity to appear 

before you. I am happy to take any questions you may have. 

115615th St NW Suite 1100, Washington, DC 20005 - 888.488.wIPP - Fax: 202.872.8543 

1714 Stockton Street, Suite 200, San Francisco, CA 94133 - 415.434.4314 - Fax: 415.434.4331 We:>hc:.ltQ: wwwWIPP om 
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Statement of Andrew S. Linder 

President and Owner 

POWER CONNECTOR INC 

Mr. Chairman and Members of the Subcommittee. My name is Andy Linder. I'm the President and owner 

or Power Connector, a small electronics business ba,ed on Long Island, NY. 

Power Connector went into business on April 1, 1987 - over 25 years ago. 

When we first put the key in the door, it was just a two-man company, me and a strong associate. 

Just two people with a vision and a lot of hope. 

In 25 years, we've grown a lot. Now there are 53 employees, not just two. 

We've built what I think is a solid reputation producing high-quality, reliable electronic connectors and 

cable hardware for the United States military. Mostly, we supply components to the Department of De rense, 

Federal Prison Industries and to our nation's primary defense contractors. 

Our products are relied on every day by American forces all over the globe, including our men and women 

in Afghanistan and Iraq. My employees and I arc still especially proud that some of the electronic components that 

we supplied to Unicor, FPI went into the transmitter that helped save the life of Air Force Captain Scott O-Grady 

after his plane was shot down in Bosnia in the summer of 1995. More recently. we supplied the connectors that 

were used on the radios that the Navy Seals used during the raid on Osama Ben Laden's compound. Additionally, 

we supply the cable assemblies that are being deployed in the joint American and Israeli defense program "Iron 

Domc~~ in the Gaza area. 

The story of Power Connector is very much the story of Federal Prison Industries. 

It's a story that's typical of thousands of other private sector small businesses in every State, who've been 

helped by Federal Prison Industries over its nearly 78 years of existence. 

It's a story that'll come as a surprise to those who believe Federal Prison Industries poses some kind of 

"threat" to the private sector. 

And it's a story that needs to be told as you hold this hearing on HR.3634. legislation that I believe would 

suffocate Federal Prison Industries. and the vitally important work it does. 

002.1082260 1 
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That's becallse Federal Prison Industries isn't just about inmates. It's about thousands of sma II businesses, 

just like mine -- many of them woman and minority-owned. These thousands of small businesses, my own 

included, partner with Federal Prison Industrics for contracts valued at over seven hundred million dollars in gross 

revenues in 20 II alone. 

We've capitalized and hired employees on the strength of those contracts. Our employees and their 

families count on these contracts. In fact, for every dollar purchased by Federal Prison Industries, 78 cents goes 

directly back to small businesses just like mine. We'rc the ones who supply the raw materials, the component parts 

and the scrvices that make FPI's work with inmates possible. 

Each of us - each of our businesses, our employees, our suppliers - are directly in the path of efforts by 

some in this Congress to tum back 78 years of success with Federal Prison Industries and force it, instead, into an 

impossible competition with the private sector. 

Mr. Chairman, Members ofthis Subeommittec, I submit to you today that Power Connector would never b, 

in business today without Federal Prison Industries. That's because it's awfully hard for any company - much less 

a two-man company -- to even submit bids to the federal government, much less to deliver a product up to specs. 

Further, to this, American businesses like mine now have to compete with India and Mexico who have been 

deemed "approved sources" for US military connectors making competition for these contracts even tougher for 

small businesses like Power Connector. 

But Federal Prison Industries isn't like much ofthe federal government: they recognize the gains to be 

made when dealing with small businesses like ours, and they make doing so a priority. TIley broke down their 

Army contracts and asked small businesses - ours included - to bid on proto-types. FPI developed a unique 

prutnership with small business whereby they invested in the costs for testing and research and development that 

would have been cost prohibitive for almost any small business to undeltakc. They mandated small business 

palticipation in the competitive bidding proccss. And they acquired the components for the finished cable 

assemblies which allowed companies like mine to participate. 

By taking on the financial burden for the testing of proto-types, Federal Prison Industries eliminated the 

single biggest financial barrier that stands in the way of small companies like ours. That expense is the major 

2 002.1082260,1 
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reason, in my mind, why other govemment contracts ofthis type seldom are awarded to small companies like mine, 

and why, instead, they wind up going to big companies with more capital and human resources. 

As a result of FPl's efforts to work with the small business community Our products were approved. FPI 

provided the intensive labor required, we provided the component parts. We had to competitively bid in order to 

partner with FPI on these contracts, and I am proud to say my company won the bids for the component parts. 

Unlike other federal agencies, Federal Prison Industries gave us the one thing we ever asked for, then or 

ever since·~ a chance. 

TIley were hard taskmasters when it came to quality, but we delivered - on time and under budget. 

We've kept on delivering to Federal Prison Industries, too -- for 25 years now, products now worth $2.4 

million a year. 

Federal Prison Industries doesn't concem itself with how big you are, but with whether you can deliver on 

time and up to specs. If we could meet military standards and perform, being a small, start-up business was not a 

liability. 

That's part ofFP!'s mission - to partner with small businesses to help us get the kinds of contracts for 

which we could otherwise never compete. 

During Power Connectors first few years, we had no customers other than Federal Prison Industries. Every 

dollar of our business, every individual employee, every dime of taxes we paid, was directly the result of Federal 

Prison Industries. Our company would never have survived without them. 

Even today,ll out of our 53 employees - roughly one-fifth of our workers, owe their jobs to Federal Prison 

Industries. That's also a testament to FPl's efforts to reach out to small businesses. 

Power Connector today has more than 27 employees who work every day fulfilling contracts with other 

government agencies and military defense contractors contracts that don't involve FPJ. None of those contractsnot one - would have happened had we not been able to build a credible performance track record with FP£. 

By giving us the opportunity to prove ourselves at a time when most agencies or defense contractors 

wouldn't have given us a second look, FPI gave us the chance we were looking for 25 years ago. 

3 002 1082260.1 
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And Power Connector isn't the only company involved. In addition to our own success, the subcontracts 

we have outsourccd over the past 25 years to over 62 other small businesses have created jobs for 186 full-time 

employees outside our doors. 

But federal Prison Industries isn't just about creating private sector jobs: 

Starting in 2001 we implemented an aetive program to employ Federal inmates as they were bcing released H'om 

prison with the requirement that they had worked suceessfully in the UnicorlFPI electronics program. In the past 

ten years we hired ten (10) former inmates of which thrce (3) are still employed by us. I am pleased to report that 

the other seven (7) former inmates utilized their employment experience at Power Connector Inc. to improve their 

own personal employment opportunities. 

Mr. Chairman, Members ofthe Subcommittee, neither I or any of the above mentioned men would be able 

to tell this success story if it weren't for Federal Prison Industries. 

But there are thousands of others, who couldn't be here today: business owners like me, employees and our 

contractors and suppliers. Countless thousands ofimnates who, over 78 years, have received job skills training 

because of Federal Prison Industries. Thousands, too, of corrections officers whose lives have been made easier 

because federal Prison Industries has been so hclpful in keeping the institutions safe. And thousands more, who 

likely would have been victims of crime were it not for FPI's 78-year track record in fighting crime through 

meaningful rehabilitation. 

It's my firm bcliet; moreover, that only the electronics division of Federal Prison Industries has the 

capability of satisfactorily supplying the government's cable, harness and mechanical assembly requirements 

during times of war or extended periods of military conflict. Federal Prison Industries has the experienced manual 

labor and the supervision necessary to perform this work. During the period !i'om tile mid nineties up to 91111200 1, 

there was a steady decline in the number of private military contractors who could perform this type of work as the 

defense budget for military products was reduced. These assemblies are used in the military's tactical 

communications systems. The sheer volume and scope of the military's needs for these products would ovcrwhelm 

the capacity of any domestic private business. The fact is that in many instances, Federal Prison Industries 

routinely has in place long-term requirement contracts with qualified defense product manufacturers, most of whom 

4 002 1082260.1 
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are small businesses. That's why Federal Prison Industries can obtain materials so quickly and efficiently. The 

proven track record of these premier Federal Prison Industries electronics facilities to delivcr quality product, 

competitively priced, under surge requirement conditions, with increased volume to their military customers, 

clearly proves how critical Fcderal Prison Industries is to our nation's defense preparedness and strength levels. 

Specifically, during 2007 and 2008 there was a tremendous surge in demand for military communication systems 

that was creating potential vulnerabilities for our military forces. FPI successfully responded to these demands 

based on the model I have described above and paltnering in total with small businesses such as mine to and 

definitively turn around a crisis situation for our military men and women in conflict. The previous record of 

Federal Prison Industries in Operation Desell Storm and its current outstanding performance during the 

Afghanistan and Iraqi conflicts obviates the fact that our nation's defense capability cannot and must not be 

significantly compromised by impairing the work of Federal Prison Industries. 

I respectfully request that you very carefully consider any further attempts to curtail or diminish the status 

of Federal Prison Industries through legislation such as H.R. 3634. I strongly oppose this legislation, as it would 

hurt small business, it would cost jobs, it would diminish the opportunities for former and current inmates, it would 

jeopardize the safety of our penal institutions and, in my opinion, risk our nation's military preparedness. 

'1nank you for your time and consideration. 

Andrew S. Linder, President 

June 25, 2012 

002.1082260.1 
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(!Laugtt.6.6 af tlJt 1JluittIl t;tatt.6 

Bouse nf 1ltqtteseniutiues 

lfull!ttngtnn. ik!! 20515 

The Honorable Howard P. "Buck" McKeon 

Chainnan 

House Anned Services Committee . 

2120 Rayburn House Office Building 

Washington, D.C. 20515 

Dear Chairman McKeon, 

April 17, 2012 

We write to express our concern with the inclusion oflanguage in the FY 13 NDAA that 

would have a significant, detrimental impact on the Federal Prison Industries (FPI) program. 

The Federal Bureau of Prisons (BOP) considers FPI its most important correctional tool 

for the safe management of prisons across the country. FPI plays a critical role in reducing 

inmate recidivism and idleness, and increases their opportunities for post-release success. 

Further, the total impact of FPI on federal government procurement is less than Y. of 1 %, the 

same as it was at the end of its first year of operation in 1935. However, over recent years, the 

FPI program has experienced a precipitous decline in the number of inmate jobs as a result of 

limitations imposed through appropriations riders on FPI's mandatory source authority relating 

to federal agencies' purchases from FPI. These legislative efforts have created serious 

impediments to FPI's ability to carry out its important mission of employing inmates in 

meaningful work by further restricting the Department of Defense, one of FPI's biggest 

customers, and the civilian agencies from purchasing products and services from FPI. 

Dozens ofFPI factories have closed, resulting in the elimination of thousands of inmate 

work opportunities over the last decade - the latest being announced as recently as September 

13,2011. The overall result has been a crippling erosion in the beneficial impact of the FPI 

program, which has fallen from BOP's recommended target of25% of the work-eligible inmate 

population to its current disappointing level of 8% of work-eligible inmates participating in this 

proven correctional program. Correctional worker representatives cite this decline as a 

significant contributor to the increase in inmate on correctional officer assaults the BOP has 

experienced in recent years. Moreover, the Congressional Budget Office has cited the reduction 

in FPI jobs as a major contributor to increased BOP operations costs, due to the need for more 

officers to oversee a larger number of idle inmates. l 

1 See, e.g., House Report 108-286 to H.R. 1829, the Federal Prison Industries Competition in Contracting Act of 

2003. 

PRINTED ON RECYCLED PAPER 
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The Honorable Howard P. "Buck" McKeon 

April 17,2012 

Page 2 

FPI currently employs 13,466 inmates working in 88 factories at 66 locations nationwide. 

This is a reduction of nearly 10,000 inmates since 2008. Research demonstrates that inmates 

who work in FPI are 24 percent less likely to re-offend upon release from prison than non-FPI 

inmates and 14 percent more likely to be gainfully employed post-incarceration. In FY 2011, 

inmates who worked in FPI factories contributed more than $1.6 million of their earnings toward 

meeting their financial obligations, including court-ordered fines, child support, or restitution. 

During FY 2011, 78 percent ofFPI expenditures were for the purchase of raw materials, 

supplies, equipment, and services from private sector businesses. More than 40 percent of FPI' s 

purchases were from small businesses, including businesses owned by women, minorities, and 

those who are disadvantaged. 

Although data from the Department of Defense appears to show that FPI's clothing and 

textile earnings have increased from $24.3 million to $34.04 million between FY 2007 and FY 

2011, FPI's overall earnings have plummeted. In FY 2010, net FPI sales were $777 million, a 

net loss of$56 million for that fiscal year. In FY 2011, net sales were down to $745 million. 

Current law requires FPI to fully compcte ill a particular market if its market share 

exceeds 5 percent. If FPI's market share is less than 5 percent, FPI's products are given a 

preference but only if they are deemed comparable to other market products. FPI administers its 

authority responsibly with respect to its impact 011 businesses by withdrawing from competition 

for a contract if there is evidence that an FPI winning bid would have a direct adverse impact on 

a private business, even though it is a contract for which FPI could lawfully compete under the 

existing restrictions. 

The proposed language would allow the Secretary to prohibit the FPI from competing in 

the market if its market share exceeds 5% despite the fact that they are already required to 

compete once their market share exceeds this threshold. The effect of this language would be 

devastating to the positive impact FPI currently provides for the BOP, the inmate population, and 

the businesses that currently partner with FPI to provide raw materials and supplies. 

For these reasons, we strongly oppose the proposed language and respectfully request 

that it not be included in the FY 2013 NDAA. 

.l(Wt.Wv~ 

LAMAR SMITH 

Chairman 

House Judiciary Committee 

Sincerely, 

~ . Ranking Member 

House Judiciary Committee 
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The Honorable Howard P. "Buck" McKeon 

April 17, 2012 

Page 3 

UEL 

~~dJc~ E. LUNGRE 

Chainnan 

Committee on House Administration 

~~R.~ Chairman 

Commerce Justice, Science, and Related 

Agencies Subcommittee 

House Committee on Appropriations 

ROBERT C. "BOBBY" SCOTT 

Ranking Member 

Crime, Terrorism and Homeland Security 

Subcommittee 

House Judiciary Committee 

BOB 

&~ GOODLATTE 

Member 

House Judiciary Committee 

STEVE CHABOT 

Member 

House Judiciary Committee 
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EST. 1830 

WOOLRICH® 

The Original Outdoor Clothing Company· 

The Honorable Mick Mulvaney, Chairman 

Subcommittee on Contracting and Workforce 

House Small Business Committee 

2361 Rayburn House Office Building 

Washington, D.C. 20515 

The Honorable Judy Chu 

Ranking Minority Member 

Subcommittee on Contracting and Workforce Committee on Small Business 

U.s. House of Representatives 

Washington, DC 20515 

Dear Chairman Mulvaney and Ranking Minority Member Chu: 

June 22, 2012 

Woolrich Inc., established in 1830, has a long history of providing jobs to residents of 

Pennsylvania. In an effort to maintain employment and provide additional employment opportunities, 

we have developed a successful Government Contracting Division whose vision is to secure government 

contracts and provide textile products to our troops. While this not only provides us with an 

opportunity to support the men and women who serve our country, it also provides employment 

opportunities for Pennsylvania residents. 

In 2005 Woolrich, Inc. entered into a business relationship with Federal Prison Industries (FPI), 

enabling us to not only retain employees at that time, but to create additional job opportunities. At the 

time we started this division our cutting department was on the verge of shutdown. To date, we have 

been able to retain our cutting facility and provide additional employment opportunities within our 

division. 

FPI has not eroded our apparel business or our opportunities to do business with the 

government. They have been a benefit to us in securing government business and providing 

employment opportunities to the people of Pennsylvania, as well as, additional business to our vendors, 

many of which are small businesses. 

As a small business, Woolrich Inc. does not view FPI as a threat to our growth and development, 

but rather as a valuable resource to the small business community. 

Best regards, !J~~ 

tvlu!L,;1 ;;:d:'t~/ ~- William R. Lilley, 7 

Vice President Government Contracting 

Woolrich, Inc. 

Cc: Mary M. Mitchell, Chief Operating Officer, FPI 

James E. Griggs, President Non-branded Assets, Woolrich, Inc. 

Mill Street P.O. Box 138 Woolrich, PA 17779 www.woolrich.com 
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PREPARED STATEMENT OF 

DALE DESHOTEL 

PRESIDENT 

COUNCIL OF PRISON LOCALS 

FEDERAL BUREAU OF PRISONS 

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO 

{OO308186.DOCX - } 

BEFORE THE 

HOUSE SMALL BUSINESS COMMITIEE 

SUBCOMMITIEE ON CONTRACTING AND WORKFORCE 

ON 

"UNLOCKING OPPORTUNITIES: RECIDIVISM VERSUS FAIR 

COMPETITITON IN FEDERAL CONTRACTING" 

JUNE 28, 2012 
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Mr. Chairman, Ms. Ranking Member, and Members of the Subcommittee -

My name is Dale Deshotel. I am the President of the Council of Prison Locals, 

American Federation of Government Employees (AFGE), AFL-CIO. On behalf ofthe 

more than 37,000 federal correctional workers at the U.S. Department of Justice's 

Bureau of Prisons' (BOP) correctional institutions, I want to thank you for the opportunity 

to submit our prepared statement for the hearing record on the important issue of 

"Unlocking Opportunities: Recidivism versus Fair Competition in Federal Contracting." 

Summary 

The AFGE Council of Prisons Locals has serious concerns regarding the Federal Prison 

Industries (FPI) Competition in Contracting Act of 2011 (H.R. 3634), a bill introduced by 

Rep. Bill Huizenga (R-MI) on December 12, 2011. In particular, we believe that the bill's 

virtually complete elimination of FPI's "mandatory source preference" from the 

Department of Defense (DoD) and civilian agency procurement activities would have a 

detrimental impact on the FPI prison inmate work program. 

The debate over FPI reform has always involved two antinomic public policies: (1) 

correctional policy that fosters prison safety and prisoner rehabilitation and (2) 

government-wide procurement policy that fosters competition. The debate also has 

involved two antinomic groups interests: (1) federal correctional workers and prison 

inmates and (2) private sector companies and non-inmate workers. Any legislative 

reform of FPI should create a balance between these necessary and reasonable - but 

opposing - public policies and group interests. 

Unfortunately, congressional reforms of FPI in the 2003-2008 period were strikingly 

imbalanced, resulting in the FPI prison inmate work program experiencing a Significant 

decline in FPI sales revenues, a significant increase in FPI factory clOSings and 

downSizings, and a Significant decline in the number of BOP prison inmates employed 

by the FPI program. We believe H.R 3634, if enacted, would make a bad situation even 

worse. 

AFGE has the following concerns: 

A. Existing FPI Prison Inmate Work Program 

1. The Huizenga bill and the accompanying material on the congressman's website 

ignore the extent to which current law requires DoD and civilian agencies - when they 

are considering buying a FPI product - to: (a) use competitive procedures and (b) 

determine if the FPI product is comparable to products available from the private sector 

that best meet their needs in terms of price, quality, and time of delivery. 

2. The Huizenga bill proponents - as evidenced by H.R. 3634 and the 

accompanying material on the congressman's website - downplay the fact that the FPI 

prison inmate work program is an important management tool used by understaffed 

BOP correctional workers to help deal with the exploding prison inmate population. The 

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proponents also downplay the fact that the FPI prison inmate work program is an 

important rehabilitation tool that provides BOP inmates an opportunity to develop job 

skills and values that will allow them to reenter - and remain in - our communities as 

productive, law-abiding citizens. 

3. Huizenga bill proponents - again as evidenced by H.R. 3634 and the 

accompanying material on the congressman's website - ignore the fact that the FPI 

prison inmate work program has experienced a significant decline in FPI sales 

revenues, a significant increase in FPI factory closings and downsizings, and a 

significant decline in the number of BOP prison inmates employed by the FPI program. 

This deterioration of the FPI program is the result of various limitations imposed by 

Congress on the program, particularly Section 827 of the National Defense 

Authorization Actfor FY 2008 (P.L. 110-181). 

4. The Huizenga bill's virtually complete elimination of the FPI mandatory source 

preference would make a bad situation even worse. The AFGE Council of Prison Locals 

does not believe that the mandatory source preference should be eliminated until a new 

alternative prison inmate work program is designed, implemented, tested and funded. 

Such an alternative prison inmate program would help replace the prison inmate jobs 

that will be lost if the FPI mandatory source preference is eliminated by the Huizenga 

bill. 

B. Rebuttals to those Arguments Opposing the Existing FPI Prison Inmate Work 

Program 

1. FPI is not a federal procurement behemoth as its total product sales, even in 

office furniture, are relatively small. 

2. FPI is not the cause of the U.S. private companies' sales losses and non-inmate 

workers' jobs, particularly in the office fumiture and textile/apparel industries. Instead, 

these sales and job losses are the result of foreign competition. 

3 The complete legislative elimination of the FPI mandatory source preference will 

not significantly help private companies and non-inmate workers, even in the office 

furniture and textile/apparel industries. But it will have a significantly adverse impact on 

the many private companies and non-inmate workers that supply FPI with raw 

materials, equipment and other services. 

Discussion 

A Existing FPI Prison Inmate Work Program 

1. The Huizenga bill and the accompanying material on the congressman's 

website ignore the extent to which current law requires DoD and civilian agencies 

- when they are considering buying a FPI product - to: (a) use competitive 

procedures and (b) determine that the FPI product is comparable to products 

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available from the private sector that best meet their needs in terms of price, 

quality, and time of delivery. 

Section 2 of the Huizenga bill provides that when procuring an FPI product, the head of 

an executive agency "shall .... [use] competitive procedures in accordance with the 

applicable evaluation factors ... " According to the bill's purpose, "[the bill shall] require 

Federal Prison Industries to compete for its contracts minimizing its unfair competition 

[mandatory source preference] with private sector firms and their non-inmate workers 

and empowering Federal agencies to get the best value for taxpayers' dollars." Finally, 

Rep. Huizenga states in his February 16, 2012, press release that his bill "requires the 

government agencies to at least open these contracts to the private sector as well for 

bidding or requires them to shop around for the best value for the taxpayers' dollar." 

However, it would appear the Huizenga bill proponents are ignoring the many 

congressional reforms of the FPI product procurement process that occurred in the 

2003-2008 period. These FPI reforms mandate that both DoD and civilian agencies (a) 

use competitive procedures and (b) determine that the FPI product is comparable to 

products available from the private sector that best meet their needs in terms of price, 

quality, and time of delivery. 

DoD Procedures for Purchasing from FPI 

DoD purchasing activities vis-a-vis FPI are subject to 10 U.S.C. 2410n, Subpart 208.6 of 

the Defense Federal Acquisition Regulation Supplement (DFARS), and Subpart 8.6 of 

the Federal Acquisition Regulation (FAR). 

These statutory and regulatory provisions provide the following: 

(a) Products for Which Federal Prison Industries Has Significant DoD Market Share. 

DoD may purchase a product listed in the latest edition of the FPI catalog for which FPI 

has a "significant DoD market share" - that is, a market share greater than 5% of the 

DoD market - only if DoD uses competitive procedures for the procurement of the FPI 

product. In conducting such a competition, DoD shall consider a timely offer from FPI. 

(b) Products for Which Federal Prison Industries Does Not Have Significant DoD 

Market Share. Before purchasing a product listed in the latest edition of the FPI catalog 

for which FPI does not have a "Significant DoD market share" - that is, a market share 

5% or less - DoD shall conduct market research to determine whether the FPI product 

is comparable to products available from the private sector that best meet the needs of 

DoD in terms of price, quality, and time of deliverv. 

• If DoD determines that a FPI product is NOT comparable in price, quality, and 

time of deliverv to products of the private sector that best meets the needs of 

DoD in terms of price, quality, and time of deliverv, DoD shall use competitive 

procedures for the procurement of the product. In conducting such a 

competition, DoD shall consider a timely offer from FPI. 

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• If 000 determines that a FPI product IS comparable in price. quality. and time 

of delivery to products of the private sector that best meets the needs of 000 

in terms of price. quality. and time of delivery. 000 must purchase the FPI 

product under the mandatory source preference - or request a FPI waiver to 

purchase it from a private sector company. (Emphasis added) 

[Attached at the end of this written testimony is a decision path flow chart that clarifies 

000 procedures for purchasing from FPI.] 

Civilian Procedures for Purchasing from FPI 

Civilian purchasing activities vis-a-vis FPI are subject to Section 637 of the 

Consolidated Appropriations Act, 2005 (P.L. 108-447) and Subpart 8.6 of the FAR. 

These legislative and regulatory provisions provide the following: 

(a) Market Research 

• Before purchasing a product listed in the latest edition of the FPI catalog, a 

civilian agency is required to conduct market research to determine whether 

the FPI product is comparable to products available from the private sector 

that best meets the needs of the civilian agency in terms of price. qualitv. and 

time of delivery. 

• Determining comparability is a unilateral determination made at the discretion 

of the civilian agency's contracting officer. 

• The civilian agency must prepare a written determination that includes 

supporting rationale explaining the assessment of price, quality. and time of 

delivery. based on the results of market research comparing the FPI product 

to products available from the private sector. 

(b) Competitive Procedures or Mandatory Source 

• If the civilian agency determines that the FPI product is NOT comparable to 

private sector products in one or more categories of price. guality. and time of 

delivery. the agency shall use competitive procedures for the procurement of 

the product. In conducting such a competition, the civilian agency shall 

consider a timely offer from FPI. 

• If the civilian agency determines that the FPI product IS comparable to private 

sector products in all three categories of price. quality. and time of deliverv. 

the agency must purchase the product from FPI under the mandatory source 

preference - or request a FPI waiver to purchase it from a private sector 

company. (Emphasis added) 

[Attached at the end of this written testimony is a decision path flow chart that clarifies 

civilian agency procedures for purchasing from FPI.] 

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2. Huizenga bill proponents downplay the fact that the FPI prison inmate work 

program is a significantly important BOP management and rehabilitation tool. 

The Huizenga draft releases on December 13 and February 16 strongly emphasize 

H.R. 3624's goal to allow fair competition for U.S. manufacturers, thereby restoring 

economic security for America and preserving private sector jobs. 

Huizenga bill proponents, however, are downplaying the following: 

(a) The FPI prison inmate work program is an important management tool used by 

understaffed BOP correctional workers to help deal with the exploding prison inmate 

population. 

Hundreds of serious inmate-on-worker assaults have occurred in the past several years 

at the 117 BOP institutions, as the men and women who work at those institutions 

struggle to keep pace with an exploding prison inmate population. 

• More than 217,000 prison inmates are incarcerated in BOP correctional 

institutions today, up from 25,000 in FY 1980, 58,000 in FY 1990, and 145,000 in 

FY 2000. About 81 % - or 176,540 - of the inmate population are confined in 

BOP-operated institutions while 19% - or 40,612 - are managed in private 

prisons and residential reentry centers. By the end of FY 2013, it is expected 

there will be 229,268 prison inmates confined in BOP institutions. 

• However, the number of correctional workers who work in BOP-operated prisons, 

is failing to keep pace with this tremendous growth in the prison inmate 

population. As of December 31, 2011, the BOP-operated institutions were staffed 

at an 88% level, as contrasted with the 95% staffing levels in the mid-1990s. This 

88% staffing level is below the 90% staffing level that BOP believes to be the 

minimum level for maintaining the safety and security of BOP institutions. 

• In addition, the current inmate-to-staff ratio at BOP-operated prisons is 4.94 

inmates to 1 staff member, as contrasted with the 1997 inmate-to-staff ratio of 

3.57 to 1. BOP believes this sUbstantial increase in the inmate-to-staff ratio 

causes negative impacts on its ability to effectively supervise prison inmates. 

Indeed, rigorous research by BOP's Office of Research and Evaluation has 

confirmed that the greater the inmate-to-staff ratio the higher the levels of serious 

assaults by prison inmates. (The Effects of Changing Crowding on Inmate 

Violence and Administrative Remedies Granted, 2010) 

• Prison inmate overcrowding also is an increasing problem at BOP institutions 

despite the activation of new prisons over the past few years. BOP-operated 

institutions at the end of FY 2011 were overcrowded by 39%, with 55% 

overcrowding at high security prisons and 51% at medium security prisons. By 

the end of FY 2013, it is expected the BOP system will be overcrowded by 43%. 

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This is why AFGE and its Councif of Prison Locals. which represent the BOP 

correctional workers. strongly supports the FPI prison inmate work program. The FPI 

program is an important management tool used by understaffed BOP correctional 

workers to deal with the exploding prison inmate population. It helps keep thousands of 

inmates productively occupied in labor-intensive activities. thereby reducing inmate 

idleness and the violence associated with that idleness. It also provides strong 

incentives to encourage good inmate behavior. as those who want to work in FPI 

factories must maintain a record of good behavior and must complete high school or be 

working toward a General Education Degree (GED). 

(b) The FPI prison inmate work program is an important rehabilitation tool that 

provides BOP inmates an opportunity to develop job skills and values that will allow 

them to reenter - and remain in - our communities as productive. law-abiding citizens. 

The Post-Release Employment Project (PREP). a multi-year study of the FPI prison 

inmate work program carried out and reported upon in 1996 by William Saylor and 

Gerald Gaes of the BOP Office of Research and Evaluation. found that the FPI prison 

inmate work program had a strongly positive effect on post-release employment and 

recidivism. Specifically. the study results demonstrated that: 

In the short run (i.e .• one year after release from a BOP institution). federal prison 

inmates who had participated in the FPI work program (and related vocational training 

programs) were: (1) 35% less likely to recidivate than those who had not participated, 

and (2) 14% more likely to be employed than those who had not participated. 

In the long run (i.e., up to 12 years after release from a BOP institution). federal prison 

inmates who partiCipated in the FPI work program were 24% less likely to recidivate 

than those who had not participated in the FPI work program. (PREP: Training Inmates 

Through Industrial Worle Participation, and Vocational and Apprenticeship Instruction, by 

William Saylor and Gerald Gaes. Office of Research and Evaluation, Federal Bureau of 

Prisons. September 24. 1996.) 

Later in 1999. Saylor and Gaes published a follow-up paper to report further analyses of 

the PREP data which focused on the differential effect of the FPI prison inmate work 

program on the post-release recidivism of four groups: (1) non-Hispanic whites, (2) nonHispanic blacks, (3) Hispanic whites. and (4) Hispanic blacks. Their analyses revealed 

that the FPI prison inmate work program provides even greater benefit to the three 

minority groups that are at the greatest risk for recidivism (non-Hispanic blacks. 

Hispanic whites. and Hispanic blacks) than it does for the non-Hispanic white group. In 

general, the reCidivism improvement rates for minority inmates who partiCipated in the 

FPI work program compared to those minority inmates who did not participate were 

between 37% and 147% higher than the recidivism improvement rates for non-Hispanic 

white inmates who partiCipated in the FPI work program compared to those nonHispanic white inmates who did not partiCipate. As Saylor and Gaes concluded: 

"Regardless of whether a minority was defined on the basis of 

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race or ethnicity, and despite their being at a higher risk of 

recidivism, minority groups benefited more from [FPI work program] 

participation than their lower risk non-minority counterparts. While 

the absolute differences may not appear that large, the relative 

improvements [in recidivism rates] indicate a much larger program 

effect for minority program participants who are otherwise more likely 

to be recommitted to prison." (The Differential Effect of Industries 

Vocational Training on Post-Release Outcome for Ethnic and Racial 

Groups, William Saylor and Gerald Gaes, Office of Research and 

Evaluation, Federal Bureau of Prisons, September 6, 1999.) 

3. Huizenga bill proponents Ignore the fact that the FPI prison inmate work 

program has experienced a significant decline in sales revenues, a significant 

increase in factory closings and downsizings, and a significant decline in the 

number of prison inmates employed by the FPI program. This deterioration of the 

FPI program is the result of various limitations imposed by Congress on the 

program, particularly Section 827 of the National Defense Authorization Act for 

FY 2008 (P.L. 110·181). 

Over the past several years, the FPI prison inmate work program has experienced a 

significant decline in its ability to remain financially self-sustaining while providing 

"employment for the greatest number of inmates in the United States penal and 

correctional institutions who are eligible to work as is reasonably possible." (18 U.S.C. 

4122) For example, FPI has experienced a: 

• Significant decline in FPI sales revenues: While FPI in FY 2009 had sales 

revenues of $889,355,000 in FY 2009, it only had revenues of $745,423,000 in FY 2011 

- a decline of $143,932.000 or 16% over three years. 

• Significant closing and downsizing of FPI factories: On July 15, 2009, FPI 

closed factory operations at 14 BOP prisons and downsized operations at four other 

BOP prisons. The next year on July 13, 2010, FPI closed 12 more factories and 

downsized three. And on September 7, 2011, FPI announced that it would close and 

downsize 12 additional factories at 10 different BOP prisons. According to then-FPI 

Chief Operating Office Paul Laird. these closings and downsizings were cost control 

actions taken to bring production capacity and expenses in line with FPl's level of 

business. 

• Significant decline in the number of prison inmates employed by FPI: While 

the FPI program employed 18,972 inmates in FY 2009, it employed only 14,200 at the 

end of FY 2011 and 13,466 in April 2012. 

These significant declines are the result of the various limitations imposed by 

Congress and the FPI Board of Directors on FPI's mandatory source authority relating 

to DoD's and federal civilian agencies' purchases from FPI. But of the many imposed 

limitations, Section 827 in the National Defense Authorization Act for FY 2008 (P.L 110-

{OO308186.DOCX • }8 
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181) -which is statutorily 10 U.S.C. 2410n - is probably the most significant impediment 

to the FPI prison inmate program. 

The FPI Board of Directors in 2003 administratively ended the application of mandatory 

source authority for those FPI-made products where FPI had a share of the Federal 

market that was greater than 20%. But Section 827 took a much more stringent 

approach, ending the application of the mandatory source authority with regard to 000 

purchases of FPI-made products where FPl's share of the 000 market for those 

products was greater than 5%. Initial analyses of the effect of this reduction of the 

"significant market share" from 20% to 5% projected an eventual loss of up to $241 

million in FPI sales revenues and 6,500 FPI prison inmate jobs. 

4. The Huizenga bill's elimination of the FPI mandatory source preference 

would make a bad situation even worse. AFGE and its Council of Prison Locals 

do not believe that the mandatory source preference should be eliminated until a 

new alternative prison inmate work program is designed, implemented, tested 

and funded. Such an alternative prison inmate program would help replace the 

prison inmate jobs that will be lost If the FPI mandatory source preference is 

eliminated by the Huizenga bill. 

As can be seen above in #3, FPI is in desperate need of new inmate work program 

authorities if it is to remain finanCially self-sustaining while providing "employment for 

the greatest number of inmates in the United States penal and correctional institutions 

who are eligible to work as is reasonably possible." (18 U.S.C. 4122) This desperate 

need would only increase if the Huzienga bill's elimination of the mandatory source 

preference were enacted. 

AFGE was pleased when Congress included Section 221 in the FY 2011 CommerceJustice-Science Appropriations bill (P.L 112-55). This section extended - for the first 

time - the Prison Industry Enhancement (PIE) inmate employment program to the 

federal BOP system. The PIE program was created by Congress in 1979 to encourage 

state prison systems to establish employment opportunities for inmates that 

approximate private-sector work opportunities. The program is designed to place 

inmates in a realistic work environment, pay them the prevailing local wage for similar 

work, and enable them to acquire marketable skills to increase their potential for 

successful rehabilitation and meaningful employment upon release. 

AFGE also was pleased that Section 221 authorized FPI to carry out pilot "off-shore 

repatriation" projects to produce items not currently produced in the United States. It is 

believed that FPI, if allowed to enter into partnerships with private businesses, could 

bring lost production back into the United States while providing BOP prison inmates 

with opportunities to learn skills that will be marketable after their release. 

However, these two exciting prison inmate programs are only in their incipient phase. 

Any future consideration of eliminating the FPI mandatory source preference should 

only occur after they are deemed successful in helping to provide "employment for the 

{OO308186.00CX· }9 
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greatest number of inmates in the United States penal and correctional institutions who 

are eligible to work as is reasonably possible." (18 U.S.C. 4122). 

B Rebuttals to those Arguments Opposing the Existing FPI Prison Inmate 

Work Program 

Opponents of the FPI prison inmate work program often argue that the FPI mandatory 

source preference must be eliminated because: (1) FPI is a federal procurement 

behemoth, (2) this FPI federal procurement behemoth is adversely impacting private 

companies' sales and non-inmate workers' jobs, particularly in the office furniture and 

textile/apparel industries, and (3) therefore, eliminating the FPI mandatory source will 

significantly help private companies and non-inmate workers. 

However, the existing evidence would seem to support the opposite arguments: 

1. FPI is not a federal procurement behemoth because its total product sales, 

even its office furniture sales, are relatively small. 

FPI opponents of FPI often contend that FPI is a federal procurement behemoth. For 

example, Rep. Howard Coble (R-NC), then-chairman of the House Judiciary 

Subcommittee on Crime, Terrorism, and Homeland Security, stated at his 

Subcommittee's July 1, 2005 hearing on H.R. 2965, an anti-FPI bill. that he was "proud 

to be a cosponsor of this legislation" because "[among other things] FPI is a large and 

growing Government-owned corporation. In 1998, FPI had total sales in excess of $534 

million and employed 20,200 inmates. In 2004, [FPI) employed 19,337 inmates with 

total sales of $802 million." 

But while Rep. Coble and others seek to portray FPI as this "large and growing" 

behemoth. the fact is that FPI's total sales represent only a very small percentage ofthe 

total federal procurement market. 

• FPI's total sales in FY 2004 - $802.720,000 - were less than one quarter of 1 % 

(.2350934% to be exact) of the total federal agency procurement market-

$341,447,181,612. FPI's total sales in FY 2007 - $852,724,000 - were less than 

one fifth of 1% (.1926680%) of the total federal agency procurement market-

$442,587,106,986. (Source: "Federal Contract Actions and Dollars by Executive 

Department and Agency, FY 2004 and FY 2007", Federal Procurement Data 

System website.) 

• FPI's total sales in FY 2011 - $745,423.000-were even less-0.1393314% of 

the total federal agency procurement market - $535 billion. (Source: "Contracting 

Smarter, Savings More," by Danny Werfel, OMB Controller of the Office of 

Federal Financial Management, and http://www.usaspending.gov.) 

Similarly, FPI opponents who support the office furniture industry argue that the FPI 

office furniture business segment is an increasingly "large and growing" portion of the 

(OO308186.DOCX· )10 
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total U.S. office furniture market. For example, then-Rep. Pete Hoekstra (R-MI), the 

primary sponsor of H.R. 2965, the anti-FPI bill, who represented a Michigan 

congressional district heavily involved with the office furniture industry, testified at the 

July 1, 2005 House Crime Subcommittee hearing on H.R. 2965 that: 

"It [the FPI office furniture business segment] is not a minuscule part [ofthe U.S. 

furniture industry]. The furniture industry is about - probably somewhere in the 

neighborhood of a $12 to $14 billion industry, depending on exactly what year 

you're taking a look at. Office furniture in FPI was a $250 million business within 

the last couple of years. It was a fast growing industry. It was the fastest growing 

office furniture company in America as the office furniture industry was going 

through its tough times. 

However, contrary to then-Rep. Hoekstra's testimony, the fact was - and is - that the FPI 

office furniture business segment is only a very small part of the total U.S. office 

furniture market. As the table shows below, FPI office furniture sales in FY 2005 (when 

Rep. Hoekstra testified) - $139.773,000 - were only 1.39% of the total U.S. office 

furniture market - $10,070,000,000. In addition, the FPI office furniture sales decreased 

in absolute terms - dropping from $217,852,000 in FY 2002 to $115,993,000 in FY 2007 

- and as a relative percentage ofthe total U.S. office furniture market - decreasing from 

2.45% in FY 2002 to 1.02% in FY 2007. Even with the beginning of the serious 

recessionary downturn in 2008, FPI furniture sales as a percentage of the U.S. office 

fumiture market still remained at a very low 1.16% 

FPI Office Furniture Sales and U.S. Office Furniture Market (2002-2008) 

Fiscal Year FPI Office Furniture U.S. Office FPI Office Fumiture 

Sales Furniture Market Sales as % of U.S. 

Fumiture Market 

2002 $217,852,000 $8.890,000,000 2.45% 

2003 $151,996,000 $8,505,000,000 1.79% 

2004 $140,935,000 $8,935,000,000 1.58% 

2005 $139,773,000 $10,070,000,000 1.39% 

2006 $118,179.000 $10,820000000 1.09% 

2007 $115.993,000 $11,420,000,000 1.02% 

2008 $129,100,000 $11.160,000,000 1.16% .. .. . Sources. The U.S. Office Fumlture Market. StatIstics, compiled by The BUSiness and 

Institutional Furniture Manufacturer's Association; FPI Annual Report, seven annual 

FPI reports for FY 2002-2008. 

(2) FPI is not the cause of the U.S. private companies' sales losses and noninmate workers' job losses in the office furniture and textile/apparel industries. 

Instead these sales and job losses are being caused by foreign competition. 

FPI's opponents argue the FPI mandatory source preference should be eliminated 

because the FPI prison inmate work program is adversely impacting private sector 

{OO308186.DOCX· )11 
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companies and non-inmate workers, particularly in the office furniture and 

textile/apparel industries. But FPI's opponents have failed to present hard evidence to 

substantiate their assertion that the FPI program is systemically causing such company 

sales losses and non-inmate worker job losses. 

An example of this inability occurred at the July 1, 2005 House Crime Subcommittee 

hearing on H.R. 2965. Then-Subcommittee Chairman Coble asked the following two 

questions of Mr. Paul Miller, Director of Government Affairs, Independent Office 

Products & Furniture Association: "A, has any member of your association experienced 

detrimental effects as a result of FPI programs? And B, have you had any small 

businesses that have been forced out of business as a direct consequence of 

competing with FPI?" In response, Mr. Miller said the following: 

"Let me answer the second question first. To our knowledge, no, 

there has not been. We cannot point to a direct relationship of any 

business going out of business because of FPI. But we do see our 

industry - the economy has struggled the last few years and our 

industry has struggled a great deal. We lost 30,000 jobs, our 

companies were losing business. So we do see a correlation that 

had they been able to compete with that Government business they 

may have been able to do a little bit better. They may not have had to 

lay employees off, or they may not have had to close down for work 

periods at a time, weeks at a time. So, we have been harmed, but I 

can't say that we've closed our doors directly because of 

FPI. It doesn't help." (Emphasis added) 

Later at the same hearing, Rep. Dan Lundgren (R-CA) asked this question of Mr. Miller: 

"Mr. Miller, with all due respect, you've got to come and show me that 

this [FPI prison inmate work program] is really hurting the industry. I 

mean, to come here and say, well, I can't show you any loss of jobs 

anywhere and I can't show you any particular business going out of 

business but we know it hurts us, frankly is insufficient to convince me 

that we've got to do something. Now, if you've got some real hard 

data to show how this [FPI] program is really hurting your industry 

in a substantial way, I'd like to hear It." (Emphasis added) 

In response, Mr. Miller failed to present any "real hard data" to show how FPI is 

adversely impacting office furniture companies and non-inmate workers "in a substantial 

way." Instead, he said his office furniture association has no problem with FPI 

"legitimately· making office furniture with prison inmate labor but is opposed to FPI's 

alleged use of the business practice referred to as "pass-through" in which the FPI 

program would purchase finished products from its private sector partners for resale to 

its federal agency customers if circumstances prevented FPI from fulfilling an order. But 

contrary to Mr. Miller's statement, the "pass-through" issue was resolved 

{OO308186.DOCX· )12 
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administratively in 2002, and there is no evidence that FPI has employed the ·passthrough" practice since that time. 

The reason why Mr. Miller and other FPI opponents have failed to present hard data to 

show that the FPI program is systematically causing losses of business sales and noninmate worker jobs is simple. The FPI prison inmate work program is not causing these 

losses. These sales and job losses, particularly in the office furniture and textile/apparel 

industries, are being caused by foreign trade competition and the outsourcing of 

American jobs to other countries. 

The very real adverse impact of foreign competition on the office furniture and 

textile/apparel industries has been documented again and again in federal government 

and trade association analyses, the office furniture and textile/apparel companies own 

stock reports to the Securities and Exchange Commission, and in the business media. 

For example, the U.S. Department of Commerce's comprehensive analYSis ofthe health 

and competitiveness of the U.S. textile and apparel industries demonstrated how rising 

textile and apparel imports have caused substantial reductions in U.S. textile and 

apparel production as measured by the value of industry shipments, job losses and 

reductions in the number of textile and apparel establishments. ("The U.S. Textile and 

Apparellndusfries: An Industrial Base Assessment," conducted by the U.S. Department 

of Commerce's Bureau of Industry and Security, as requested by the Joint Statement of 

Managers accompanying the Conference Report on the Consolidated Appropriations 

Resolution, 2003 (H.Rpt. 108-10.) 

An example of both the adverse impact of foreign trade and the outsourcing of 

American jobs to other countries is a Business Week article on Haworth Furniture, a 

$1.4 billion Holland, MI-based maker of office furniture, and its increasing success in 

China. In addition to discussing how successful Haworth has been in moving a 

significant part of its manufacturing capacity to Shanghai, the August 22, 2005 article 

points out the adverse impact of Chinese imports on U.S. office furniture companies. 

"What's particularly impressive is that Haworth is beating many 

Chinese manufacturers at their own game - and doing it on the 

locals' turf. For the past rIVe years, U.S. furniture manufacturers 

have been under siege from Chinese imports. Hundreds of 

U.S. furniture factories have shut, unable to compete with 

high-quality Chinese-made furniture costing 30% to 40% 

less. Few U.S. furniture makers have even contemplated taking 

the fight to China by manufacturing there and selling to the 

domestic market. 

[But] the family-owned company has seen its Middle Kingdom sales 

grow 50% annually for the past three years. From its 250,000-

square-foot factory in Shanghai, Haworth is selling more than 

100,000 chairs a month, priced at $250 to $2,000 apiece, and 

around 100,000 office work stations, which go for up to $2,500 

{OO308186.00CX· }13 
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apiece." ("Sitting Pretty in Shanghai," Business Week, August 22, 

2005) 

So why the anti-FPI animus? U.S. office furniture and textile/apparel companies and 

labor unions, who have suffered tremendous sales and job losses, and the legislators 

who represent the congressional districts in which these companies reside, are 

attempting to mitigate these losses somewhat by gaining better access to federal 

procurement contracts and the relatively few jobs that FPI prison inmates perform. Mr. 

Miller explained this in his response to Chairman Coble when he said 'We lost 30,000 

jobs, our companies were losing business. So ... had [we] been able to compete with 

[FPI, we] may have been able to do a little bit better. [We] may not have had to lay 

employees off .. : 

But it would seem to be wrong-headed, policy-wise, to legislate the elimination of the 

FPI mandatory source - thereby endangering a successful correctional work program 

that is both an essential prison management tool and an important prisoner 

rehabilitation tool - simply to gain a few federal contracts and jobs. It would be better 

public policy - and more helpful to those living in North Carolina and Michigan - to 

directly deal with the root causes for the tremendous losses in sales and jobs in the 

office furniture and textile/apparel industries - foreign trade competition and outsourcing 

of American jobs. 

To be fair, there have occurred isolated instances over the past two decades in which 

the FPI prison inmate work program adversely impacted an individual business whose 

primary customer is the federal government. One example often presented is the 

Glamour Glove Company problem a decade ago, in which Glamour Glove's production 

of gloves for the Department of Defense was being adversely impacted by FPI's 

increased glove production. Glamour Glove and FPI, of course, were able to negotiate a 

reasonable compromise to ensure that FPI no longer threatened the company's military 

glove production. 

But again it would seem to be wrong-headed, policy-wise, to legislate the elimination of 

the FPI mandatory source - thereby endangering a successful correctional work 

program that is both an essential prison management tool and an important prisoner 

rehabilitation tool - when the isolated instances where the FPI program is adversely 

impacting individual businesses can be resolved administratively. 

3. The legislative elimination of the FPI mandatory source preference will not 

significantly help private companies and non-inmate workers, even in the office 

furniture and textile/apparel industries. But it will have a significantly adverse 

impact on the many private companies and non-inmate workers that supply FPI 

with raw materials, eqUipment, and other services. 

FPI's opponents argue that eliminating the FPI mandatory source preference will 

significantly help those private companies and non-inmate workers, particularly in the 

office furniture and textile/apparel industries, who have suffered tremendous sales and 

{OO308186.DOCX • 114 
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job losses. But, since the FPI inmate work program is not a federal procurement 

behemoth, and the FPI program is not systemically causing the losses in U.S. business 

sales and non-inmate worker jobs, the elimination of the FPI mandatory source 

preference will not provide significant help to those companies and workers. 

Ironically, most of the impact of the legislative elimination of the FPI mandatory source 

preference will be adverse and will fall on those private companies (and their noninmate workers) that provide the materials and equipment FPI factories need to produce 

their products. In FY 2009, FPI spent $705.6 million, or 79.7% of its net sales revenue 

of $8885.3 million, on purchases of raw materials, supplies, equipment, and services 

from these private sector companies. About 63.7% of those purchases - or $449 million 

- were from small businesses, including businesses owned by women, minorities, and 

those who are disadvantaged. In addition, FPI estimates that these contractual 

relationships have generated about 5,000 U.S. non-inmate worker jobs, many of which 

are unionized. 

Each of these private companies has played by the rules. competing fair and square for 

the FPI contracts. They responded to solicitations issued by FPI and were awarded 

contracts through competitive procedures. In order to fulfill their contractual obligations. 

these companies often have hired law-abiding citizens as workers. added equipment. 

and some have opened entire new plants. These private companies and their noninmate workers do not deserve to be on the receiving end of a wrong-headed. policywise. animus toward the FPI prison inmate work program. 

This concludes my written statement. I thank you for including it in the hearing record. 

{OO308186.00CX 'llS 
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* Derived from: 

Decision Path of DoD Procedures 

for Purchasing from FPI* 

DoO~~~Offi!l~ d~tet:tn!~ifit~m ·!soo tl1e.~}r's'ff!t$~~atkat$t\are list." 

If not ~C)mp_ble 

DoDtequesls 

waillar. 

based.upon 

other 

comJ?ellil'l9 

consldaretjoo$. 

• Sections 827 of the National Defense Authorization Act for Hsca! Year 2008; Public 

Law 110-181 (effective 3/31/08) 

** See the most recent Marketshare List at www.unicor.gov{clickon "PurchaseNVaiver 

Procedures and Policy") 
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Decision Path of Civilian Agency Procedures 

for Purchasing from FPI* 

* DerIved from: 

Cqhtrll'"Yn9 Offi~er 

req\.lests.l(vai\i6f .~f 

O111ndliltol'Y $Ol,lrCe 

ba$lild of\ptl1er 

considerationS 

• Sections 8111819 of the DoD Authorization Acts of FY 2002 and FY 2003. 

the implementing regulation for DoD at 68 Federal Register 64559 (11/14103); 

affecting 48 CFR Parts 208, 210, 219, and 252 . 

• Section 637 of the Consolidated Appropriations Act, 2005, 

modifying FAR B.B (1/3106). 

Contracting Offlcer.reltiEl'''!;(; •. 

all offers (inclu.al~:EP"s.);' .... 

Contracting Officer makes 

"best value" award. 

"""" '",,~ 

unico( 
81 


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~ 

...••..•. · .. ·T 

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Contact 

Your Sales 

Representative 

for More 

Information 

About 

Availability. 
82 


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83 


smartinez on DSK6TPTVN1PROD with Insert graphic folio 139 here 76483A.051

Combining maximum support and ergonomic excellence", 

Mesh features a twin-tension knit to ensure 

lumbar suppo~ available in black, grey or white 

lit Synchronized mechanism with graphics 

U Visitor chairs stack 4 high; cantilever frame 

available in chrome or painted steel finish 

Black nylon or chrome S-star base 

w Black or chrome riser 

Accredited to BS EN 1335; 2000, 

Part 1, BS 5459,2;2000 

Dimensions: 

lily Mesh Task Chair with Arms 

OESCRIMlON Task 

OVERAll HEIGHT 38' ·n~ 

OVERALL WIDTH ,," OVERAllOEPTH 

Sl:ATHEtGHr "" n5'13' 

SEAT$rZE" lS'wx 19~d 

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ARM HEIGHT AD) ,3.9' 

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lily Mesh Cashier Stool with Arms 

OCSCRIPnON Cash,rrStool 

OV{ Mll HEIGHT 44's·'d.!l" 

0Vl RAlL WIDTH 

W:RAtlDEP'm 20,~' "" SlATHI:!GHT 26"38.3" 

SI;ATSlZt 19"wx 19~d 

BACK SlZl' 16.5'w)(16"h 

ARM HnGHT Am 3.9" 

ARM WIDTH ADJ' 1.4· 

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lily Mesh Visitor Chair with Arms 

rn-SCR!PfION" G""" OV{RAU Hf'GHT: 3S,~ .• 

ovtRAll WI01lt. 21.5' 

OVERAll DEFTH· 21.5" 

SEAT HNGHT 16' 

SEATS!ZE· la.~·wxlt!.:'"d 

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. ..• ' •.. T· ... · .. ·•· 

Poly 

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lIl7000PBlK 

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UL700SUCRM 
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An intuitive line of seating that can be adjusted easily", 

Dimensions: 

lily Task Chair with Arms 

;¢ DESaUf'llON \Jpl'l Ta~k 

OVf.MtlHE1GHT 39.5"44.5" 

(MMllWiOTH ". 

OVERAll OEf'TH 21' 

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SEAT$!Z[ 19~wx 19"d 

£>ACKSlzt' 11"wlt22Yh 

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WElGH1(lbs) 375 

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• lily Cashier Stool with Arms 

Fully upholstered back features twin-stitched finish 

Synchronized mechanism with graphics 

Visitor chairs stack 5 high; cantifever frame 

available in chrome or painted steel finish 

Black nylon or chrome 5-siar base 

Black or chrome riser 

, Accredited to BS EN 1335; 2000, Part 1. 

as 5459-1:1000, as EN ISO 9241; Part 5, 

• ANSI/BIFMA M7.j,2007 

.7t. 

• . 

DlSCRIPTION 

MRAtLH(f(iHT 

MAAll WIDTH 

(Nt RAll OErnt 

Sf AT HEIGHT 

SEATSIlf. 

BACK SIZE 

ARM HEIGHT AOl 

ARM WlOTH A01' 

w(fGHT{lbs~ 

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OVfRAlt W1DTt-< 

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44S54.-:'" 

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smartinez on DSK6TPTVN1PROD with Insert graphic folio 143 here 76483A.055

An attractive profile with flexibility«. 

* Fully upholstered mid-back height 

Waterfall edge 

Hardwood floor casters in black only 

Memory foam seat 

Black nylon or chrome S~star base 

Black or chrome riser 

Meets or exceeds ANSIIBIFMA performance 

standards 

Meets California 117 Fire Standards 

Dimensions: 

Aspire Task Chalf with Arms 

OESCR1PflON 

{)\I[RAU HElGHT 

OVERAllWlOTH 

OVERAll DEPTH 

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smartinez on DSK6TPTVN1PROD with Insert graphic folio 145 here 76483A.057

Ingenuity and innovation in a chair that will enhance your environment... 

Optional upholstered back can be removed to 

expose the standard breathable poly mesh back 

m Unique lumbar adjusts vertically as wei! as 

horizontally for personalized fit 

4t Optional adjustable headrest available 

M Adjustable t~arms with pivoVextending arm caps 

fu Synchronized mechanjsm 

Equipped with seat height, seat depth, 4'POSltIOIl 

back lock, 3~position tilt angle and tift tension 

adjustments 

5-star black nylon caster base 

$' Meets or exceeds ANSflB!FMA performance 

standard .. 

Wi California 117 Fire Safety 

Dimensions: 

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Rmo Poly Mesh Task Chair 

DESCIUPTlOO fask 

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OVfRAtlwtDTH 255' 

tI L • OVERAll DEPTH, 265* 

SEAT HEIGH IS- 21' 

SfATSllE 10·wJ(t9.2,,"d 

9ACKSIZE 19.5·wx;Wh 

ARM HEIGHT ADJ 3.15' 

WEI(jHT{!bs~ 37 

Rmo Upholstered Task Chair 

mSCRIPTION Uphot~teredTask 

OVERAll HEIGHT 18.75' 41.15~ 

OVERAll WIDTH 25.'" 

OViMtlDEf'l"H 26.5' 

SEATH£lGHf !8'21" 

stAT SIZE" 20'wx 19.2\~d 

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ARM HEIGHT ADJ 325" 

Wf!GHT(lbs) 39 
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! 

Thsi:: ChairN(l Aw-\\ 

MONY2000 

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91 


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Modern looks combine seamlessly with ergonomic enhancements ... 

*' Optional headrest available 

*' Base available in polished aluminum or 

standard black 

Specify with or without arms 

* Equipped with seat slider function 

Black mesh back has built-in lumbar support 

ill Accredited to BS EN 1335; 2000, Part 1. 

BS 5459-2:2000 

Dimensions: 

Moneypenny Task Chair 

MODEt 

DESCRIPTION 

OVERAll HUGUf: 

ovtRAll WIDTH 

OVERAllDt:PfH 

StAT HEIGHT 

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WEKiHTObs) 

M0NY2001 

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42' 47' 

256' 

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92 


smartinez on DSK6TPTVN1PROD with Insert graphic folio 148 here 76483A.060
93 


smartinez on DSK6TPTVN1PROD with Insert graphic folio 149 here 76483A.061

A refined, sleek profile with distinctive comfort and support, .. 

Th Seat foam conforms to your body and disperses 

weight ergonomically 

Waterfall edge reduces fatigue and promotes 

healthy posture 

lii Synchronous balanced recline mechanism 

1# Single positIon tilt lock adjustment and 

pneumattc height adjustment 

<Iii Height adjustable arms with pivoting arm pads 

JJ\ Black nyfon base with 2" carpet casters 

Meets or exceeds ANSI/BIFMA performance 

standards 

Dimensions: 

WXOChair 

MODEl: 

DfSCRlf'T10N 

OVERAU H{IGHT 

OVEAAll WIDTH 

OVERAll DEPTH 

SEAT HEIGHT 

SEATSlZE 

BACK SIZE 

WEIGHTil~) 

~ WXO Mesh Chair 

MODEL: 

DESCRIPTION 

OVERAll HEIGHT 

OVERALL WIDTH 

OVEMttOEPTH 

SEAT HEIGHT 

SEAT SIZE 

SACKSlzr 

WEICHT litis} 

WJ(058000lJ( 

365' 40' 

25' 28' ,,' 

H,' 20S' 

W'wx 19,5"d 

10'wx 19S'h 

44 

WX05800M8LK 

365' 40' 

26'28" 

'" 16'-205" 

20'wx19S'd 

2O*WlI. 19.5'-'\ 

"" 
94 


smartinez on DSK6TPTVN1PROD with Insert graphic folio 150 here 76483A.062

- 4·leg Guest Chair with Arms 

.. MARS200M4CHR 

Cantilevet Chait No Arms 

MARS100MCH~ 
95 


smartinez on DSK6TPTVN1PROD with Insert graphic folio 151 here 76483A.063

A modern yet reassuringly practical and generously proportioned chair ... 

• 4-Leg base can be ordered with optional casters 

• cantilever option 

• Chrome linking mechanism available 

• Perforated glass-filled polypropylene back 

available in black or white; upholstered back 

pad optional 

• Chairs stack 4 high; stack up to 10 on a dolly 

., Specify with or without arms 

• Available with black frame (standard). or in chrome (optional) 

Dimensions: 

~ • I 

. 

• 

Mars 4·Leg Chair 

MODE~ 

OESCRtPJlON: 

CMRAllHEIGHT: 

OVERAll WlOTH: 

OYERAtl DEPTH: 

SEAT HaGHT: 

SEAT SIZE: 

8ACKSIZE· 

W£IGHT(Ibs,): 

MARS2Q0M4WC11l1 

Guest ChaIr 

31.5-

22,S" 

2l.6" 

17.7· 

lS-wxl7.7'd 

lS·wx13.a"b 

18 

Mars 4·Leg Chair with Casters 

MOD~ 

DESCflIPflON: 

CMRAllHEIGU'r: 

OV£AAllWUffit 

OV£AAllO£P'tH' 

SEATHEICiHT: 

SEATSIZE~' 

ffACKSlZ£: 

W£1GHT("'~ 

Mars Cantilever Chair 

MODEl: 

DESOUPJ1ON: 

(M:ftAilHEIGHT: 

OYfRAtlWlf)TH: 

OVERAll OEPrH; 

S£ATftEJGHT: 

SEATSIZE: 

BACK.:5iZE: 

WEKiHTfIbs~ 

MAIlS2Q0M4COtR 

Gllesf:Chllif 

32.75' 

22.13 ' 

21.6' 

17.7~ 

lS·wxl7.7"d 

lS"wxl3,S"b 

18 

MAIlS201Ul'C1lR 

GuestChair 

315" 

22.8" 

21.6" 

17.'" 

lS"wx17.7"d 

la"wx13.S·h 

20 

Mars Chrome linking Mechanism