U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

22–258 PDF 2005

FEDERAL PRISON INDUSTRIES COMPETITION

IN CONTRACTING ACT OF 2005

HEARING

BEFORE THE

SUBCOMMITTEE ON CRIME, TERRORISM, 

AND HOMELAND SECURITY

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

ON

H.R. 2965

JULY 1, 2005

Serial No. 109–47

Printed for the use of the Committee on the Judiciary

(

Available via the World Wide Web: http://judiciary.house.gov 

(II)

COMMITTEE ON THE JUDICIARY 

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

HENRY J. HYDE, Illinois 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

WILLIAM L. JENKINS, Tennessee 

CHRIS CANNON, Utah 

SPENCER BACHUS, Alabama 

BOB INGLIS, South Carolina 

JOHN N. HOSTETTLER, Indiana 

MARK GREEN, Wisconsin 

RIC KELLER, Florida 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

CHRIS VAN HOLLEN, Maryland 

DEBBIE WASSERMAN SCHULTZ, Florida

PHILIP G. KIKO, General Counsel-Chief of Staff 

PERRY H. APELBAUM, Minority Chief Counsel 

SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY

HOWARD COBLE, North Carolina, Chairman

DANIEL E. LUNGREN, California 

MARK GREEN, Wisconsin 

TOM FEENEY, Florida 

STEVE CHABOT, Ohio 

RIC KELLER, Florida 

JEFF FLAKE, Arizona 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

LOUIE GOHMERT, Texas 

ROBERT C. SCOTT, Virginia 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

MARTIN T. MEEHAN, Massachusetts 

WILLIAM D. DELAHUNT, Massachusetts 

ANTHONY D. WEINER, New York

JAY APPERSON, Chief Counsel 

ELIZABETH SOKUL, Special Counsel for Intelligence 

and Homeland Security 

MICHAEL VOLKOV, Deputy Chief Counsel 

JASON CERVENAK, Full Committee Counsel 

BOBBY VASSAR, Minority Counsel 

(III)

C O N T E N T S 

JULY 1, 2005

OPENING STATEMENT 

Page 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Crime, Terrorism, and 

Homeland Security ............................................................................................... 1

The Honorable Robert C. Scott, a Representative in Congress from the State 

of Virginia, and Ranking Member, Subcommittee on Crime, Terrorism, 

and Homeland Security ....................................................................................... 2

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 5

WITNESSES 

Mr. Phillip Glover, President of the Council of Prison Locals, American Federation of Government Employees 

Oral Testimony ..................................................................................................... 8

Prepared Statement ............................................................................................. 10

Mr. Paul Miller, Director of Government Affairs, Independent Office Products 

& Furniture Dealers Association 

Oral Testimony ..................................................................................................... 11

Prepared Statement ............................................................................................. 14

Mr. Reginald Wilkinson, Director, Ohio Department of Rehabilitation and 

Correction 

Oral Testimony ..................................................................................................... 20

Prepared Statement ............................................................................................. 21

The Honorable Peter Hoekstra, a Representative in Congress from the State 

of Michigan, and Chairman, Permanent Select Committee on Intelligence 

Oral Testimony ..................................................................................................... 24

Prepared Statement ............................................................................................. 26

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Statement submitted by the U.S. Chamber of Commmerce to the House 

Judiciary Committee ............................................................................................ 47

Statement of Roger F. Cocivera, President and CEO, Textile Rental Services 

Association of America ......................................................................................... 51

Letter from Dan Danner, Executive Vice President, National Federation of 

Independent Business (NFIB) ............................................................................. 56

Statement submitted by the National Federation of Independent Business 

(NFIB) ................................................................................................................... 57

Letter from Chris Jahn, President, Contract Services Association (CSA) to 

the Honorable Howard Coble .............................................................................. 59

Letter from Chris Jahn, President, Contract Services Association (CSA) to 

the Honorable Bobby Scott .................................................................................. 60

Statement submitted by the Contract Services Association (CSA) ..................... 61

Statement submitted by the Coalition for Government Procurement ................ 64

Statement by Remy International, Inc. ................................................................. 68

Statement submitted by Michael B. Styles, National President, Federal Managers Association(FMA) ....................................................................................... 71

Page

IV

Letter from Matthew T. Powers, General Manager, Prison Industry Authority 

(PIA) to the Honorable Howard Coble ................................................................ 74

Supplemental attachments submitted by Philip Glover, President of Coucil 

of Prison Locals, American Federal of Government Employees ....................... 75

Supplemental attachments submitted by Paul A. Miller, Director of Government Affairs, Independent Office Products & Furniture Dealers Association 88

Statement submitted by Kevin M. Burke, President and CEO, American 

Apparel and Footwear Association (AAFA) ....................................................... 97

Letter from Kevin M. Burke, President and CEO, American Apparel and 

Footwear Association (AAFA) to the Honorable F. James Sensenbrenner, 

Jr. .......................................................................................................................... 99

Letter submitted by various Dealers ..................................................................... 100

Statement submitted by Management Association for Private Photogrammetric Surveyors (MAPPS) ......................................................................... 112

Fact Sheet submitted by the Correctional Vendors Association, ‘‘FPI Fact 

or Fiction?’’ ............................................................................................................ 114

Summary Statement submitted by the National Citizens United for Rehabilitation of Errants (CURE) .................................................................................... 115

(1)

FEDERAL PRISON INDUSTRIES COMPETITION 

IN CONTRACTING ACT OF 2005

FRIDAY, JULY 1, 2005

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON CRIME, TERRORISM,

AND HOMELAND SECURITY

COMMITTEE ON THE JUDICIARY, 

Washington, DC.

The Subcommittee met, pursuant to notice, at 9:30 a.m., in Room 

2141, Rayburn House Office Building, the Honorable Howard Coble 

(Chair of the Subcommittee) presiding. 

Mr. COBLE. Good morning, ladies and gentlemen. Today, we will 

examine the operation of the Federal Prison Industries, popularly 

known as FPI and its impact on the private sector as well as its 

benefits to combat inmate idleness and assist inmate rehabilitation. 

We expect to receive testimony regarding H.R. 2965, the ‘‘Federal 

Prison Industries Competition in Contracting Act of 2005.’’ I am 

proud to be a cosponsor of this legislation because it will level the 

playing field in competition for Federal agency contracts. 

Now, ladies and gentlemen, I think the issue before us today 

clearly portrays and corroborates the old adage that reasonable 

men and women can differ, and this clearly illustrates that in my 

opinion. 

The Federal Bureau of Prisons is responsible for the custody and 

care of more than 181,000 Federal offenders. Approximately 85 percent of these inmates are confined in Bureau-operated correctional 

facilities or detention centers. Prisoners who are physically able to 

work must labor in some capacity 5 days a week. FPI is a Government corporation that operates the BOP’s correctional program and 

employs inmates from the Federal prison population to manufacture goods for and provide services to Federal agencies. 

About 20 percent of the inmates work in Federal Prison Industries, FPI, factories. They generally work in factory operations such 

as metals, furnitures, electronics, textiles, and graphic arts. FPI 

work assignments pay from 23 cents to $1.15 per hour. 

Federal agencies are required by law under 18 USC, section 

4124, to purchase FPI products if a product is available that meets 

the agency’s requirements and does not exceed current market 

prices. This provision in the law is deemed ‘‘mandatory source preference’’. Because of this law, Prison Industries enjoys a mandatory 

market for its goods, a facility in which to run them, and what 

amounts to captive labor to manufacture them. 

2

In the last two Congresses, this Committee brought up legislation to reform FPI. The legislation passed this Committee twice. 

The text of H.R. 2965, as introduced, is substantially identical to 

that legislation, including improvements that we, as a Committee, 

agreed to include. 

H.R. 2965 amends title 18 to require FPI to compete for contracts 

with private sector firms and provides a 5-year period during which 

FPI adjusts to obtaining inmate work opportunities through other 

than its mandatory source status. 

Additionally, the legislation provides for inmate access to remedial and vocational opportunities and other rehabilitative opportunities to better prepare inmates for a successful return to society, 

including authorizing alternative inmate work opportunities in support of nonprofit organizations and other public service programs. 

This legislation does not eliminate FPI. It simply requires FPI to 

deliberately begin to compete in the same way that other businesses do. FPI however still has the advantage over some businesses because they don’t have the same overhead costs as the average business, such as paying Union wages, paying for health insurance, and for providing retirement benefits. 

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, employed 19,337 inmates with a total 

sales of 802 million—in excess of 802 million and a profit of 120.4 

million dollars. 

This legislation will fundamentally alter FPI’s relationship with 

its Government customers. They will no longer be held captive by 

mandatory source requirements. All Federal Government agencies 

would have the ability under this legislation to utilize taxpayer dollars in the most efficient manner possible. I believe it is worthwhile 

legislation. And I look forward to hearing from our witnesses. 

And I am now pleased to recognize the distinguished gentleman 

from Virginia, the Ranking Member. Mr. Scott, may think—he 

hasn’t accused me of this yet—but he may think I am trying to put 

FPI out of business, which I am not trying to do. Now I will admit, 

folks, I have been subjectively involved because I represent a district that is heavily involved with furniture and textiles. So having 

said that, Mr. Scott, glad to hear from you. 

Mr. SCOTT. Mr. Chairman, I have never questioned your motives. 

I just question the impact of the legislation. 

I want to thank you for holding the hearing on H.R. 2965, the ‘‘Federal Prison Industries Competition in Contracting Act of 

2005.’’ I am especially appreciative of your willingness to do so despite the fact that the House is actually in recess for the July district work period. 

The Federal Prison Industries, or FPI, provides prisoner made 

products and services to Federal agencies. In its first year of operation, the percent of agency procurement from FPI represented 

about one quarter of 1 percent of total Federal agency procurement, 

a negligible and even a more negligible total of the total industries. 

The percentage is the same today. FPI can only sell its products 

and services to Federal agencies. The program was established in 

the 1930’s in the midst of the Great Depression as a way to teach 

prisoners real work habits and skills so that when they are reVerDate 0ct 09 2002 12:29 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6601 G:\WORK\CRIME\070105\22258.000 HJUD2 PsN: 22258
3

leased from prison, they will be able to find and hold jobs to support themselves and their families and be less likely to commit 

more crimes. 

It is clear that the program works to do just that. Follow-up 

studies covering as much as 16 years of data have shown that inmates who participate in prison industries are 14 percent more 

likely to be employed and 24 percent less likely to commit crimes 

than prisoners who do not participate in the program. While this 

certainly benefits offenders and families, that is not the main point 

from a public policy perspective. 

The real benefit to all of us is that as a direct result of this program, there are many fewer victims of crimes. Now we have spent 

billions of dollars to build Federal prisons and spend 4 billion a 

year for prisoner upkeep. With FPI, there will be fewer inmates in 

the future. Now FPI pays for itself 100 percent and reduces crime. 

All able-bodied inmates in the Federal system are required by law 

to do some work. Few offenders in a prison have marketable skills 

and the vast majority do not even have credible work habits, such 

as showing up for work on time and working cooperatively and productively with others. Such habits are required to maintain an FPI 

job. These are the same habits required to be productive, desirable 

workers anywhere, and that is why the FPI experience has been 

found to be—those with FPI experience have been found to be more 

employable than those that don’t. 

And in the past few years, we have eliminated parole, we have 

eliminated good conduct credits, Pell grants, and other incentives 

for prisoners to improve themselves. In the Federal prison system 

now, we have very few incentives for self development. One shining 

example is FPI. 

Non-FPI inmates work on jobs that pay about 12 cents to 13 

cents an hour—excuse me, 12 cents to 30 cents per hour, while FPI 

jobs pay about a dollar and a quarter an hour. Now to hold down 

an FPI job, an inmate must have completed high school or be making steady progress toward obtaining a GED and maintain a record 

of good behavior. This is true not only for those on an FPI job, but 

for those on the waiting list as well as those seeking to establish 

eligibility to be placed on the waiting list. And that is why FPI is 

a great managerial tool to help ensure that prisons operate safely 

for prison employees as well as inmates. 

I have never met a prison administrator who does not support 

the program. In recent years, appropriations and FPI board restriction have caused elimination of thousands of inmate jobs at a time 

when the Federal inmate population has increased by more than 

23,000 inmates. In 2000, for example, the FPI jobs represented 25 

percent of prison jobs. Now that figure is down to 19 percent. 

Fortunately for the program, the Iraqi war has caused a surge 

in certain products and services that FPI provides to the military. 

Hopefully, this level of purchase will be only temporary. And certainly, it has not helped to keep pace with the rising inmate population. 

Now, H.R. 2956 would greatly depress the ability of FPI to provide much inmate jobs and greatly erode its percentage of inmate 

jobs requiring the prison system to further divide the limited work 

and pay that is already divvying 

4

up between too many inmates. 

The bill amends the current requirement in the law for agencies 

to purchase goods from FPI, establishes a competitive bid process 

for FPI for agency purchases of goods and services, unless the Attorney General and the director of the Bureau of Prisons and the 

FPI program and the warden at a particular institution where the 

goods and services are produced certify that they cannot safely run 

the prison with that the particular contract award. And they must 

report the situation to Congress 30 days before obtaining the contract to provide the goods and services. Now let’s be serious. We 

cannot expect any of these officials to publicly admit such a level 

of incompetence for a single purchase contract. 

The bill also provides for a temporary preferential purchase program that allows agencies to purchase goods and services for FPI, 

quote, only if the contracting officer for the procurement activity 

determines that they will meet all prequalification and other requirements. Unlike the Attorney General, who has to show specific 

findings by his subordinates, one purchasing agent can decide. 

The bill also authorizes the production of goods and services for 

charitable organizations through which taxpayers would pay inmates and allows FPI to sell products and services to agencies on 

a noncompetitive basis, if they are currently only provided offshore. 

However, there is no basis for concluding that any of these authorities will replace the impact of the loss of the current statutory 

mandatory source that we have now, and there is no indication 

that it will actually appropriate the money for these purchases to 

be made. As I indicated, FPI pays for itself. 

Now, critics say that FPI has resulted in thousands of jobs lost 

for law abiding citizens. Now, the furniture and apparel industries 

are two industries in which FPI has traditionally done most of its 

work. And Mr. Chairman, you indicated that you represent one of 

those areas. 

But when asked, representatives of these industries concede that 

FPI sales represent an insignificant or negligible portion of their 

industries. If such industries are having problems, it is not due to 

FPI. In textiles, for example, we are told that 600,000 jobs were 

lost over the last 10 years. 

There are approximately 7,000 prisoners working in textiles in 

FPI, and each one divides up a job, so you certainly can’t blame a 

few thousand prisoners for the loss of 600,000 jobs. 

The office furniture industry is apparently quite robust. I would 

like unanimous consent to introduce an article that shows one of 

the industries showing how good things have been recently. 

Mr. COBLE. Without objection it will be submitted as part of the 

record. 

[The information referred to follows in the Appendix] 

Mr. SCOTT. And I am first to concede that there are problems 

with FPI that could be fixed. And I think a lot has been done 

through the activities of this Congress to make things better. But 

unfortunately, we have also made things worse, because as a direct 

result of some of our actions, thousands of jobs have been lost, and 

that is thousands of prisoners that will commit crimes in the future 

that will be incarcerated at our expense in the future because we 

5

wouldn’t provide them the jobs that they need to prevent those activities. 

Now, we need a comprehensive study to show how we can, if we 

are going to replace the mandatory source, we need a comprehensive study to show how he can we can better address our responsibilities and concerns. I don’t believe, however, that we should continue to reduce the number of jobs as this bill will do without replacing them with some other program. 

So, Mr. Chairman, I look forward to the testimony of our witnesses and to working with you in such a way that we can provide 

inmates jobs, and do something about the impact that this bill 

would have. 

Mr. COBLE. I thank you, Mr. Scott. We also have with us today 

the distinguished gentlemen from Michigan, the Ranking Member 

of the full House Judiciary Committee, Mr. Conyers. 

Mr. CONYERS. Thank you, Chairman Coble and Ranking Member 

Scott. 

There are lots of reasons why this is an important hearing. And, 

I begin by welcoming all of these witnesses that are experts, we 

look forward to their testimony. And, we are glad that Chairman 

Hoekstra is able to join us today, as well. 

First of all, just stepping back from the immediate issue, we have 

got a problem with the prison systems in America to begin with. 

And it is very important that we realize that. We have a lot of 

work to do. 

The second thing I want to get out is that I am working on more 

reentry programs back in Michigan. It is incredible. The tragic fact 

in our economy, of course, is that people coming back into the citizenry can’t get jobs. Some by law, can’t become a barber and many 

other things. It is a sad tale. And, of course, there are many people 

that haven’t been to prison that don’t have jobs, as well. So, I am 

looking at this on a little bit larger scale. 

And we have some very exciting organizations that are working 

night and day, around the clock, trying to deal with how we welcome people back. The idea for some of us on Judiciary is that a 

person who has paid his dues, come out, and then can’t vote is another slap in the face. It means, yes, you served your time. Yes, you 

have done probation or parole. But in some places in this country, 

we are not going to let you vote. Fortunately, that is not the case 

in Michigan. But it is that stamp you have been in, and you are 

going to pay for this, some way for the rest of your life. 

And so now we get to the question of how we retrain people to 

enter the system. 

And I am very eager to hear this discussion from the four gentlemen that are with us, because they bring a particular background 

and skill in this that is very important. 

Now, and I noticed there are people here in the Judiciary Committee, Charlie Sullivan of CURE, who has been working for at 

least two decades on this question, and there are others of you here 

who put in lots of good hard work. So, I think we have got the ability and the experience here to work out and fashion something that 

is mutually agreeable. 

You know, I have noticed, and I have listened to the Chairman 

and the Ranking Member of the Subcommittee, I don’t find much 

6

to disagree with either of them about. Nothing leaps up at me that 

I would want to lecture them about. 

But, of which we have, you know, a great predisposition, but 

mandatory source, are we going to phase it out and require competition? 

Where do we go from here? And I was hoping that somebody 

might lift up this section 10 of the bill which I thought would get 

me a little, a few accolades about how a reentry demonstration 

project, a vocational and educational training program and providing the necessary Federal Prison Industries with the financial 

resources to do even more and better things. 

So it seems to me, in conclusion, Mr. Chairman, that we are really roughly all on the same page. I mean, there is nobody here that 

wants to blow away the training program for—and Scott is giving 

me that look—which, I mean really, and if there is, we will find 

out about it at this hearing. 

But it seems to me we all come here concerned about how we 

deal with this problem. And it is in that spirit that I come here on 

a day that we are in recess. And I stayed because this is so important. I mean, we have the largest prison population on earth. To 

me that is a very disgraceful statistic, since we are the most—the 

wealthiest country on earth at the same time. And it seems like all 

of these considerations should be taken into consideration as we 

listen to our witnesses. And I thank the Chairman. 

Mr. COBLE. I thank you, Mr. Conyers. Gentlemen, it is the practice of this Subcommittee to swear in all witnesses appearing before it so if you would please stand and raise your right hands. 

Mr. SCOTT. Mr. Chairman we are not going to swear in a colleague, are we? 

Mr. COBLE. Well, okay, Mr. Conyers says, Mr. Hoekstra you may 

be seated, Mr. Hoekstra. 

[Witnesses sworn.] 

Mr. COBLE. Let the record show that the witnesses have been affirmed. Please be seated. And gentlemen, I hate that the implication is that you all are not to be trusted and Mr. Hoekstra is. And 

that is not the message at all, I assure you. 

Mr. CONYERS. Mr. Chairman, let the record show that Congressman Chairman Hoekstra was willing to take the oath. 

Mr. COBLE. Well said, Mr. Conyers. Well, as has already been 

said we are blessed with a very fine panel this morning. First witness is Mr. Phil Glover, the President of the Council of Prison 

Locals for the American Federation of Government Employees. Mr. 

Glover was first hired as a correctional officer in September 1990 

in Loretta, Pennsylvania, and was promoted as senior officer specialist in 2002. 

Mr. Glover served as president of Local Union 3951, and as regional vice-president of the Council of Prison Locals from 1994 to 

1997. He was elected council president in 1997 and currently 

serves in that capacity. 

In addition to his service as a correctional officer, Mr. Glover also 

served in our military in the 82nd airborne division, 505th parachute infantry regiment as a military intelligence analyst, and the 

18th Airborne Corps 118 MP Company Airborne as a military policeman. 

7

And Mr. Glover, I assumed you spent some time in Fort Bragg, 

did you not? 

Mr. GLOVER. Seven years. 

Mr. COBLE. Which is not my district, but my State. Good to have 

you with us, Mr. Glover. 

Mr. GLOVER. Thank you. 

Mr. COBLE. Second witness today is Mr. Paul Miller. Mr. Miller 

served as director of Government affairs for the Office Furniture 

Dealers Alliance, which is a National Trade Association serving 

small family-owned and operated office furniture dealers. 

He has served in that capacity for over 5 years. He also has 

served as administrator of the business labor competition and contracting coalition for the last 2 years. Mr. Miller was graduated 

from the University of Wisconsin, Whitewater, with a degree in political science. 

Now, a very fine colleague from the Buckeye State, Mr. Chabot, 

has asked permission to introduce our third witness. Mr. Chabot. 

Mr. CHABOT. I thank the Chairman for yielding and I have the 

distinct honor of introducing a good fellow buckeye, Dr. Reginald 

Wilkinson, who is with us this morning. Dr. Wilkinson has been 

employed with the State of Ohio Department of Rehabilitation and 

Corrections since September 1973. He has served in a variety of positions, including superintendent of the Corrections Training Academy, warden of the Dayton Correctional Institution, and Deputy 

Director of Prisons, south region. 

Former governor, now senator, George Voinovich appointed Dr. 

Wilkinson director in February 1991 and Governor Bob Taft reappointed him director in January 1999. 

Director Wilkinson’s academic background includes a bachelor’s 

degree in political science and a master’s degree in higher education administration, both from the Ohio State University. He was 

also awarded a doctor of education degree from the University of 

Cincinnati, in my district, and from where my daughter just graduated a couple of weeks ago. 

Dr. Wilkinson is president and executive director of the International Association of Reentry. He is also a past President of both 

the Association of State Correctional Administrators and the American Correctional Association. He is vice chair for North America 

of the International Corrections and Prisons Association. Dr. 

Wilkinson is additionally director of the ICPA Center for Exchanging Correctional Best Practices. 

Dr. Wilkinson has authored numerous journal articles on a variety of correctional topics. He is editor of two books, ‘‘Correctional 

Best Practices, Directors Perspective,’’ and ‘‘Best Reentry Practices, 

Directors Perspectives.’’ As ACA President, he commissioned the 

publication of ’’Best Practices Excellence in Corrections.’’ Dr. 

Wilkinson has written chapters in a number of books, a few of 

which include Ohio Crime, Ohio Justice, Prison and Jail Administration, Practice and Theory, Frontiers of Justice Volume II, and a 

full spectrum of essays on Staff Diversity in Corrections. Director 

Wilkinson has, moreover, received many awards from a variety of 

organizations. A few of the associations he has received honors 

from include the National Governors Association, the American 

Correctional Association, the Association of State Correctional AdVerDate 0ct 09 2002 12:29 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 G:\WORK\CRIME\070105\22258.000 HJUD2 PsN: 22258
8

ministrators, the International Community Corrections Association, 

the National Association of Blacks in Criminal Justice, the Volunteers of America, the Ohio Community Corrections Organization, 

and the Ohio Correctional and Court Services Association. 

He has also been appointed for a 3-year term to the National Institute of Corrections Advisory Board by U.S. Attorney General 

John Ashcroft. And we welcome you here this morning, Dr. 

Wilkinson. 

Mr. COBLE. Good to have you, Dr. Wilkinson. 

Mr. Miller, I don’t think I welcomed you as I did Mr. Glover. It 

is good to have you with us today. 

Our final witness today is the Honorable Pete Hoekstra, known 

to all of us, a Member of the House of Representatives. He represents the second district of Michigan, Representative Hoekstra 

was originally sworn into Congress in 1993. In August 2004, Pete 

was named as Chairman of the House Permanent Select Committee on Intelligence. Representative Hoekstra also served as 

Chairman of the House Committee of Education and the Work 

Force Subcommittee on Oversight and Investigations in the 104th, 

105th, and 106th session of Congress. He is a graduate of a Holland Christian school, holds a bachelor’s degree in political science 

from Hope College in Holland, Michigan, and holds a bachelor’s of 

business administration from the University of Michigan. 

Prior to his election in Congress, Pete served for 15 years at Zeeland, Michigan-based office furniture manufacturers, Herman Miller, Inc., where he held the title of vice-president for marketing. 

Gentlemen, it is good to have each of you with us. As Mr. Conyers and Mr. Scott have indicated to you previously, this is our 

first day of the July work period. And I don’t want to compromise 

any of your testimony with my schedule. But your old Chairman 

has got to be at the airport at 12 o’clock. So if you all could keep 

that in mind, I would be deeply appreciative. 

Gentlemen, as we have previously told you, we operate under the 

5-minute rule. And when you see that panel red light up appear 

into your eye, that does not mean that Mr. Scott and I will come 

to haul you off to the hoosegow, but it does indicate to you that 

your 5 minutes have elapsed. So if you could wrap it up about that 

time, we would be appreciative. And we apply the 5-minute rule to 

ourselves as well. So if you could keep that in mind in responding 

to our questions. 

As has been pointed out, this is an important hearing. It is good 

to have all of you with us. Mr. Glover, why don’t you kick us off? 

TESTIMONY OF PHILLIP GLOVER, PRESIDENT OF THE COUNCIL OF PRISON LOCALS, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES 

Mr. GLOVER. Chairman Coble, Ranking Member Scott, Members 

of the Subcommittee, my name is Phil Glover, and I’m president of 

the Council of Prison Locals, American Federation of Government 

Employees. As the elected representative for over 28,000 bargaining unit employees in the Federal Bureau of Prisons, I want 

to thank you for the opportunity to express our views to the Subcommittee on the proposed bill today. 

9

I am not here speaking for the Administration, nor am I speaking for BOP. I am speaking here as a line staff member representing the employees who work inside the 105 facilities nationwide. 

This bill passed convincingly last Congress, but that doesn’t 

mean the correctional professionals agree with its content. Over the 

last 4 years, we have had our staffing at each individual institution 

cut by 15 to 20 percent. Over the last 3 fiscal years, the inmate 

population has grown by 29,000 net new inmates. Overcrowding is 

at an all-time high of 41 percent. This fiscal year, it was proposed 

to eliminate the construction of two new facilities. Four Federal 

prison camps are now being closed in North Carolina, Florida, and 

Nevada, which currently work for the military. A tax on staff have 

increased. The director stated to the Appropriations Committee last 

year that BOP had a 28 percent increase in assaults over the last 

3 years. The union believes it was higher increasing to 34 percent 

with an increase of 63 percent with weapons. There are attachments to my statement. 

Morale in the Federal system is as low as I have seen it in years. 

People are expected to perform the duties of two, three, sometimes 

four other staff because of shortages. We are asked to handle violent inmates and terrorists and are investigated by an Inspector 

General who seems gleeful at attacking us. We are vacating correctional posts left and right to save money. BOP is planning on contracting out our security at outside hospitals and for the contracting out of normal Federal prison operations. While the inmate 

population is increased by 29,000 new inmates, inmate employment 

in FPI has actually decreased by 3,000 jobs in the same period. 

Now, some point out that FPI made more money this year. We 

have. We have because of contracts with DOD for war fighting 

items in electronics and textiles. Other than that, our funds are 

dropping. Our inmate employment is down. When the war ends, 

and it will, we will lose large portions of the program. In 2001, 

there were 22,560 inmates working, or 25 percent of the inmate 

population. Now since the DOD general treasury changes and 

changes by our own board of directors, we are providing employment to 19,337 inmates, or only 18 percent of our population. 

While the bill discusses vocational training and educational programming, all of this has been cut over the last 4 years. We have 

less teachers, less vocational staff, instructors, and, frankly less security. Over the last 3 fiscal years, the Administration and the 

Congress have cut our building and facilities budget by $255 million, from 325 million in 2004 to 70 million in 2006. 

Many of these funds were used to upgrade facilities using inmate 

work crews. Now they sit idle. After this bill passed last year, to 

my knowledge, no one went to the Appropriations Committee and 

asked for additional funding for money for these programs. 

We would love to build items for the underprivileged; however, 

we have to pay the staff and for the materials to do so. And of the 

competition, the furniture industry, which is one of the main elements of all this, they have increased profits without these changes 

to FPI by large margins. It has also been reported that Steelcase 

doubled its use of suppliers in lower-cost countries last year. See 

attached articles in my testimony. It seems to me a win-win would 

10

be to partner with FPI and the items sent out of the country could 

be brought back to us. We could partner with these companies and 

help each other. Inmates could learn their business under apprenticeships, and then perhaps get hired in these production facilities 

here in the United States. We could do that with any business that 

is struggling against the pressure of outsourcing or outsourcing 

overseas. This may decrease their shipping costs. It would increase 

inmate employment and help prison workers. 

It is unfortunate we can’t seem to get to that point. We believe 

any part of the bill must include repatriation of services and products into the entire market. If we give up mandatory source, which 

legislatively we have, you should allow us to bring back production 

from overseas. We have no problems with oversight of this. A certification from the Department of Commerce, Labor, or whoever 

you would like, such as a board of labor, business and prisons could 

verify this and establish parameters. 

Members of the Committee, I want to thank you for inviting me 

today. And I would be more than happy to answer any questions. 

[The prepared statement of Mr. Glover follows:]

PREPARED STATEMENT OF PHIL GLOVER

Chairman Coble, Ranking member Scott, and members of the subcommittee, my 

name is Phil Glover and I am President of the Council of Prison Locals, American 

Federation of Government Employees. As the elected representative for over 28,000 

bargaining unit employees in the Federal Bureau of Prisons (BOP), I want to thank 

you for the opportunity to express our views to the subcommittee on the proposed 

bill in front of us today, HR2965. 

I first want to clarify, that I am not here speaking for the administration or the 

BOP. I am speaking as a line staff member, representing line employees who work 

inside the walls and fences of 105 federal facilities in many of your districts. 

As we all know, this bill passed convincingly last Congress. That doesn’t mean 

correctional professionals agree with its content, its conclusions, nor its effect. Let’s 

review what is happening in corrections and FPI in the federal system briefly. 

Over the last four years we have had our staffing at each individual institution 

cut by as much as 15 to 20 percent as compared to the staffing percentages of the 

late 1990’s. A chart is provided in my statement for the record to verify this (attachment 1). 

Over the last three fiscal years the inmate population has grown by 29,000 new 

inmates. Overcrowding is at an all time high of 41 percent. This fiscal year, it was 

proposed to eliminate the construction of two new facilities. We are taking United 

States Penitentiary Leavenworth and United States Penitentiary Atlanta offline as 

High Security Prisons and demoting them to Medium facilities. We didn’t receive 

the funds to keep them updated and operational as United States Penitentiarys. We 

are cutting four federal prison camps, three of which do work for the military on 

bases in North Carolina, Florida and Nevada. 

Attacks on staff have increased, the Director stated to the appropriations committee last year that BOP had a 28 percent increase in assaults over the last three 

years. The union believes it was higher increasing 34 percent, with an increase of 

63 percent with weapons. Again, a chart is provided from BOP’s own statistics. 

Moral in the federal system is as low as I have seen it in years. People are expected to perform the duties of two, three, sometimes four other staff because of 

shortages. We are asked to handle violent inmates and terrorists, and are investigated by an Inspector General who seems gleeful at attacking us. We are vacating 

correctional posts, left and right, to save money. Overtime funding has been cut dramatically and BOP is planning on contracting out our security at outside hospitals. 

Our last staff member murdered has not received justice because of eight years of 

delay to a trial of the inmate. Our assault rates have climbed. The congress has allowed privatization of prisons to creep into the system. 

People in FPI have been reorganized over and over, had to retire early, had to 

leave their FPI positions returning to custody work in the senior days of their careers. It is a lot to handle. 

11

And now comes again, this piece of legislation. As you all are aware, mandatory 

source as it’s called has been eliminated in appropriations bills for DOD and general 

government for the last three fiscal years. While the inmate population has increased by 29,000 new inmates, inmate employment in FPI has actually decreased 

by 3,000 jobs in the same period. Now, some point out that FPI has made more 

money this year. We have. We have because of our contracts with DOD for war 

fighting items. When the war ends, and it will, we will lose larger portions of the 

program. Keep in mind, that in 2001 there were 22,560 inmates working or 25 percent of the inmate population. Now, since the DOD, general treasury changes, and 

changes by our own Board of Directors, we are providing employment to 19,337 inmates or only 18 percent of our population. 

While this bill talks about vocational training and education programs the funding for all of this has been cut. We have less teachers, less vocational instructors 

and less security. Over the last three fiscal years, the Administration and the Congress has cut our Building and Facilities budget by 255 million dollars from 325 million in 2004, to 70 million in 2006. Many of these funds were used to upgrade facilities using inmate work crews, now they sit idle. We have been placed in the category of ‘‘a domestic program’’ and so, when you do an across the board cut in an 

Omnibus bill we get hit again. We are security for this nation and have been for 

over 70 years. We have kept the felon of this country locked up, we deserve better. 

After this bill passed last year, no one went to the appropriations committee and 

asked for additional money for these new programs. We would love to build items 

for the underprivileged, however, we have to pay the staff and purchase the materials. There is no money in the budget for this when we can’t even hire correctional 

officers for security. We would love to work for non-profits, again this isn’t practical, 

because of limited funds and non-profit’s limited budgets. 

And what of the ‘‘competition,’’ the furniture industry, who is one of the main elements of all this. They have increased profits without these changes to FPI by large 

margins. It has also been reported that Steelcase doubled its use of suppliers in 

lower-cost countries last year. (see attached article). 

It seems to me a ‘‘win, win’’ would be to partner with FPI and the items sent out 

of the country could be brought back to us. We could partner with these companies 

and help each other. Inmates could learn their business under apprenticeships and 

then perhaps could get hired in their production facilities here in the United States. 

We could do that with any business that is struggling against the pressure to 

outsource overseas. Textiles could provide us lists of product that is produced only 

overseas and we could bring back that work. This may decrease their shipping costs, 

it would increase inmate employment, helping prison workers, increase domestic 

raw materials purchases and other important economic interests. Wages could be 

raised for the inmates so they could pay fines off earlier, assist their families, pay 

taxes and other parts of their debt to society. It is unfortunate, that we can’t seem 

to get to this point. 

We believe any part of this bill must include repatriation of services and products 

into the entire market. We should give up mandatory source (which legislatively we 

have) and you should allow us to bring back production from overseas. We have no 

problems with oversight of this. A certification from Department of Commerce, Department of Labor or whoever would do this type of certification would be welcome. 

Or a board established of labor, business, and prisons who could verify this and establish parameters on what to bring back. We think that is the way to go. 

Members of the committee, I want to thank you for inviting me today. I hope I 

have given you some idea of the issues facing corrections in the federal system and 

our extreme challenges. I would be more than happy to answer any questions at 

this time.

Mr. COBLE. Thank you, Mr. Glover. 

Mr. Miller. 

TESTIMONY OF PAUL MILLER, DIRECTOR OF GOVERNMENT 

AFFAIRS, INDEPENDENT OFFICE PRODUCTS & FURNITURE 

DEALERS ASSOCIATION 

Mr. MILLER. Mr. Chairman, Ranking Member, and Members of 

the Subcommittee, I appreciate the opportunity to testify at today’s 

Subcommittee hearing to discuss H.R. 2965, the ‘‘Federal Prison 

Industries Competition in Contracting Act of 2005.’’ My name is 

Paul Miller, and as you mentioned, I serve as the director of GovVerDate 0ct 09 2002 12:29 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6601 G:\WORK\CRIME\070105\22258.000 HJUD2 PsN: 22258
12

ernment Affairs for the Office Furniture Dealers Association. Let 

me start by saying emphatically that the coalition established 9 

years ago representing business and labor supports the original 

mission of the Federal Prison Industries Program, which was to 

provide inmates with real job skills they can use upon release back 

into their communities. 

What we don’t support is a program that has gone beyond this 

mission and is more about generating profits at the expense of 

business, labor, and, most importantly, the inmates this program 

was supposed to help. Our coalition is often criticized for trying to 

put FPI out of business. This is just another scare tactic used by 

FPI and its trading partners to dissuade further action on this important legislation. 

It is also said that H.R. 2965 is intended to be harmful to small 

businesses, prison guards, and inmates. That’s pure rhetoric. The 

goal of this legislation is just the opposite. 

I expect we will hear today from opponents that these are our intended goals. 

Mr. Chairman, I can assure this Subcommittee that this is furthest from the truth. Our coalition is made up of mostly small businesses. Our coalition supports the prison guards charged with overseeing these inmates in these facilities. I would not, nor would any 

member of our coalition, support legislation that puts prison guards 

in harm’s way. Our coalition supports rehabilitation of inmates. All 

this is proof in a legislation Representative Hoekstra has once 

again introduced. With his leadership, this bill has come a long 

way from where it was some 12 years ago. 

H.R. 2965 looks to help inmates. It also looks to level the playing 

field for business and labor against the unfair advantage FPI has 

had for far too long. What is lost in this whole debate is that 

changes needed in this program are out-of-date in today’s society. 

Those charged with creating FPI didn’t intend it to become a huge 

profit center at the expense of business, labor and inmates. Its mission was to provide rehabilitation to inmates at a time in this country when economic conditions were bleak. Today, some 61 years 

later, this program does not meet today’s needs or demands. 

H.R. 2965 corrects this problem by changing FPI to fit today’s society and its needs. If opponents to H.R. 2965 really look closely as 

what this legislation does, they should support it. The only reason 

not to support this legislation is to support the status quo of a Government monopoly that has for years gone unchecked. 

I expect today we will also hear about FPI’s need to hold on to 

mandatory source. We will hear how they have lost revenues. We 

will hear how they have lost jobs. We will also hear how FPI has 

cut programs to help level the playing field for business and labor. 

I guess whether you believe this or not will be in how you interpret FPI’s definition of lost revenue, lost jobs, and cutting programs. Based on their most recent annual report, I’m not sure how 

FPI can make those assertions. The numbers just don’t support the 

facts. With FPI’s current operations, I would like to know exactly 

how FPI is able to lay off inmates with this kind of growth. I would 

also like to know how FPI believes it is being harmed by H.R. 

2965. As I look at the numbers, I would say FPI owes Congress a 

13

thank you for passing the current reforms. It sure seems like they 

have benefited from them. 

We hear every year how, from FPI passing any legislation, will 

have a negative impact on their ability to survive and train inmates. Again, I think the annual report proves otherwise. If FPI 

is laying off inmates today, then the questions have to be why and 

how? Why are inmates being laid off at a time when FPI’s products 

appear to be in higher demand? Is it that FPI is laying off inmates, 

or is it simply that FPI is shifting inmates to business segments 

that are in greater demand than others? Again, it is all on how you 

define those terms. How can a company like FPI lay off inmates 

when production appears to have increased? The companies we all 

represent would like to know the secret of their success. 

I think one could come to the conclusion that FPI is defining the 

term ‘‘laid off’’ to mean any inmate moved from one business sector 

to another, or it could be that FPI is, in fact, working with more 

outside companies to provide the products to the customer with little or no inmate work being done, and thus actually laying inmates 

off. Either way, there is a problem. 

I’m sure the question will come today why we believe further reform is still needed. Well, the answer is simple. When you have a 

Government corporation going out to Government customers still 

today telling them that the old provisions allowing for competition 

have expired and contracting officers must once again buy from 

FPI, there needs to be a more permanent solution. H.R. 2965 is 

that solution. And if there is even one case of pass-throughs or 

drive-by manufacturing, then there is a problem, and H.R. 2965 is 

the answer. 

As I said earlier, H.R. 2965 is not a tool to put FPI out of business as claimed by our opponents. This legislation has come a long 

way from its original version some 12-plus years ago. Numerous 

provisions have been added to this legislation to deal with such 

concerns as marketable skills, educational and vocational opportunities, and charitable provisions allowing FPI to team with organizations like Habitat For Humanity to build homes which should 

prove that we support FPI survival and its original mission. We 

strongly believe that these provisions will better help inmates once 

they are released from prison find real long-term opportunities 

while protecting prison guards and small businesses. 

Practices like drive by manufacturing do not provide any of this 

type of training for inmates or protection for prison guards. H.R. 

2965 does. What these types of provisos do produce is large profits. 

Let me conclude by sharing with you some comments made by 

the General Services Administration during a hearing on this very 

issue before the United States Senate last year. The GSA witness 

was asked by Senator Craig Thomas whether FPI could sustain 

itself without mandatory source. The witness’ response was that it 

could. GSA told the story of their having mandatory source years 

ago. Congress eliminated GSA’s mandatory source, and they are 

thriving. The reason GSA told the Committee is they have created 

a different business model built on competition. The witness went 

on to add that GSA learned how to compete in an open market. 

FPI can too. Thank you for the opportunity today. And I will cut 

my time short and answer any questions. 

14

Mr. COBLE. Thank you, Mr. Miller. 

[The prepared statement of Mr. Miller follows:]

PREPARED STATEMENT OF PAUL A. MILLER


PM0001.eps
15


PM0002.eps
16


PM0003.eps
17


PM0004.eps
18


PM0005.eps
19


PM0006.eps
20

Mr. COBLE. Dr. Wilkinson, you’re sort of on the spot. Mr. Glover 

beat the red light. Mr. Miller permitted the red light to beat him. 

So we will be watching the buckeye. Good to have you with us, Dr. 

Wilkinson. 

TESTIMONY OF REGINALD WILKINSON, DIRECTOR, OHIO 

DEPARTMENT OF REHABILITATION AND CORRECTION 

Mr. WILKINSON. Thank you, Mr. Chairman. 

Mr. Chairman, Members of the House Subcommittee, I appreciate the opportunity to provide testimony to you today regarding 

the impact of resolution 2965 on Federal, State and local correctional industries. I would especially like to thank Congressman 

Chabot and Congressman Scott for inviting me to speak on behalf 

of correctional industries and for their ongoing support for the development of quality industry programs in our Nation’s prisons and 

jails. I am now in my 32nd year as a correctional administrator, 

all in Ohio. A more detailed biography is included in my written 

testimony. 

I would like to provide you with a general overview of the importance of prison industries in Federal and State correctional institutions, as well as a thumbnail sketch of Ohio’s approach to prisoner 

employment before delving into further areas impacted by 2965. 

Let me first address the issue of why I believe that it is vital to 

have effective State and Federal prison industrial programs. In my 

view, there are at least six primary rationals. First, Federal and 

State industry jobs are a management tool to keep prisoners busy. 

When prisoners are idle, tensions and violence increase in correctional institutions. Prison industry programs keep thousands of inmates productively involved in day-to-day structured operations of 

our nations correctional facilities, thereby increasing the safety of 

civilians, inmates and the communities surrounding facilities as 

well as staff persons. 

Second, Federal and State correctional industries job training 

programs reduces crime. Inmates who participate in meaningful job 

training demonstrate a statistical reduction in recidivism. A Washington State Institute for Public Policy showed that for every dollar 

spent on correctional industry programs, as much as $6.23 is saved 

in future criminal justice costs. In Ohio, in 1995, a study conducted 

by our Department showed that participation in prison industry 

jobs reduced the rate of return for offenders by at least 20 percent. 

Third, meaningful job training contributes to successful reentry 

of offenders and increases their chances of finding and keeping jobs 

after release. As one can imagine, former prisoners attempting to 

find jobs are at a natural disadvantage. At FPI, it is our mission 

to teach them skills so that they can compete in the job market 

after they have served their prison sentences. 

Fourth, Federal and State prison industries contracts with private sector businesses boost economic development and, in particular, minority-owned small companies. And in an attempt to expand prison industries and create more real world, high-skilled 

jobs, prison industries have placed an emphasis in recent years on 

partnering with the private sector. These partnerships benefit from 

both Federal and State departments of corrections and companies 

they contract with. In Ohio, we have nine contracts with private 

21

sector entities that employ approximately 500 inmates, including 

the furniture industry. 

Fifth, prison industries offset the cost of incarceration. Like FPI 

and most other state correctional industry programs, OPI is a selfsupporting entity that does not require financial assistance from 

Ohio’s general assembly general revenue fund. According to an 

independent study commissioned by our agency, again, our prison 

industries further defrayed taxpayer costs by providing 15.9 million 

dollar annual benefit to Ohio and creating 62 private sector spinoff jobs for a net gain to the local economy. 

At the end of fiscal year 2004, our industries employed over 2100 

inmates and generated sales of over 32 million dollars. 

Finally, Federal and State prison industries imbue inmates with 

a work ethic and a sense of self responsibility. Many inmates have 

never held a job for any length of time nor have they learned to 

take instruction and feel the satisfaction of a job well done. 

Ohio’s inmates employment and reentry programs are equally as 

important. We work very hard to increase the employability of inmates through initiatives such as our offender job linkage program, 

where we work with local businesses to help employ these persons 

following release. One of our important employment initiatives in 

Ohio is our community service program. We have expanded the 

number of inmates now as devoted to this area of over 75,000 

hours in 1991 to 6.9 million hours in 2004. 

Finally, it is important to note that offender employment is just 

one component of a broad systems approach to managing offenders 

returning to the community. In Ohio and many other jurisdictions, 

innovative reentry initiatives such as the ones that were mentioned 

earlier by the congressman from Michigan, are underway that emphasize a continuum of services, programming, support, and offender accountability. 

Mr. Chairman, there is much more to say about this, but I will 

reserve comments for questions. 

Mr. COBLE. Thank you, Dr. Wilkinson. 

[The prepared statement of Mr. Wilkinson follows:]

PREPARED STATEMENT OF DR. REGINALD A. WILKINSON

INTRODUCTION

Chairman Coble and members of the House Judiciary Subcommittee on Crime, 

Terrorism, and Homeland Security. I appreciate the opportunity to provide testimony before you today regarding the impact of House Resolution 2965 [HR 2965] 

on federal, state, and local correctional industries. I would especially like to thank 

Congressmen Chabot and Scott for inviting me to speak on behalf of correctional industries, and for their on-going support for the development of quality industry programs in our nation’s prisons and jails. 

I am now in my 32nd year as a correctional administrator—all in Ohio. I have 

served as Director of the Ohio Department of Rehabilitation and Correction for fourteen years. I am a past president of both the American Correctional Association and 

the Association of State Correctional Administrators: two of the nations leadings 

corrections trade associations. I was appointed a member of the U.S. Department 

of Justice, National Institute of Corrections Advisory Board by former U.S. Attorney 

General John Ashcroft; its members elected me chair of the Board. Moreover, I serve 

as president and executive director of the newly formed International Association 

of Reentry. 

I would like to provide the subcommittee with a general overview of the importance of prison industries in federal and state correctional facilities, as well as a 

thumbnail sketch of Ohio’s approach to prisoner employment, before delving further 

into the areas impacted by HR 2965. 

22

IMPORTANCE OF PRISON INDUSTRIES

Let me first address the issue of why I believe that it is vital to have effective 

state and federal prison industrial programs. In my view, there are at least six primary rationales: 

First: Federal and State industry jobs are a management tool to keep prisoners 

busy. When prisoners are idle, tension and violence increase in correctional facilities. Prison industry programs keep thousands of inmates productively involved in 

the day-to-day, structured operation of our nation’s correctional facilities, thereby increasing the safety of civilians, inmates, and the communities surrounding the facilities. This theory is backed by research data. Criminologist Bert Useem, Ph.D., 

noted in a 1999 multivariate analysis of prison protests, disturbances and riots that 

‘‘the percentage of inmates with paid employment was inversely related to the probability of an inmate disturbance.’’ Another criminologist, Beth M. Huebner, stated 

in her 2003 multilevel analysis of administrative determinants of inmate violence 

that ‘‘prisoners involved in work programs were significantly less likely to assault 

staff.’’

Second: Federal and State prison industries’ job training reduces crime. Inmates 

who participate in meaningful job training demonstrate a statistical reduction in recidivism. A Washington State Institute for Public Policy study showed that for every 

$1 spent on prison industry programs, as much as $6.23 is saved in future criminal 

justice costs (arrest, conviction, incarceration, post release supervision and crime 

victimization). In Ohio, a 1995 study conducted by the ODRC showed that Ohio 

Penal Industries (OPI), our inmate industrial training program, is having a similar 

positive impact. Participation in OPI jobs reduced the return rate of offenders released from prison by 20 percent. Participation in high-skilled OPI jobs resulted in 

a 50 percent reduction in recidivism. Similarly, studies also show that Federal Prison Industry (FPI) inmates are 24 percent less likely to recidivate than those inmates in non-FPI jobs. These studies also indicated that certain groups of prisoners 

benefited differently. For instance, federal and state prison industry participation 

had the greatest positive impact on African American males. 

Third: Meaningful job training contributes to the successful reentry of offenders 

and increases their chances of finding and keeping jobs after release. As one can 

imagine, former prisoners attempting to find jobs are at a natural disadvantage. 

Like FPI, it is our mission to teach them skills so that they can compete in the job 

market after they have served their prison sentences. Ohio’s 105 vocational education programs range from building maintenance to welding, from brick laying to 

auto mechanics. Ohio’s industries programs work with areas in our Department, as 

well as with other state agencies to enhance the skill-set obtained by offenders. Our 

most recent enterprise is the opening of our Meat Processing Career Center. It is 

a multi-functional operation, doing both processing and packaging, which has created 100 offender jobs who will receive vocational training by The Ohio State University. The certification these inmates obtain will assist them in securing jobs in 

the meat processing industry upon release. Our farm operation provides the animals 

processed at the plant and the finished products are served in our institutions, driving down the cost to the taxpayers of Ohio. 

A solid base of educational, treatment programs, reentry activities, and formalized 

linkages to the community combined with real work experience and developing work 

ethic, buttress prison vocational and industry programs. Similar to our experiences 

in Ohio, studies have demonstrated that federal inmates who participate in FPI jobs 

are 14 percent more likely to be post release successful than those inmates in nonFPI jobs. 

Fourth: Federal and State prison industries contracts with private sector businesses boost economic development and in particular minority owned and small companies. In an attempt to expand prison industries and create more real-world and 

high-skilled jobs, prison industries have placed an emphasis in recent years on 

partnering with the private sector. These partnerships benefit both federal and state 

Departments of Correction and the companies they contract with. In Ohio, we currently have 9 contracts with private sector entities that employ approximately 500 

inmates. 

Before signing, contracts are reviewed by our Prison Labor Advisory Council 

(PLAC), a six-member board that advises and assists the Department in its responsibility to create meaningful work for inmates. The Council is comprised of business 

and community leaders, who help insure that proposed private sector contracts meet 

the Department’s objectives to have no adverse impact on Ohio’s labor market. If 

endorsed by the PLAC, companies agree to sign a statement that they will not displace Ohio workers in utilizing inmate labor. 

23

Additionally, many private sector businesses benefit from purchases made by federal and state prison industries. In 2003, Federal Prison Industries (FPI) purchased 

$502 million in goods, services, and raw materials from the private sector—$1.5 billion from 1997 through 2001—a figure representing 74 percent of gross sale revenues. Nearly two-thirds of these purchase contracts are with small businesses, many 

of them female and minority-owned or disadvantaged. Estimates indicate that 

roughly 5,000 jobs in the private sector are the result of goods purchased by FPI. 

Fifth: Prison industries offset the cost of incarceration. Like FPI and most other 

state correctional industry programs, OPI is a self-supporting entity that does not 

require financial assistance from Ohio’s General Revenue Fund. According to an 

independent study commissioned by ODRC, OPI further defrays taxpayer costs by 

providing a $15.9 million annual benefit to Ohio and creating 62 private sector 

‘‘spin-off’’ jobs for a net gain to the local economy. Customer surveys, moreover, consistently demonstrate that OPI is fulfilling its mission to produce quality products. 

At the end of fiscal year 2004, OPI employed over 2,100 inmates and generated 

sales of over $32 million. These sales enable OPI to cover expenses and operate selfsufficiently. OPI shops and services range from the traditional production of license 

plates and janitorial supplies, to high-tech services such as, asbestos abatement and 

computer refurbishing. Some of our current contracts are saving Ohio taxpayers millions of dollars by utilizing inmate workers to convert information digitally and 

make it available to the general public using Computer Aided Design (CAD) and 

Geographical Information Systems (GIS) support services. These activities are also 

preparing inmates for high-tech employment upon release. 

Finally, federal and state prison industries imbue inmates with a work ethic and 

a sense of self-responsibility. Many inmates have never held a job for any length of 

time, nor have they learned to take instruction, and feel the satisfaction of a job 

well done. In FPI, Ohio, and other jurisdictions, prison industries work standards 

mirror the normal work environment as closely as possible so that when offenders 

are released to the community they are as ready as possible to join the work world 

and make a productive contribution. 

It is also important that former prisoners learn to accept the same employment 

responsibilities that you and I do. They must support their family, pay rent, and 

fulfill other obligations. In many cases, they are required to pay restitution, child 

support, and other legal judgments. I believe it is our duty to instill these traits. 

OHIO’S INMATE EMPLOYMENT AND REENTRY EFFORTS

In Ohio, we’ve worked very hard to increase the employability of ex-inmates 

through initiatives such as our Offender Job Linkage Program, where we now invite 

local business leaders to interview skilled inmates close to release at job fairs in our 

prisons. As a prerequisite to participation in the job fairs, inmates must be within 

90 days of release and are required to produce a current resume and participate in 

classroom training to develop interview skills. To date, close to 10,000 inmates and 

nearly 500 employers have participated in over 300 job fairs across the state. Inmates participating in these job fairs gain valuable interview experience, and many 

have been offered employment following their release, or have been encouraged to 

report after their release for additional interviewing and consideration. Additionally, 

as a part of this initiative, we are utilizing innovative teleconferencing technology 

that allows employers in Ohio’s urban centers to interview job-ready inmates in 

prisons via video linkages. Since 1997, 162 monthly videoconference interviews have 

been conducted with about 350 employers and 42 social service agencies. A total of 

2,344 inmate interviews were conducted using this technology, with approximately 

38 percent receiving referrals for follow-up interviews. 

One of our most important employment initiatives in Ohio is our community service program. We have expanded the numbers of inmates and hours devoted to this 

area from over 75,000 hours in 1991 to over 6.9 million hours in 2004. Our Department has provided Ohio communities with over 35 million hours of volunteer inmate 

service since the inception of the program. This initiative has provided much needed 

assistance to Ohio’s schools, government agencies, churches, and many other deserving charitable and non-profit organizations. Just as important, it has provided valuable job skills to offenders and has allowed them to experience the positive rewards 

of contributing back to society. 

Finally, it is important to note that offender employment is just one component 

of a broad systems approach to managing offenders returning to the community following a period of incarceration. In Ohio, and many other jurisdictions, innovative 

‘‘reentry initiatives’’ are underway that emphasize a continuum of services, programming, support, and offender accountability from the time of sentencing to well 

beyond an offender’s release to the community. I recently testified before Congress 

24

in support of landmark legislation entitled the Second Chance Act of 2005 (HR 

1704) originally initiated by former Congressman Rob Portman. Passage of this important initiative would further enhance public safety, and ensure that many more 

offenders return home as tax paying and productive citizens. 

COMMENTS ON HOUSE RESOLUTION 2965

I would now like to briefly address some specific points of discussion regarding 

HR 2965. Ohio and other State Departments of Correction are concerned with provisions contained in section 7 of the bill amending 18 USC 1761 (a) at the state, and 

local levels to prohibit the interstate sale of services furnished wholly or in part by 

prisoners. We are also concerned with the provisions in section 7 amending 18 USC 

1761 (c) that require the phase-out of existing state and local inmate work programs 

providing services for the commercial market and their future certification through 

the federal Bureau of Justice Assistance. This language includes state programs in 

prohibiting services such as packaging, telemarketing, and data entry. These are the 

types of services that are being contracted offshore, that states are trying to attract 

back and return to their prison industries. Additionally, we believe that the language in section 3 of the bill prohibiting access to geographic data would eliminate 

two of our prison industry shops. These employ 72 inmates working on mapping 

services, including tax-mapping services for counties; mine reclamation mapping; 

gas/water well placement; bedrock geology and cadastral imaging; as well as the 

mapping of utilities. 

Furthermore, we are opposed to restrictions contained in the legislation involving 

FPI. The restrictions on sale of inmate provided services into interstate commerce 

and the phase-out of the mandatory source preference could result in further loss 

of inmate jobs and training opportunities, along with the loss of many civilian industry jobs. Additionally, many private companies who supply raw materials and 

partner with correctional industries would be placed at risk to lose their jobs should 

HR 2965 pass in its current form. Finally, the states would be in jeopardy of being 

sued by these companies due to the abrogation of existing contracts, not to mention 

the related legal and court fees. 

21CONCLUSION

As I have stated above, prison industries provide many positive benefits to federal, state, and local correctional agencies by keeping inmates meaningfully engaged 

and by providing them with marketable job skills that may reduce the likelihood 

of future recidivism. They also provide positive economic benefits to states by reducing reliance on general revenue fund sources, creating demand for raw products and 

supplies purchased from the private sector, and by increasing skilled labor. Communities and families benefit by offenders being returned to society with a greater likelihood for employment, a chance to become productive, law-abiding, and drug free 

citizens. 

Based on the concerns that I and other corrections professionals have articulated 

with HR 2965, I would urge you to delay its passage and work towards legislation 

that enhances rather than constrains prison industries. 

Mr. Chairman and Committee members, thank you for the opportunity to offer 

my testimony. I would be pleased to address any questions that you may have.

Mr. COBLE. I believe you are clean-up, and we gave you a pass 

on the oath, but you are not immune from the 5-minute rule. Representative Hoekstra. 

TESTIMONY OF THE HONORABLE PETER HOEKSTRA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN, AND CHAIRMAN, PERMANENT SELECT COMMITTEE ON 

INTELLIGENCE 

Mr. HOEKSTRA. Thank you, Mr. Chairman. It is good to be here. 

It is good to be here with my friends from the Education and Workforce Committee where we had a lot of good times together. Mr. 

Scott, Mr. Conyers, it is good to see you. Mr. Lungren and Mr. 

Chabot, I thank you for being here. Mr. Chabot, I just remind you 

that the buckeye sitting next to me, his roots are from the State 

25

of Michigan. He was born and raised in Detroit. I don’t know what 

went wrong in between there. But we can maybe fix that. 

Thank you for the opportunity. I just like to submit my statement for the record. Let me make a couple of comments and make 

sure that I stay within the record. 

Mr. Glover, in terms of your statement, I think that we all recognize the dangers and the challenges that the organization that you 

represent, the guards, face each and every day. I can’t imagine a 

more difficult working environment than some of the statistics that 

you’ve outlined. I am sure they are accurate. We really need to be 

working on getting you the resources that are necessary in the 

prisons. 

Second, you know that we have been working almost a year to 

craft a work-based inmate training program of the type that you 

are suggesting. I want a proposal that is acceptable to all elements 

of the family of labor, that has been the most daunting challenge. 

I think we can reach an agreement with the business community. 

We just need to make sure that we can reach an agreement that 

is fair and is acceptable to the entire family—labor family as well. 

And we are going to be working on that. 

Third, Mr. Frank of Massachusetts and I have a pact. Once this 

bill is passed and becomes law, we will press equally as hard to obtain the relatively modest funding necessary for these enhanced inmate and educational training programs and the alternative inmate work opportunities that are outlined in the bill. We suspect 

that others will join us. 

One of the unique things about this bill has been the broad bipartisan support and the unique coalition that we have put together. I can tell you that my colleagues, every time they get a 

‘‘dear colleague’’ from Barney Frank and Pete Hoekstra, they kind 

of look at it, and they say, ‘‘What in the world will these two folks 

agree on?’’ and they have been getting them now for 9 years. And 

we have kept this coalition together. And I think as we have 

worked to move this bill forward, we will also work to make sure 

that we implement all the sections of the bill, which includes the 

funding for the programs that this bill authorizes. 

You know, the solution to the staffing problem that you outlined 

earlier is not to move the correctional officers to the FPI payroll. 

We need to fund these directly and address those issues directly. 

Finally, on that, on one of your other points is, FPI status of 

mandatory sourcing is still in place. The other interesting thing is, 

I don’t accept the premise that there is no correlation between FPI 

sales and inmate employment. There should be a more direct correlation. I think one of the most interesting things is that in the 

period that has been cited, 2002 to 2004, we have seen significant 

employment, or excuse me, significant increases in sales. FPI has 

been one of the most successful corporations in America during 

that 3-year span. Sales have increased by 18 percent, profits have 

increased by over 70 percent, but yet, employment has decreased. 

And six out of the eight segments of the businesses that they are 

employed in have seen significant increases in sales. But yet, employment has gone down. And I think we need to take a close look 

at why, as the company is growing, why their employment numVerDate 0ct 09 2002 12:29 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6601 G:\WORK\CRIME\070105\22258.000 HJUD2 PsN: 22258
26

bers are actually going down. That is not how—or what we would 

expect to have seen. 

Dr. Wilkinson, let me make some observations on some of your 

statements. We agree, rehabilitation through work and vocational 

training programs are absolutely essential. That is why we put 

more of those things in place. To argue that FPI or Government 

contracting is good for small minority businesses I think is a false 

assumption. 

These businesses can compete for Federal Government contracts. 

Making FPI the gateway by which these entities get access to the 

Federal Government isn’t necessary. Now, there was just a contract that was awarded, mandatory source, $198 million. Mandatory 

sourcing is alive and well, and 1 percent of that business went to 

a vendor, a small company in my district. The rest went to the 

prisons. 

You know, in the real word, the company should have had the 

opportunity to compete for this business rather than having FPI as 

the gateway. You know, I am going to make my red light—beat my 

red light. We have got a great—I am done. 

I don’t want to get the Chairman mad at me. I am done. 

[The prepared statement of Mr. Hoekstra follows:]

PREPARED STATEMENT OF THE HONORABLE PETE HOESKTRA, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MICHIGAN, AND CHAIRMAN, PERMANENT SELECT

COMMITTEE ON INTELLIGENCE

Mr. Chairman (Mr. Coble), I appreciate the opportunity to appear before the Subcommittee as its considers H.R. 2965, the Hoekstra-Frank-Maloney-SensenbrennerConyers-Coble Federal Prison Industries Competition in Contracting Act of 2005. I 

expect that we will have a spirited discussion of what some assert will be the adverse impacts, when the bill is enacted. These opponents of FPI reform will seek 

to use as ‘‘evidence’’ the a statement made in FPI’s Annual Report regarding reductions in inmate work opportunities during fiscal year 2002 through 2004. Hard numbers reflected in that report, and prior FPI Annual Reports since the mid-1980s, 

would suggest that the assertions about losses of inmate work opportunities are 

questionable, if not contrived. 

H.R. 2965 is substantively identical to H.R. 1829 in the 108th Congress, which 

was ordered reported on the Committee on July 25, 2003, on a strong bipartisan 

voice vote. Subsequently, the bill was passed by the House on November 6, 2003, 

by a vote of 350-65. 

H.R. 2965 again enjoys strong bipartisan support within the Committee and within the Congress. I am again fortunate to have as lead cosponsors, Rep. Barney 

Frank, Rep. Carolyn Maloney, Rep. Jim Sensenbrenner, the Chairman of the full 

Committee, my colleague from Michigan, Rep. John Conyers, the Committee’s Ranking Democratic Member, and you, Mr. Chairman (Mr. Coble). In all, the bill had 77 

original cosponsors. An addition, 15 cosponsors were added last night. Chairman 

Sensenbrenner and Rep. Conyers have agreed to schedule H.R. 2965 for markup 

shortly after the House returns for the Independence Day District Work Period. Fifteen Member of the Committee are already cosponsors of H.R. 2965. I expect that 

it will enjoy the same strong bipartisan support that was enjoyed by H.R. 1829. 

The background information you have furnished to the Members of the Subcommittee provides an excellent summary of H.R. 2965. I will not repeat it here. 

I would emphasize that the bill before you reflects a broad array of improvements 

that have been made over many, many years. Most of the most important improvements were made during the 107th and 108th Congress during the bill’s consideration by this Committee. H.R. 2965 continues to reflect the important changes made 

by an extensive Conyers-Frank Amendment, during the Committee consideration of 

H.R. 1577 in the 107th Congress. It ingrained in the bill provisions designed to substantially increase the likelihood of Federal inmates making a successful return to 

society. The core of the Conyers-Frank Amendment was to increase inmate access 

to educational opportunities, both remedial education and modern ‘‘hands-on’’ vocational training, especially in skills in which there are jobs available in the economy 

after release. Such educational programs have been shown to be more effective than 

27

traditional inmate work programs in reducing recidivism. The most recent analysis 

of the Post Release Employment Project (PREP) data, a multi-year assessment undertaken by the Federal Bureau of Prisons, shows that inmates participating in 

such educational programs were 33 percent less likely to return to prison. In contrast, those who participate in traditional prison industry programs are 24 percent 

less likely to return to prison. 

Other provisions of the bill come from other diverse sources. The bill provides for 

deductions from inmate wages to be accumulated in an account in the inmate’s name. These funds can be used by the inmate to stay in touch with their family 

during the term of incarceration. It also will provide a so-called ‘‘gate fund,’’ re- sources to sustain the inmate immediately upon release. The ‘‘gate fund’’ provision 

was initially suggested by Pat Nolan, President of Justice Fellowship, the public policy arm of Prison Fellowship. During the consideration of H.R. 1829 on the House 

Floor, an amendment offered by Representative Waters and Rep. Millender-McDonald that would increase the effectiveness of the gate fund provision. It would require 

that inmates within 24 months of release be paid a wage of $2.50 per hour for work 

performed for FPI. 

Opponents of FPI reform will also argue that it receives no appropriated funds, 

that it is ‘‘self-sustaining.’’ It is accurate to say that FPI does not receive any appropriated funds to sustain its operations. Rather, its mandatory source status enable 

it to simply take funds appropriated to its captive Federal agency customers for the 

execution their missions, whether national defense, homeland security, or administration of the Social Security System. In the noncompetitive manner in which the 

program operates today, it more likely than not that the captive Federal agencies 

are not getting the best product, in the most timely fashion, at the best price. A 

steady stream of reports from the GAO and various Inspectors general confirm this. 

Those seeking to maintain FPI’s mandatory source status will argue that enactment of the legislation will cause mass inmate idleness, endangering the safety of 

entire institutions, their guards and inmates. This ‘‘prison riot argument’’ simply ignores the fact that the vast majority of Federal inmates in Federal institutions have 

work assignments helping to run and maintain the institution in which they are incarcerated. They help prepare meals, run laundries, maintain grounds, and help do 

electrical, plumbing, carpentry repairs and other similar work. These assignments 

can provide many of the same rehabilitative benefits as traditional prison industry 

work assignments. Based on FPI employment figures for FY 2004, approximately 85 

percent of Federal inmates have institutional work assignments. Only approximately 15 percent of Federal inmates have FPI work assignments. Only these inmates will be affected when H.R. 2965 is enacted, and, I believe, that these inmates 

and the overall institution will be affected for the better. 

The ‘‘prison riot argument’’ also ignores the authorities granted to the Attorney 

General by the bill. They simply declare that they won’t be used. Mr. Glover may 

have no faith in his management, I believe that Attorney General Gonzales would 

not deliberately endanger the safety of a Federal correctional institution just to 

prove a point. 

Mr. Chairman, I expect many other issues may be raised by the opponents. I look 

forward to responding.

Mr. COBLE. I would not be angry with you, Pete. Thank you, Mr. 

Hoekstra. And we have been joined by the distinguished gentleman 

from California, Mr. Lungren. Prior to my time starting, I want to 

take care of a couple of housekeeping matters. Several organizations have asked for the opportunity to submit statements for the 

record regarding this very important issue. And without objection, 

the following statements will be included in the record, American 

Apparel and Footware Association, Contracts Services Association, 

United States Chamber of Commerce, Citizens United For Rehabilitation of Parents, National Federation of Independent Business, 

Management Association of Photogrammetric Surveyors and Mappers, and Correctional Vendors Association. Without objection, 

those statements will be made part of the record. 

[The information referred to follows in the Appendix] 

Mr. COBLE. And finally, I want the record to reflect that my dealings with the Federal Bureau of Prisons from the director on down, 

have been favorable. I am very high on BOP. I think they do a good 

28

job. And I just wanted the record to reflect that. Now you start my 

time. 

Mr. Glover, in your testimony, you express concern, and Mr. 

Hoekstra responded to that, but your staff members have become 

increasingly prone to violent attacks by inmates. 

Have you reviewed, Mr. Glover, the provisions included in 2965 

that allows FPI to make sales on a noncompetitive basis if the Attorney General makes findings regarding the deed for the contract 

to maintain safety of the prison and the community as well as the 

section of the bill which provides for vocational training and work 

for nonprofits? What impact, if any, do you believe these provisions 

would have? 

Mr. GLOVER. Well, Mr. Chairman, the first issue, with the—I did 

review all of the sections. And certainly we have we had some 

other people review them as well from our national union. The 

issue here is frankly money. 

The way FPI works currently with their sales, they hire their 

staff. Those are not S&E funded staff. So FPI runs their entire program based on nonappropriated dollars. 

Our vocational and educational staff have been cut since 2001, 

every fiscal year, our appropriations, while it appears to go up, we 

have increased the number of facilities nationwide. And so what 

has happened is at current facilities, current prisons, you have actually had a decrease in staffing, in all departments across the 

board, by 15 to 20 percent. And so where we used to have six 

teachers before, we may only have four. We might only have one 

voc. tech. teacher right now on staff because that is the only appropriated money that that warden has. 

Mr. GLOVER. Now, regarding the fact that the Attorney General 

could step in, I just have a real hard time believing—and this is 

just me personally as a correctional worker from a line staff member—I don’t know a warden in the system that would say he is 

going to lose control of the facility and tell the boss that, tell the 

regional director and the director and then the Attorney General 

that he is going to lose control of that prison if he doesn’t have a 

contract from some outside supplier. I don’t believe that’s going to 

happen. They will do anything they have to do, you know, reassign 

staff, move staff around, they’ll do whatever they have to do to 

keep the facility safe, but as far as running clean, organized correctional programming, we are running out of resources. I mean, I’m 

just trying to be straight. 

Mr. COBLE. Mr. Miller, has any member of your association experienced detrimental effects as a result of FPI programs? A. And B, 

have you had any small businesses that have been forced to go out 

of business as a direct consequence of competing with FPI? 

Mr. MILLER. 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 

29

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. 

Mr. COBLE. Thank you, sir. 

Dr. Wilkinson, in your testimony you indicate the studies have 

shown that prisoners involved in work programs were less likely to 

cause disturbances or mischief or violence. Did the study discuss 

whether it makes a difference if these programs are for-profit programs or not-for-profit? And if a prisoner is engaged in educational 

programs or jobs around the prison area, does that also decrease 

the likelihood that they will likely cause a disturbance? 

Mr. WILKINSON. I don’t know. Probably what causes most of our 

concern regarding disturbances, the more sophisticated the program, the less likely that person might be to engage him or herself 

in adverse activities. 

Prison Industries is a very sophisticated and much-coveted program, and most prisoners who are involved in any Prison Industries program aren’t going to do very much to jeopardize that. So 

you have a very high level, intelligent group of prisoners who are 

banking on staying out of trouble and trying to use those experiences as ones that they can market once they get out of prison. 

Mr. COBLE. I thank you, Doctor. And I see the red light has illuminated in my eye. 

Pete, I will have a question for you because I believe time will 

permit a second round and get me at the airport by 12 o’clock at 

the same time. So I now recognize Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

And for our colleague from Michigan, I’d like to remind him that, 

although he has brought bipartisanship in support of the legislation, there is equally broad bipartisan support in opposition. Some 

of the letters in opposition come from as diverse Members as those 

in support. It’s one of the few areas where partisan political affiliation doesn’t predict support or opposition to the legislation. 

Mr. HOEKSTRA. If the gentleman will yield? I look forward to the 

day when you and I will have the opportunity to work together in 

a bipartisan way and people will say, ‘‘What in the world would 

Hoekstra and Scott have to be working on together?’’

Mr. SCOTT. We’ll do the best we can. 

Mr. Miller, the suggestion has been made that FPI is causing 

problems with the furniture industry. How many employees are in 

the furniture industry? 

Mr. MILLER. That number I don’t have right now; I’d be happy 

to get that to you. It depends on—I mean, our dealers roughly 

range anywhere from 3 to 25 employees typically. 

Mr. SCOTT. Well, I mean, you had about a couple thousand in the 

Prison Industries program, and that would be totally dwarfed by 

whatever is in the industry. And if you eliminated those 7,000, it 

wouldn’t be a blip to the industry. What are the total sales in the 

furniture industry? 

Mr. MILLER. The sales have gone up, but you have to look at it 

in its entirety. We have gone through a very tremendous downturn 

in which we are now just starting to see some recovery from that. 

30

Mr. SCOTT. And the total sales in the FPI—if you stated the total 

amount of sales in furniture and compared that to, if you eliminated FPI, that number wouldn’t change, would it? 

Mr. MILLER. No. But what it does is allow for us—the opportunity to compete for Government contracts has kept some of these 

folks in business and helped them continue to keep growing, I 

guess, now. Without that opportunity, they’re not able to do that. 

Mr. SCOTT. If you eliminated sales, which represent a miniscule 

portion of 1 percent of the total sales in furniture, it would not 

have any measurable impact on the furniture industry, is that not 

true? 

Mr. MILLER. I would disagree with you. 

Mr. SCOTT. Well, how much impact would it have if you eliminated? What, it is less than one-quarter of 1 percent? 

Mr. MILLER. Any lost opportunity from a small business is going 

to have a harmful impact, and for our dealers not to be able to 

compete for those contracts or have a fair playing field, it’s going 

to hurt them. 

Mr. SCOTT. Okay. So if you have a million people working in the 

furniture industry and 5,000 prisoners lose their jobs, I guess that 

would revive the entire furniture industry; isn’t that right? 

Mr. MILLER. No. But what it does—I mean, if we’re looking at, 

is FPI laying those employees off or those inmates off, or are they 

just moving it from one product sector to another? That’s really not 

laying off, it’s putting the resources where the opportunity is at 

this time. 

Mr. SCOTT. The point I’m making is that the FPI represents such 

a minuscule portion of the furniture industry that it’s just disingenuous to suggest that whatever FPI does is going to have any 

measurable effect on the industry. 

Mr. HOEKSTRA. Excuse me, Mr. Scott. 

Mr. SCOTT. Yes. 

Mr. HOEKSTRA. Can I? 

Mr. SCOTT. Yes. 

Mr. HOEKSTRA. Thank you. It is not a miniscule part. 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 and was probably one of the 10 largest—it would have 

cracked the top 10 in terms of its size in the office furniture industry. So within the last couple of years—— Mr. SCOTT. Are you talking about a full percent? 

Mr. HOEKSTRA. Two and a half percent, at a minimum. 

So it would have been the faster growing office furniture company in America and would have been one of the 10 largest office 

furniture companies in America during that period of time. 

Mr. SCOTT. Are we talking about 1 percent, one and a half percent? 

Mr. HOEKSTRA. You’re probably talking—it’s probably at least 2 

percent, depending on exactly what year you’re going to. If you’re 

going to—I think in 2004 it was about——

31

Mr. SCOTT. So if you eliminated Industries altogether in that industry, you’re talking 2 percent. 

Mr. HOEKSTRA. Potentially, yes. 

Mr. SCOTT. Okay. Thank you. 

Mr. Chairman, if we’re going to have a second round, I’ll just 

defer so the—— Mr. COBLE. We will permit a second round. 

In order of appearance, the distinguished gentleman from Ohio. 

Mr. CHABOT. Thank you, Mr. Chairman. 

Before I ask a couple of questions I just want to make a brief 

statement. All of us have histories before we come here, and prior 

to coming here I was a 10-year local elected official. I was on city 

council and the county commission, and in that capacity had the 

opportunity, at least at the local level, to be quite involved with 

prisoner activities as far as having them work around the community and other projects within the prison. So it’s something that 

I’ve been involved in at some times and care a lot about. 

And as some of the panel members know, I’ve been a long time 

supporter of the Federal Prison Industries. And it’s my view that 

inmates who have shown a willingness to better themselves, those 

who obtain, for example, a GED and maintain a clean record of 

good behavior, should be given the opportunity to better themselves. 

FPI has for the most part been a quite effective alternative to 

idleness and has been shown to reduce recidivism rates, as inmates 

with job skills are more likely to find gainful employment when 

their debt to society has been paid. Opponents of the FPI argue 

that the program hurts businesses. I disagree with that. According 

to the Congressional Budget Office, the CBO, dismantling the FPI 

would cost taxpayers $50 million a year in added security for idle 

inmates. And last year alone the FPI purchased over a half billion 

dollars in goods, services and raw materials from the private sector, a figure representing approximately 74 percent of its gross 

sales revenue. Most of those dollars go to small businesses. 

Before we talk about legislation that could effectively end this 

important and worthwhile program, I think we should take a step 

back. Mr. Scott and I are in the process of drafting legislation that 

would establish a commission to study the FPI industry issue, its 

impact on prisoners, and its impact on small businesses in this 

country. I hope the Members of this Committee would consider 

joining Mr. Scott and myself in taking a closer look at this 69-yearold program before considering legislation which could have such a, 

I believe, tremendously adverse impact on the Federal Industries. 

Let me just, in the time that I have, just ask a couple of questions, and any of the panel members are welcome to answer. And 

if I could keep your answers relatively brief. 

First of all, I think one of the most important reasons for this 

program is what Mr. Wilkinson said, and that’s the recidivism 

issue. If you have people that are behind bars, and, ultimately, unless they’re pretty—you know, they’re serial killers or murderers or 

somebody like that that aren’t ever going to get out, these folks are 

going to get out on the streets, and I think studies have shown that 

you have a lesser chance of people that have skills are going to 

commit crimes once they get out. And I would invite any of the 

32

panel members to just comment briefly on that issue if they’d like 

to. 

Mr. Wilkinson, if you want to just start to that. 

Mr. WILKINSON. Yeah. And your comments, Congressman, are 

exactly correct. And it’s not just the skills that are important, what 

Industries does is teach a work ethic that doesn’t compare to any 

other program that we have in our prisons. And we know that getting out—and we treat those prisoners like real workers on the 

street. They have to be at work at a certain time, they can earn 

benefits, they can do different things that would resemble what a 

real live work situation would be. And that’s what we want because 

we know the main thing that keeps the people out of prison, the 

number one thing that keeps persons from coming back to prison 

is their opportunity to find meaningful work, not just a job but 

meaningful work. Industries helps facilitate that. 

Mr. CHABOT. Any other panel members? Okay. Let me just shift 

over to another issue real quickly with the time I have remaining, 

and that’s relative to the security for the guards themselves. Probably, Mr. Glover, you’re in the best position to comment on that. 

Could you just—as a practical matter, what difference it makes 

if the inmates have something to do to keep them from being idle 

and getting into mischief? 

Mr. GLOVER. The difference, Congressman, is what historically 

we’ve had happen is inmates that work in Industries are on a waiting list. If they get an incident report inside the prison for any infraction, any infraction, they drop to the bottom of the list on the 

waiting list to work in Industries. And we have waiting lists. This 

isn’t like a—we’re not forcing inmates into that system. We have 

waiting lists of inmates who want to work in that system. 

If an inmate is working in FPI and gets an incident report, he 

is immediately removed from Federal Industries and placed into a 

lower—frankly, a lower class of jobs, either cleaning floors or something else throughout the prison, and then he has to work his way 

back up into—he or she—has to work his way back up into the Industries system. 

It’s a huge tool for us as far as maintaining order with a large 

group of inmates. 

Mr. CHABOT. I see my time has expired, Mr. Chairman. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from Michigan is recognized for 5 

minutes. 

Mr. CONYERS. Thank you, Mr. Chairman. 

The big problem that we’re really grappling with is the determination to eliminate mandatory source. Now, take this issue: We 

eliminate mandatory source, jobs go down—80 percent of the inmates don’t get into this training system anyway—and then crime 

goes up. And what the bill before us, that’s meeting so much opposition, does is try to ameliorate that. 

But the problem, Chairman Hoekstra, is that, if we don’t get the 

appropriations coming in, the provision that I’ve added to the bill, 

this bleak picture may come true. So what I want to do is just have 

each of you just briefly comment on it so that we can get some 

sense of direction from you about this subject. 

Phil. 

33

Mr. GLOVER. Department of Defense, as you know, through the 

last few appropriation years have cut mandatory source out of the 

Department of Defense, their appropriation bills. And so we have 

seen a loss of 3,000 inmate jobs. I don’t know how you correlate 

that. I’m not an expert on numbers and how people crunch numbers. All I can say is that since we have these revisions we have 

lost inmate jobs. 

Now, if I could just briefly say this, we’ve had 13 factories either 

close or reorganize. Many of those in furniture sales—which that 

should be very promising for—— Mr. CONYERS. Phil, are you willing to risk eliminating mandatory 

source? 

Mr. GLOVER. I personally don’t want to lose mandatory source. 

I have seen what the Congress has done the last few years, and 

I’m looking for a solution to help us keep as many inmates employed as possible, and that seems to be the partnering effort that 

oversees employment. 

Mr. CONYERS. Mr. Miller, you’re for trying to eliminate mandatory source with the guarantees that are in the bill, is that right? 

Mr. MILLER. Correct. 

Mr. CONYERS. Okay. Dr. Wilkinson, how do you come out on this? 

Mr. WILKINSON. I am not a proponent of eliminating mandatory 

source. You know, we need to keep it. In Ohio it’s called the State 

Use Law. There have been attempts in our General Assembly to 

challenge it, and we’ve been able to keep it. 

Mr. CONYERS. Chairman Hoekstra, how do we rationalize this? 

This, to me, is the heart of the tension on both sides. Do you think 

that we put together something that can get us through these 

shoals, or when we come back here in a year, if this bill goes into 

effect, we could be in big trouble because some of these predictions 

might come true? 

Mr. HOEKSTRA. Well, actually, I don’t think that in a year you 

would be in big trouble. The first thing we really need to take a 

look at is FPI sales are increasing; I mean, in the last 2 years 

they’ve increased 18 percent, and their profits have gone up 71 percent. I think they should be explaining to us why prison employment is going down. I can’t explain why prison employment is 

going down as their sales are going up 18 percent. That would be 

very good performance for a company in the private sector. And we 

know from what we’re seeing in the State of Michigan, we’re not 

seeing those kinds of results and that kind of performance in the 

private sector, that kind of growth in either sales or jobs. 

The second thing is it is a phaseout of mandatory sourcing. It is 

not day one. It is, you know, through 2011. It is a phaseout of mandatory sourcing. 

And the third thing is, you know, again, with the work that you 

and Congressman Frank have done, is we have put in a whole 

range of other options, some of which are used in the State of Ohio 

which are not-for-profit. There are other work opportunities, there 

are other training opportunities. And again, you know, as I said, 

Barney and I have committed to work on this program together, 

and I think there are—this would probably be a program that all 

of us here would be united on. And if there was a change in the 

mandatory sourcing statuses, we would have a bipartisan effort to 

34

put increased funding in for vocational training. Because the other 

thing that we know, the statistics will show you that the vocational 

training programs are more effective in recidivism, reducing recidivism than inmate work programs. 

So the work that you have done with your colleagues and the 

amendment that we’ve put in is putting money in focus and effort 

on the things that are more effective than work training programs 

through the vocational training. So the combination of—their business is growing, we’ve put in the authorization for these kinds of 

programs that will really be effective tools to reduce recidivism, 

and it is a 5-6 year phaseout. It is not a drop-dead date that says 

tomorrow you need to change the scope of your business. 

Mr. COBLE. The gentleman’s time has expired. Thank you, Mr. 

Conyers. Thank you, Mr. Hoekstra. 

The distinguished gentleman from California. 

Mr. LUNGREN. Thank you very much, Mr. Chairman. 

My years in Congress before, and now, and as Attorney General, 

I have always gotten good report cards from the various business 

groups that are allied in support of this bill and seemingly in support of a major change in the FPI program. And during that time 

I’ve been in public life, I’ve spent most of my time trying to make 

laws tougher, put more people in prison who need to go there. During my tenure as Attorney General, we dropped the crime rate in 

California by about 35 percent, the homicide rate by 50 percent, 

and we put more people in prison, a lot more in prison. 

That’s only one half of the equation. The other half of the equation is how do we control it and what do we do? We have not been 

able to attack the terrible problem of sexual assault and rape in 

our prisons, we are woefully lacking in that, whether it is the Federal or State prisons, and that’s a huge mark against our country 

in my judgment. 

We don’t do a very good job of rehabilitating our prisoners. And 

this is like deja vu all over again. When I was here 20 years ago 

there were attacks on this program. We were told that this program was the death now of various parts of our economy, and unless we got rid of the program those parts of our economy were 

going to go down. 

We talk about the cost. What is the cost of getting somebody out 

who is not going to commit crime? I mean, what’s the cost of keeping somebody in prison when they’re not on the street and they’re 

not committing crime? That’s an economic benefit to society. 

We know that there are certain areas we can’t allow prisoners 

to work in, certain services. You don’t want to call up and have a 

prisoner doing a background check on your credit. I mean, we 

laugh, but that was done, until we found out that was a big mistake. So there are certain areas of the economy that we can’t have 

them doing. 

They can learn to build things in the electronic area, clothing 

and textiles, and furniture. And I would be loath to look at a major 

restructuring unless we can prove that it will not diminish the 

number of people we’ve got working. In fact, I think we need to 

have more of them working. 

So I just, you know, this is the tension we always have. We’ve 

got a lot of people out there, when I ran for office, who were willing 

35

to throw the book at anybody who commits a crime, but they’re not 

willing to put the money into the prison system and they’re not 

willing to put the money into taking care of prisoners and they’re 

not willing to protect prisoners against rape. I don’t believe, if I 

sent someone to prison when I was Attorney General and because 

of the laws I passed here, that person is sentenced to rape or sexual assault, yet we go blindly out of our way to pretend that that 

doesn’t exist. And then we give lip service to the fact that we want 

to help them on the way out to the door, and we don’t do anything 

about it. 

So while I have been very supportive of business interests across 

the board, small business, all these sectors, I am one that has to 

be put down as very skeptical of us making a very major change 

like this. 

Mr. Miller, with all due respect, you’ve got to come and show me 

that this is really hurting the industry. I mean, to come here and 

say, well, I can’t show any loss of jobs anywhere and I can’t show 

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 program is really hurting your industry in a substantial way, I’d like 

to hear it. 

Mr. MILLER. Congressman, we don’t disagree with you that there 

needs to be some work opportunities, and we’re with you on that. 

The problem that we have as an industry, and I think as a coalition, is that when you have a system or a Government corporation 

that in many cases isn’t making furniture—nobody has a problem 

if they want to make furniture, legitimately make office furniture. 

No problem, it’s a skill that they can utilize. The problem we have 

is when you hire an outside manufacturer to produce that product 

where you’re going to ship it directly to the buying agency with little or no inmate labor whatsoever. Even one case of pass-through— or drive-by manufacturing we refer to it as—is one case too many. 

Mr. LUNGREN. Selling to whom? 

Mr. MILLER. To the Government. 

Mr. LUNGREN. So we’re talking about it’s a Government enterprise which is putting people in prison in order to protect society 

not having an advantage to sell to Government, where taxpayers 

would say, ‘‘Hey, you’re supporting one part of our effort here that’s 

costly to us and in part you’re partnering up on the other side.’’ See, that’s what I don’t—I understand that the Federal Government is the largest, I don’t know, one of the largest purchasers of 

goods and services in America, and we’re talking about relatively 

small percentage of what the Federal Government buys going to Industries across the board—— Mr. MILLER. But why shouldn’t every other manufacturer or 

independent reseller have the same opportunity as Krueger International or anybody else who is partnering with FPI to do that? If 

there is no work, inmate labor, going into that product whatsoever, 

how is that helping any inmates to get a job once they’re released 

from prison? 

Mr. LUNGREN. There is no inmate——No inmate labor whatsoever in the making of the product. How is that helping the inmate 

once they’re released back into the community? 

36

Mr. MILLER. That’s a good question. 

Mr. COBLE. The gentleman’s time has expired. We will have a 

second round, and we will start it now. 

Pete, I didn’t get to examine you on my first round, so I will do 

that now. And I don’t mean for this to sound like a rhetorical softball question, which Mr. Scott will probably accuse me of doing, but 

I want to extend what Mr. Conyers was talking about concerning 

mandatory source. 

Do you believe, Mr. Hoekstra, that the elimination of mandatory 

source will result in the elimination of FPI, or do you believe that 

FPI will still be able to compete with private sector business? 

Mr. HOEKSTRA. Well, I think this is the real key here. We’ve been 

accused of saying that we want to get rid of Federal Industries. We 

do not want to get rid of Federal Industries. I think this bill is 

structured in a way that constructively reforms Federal Industries 

and it’s why we’ve been able to put together the coalition that 

we’ve been able to put together. 

Federal Industries will argue day in and day out that they can 

compete with the private sector, that they can provide a quality 

product at a quality price at the delivery schedule that the customer wants, and that they can compete with the private sector. 

We’re saying give them the opportunity. 

We then go through, and we put in place a whole serious of 

checks and balances to make sure that Federal Industries, if they 

have trouble competing with the elimination of mandatory 

sourcing, that there are things that will enable them to keep people 

working, but more importantly, get them ready to make the transition back to private life. You know, we give them the opportunity 

for training programs, we give them the opportunity to do work for 

the not-for-profit sector in new and unique ways—again, new and 

unique to the Federal Government, but not new and unique to 

State prisons. State prisons are doing this and it’s working very 

well where they are partnering with not-for-profit organizations. 

And Mr. Lungren, you talk about, give me the fact where we 

have hurt an industry. Take a look at textiles and clothing. Textiles and clothing are the largest supplier to the Department of Defense from FPI. They are larger than the next three companies 

combined. And if you go into—if you go into Pennsylvania, I’ve 

gone to the factory where they have laid off workers because they 

lost significant contracts to Federal Industries. I’m sure that is exactly the case in Mr. Coble’s district, where you would go to textile 

plants that are either shut down or they have large numbers of unused equipment. 

The reason that the Chairman of the Full Committee is passionate about this is—he calls me the Johnny come lately to this 

issue because in the 1980’s he had a small business that went out 

of business because of losing their business to Federal Industries. 

People come on and join this coalition because they have a genuine interest in rehabilitating prisoners, but also because they’ve 

had job losses in their district. 

Mr. COBLE. Mr. Hoekstra, before my time expires I want to visit 

Mr. Glover again. 

Mr. Glover, in your statement you said you believe that any part 

of this bill must include repatriation services and products into the 

37

entire market. We should give up mandatory source, you say. I 

think what you meant to say was ‘‘if’’ we have to give up mandatory source, did you not? 

Mr. GLOVER. Yes, sir. 

Mr. COBLE. Okay. I wanted to be sure about that. 

And let me revisit with you, Mr. Glover, also something that Mr. 

Hoekstra, I think, mentioned. 

In your testimony you indicated that your staff had been reduced, but yet conversely your earnings increased. Comment on 

that for me. 

Mr. GLOVER. Well, Mr. Chairman, certainly I’m not the head of 

FPI. I’m a senior office specialist in the prison system, so as far as 

how that happened, I don’t know. 

Mr. COBLE. I think we can all benefit from learning how that 

happened. 

Mr. GLOVER. Frankly, probably a written question to the agency 

would probably get you the response. 

I do know this; I know that 35—that chart talks from 2002—my 

understanding is from 2001-4 we lost—we had a 35 percent drop 

in furniture sales. Last year, I think we sold about $150 million in 

furniture, not $250. I mean, I’m not trying to get into anything 

here with the Congressmen. I just want to be—I’m trying to be as 

accurate as possible. 

You know, the assertions keep coming, Mr. Chairman. The Sixth 

Circuit Court of Appeals—this went to the Sixth Circuit Court of 

Appeals, if we were abusing our mandatory sourcing privileges, if 

we were not following the law. And in my statement there is an 

attachment five, and it has an article in there about the Sixth Circuit Court of Appeals decision. And we keep getting assertions, and 

this went to court, so they’ve had their chance to air their differences on the statute, and frankly the court upheld FPI’s position, not the other position. 

Mr. COBLE. I thank you, Mr. Glover. My time has expired. 

The gentleman from Virginia. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Mr. Glover, a suggestion was made that some of the work is 

being done outside the prison and sold. Was that ever done and is 

it going on now? 

Mr. GLOVER. Mr. Scott, the pass-through issue has come up year 

after year. President Bush appointed a brand new board of directors in 2001. He got rid of all the rest, all the other ones, the old 

ones, and he appointed a brand new panel. That panel is chaired 

by Mr. Ken Rocks out of FOP. They have passed resolutions since 

2002, I believe, the first year they were officially on board, that 

there are to be no pass-throughs of any items. 

Mr. SCOTT. So to the extent that it ever happened before, it’s not 

happening now. 

Mr. GLOVER. It certainly hasn’t happened since the new board 

has taken over. And everybody here has had a chance to go to that 

board and air their differences with FPI because they’ve held open 

hearings. 

Mr. SCOTT. Okay. Now, one of the problems we have in this legislation is it’s a two-step process. One, you get rid of mandatory 

source, and two, we hope for some appropriations to replace the 

38

jobs. And this bill would be a little different if the mandatory 

source were eliminated as the replacements came on. I don’t think 

anybody is kind of stuck on mandatory source, but mandatory 

source works. And if you’re going to get rid of it, you’ve got to replace it with something. And one suggestion has been vocational 

education. 

Mr. Glover, on vocational—well, maybe Mr. Wilkinson. On vocational education, as I understand it, that’s just for the last couple 

of years that you’re in prison. How long—if someone is in for a long 

time, how long can you do vocational education? 

Mr. WILKINSON. Most vocational education programs—they’re 

called career tech programs today—are probably no longer than a 

6-month activity because you earn a certification, you go like you’re 

going to a junior college or a tech school. You get a certification in 

a particular area and then you’re done. And what we’d like to do 

is to take these people who have gotten these skills in career tech 

and put them in correctional industries so that they can use the 

skills while they’re still in prison. 

So although we love and want more vocational programs, they 

are not the same as Industries. 

Mr. SCOTT. Thank you. 

And, Mr. Glover, Mr. Miller suggested that the bill does not hurt 

FPI or correctional workers. Do you want to respond to that? 

Mr. GLOVER. Well, I can only say that over the years we’ve invited anybody that has spoken against FPI to tour our facilities 

and look at FPI, look at the program, look at what it does for inmates. I have yet to see anyone from that particular coalition, and, 

certainly, Mr. Miller, I believe, was invited at one time or another 

to come and take a look, or if he wants to come and take a look 

he can certainly do that and look at how the program is run and 

why we run it the way we do. 

I believe wholesale changes to the program are going to do what 

the DoD provision did with the appropriations, which is it’s going 

to drive a market change. The reason mandatory source has been 

effective is because it gives us steady work. We have steady employment for the inmates. We know how many contracts we have, 

we know how much work we have and how to schedule it. If you 

are all the time competing up and down, up and down for contracts, I understand their frustration with the program, however, 

prison is based on steadiness and not a lot of changes. When you 

have a lot of changes in prison, you have problems. It’s how it 

works. Inmates are not good at change. Staff, frankly, aren’t that 

good at change either, but inmates are not good at change. And so 

when you are laying them off, sending them back to housing units 

because you don’t have any contracts, then the next week you have 

a contract that you have to get out in 2 weeks, so you work three 

shifts, then you cancel the three shifts and lay them off again, it 

is a constant problem in the system. 

Mr. SCOTT. Thank you. 

Mr. MILLER. Congressman, if I could just add one thing? I have 

been invited to their facility, and I have done so. So——

Mr. SCOTT. Thank you. 

39

Mr. Wilkinson, in your written testimony you had comments 

about the—specifically about the legislation. Do you want to make 

those comments now? 

Mr. WILKINSON. About this legislation? 

Mr. SCOTT. Yes. 

Mr. WILKINSON. Well, first of all, before I say that let me acknowledge the proposal that Congressman Chabot and the Ranking 

Member are discussing about the Commission to look at exactly 

what the real situation might be. We know that our Industries has 

a positive impact on industry in general; it does not take away 

from what’s going on in the community. There is research that 

shows that when we purchase goods and services, when we partner 

with corporations, that it has a major, major impact on the economy. So what we’re doing is adding to it. And when you add to 

that, bringing back—and I know this is FPI’s goal—businesses that 

are offshore back into the prison that nobody else is going to probably do, then it’s going to aid security, it’s going to reduce that person’s recidivism, it’s going to minimize the victimization in the 

community and just have an overall positive impact. So I think 

we’ve got to be real careful about some of the rhetoric that we are 

now hearing. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from Ohio. 

Mr. CHABOT. I thank the Chairman. 

And we’ve covered an awful lot, so there’s only a couple of things 

that I wanted to focus a little bit of attention on at this point. 

Mr. Miller, you made this point about the pass-throughs, and I 

would agree, if that’s been happening, you know, that shouldn’t 

have happened. And that’s one of the reasons that Mr. Scott and 

my suggestion about studying this, and if there are things that 

need to be changed as opposed to doing something which could gut 

the whole program, I think should have some serious consideration. 

But back to the pass-through issue, Mr. Glover mentioned they 

have a new board back in 2001; they’ve changed that so it’s not 

happening anymore. Do you—is that correct? 

Mr. MILLER. I mean, you look at the numbers—- Mr. CHABOT. Because you had mentioned that that’s your—you 

said you agree this is something we ought to do. You don’t have 

any objection to it but pass-through is bad, and now they said they 

don’t do it. 

Mr. MILLER. Two points though. One is, you look at the annual 

report numbers, and I question as to how that could not be happening. With the numbers and the increases in sales and revenues 

and those type of things and the decreases in the workforce, how 

do you accomplish that? I guess that’s one question. The second 

question is——

Mr. CHABOT. But you have no facts to indicate that that is what 

it is——

Mr. MILLER. That’s correct, because the only thing I have access 

to is the annual report. 

Mr. CHABOT. So you don’t have any evidence that this is continuing to go on then at this point? 

Mr. MILLER. No. But I don’t have any evidence to say otherwise 

either. 

40

Mr. CHABOT. Let me ask another question here. It’s my understanding that the Bureau of Prison inmates are currently engaged 

in a number of other type community service projects; for example, 

like nonprofit, Toys for Tots, that they make this out of scrap wood, 

that they—even some that have the ability to do transcribing into 

braille for the blind, they do mowing of grass on military facilities 

and those types of things, they even cleared trails in some of the 

national forests. Are there any—Mr. Glover, I don’t know if you 

wanted to comment on any of those activities that are carried out. 

Mr. GLOVER. We certainly have those programs, Congressman. A 

very small number of inmates, you’re talking minimum custody to 

low-end custody, which they would have to be required—they 

would have to be able to have a gate pass to go out of the secure 

facility. So it’s a fairly low number that works on the outside community projects and the national parks. We have some that work 

with the VAs, one of the VA hospitals, cleaning up areas and stuff 

like that. 

The Toys for Tots program is handled out of Oregon, I believe, 

in our Sheridan facility, and there is probably maybe 20 to 30 inmates that actually do that work and build Toys for Tots program 

out of scrap pieces of material. That was an offshoot of an idea that 

one of the wardens out there had, and he kind of—it’s not really 

a Prison Industries project, it’s more of a community service project 

that one of the wardens came up with at the time. 

Mr. CHABOT. I know we were always very careful—I mentioned 

that I had been involved in this type of activity previously as a 

local elected official. We were always very careful about those that 

went out to the community, that they were your very low-risk individuals. I assume that’s the same with us at the Federal level. 

Mr. GLOVER. Let’s face it, Congressman, if we let an inmate out 

to work somewhere and something bad happens, we’re going to get 

some serious egg on our faces and that’s not something we want. 

Mr. CHABOT. Thank you. 

And finally, Mr. Wilkinson, let me ask you, relative to the issue 

of recidivism, as I mentioned before, can you give some typical examples as far as jobs that people have gone into after they’ve gotten out and been through your program? Do you have any types 

of examples that you can give us and—— Mr. WILKINSON. Sure. For example, we have computer-aided 

drawing. And this is a very sophisticated operation, business. 

Every one of those persons who do that work have gotten a job, 

every one of them. Our Industries do asbestos abatement. These 

are some highly skilled, highly trained persons, they all get jobs. 

So it depends on the nature and the sophistication and the technology that’s involved with the job, is directly correlated with their 

ability to find work. 

A common job that might be in Prison Industries is making license plates, where there is no real industry for that on the street, 

but we do that. But what we teach in those instances are the work 

ethic that is extremely important, and sometimes the presses that 

they use can be used for other things. 

You know, one of—the conversation came up about why can you 

have—make more money and have fewer inmates? Well, one of the 

reasons is technology. You know, the same equipment that we’re 

41

using now is not the equipment that we used 30 years ago to make 

license plates. So we need fewer prisoners to do it. There are industries, such as the ones that make validation stickers in our prison, 

that are less costly and we need fewer inmates to do it, and we 

make thousands of them. So the industry has changed as well. 

Mr. CHABOT. Thank you. I see that my time has once again expired. Mr. Chairman, thank you for holding this hearing. I think 

it has been very helpful. 

Mr. COBLE. Thank you, Mr. Chabot. 

The distinguished gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. I want to go on the Chabot-Scott search for truth 

in this matter. And I only wish we could hear from Jocelyn McCurdy at ACLU and Charlie Sullivan for CURE and some of the other 

people who spend huge amounts of time here. 

The question—two questions. What more can we add to this bill 

to make everybody sleep more comfortably in their beds at night 

about the reduction of employment opportunity that might come if 

we eliminate mandatory source? And the issue that hangs over this 

whole Committee is whether mandatory source is, in fact, unfair 

competition. And I’d like to, once again, go down very quickly. Forgive me if I interrupt you if you spend too much time at the mic. 

Phil. 

Mr. GLOVER. Well, first I’d like to say that we’re not a business. 

Industries keeps being referred to as a business. We’re a prison 

program developed in the 1930’s to put inmates to work, and at 

that time because wardens were using inmates out in the public as 

frankly, slave labor. I mean, let’s face it, that’s what was going on. 

They were shelling off labor from the prisons out into communities, 

and so this program was built. 

I guess what I would have to say is this, that there should be— if this is the bill I have to operate under—which I’m more opposed 

to mandatory—to losing it than getting rid of it. I would say that, 

let us start to expand in the repatriation for a couple of years because I think that Congressman Hoekstra is right, the Chairman 

is right, you’re not going to see an effect in this for a year. A year 

is not going to give an effect. Give us repatriation for a couple of 

years. Stay our mandatory source, status quo it so that we see if 

we can start bringing work back and start to develop factory work 

that way. 

Mr. CONYERS. That’s a good idea. 

Mr. GLOVER. And then——

Mr. CONYERS. Okay. Let me skip to Dr. Wilkinson for a minute 

here. 

Mr. WILKINSON. I’m not sure, Congressman, that there is a substitute for mandatory source, and I have been pretty vehement 

about that in my jurisdiction. What we don’t want in prison is to 

have an industry that is doing well and then all of a sudden that 

industry and that shop carrying out that industry goes idle for 6 

months because they don’t have any work because they may have 

been outbid by a sister State agency or a sister Federal agency. So 

I am not a proponent of saying that there is an alternative to mandatory source or in our case State use. 

Mr. CONYERS. Is there anything we can add to the bill that 

would beef it up if it comes to that, Doctor? 

42

Mr. WILKINSON. Congressman, I think—yes. And one of the 

things that I would like to see is more voluntary participation by 

businesses that are unaffiliated with prisons. Now we have made 

a big effort to work with Continental Office Supplies, for example, 

and we are working in partnership with them. We’ve worked in 

partnership with Thomas Ruff. So I think that to develop these 

collaboratives, these relationships, these partnerships with organizations that would be willing to help teach the industry, to develop 

partnerships with the trade industries I think can be a big help. 

Mr. CONYERS. Thank you. 

Chairman Hoekstra. 

Mr. HOEKSTRA. Thank you. Knowing the folks at Continental Office Supply, I can tell you they’ve been big supporters of reforming 

Federal Industries. 

But, you know, we can do the study, all right, but we ought to 

do it in the context of making it part of this bill. We have two and 

a half pages of studies that have been completed since the 1980’s 

on Federal Industries, and we can do it. 

We have been taking a look at what we can do with repatriation, 

and maybe we need to revisit that. But I think we need to move 

forward. You have to take a look at the impact that this has on 

the other part of society as well. You know, you and I are from a 

State that is getting hammered right now, both from the east side 

and on the west side. You know, mandatory source was great for 

Federal Industries during the 1990’s and 2001 and 2002, but you 

know what? I think it was wrong that Federal Industries was the 

fastest and probably the only growing office furniture company in 

America during that time. As the industry was going through significant lay-offs, Federal Industries was growing by double digits 

each and every year. 

Mr. CONYERS. Thanks, Pete. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from California, Mr. Lungren. 

Mr. LUNGREN. Mr. Glover, do you have any statistics on what the 

prison population has increased by during this period of time we’ve 

just been talking about? I’m not talking about your program, but 

the prison population. 

Mr. GLOVER. No, no. I represent—just to be clear, I represent all 

of the prison workers in the Federal system, not just Industries. I 

am here speaking about it—— Mr. LUNGREN. What I’m trying to say is, if we’re concerned that 

the program has increased——

Mr. GLOVER. It’s because of the inmate population. 

Mr. LUNGREN. Has the inmate population increased? 

Mr. GLOVER. Over the last 20 years the inmate population is up 

650,000 percent—I mean, 650 percent. We have only increased 

staffing 250 percent. That was in the Federal Times approximately 

6 months ago. 

Mr. LUNGREN. You’re talking about the Federal system. 

Mrs. GLOVER. The Federal prison system has increased inmates 

650 percent since 1980. 

Mr. LUNGREN. Well, since we’ve got the Comprehensive Crime 

Control I passed in 1984, that might be one of the reasons for it. 

And I’m proud of that, and I happen to think it’s something that 

43

has helped bring the crime rate down, but it also means we ought 

to expand programs of opportunity for prisoners, it seems to me. 

Chairman Hoekstra, the pass-through, I think we can all agree 

that ought to be eliminated. Do you have evidence that it hasn’t 

been eliminated; and what do we need to do if it hasn’t been? 

Mr. HOEKSTRA. We have worked very, very hard with the board, 

that when we tried to identify cases where pass-through may have 

occurred or products where it may have occurred, brought them to 

the attention. And I can’t tell you whether they’re going on right 

now or not. I know that Ken Rocks has been committed to eliminating pass-through. He recognizes that that is wrong, that Federal 

Industries should not just have a catalogue, sell their stuff and—— Mr. LUNGREN. We can all agree on that. 

Mr. HOEKSTRA. And I think the board has been trying to implement that. 

Mr. LUNGREN. Was there a serious problem at one time? 

Mr. HOEKSTRA. At one time it was a concern, yes. I can’t tell you 

the dollars that would have been involved. 

Mr. LUNGREN. So as I take it, pass-through is not your big problem with the program, it’s the mandatory source. 

Mr. HOEKSTRA. It’s not the pass-through, it’s the mandatory 

source. And we are not in favor of eliminating and reducing—I 

mean, I hope that the way this bill goes through, and again, because the folks that are involved with this are expecting that the 

opportunities will—and the effective opportunities for prison workers will increase with a revised Federal Industries, not decrease. 

Federal Industries says they can’t compete, we open up not-forprofit, new opportunities there, we open up the vocational and remedial education. That becomes the expanded and effective new 

model for Federal Industries. 

Mr. LUNGREN. Okay. Let me ask you a question, though. Do you 

disagree with Dr. Wilkinson that vocational education is substantively different than Industries in that it’s a short term in 

order to be certified and it wouldn’t allow long-term participation 

by those who are in prison? 

Mr. HOEKSTRA. Yes. We would not see somebody involved in vocational education for 5 years, that is correct. 

Mr. LUNGREN. So it’s not a one-for-one substitute? 

Mr. HOEKSTRA. It is not a one-for-one substitute, that is correct. 

Mr. LUNGREN. If, in fact, it proves out that Industries can’t compete without mandatory source, would it be your position that we 

ought to eliminate the program because of its deleterious effects on 

sectors in the economy, including furniture manufacturing? 

Mr. HOEKSTRA. You know, if the State—if they came back and 

said that they could not compete, or the facts bore out that they 

could not compete, we would have to take a look at exactly how we 

would restructure work opportunities for prisoners. I mean, FPI 

right now says that they can’t compete. They say that they do compete, and they compete effectively each and every day. And, you 

know, the head of the Bureau of Prisons has indicated that they 

favor less reliance in moving away from mandatory sourcing, but 

they say they can’t compete. 

Mr. LUNGREN. Mr. Glover, number one, do you think your program can compete without mandatory source? And secondly, I want 

44

to ask this, one of the conundrums we have in dealing with prisons 

is the reality of prison gangs. And as I studied prison gangs and 

youth gangs, their attraction is twofold. One is protection racket. 

You don’t join them, you’re going to get harmed. The second is a 

lot of these people come from backgrounds where they never had 

authority figures, they never had anyone that gave them anything, 

there was nothing in their life which gave them an identification 

outside of themselves, and gangs do that unfortunately. 

What is the mechanism that you see—if there is any mechanism—of a Prison Industry to create something outside the gang 

environment? I’m not saying it is the solution, but does it give an 

alternative lifestyle, if you will, alternative hopes and aspirations 

in time? 

Mr. GLOVER. I believe that the Industries program, as it’s currently built in our system, what it does is it individualizes the inmate. He goes through a screening process, he actually goes 

through a job interview to get into Industries. The gang parameters don’t really fit in there. In order to get hired in the FPI, they 

certainly look at who the inmates are running with in the system. 

You don’t see, like, 10 people in one gang applying for an FPI job, 

it doesn’t seem to work that way. There may be statistics that say 

different, but I haven’t seen it work that way. 

What we see is that this program is a long-term program. If you 

have someone that’s serving at USP Leavenworth, for instance, and 

they’re in for 45 years or 50 years, you know, you can educate 

them, you can vo-tech them, but to keep them productive and occupied on a daily basis and feel like they have a little bit of worth, 

this program seems to do that. 

That’s where, at least as a correctional officer, that’s where I 

come from on this program, is that it gives the inmate a sense of 

worth every day he goes down and does something productive. 

A couple years ago there was a proposal to put together an engine, let it come through a factory line, come back around, break 

it apart and make it again. You would only get inmates to do that 

for so long. They’re not going to go that direction. 

As far as alternatives, like I said, if we could see this held off 

and repatriation looked at as an alternative, but it would have to 

open up—I mean, the Federal market is shrinking anyway for us. 

Now, I realize these statistics. You know, yeah, we’ve made more 

money, and we’ve said when you have to make more Kevlar helmets—you know, we have one factory that does that, we don’t have 

10. And we don’t move factories around that often, moving inmate 

production lines around, we don’t do that. We don’t move inmates 

around to work in different factories so that we can have different 

product lines. I mean, you have what you have in whatever prison 

you’re in, because if he’s a USP inmate, a high security inmate, you 

don’t move him to a low because he used to make one thing and 

we’re making it over here now. We don’t move that inmate. So you 

have to retrain the entire workforce at the low level facility, or vice 

versa. It’s just not that simple. 

Mr. COBLE. My airport is calling. I don’t want to cut you off. 

I want to, first of all, thank the four Members for having—yes, 

Mr. Scott. 

45

Mr. SCOTT. Can I make a short statement? Because we were 

talking about the mandatory source, and the problem that we’ve 

got is that the bill will eliminate mandatory source and replace it 

with a hope and a promise that we will get appropriations to replace it, and that’s not a realistic hope, as the gentleman from California has indicated. Sometimes we just don’t appropriate money 

for some of these prisoner programs. And nobody is, like I said, 

married to mandatory source, but, if you’re going to get rid of it, 

jobs are going to go down, crime is going to go up. That’s not a good 

result. 

And so what we need to do, Mr. Chairman, is make sure that before we do anything that we protect the number of jobs that we 

have, and with the increased prison population even have more 

jobs because this program has been proven to be not only good for 

prisoners, but good for the taxpayer in reducing recidivism and 

good for the law-abiding public because you have fewer people out 

there committing additional crimes. We’ve done a lot in this Committee trying to reduce crime, and this is one that actually works. 

Mandatory source works. Now you replace it with something else, 

it might work, it might not, but we ought to have some confidence 

that what we do will in fact work before we get rid of something 

that works. 

Mr. COBLE. Well, I think it’s been a productive hearing. I want 

to thank the four Members who delayed their departure on the 

first day of the district work period. I want to thank the four distinguished witnesses, and for that matter those in the audience 

who stayed with us the entire hearing. 

In order to ensure a full record of adequate consideration of this 

important issue—and it is, indeed, an important issue—the record 

will remain open for additional submissions for a 7-day period. Any 

written question that a Member wants to submit should be submitted within that 7-day framework. 

This concludes the legislative hearing on H.R. 2965, the ‘‘Federal 

Industries Competition and Contracting Act of 2005.’’ Thank you 

for your cooperation. Without objection, the Subcommittee standing 

adjourned. 

[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.] 

(47)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

STATEMENT SUBMITTED BY THE U.S. CHAMBER OF COMMMERCE TO THE HOUSE

JUDICIARY COMMITTEE

The U.S. Chamber of Commerce appreciates the opportunity to submit this statement for the record on Federal Prison Industry Contracting Reform and to demonstrate our support for H.R. 2965. The U.S. Chamber is the world’s largest federation of business organizations, representing more than three million businesses and 

professional organizations of every size, sector, and region of the country. Over ninety-six percent of our members are small businesses with fewer than 100 employees. 

We commend the Subcommittee for their interest in holding this legislative hearing 

on H.R. 2965, 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 Hoekstra, Frank, Maloney, Sensenbrenner, 

Conyers and Coble, and so many others, for their leadership and dedication to reforming the unfair competitive practices of FPI. 

FPI in the Free Market 

Our free market system is essential to achieving and maintaining a vibrant and 

productive economy and is a necessary foundation of political and social freedom. 

The United States government is responsible for enforcing laws that promote competition in the marketplace and ensure a level playing field among competitors to 

benefit American consumers. Monopolies do not belong in a free market economy. 

When you remove competition from the equation you are left with higher prices, 

lower quality of service, and lower productivity as a result of lower efficiency. Nonmarket practices also stifle innovation and reduce the availability of goods and services. 

This is exactly the situation with respect to FPI sales in the federal market. The 

federal government-the consumer in this case-is paying above market prices for 

lower quality goods and in doing so, is squandering American taxpayer dollars while 

completely ignoring the very rules it enforces in the commercial market. The federal 

procurement process should be aimed to deliver on a timely basis the best value 

product or service to federal agencies while promoting competition and reliance on 

the private sector for commercial items. Reform of FPI is aligned with the goals of 

ensuring fair and full competition to ensure the best value for the American taxpayer while removing barriers that prevent businesses, particularly small businesses, from obtaining government contracts. 

The Need for Reform 

In 1934, President Roosevelt established FPI as a government-owned corporation. 

FPI was given special ‘‘mandatory source’’ status in the government procurement 

process, forcing government agencies in need of a product to purchase that product 

from FPI. No consideration can be given to a private sector competitor unless that 

agency asks FPI for an exception from its own monopoly. It is ironic that there are 

laws prohibiting the U.S. from importing goods that are made by prisoners in other 

countries, yet we have laws that require our own federal government to buy goods 

and services from prisoners in this country. 

Each year, FPI expands to produce even more goods and services. FPI’s sales 

growth, all through non-competitive contracts, has been formidable: $802.7 million 

in 2004, up from $666.8 million in 2003, $546 million in 2000, $339 million in FY 

1990, up from $117 million in 1980, and $29 million in 1960. Today, FPI produces 

over 300 products and services making it the 49th largest Government contractor. 

48

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 in order to be a profitable enterprise, forcing 

businesses to halt production lines, lay off 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 the Chamber. The 

Chamber has a long-standing policy that the government should not perform the 

production of goods and services for itself or others if acceptable privately owned 

and operated services are or can be made available for such purposes. The private 

sector should be allowed to compete fairly with FPI for federal contracts-plain and 

simple-by eliminating the requirement that government 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 FPI’s products 

and services and delivery schedule met 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 of U.S. taxpayers. Contrary to FPI’s assertions, the General Accounting Office (GAO) reported in 1998 that FPI cannot 

back up its frequent claims about being a quality supplier to Federal agencies, furnishing quality products at low prices to meet their needs. Once FPI commandeers 

a product, it erodes, displaces, or eliminates private sector competition, thus opening 

the door for it to raise its prices. 

Recent aggressive expansion by FPI into the services arena has caused great concern in the business community. Even though FPI’s authorizing statute does not 

specifically mention services, FPI 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. 

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. 

FPI’s desire to expand into the commercial marketplace is an alarming development that is seen as a call to arms by industry. The Chamber opposes FPI’s move 

into the commercial marketplace for four reasons. First, the decision to expand into 

the commercial marketplace is in conflict with the clear language of FPI’s enabling 

legislation and beyond the discretion of the Board. Second, it is a reversal of more 

than sixty years of public policy. Third, FPI has claimed this authority 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 the United 

States, but not for sale to 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. Sixty-five 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. 

While we are empathetic 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. 

49

However, we believe other sources of work opportunities for inmates should be explored that do not infringe upon the private sector’s opportunities to compete for 

government contracts, threaten the general safety of our citizens, and provide for 

expansion in the commercial market. 

Legislative Solutions 

Legislative reform addressing these concerns is way overdue and more oversight 

by the FPI Board and Congress is needed now. Language enacted in the FY02 and 

FY03 Defense Authorization bills, the FY04 Consolidated Appropriations Act, and 

the FY05 Omnibus Appropriations Act provided partial interim relief from FPI’s mo- nopoly 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. In the 108th Congress, the House overwhelmingly passed the 

Hoekstra-Frank-Collins-Maloney-Sensenbrenner-Conyers-Coble Federal Prison Industries Competition in Contracting Act of 2003, H.R. 1829, a comprehensive reform 

bill that eliminates FPI’s preferential status, by a 350–65 margin. A companion Senate bill, S. 346, was reported from the Senate Committee on Governmental Affairs 

in 2004. 

For many years, the Chamber has been a leader in the broad-based Competition 

in Contracting Act Coalition, comprised of the business, labor and federal manager 

communities that advocate comprehensive, fundamental reform of FPI. The Chamber and the Coalition strongly support H.R. 2965. This bipartisan legislation would 

impose overdue and much-needed restraints on the unfair competitive practices of 

FPI that inflict damage on law-abiding businesses and the workers they employ, 

while blatantly wasting taxpayer dollars. 

H.R. 2965 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 use competitive procedures for the 

purchase of products. H.R. 2965 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 FPI. Agency contract officers, 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. 2965 provides new authorities 

for 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 $.23-$1.15 per hour and 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 state and local 

sales taxes on purchases. FPI does not have to pay for utilities or equipment and 

has a special statutory line-of-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. 2965 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, addresses, and value of their 

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 yet 

adequately stated, sensitive information of this nature should not be in the hands 

of convicted criminals. 

H.R. 2965 also protects Federal prime contractors and subcontractors at any tier 

from being forced to use products or services furnished by FPI. FPI would no longer 

be able to force 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 of the prison guards and the inmates themselves, H.R. 2965 

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 reVerDate 0ct 09 2002 12:29 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00053 Fmt 6601 Sfmt 6621 G:\WORK\CRIME\070105\22258.000 HJUD2 PsN: 22258
50

duce 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. 2965 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. 

Conclusion 

The U.S. Chamber and the business community appreciate the Subcommittee’s 

examination of FPI’s impact on the private sector and urge quick consideration of 

H.R. 2965 by the full committee. Businesses rely on an efficient, fair competitive 

process to provide the federal government with goods and services to maintain and 

grow their businesses. 

Thank you for the opportunity to submit this statement for the record.

51

STATEMENT OF ROGER F. COCIVERA, PRESIDENT AND CEO, TEXTILE RENTAL

SERVICES ASSOCIATION OF AMERICA


TRSA1.eps
52


TRSA2.eps
53


TRSA3.eps
54


TRSA4.eps
55


TRSA5.eps
56

LETTER FROM DAN DANNER, EXECUTIVE VICE PRESIDENT, NATIONAL FEDERATION OF

INDEPENDENT BUSINESS (NFIB) 

Dear Chairman Sensenbrenner, 

On behalf of the 600,000 members of the National Federation of Independent 

Business (NFIB), I write to express our strong support for H.R. 2965, the HoekstraFrank-Maloney-Sensenbrenner-Conyers-Coble ‘‘Federal Prison Industries Competition in Contracting Act of 2005’’ and urge swift passage through your committee. 

Eighty-nine percent of NFIB members believe that prison inmates should not receive preference for federal contracts. NFIB’s members have long fought against unfair government competition with the private sector. Federal Prison Industries (FPI) 

has become one of the most egregious examples of unfair government competition. 

FPI, also known by its trade name UNICOR, is a government-owned corporation operated by the Federal Bureau of Prisons. 

H.R. 2965 would provide for fundamental change of FPI by making it less predatory to small business and a more responsible supplier to federal agencies and taxpayers. The bill would require FPI to compete with the private sector for federal 

government contracts and require FPI to perform its contract obligations in a timely 

manner, the same as all other government contractors. Also, the bill would require 

FPI products to meet the same design and performance specifications as well as 

similar workplace health and safety standards that are applied to private sector 

suppliers. 

A ‘‘soft landing’’ provision in the bill would allow FPI to adapt to the competitive 

marketplace, and many of the concerns expressed by groups representing prison 

guards and prison life advocates have been addressed. With these protections and 

other much-needed reforms, H.R. 2965 enjoys a broad base of support from Members 

on both sides of the aisle. A similar bill, H.R. 1829, passed the House in the 108th 

Congress by a roll call vote of 350-65. 

I want to commend you for your leadership on this issue. I trust that your colleagues will follow your lead by voting in favor of this common sense reform of FPI 

and by voting against any extraneous or weakening amendments. NFIB looks forward to working with you to pass this much-needed legislation. 

Sincerely, 

Dan Danner 

Executive Vice President 

Public Policy and Political

57

STATEMENT SUBMITTED BY THE NATIONAL FEDERATION OF INDEPENDENT BUSINESS

(NFIB) 

The National Federation of Independent Business (NFIB) is the nation’s largest 

small business advocacy organization, representing more than 600,000 small-business owners in all 50 states and the District of Columbia. We are pleased to present 

our perspective on how current practices of the Federal Prison Industries (FPI) adversely impact small businesses and to express our support for the Hoekstra-FrankMaloney-Sensenbrenner-Conyers-Coble Federal Prison Industries Competition in 

Contracting Act of 2005, H.R. 2965. 

We applaud the work of Chairman Sensenbrenner and Mr. Hoekstra on this very 

important issue for small business. We also applaud the passage of the FY05 omnibus spending bill, which allowed small business to compete for federal contracts by 

ending FPI’s mandatory source status. However many small businesses across the 

nation still cannot compete fairly against the Federal Prison Industries for federal 

contracts. H.R. 2965 is a comprehensive reform bill that will fundamentally change 

the unfair contracting practices of FPI and protect small-business contractors and 

taxpayers alike. 

FPI has numerous advantages over small business in competing for government 

contracts. Inmate workers are paid hourly rates of $1.23 per hour or less, rather 

than market-driven wages. FPI’s facilities are built as part of a prison and has access to production equipment from other government agencies, at no cost. Congress 

even gave it direct access to the Treasury with authority to borrow up to $20 million, at rates far below what would be available to the largest commercial enterprise. 

These advantages are illustrated by the amount of business FPI conducts with the 

government. FPI operates a centrally managed chain of over 102 prison factories 

and ranks 49th among the top 100 contractors with the federal government. Over 

300 products and services are produced by federal prisoners, totaling over $800 million in sales to the federal government in 2004. FPI’s sales growth through mandatory source status is staggering: $546 million in 2000, $339 million in FY 1990, $117 

million in 1980, and $29 million in 1960. 

Since the 1980s, NFIB has worked actively to allow small businesses to compete 

fairly with FPI - we’re not asking for special treatment, we’re just asking to be allowed to compete for government contracts. NFIB members feel very strongly about 

this—eighty-nine percent do not believe that prisons should receive preference for 

federal contracts. 

One member from Ohio, Bobbie Gentile, has had several problems trying to deal 

with FPI. Bobbie is president and owner of Q-Mark, Inc., a small woman-owned 

business in Dayton, Ohio. Q-Mark is a manufacturers’ representative firm that represents fifteen manufacturing firms. Of these fifteen firms, twelve are small businesses, and four of the twelve are electronic connector manufacturers. 

In testimony before the House Small Business Committee on June 6, 2001, she 

stated: 

‘‘The situation with FPI is becoming worse as time progresses. FPI has the 

right to demand that the government set aside any connector series FPI 

chooses. They now successfully dominate the circular connector market. I 

brought with me today examples of quotes that I sent to the government. 

In all cases, my price was lower than the price offered by FPI. FPI received 

the awards. Once again the government had no option but to award to 

them. I find their pricing an example of price gouging when their labor rate 

is so low.’’

NFIB supports H.R. 2965, Federal Prison Industries Competition in Contracting 

Act of 2005 because it seeks to reform FPI to make it more accountable to the public 

and less predatory to small business. While the FY05 omnibus-spending bill did end 

FPI’s mandatory source status, this bill is needed for further reform of the FPI. 

H.R. 2965 requires FPI to compete for government contracts with the private sector to provide services and products, eliminating mandatory contracting with the 

federal government. It enhances public participation in the process by which the 

FPI Board of Directors (Board) considers a proposed expansion of products and extends this process to services. It also clearly defines the standards under which the 

Board can authorize these expansions. 

H.R. 2965 also protects prison employees and better prepares inmates for life 

after incarceration. Under the bill, FPI is provided with a five-year phase-out schedule of the mandatory sourcing with the federal government. This ’soft landing’ gives 

FPI a transition period to adjust to private sector competition. The bill also improves vocational and educational programs to teach inmates skills that are needed 

58

for outside employment as well as provide for employment assistance programs to 

help inmates find jobs upon release. 

Thank you for holding this hearing and for allowing NFIB to submit testimony 

for the record. NFIB looks forward to working with you to pass H.R. 2965 to further 

efforts that lessen the harmful impact of FPI on small business and economic 

growth.

59

LETTER FROM CHRIS JAHN, PRESIDENT, CONTRACT SERVICES ASSOCIATION (CSA) TO

THE HONORABLE HOWARD COBLE

July 1, 2005

The Honorable Howard Coble 

Chairman 

Subcommittee on Judiciary; Crime, Terrorism and Homeland Security 

207 Cannon House Office Building 

Washington, D.C. 20510

Dear Mr. Chairman: 

On behalf of the Contract Services Association (CSA), I urge you to support the 

Federal Prison Industries reform bill sponsored by Representatives Peter Hoekstra 

(R-MI) and Barney Frank (D-MA), which would establish long overdue and much 

needed restraints to reign in the unfair competitive advantage enjoyed by the Federal Prison Industries (FPI). This bill not only has strong bi-partisan support in the 

Congress, it has generated broad support from the business community and labor 

unions. 

CSA is the nation’s oldest and largest association of service contractors representing over 200 companies that provide a wide array of services to Federal, state, 

and local governments. CSA members perform over $40 billion in Government contracts and employ nearly 500,000 workers, with two-thirds of CSA companies using 

private sector union labor. CSA members represent the diversity of the government 

services industry and include small businesses, 8(a)-certified companies, small disadvantaged businesses, women-owned, HubZone, Native American owned firms and 

global multi-billion dollar corporations. Unfair competition from FPI increasingly is 

important to CSA members because FPI sees services as ripe for aggressive expansion, both within the Government contracting and the commercial markets. 

As a mandatory source of supply, the FPI has a virtual lock on the Federal market in several broad classes of products, and its growth comes at the expense of employers in every corner of the country and their hardworking, law-abiding employees. Furthermore, the FPI need not comply with the laws and regulations imposed 

on the private sector such as those governing minimum wage rates, retirement and 

other fringe benefits, insurance costs and compliance with OSHA regulations. Increasingly, employers and workers are losing their livelihood as FPI looks for new 

areas in which to expand. 

The Hoekstra-Frank bill offers a rational approach, allowing the private sector to 

compete fairly with FPI for all Federal contracts by eliminating the mandatory 

source requirement that FPI currently enjoys. It also will provide additional opportunities for vocational and remedial education opportunities to better prepare inmates for a successful return to society. 

In conclusion, I again urge you to support H.R. 2965. CSA believes that both industry and the Government benefit from fair competition based on the price and 

quality of the product in question. Thank you for your consideration. 

Sincerely, 

Chris Jahn 

President 

60

LETTER FROM CHRIS JAHN, PRESIDENT, CONTRACT SERVICES ASSOCIATION (CSA) TO

THE HONORABLE BOBBY SCOTT

July 1, 2005

The Honorable Bobby Scott 

Ranking Member 

Subcommittee on Judiciary; Crime, Terrorism and Homeland Security 

207 Cannon House Office Building 

Washington, D.C. 20510

Dear Representative Scott: 

On behalf of the Contract Services Association (CSA), I urge you to support the 

Federal Prison Industries reform bill sponsored by Representatives Peter Hoekstra 

(R-MI) and Barney Frank (D-MA), which would establish long overdue and much 

needed restraints to reign in the unfair competitive advantage enjoyed by the Federal Prison Industries (FPI). This bill not only has strong bi-partisan support in the 

Congress, it has generated broad support from the business community and labor 

unions. 

CSA is the nation’s oldest and largest association of service contractors representing over 200 companies that provide a wide array of services to Federal, state, 

and local governments. CSA members perform over $40 billion in Government contracts and employ nearly 500,000 workers, with two-thirds of CSA companies using 

private sector union labor. CSA members represent the diversity of the government 

services industry and include small businesses, 8(a)-certified companies, small disadvantaged businesses, women-owned, HubZone, Native American owned firms and 

global multi-billion dollar corporations. Unfair competition from FPI increasingly is 

important to CSA members because FPI sees services as ripe for aggressive expansion, both within the Government contracting and the commercial markets. 

As a mandatory source of supply, the FPI has a virtual lock on the Federal market in several broad classes of products, and its growth comes at the expense of employers in every corner of the country and their hardworking, law-abiding employees. Furthermore, the FPI need not comply with the laws and regulations imposed 

on the private sector such as those governing minimum wage rates, retirement and 

other fringe benefits, insurance costs and compliance with OSHA regulations. Increasingly, employers and workers are losing their livelihood as FPI looks for new 

areas in which to expand. 

The Hoekstra-Frank bill offers a rational approach, allowing the private sector to 

compete fairly with FPI for all Federal contracts by eliminating the mandatory 

source requirement that FPI currently enjoys. It also will provide additional opportunities for vocational and remedial education opportunities to better prepare inmates for a successful return to society. 

In conclusion, I again urge you to support H.R. 2965. CSA believes that both industry and the Government benefit from fair competition based on the price and 

quality of the product in question. Thank you for your consideration. 

Sincerely, 

Chris Jahn 

President

61

STATEMENT SUBMITTED BY THE CONTRACT SERVICES ASSOCIATION (CSA) 

Mr. Chairman and Members of the Committee, the Contract Services Association 

(CSA) requests that this statement be included in the official record for your July 

1, 2005, hearing on the ‘‘Federal Prison Industries Competition in Contracting Act 

of 2005’’ (H.R. 2965). 

CSA is the nation’s oldest and largest association of service contractors representing over 200 companies that provide a wide array of services to Federal, state, 

and local governments. CSA members perform over $40 billion in Government contracts and employ nearly 500,000 workers, with two-thirds of CSA companies using 

private sector union labor. CSA members represent the diversity of the government 

services industry and include small businesses, 8(a)-certified companies, small disadvantaged businesses, women-owned, HubZone, Native American owned firms and 

global multi-billion dollar corporations. 

CSA would like to register its longstanding concerns over the operations of the 

Federal Prison Industries (FPI) and its impact on the services industry, in both the 

Federal government and commercial markets. As a result, we have worked closely 

with private sector labor unions, the U.S. Chamber of Commerce and other associations and individual companies to develop an equitable resolution to the problems 

that FPI poses for our Nation’s small businesses. While the goals of FPI are laudable - to employ prisoners - the manner in which it has aggressively pushed itself 

into the Federal marketplace - and many legitimate businesses out of that same 

market - is not. Such tactics harm law abiding citizens, while not necessarily improving employment prospects for prisoners attempting to re-enter society.

Background

The history of FPI is well known—created in 1934 to employ Federal prisoners 

to manufacture products exclusively for all Federal agencies. But over the years, as 

a mandatory source of supply, FPI has had a virtual lock on several aspects of the 

Federal market - putting the rights of felon’s above the need for the Government 

to get the best value for its procurement needs, and above the rights of law abiding 

businesses, and their employees, to bid on Government procurements. 

How does this mandatory source status work? Current law and regulation obligates a Federal agency to look first to FPI to fulfill its requirements for a product 

- and to negotiate a contract with FPI on a sole source basis. The final determination of the price to be paid for its products is left to FPI - not to the Federal manager. The only way around buying from the prisons is for an agency to request a 

waiver from FPI itself, which controls both the waiver and appeals process. This ties 

the hands of Federal managers on FPI designated items. The mandatory source is 

also contrary to the bi-partisan efforts of the past decade to encourage greater commercial practices in how the Federal government conducts its business. These reform initiatives (e.g., the 1994 Federal Acquisition Streamlining Act, the 1996 

Clinger-Cohen Act and the FAR Part 15 rewrite) require Federal agencies to conduct market research, have informal discussions with industry and take similar 

steps to assist agencies in identifying their needs. Acquisition reform, with its emphasis on best value, also has led to more performance based contracting, the 

issuance of more refined statements of work, a reduction in procurement lead times, 

and an improvement in quality control. 

Of course, FPI claims it can provide products of equal or better quality than the 

private sector, make deliveries as promptly as the private sector, and sell some 

products at a lower price than the private sector thereby saving taxpayer dollars. 

But these statements are not accurate. That is why FPI fights so hard to keep its 

‘‘super preference’’ that allows it to force out the private sector and prevent companies from competing for contracts. 

Indeed, contrary to FPI’s assertions, General Accountability Office (GAO) reports 

stated that Federal Prison Industries cannot back-up its frequent claims about 

being a quality supplier to Federal agencies, furnishing products that meet their 

needs in terms of quality, price, and timeliness of delivery. Once FPI commandeers 

a product, it erodes, displaces, or eliminates private sector competition, thus opening 

the door for it to raise its future prices. 

Further, FPI has several additional unfair advantages over the private sector. It 

need not comply with the laws and regulations imposed on the private sector such 

as those governing minimum wage rates, retirement and other fringe benefits, insurance costs, and compliance with OSHA requirements. And, according to the General Accountability Office, the cost of prison labor ranges from $0.25 to $1.23 per 

hour.

62

Unfair Expansion into Services Contracting

So far, these comments have focused on FPI’s mandatory source in the manufacturing arena. So why should Contract Services Association (CSA) and its members 

care about FPI’s impact in the manufacturing world? CSA has entered the debate 

because FPI sees services as ripe for aggressive expansion. While the authorizing 

statute is silent with respect to services, FPI already is involved in numerous service-related activities including laundry services, mailing and distribution services, 

data services, and telephone support services. 

While the mandatory source requirement does not strictly apply to services, FPI 

has implied that it is a ‘‘preferential source’’ for services and used this to enter into 

sole source contracts with Federal agencies for services. Unfortunately, the approval 

process and the requirement for an adverse market impact study that affords some 

coverage for private sector manufacturers are not applied to services. Furthermore, 

FPI does NOT have to pay any competitive wages to prisoners. As noted earlier, this 

ensures they have an advantage over service companies that must comply with the 

Service Contract Act and other labor laws and regulations.

Recent Legislative Actions

Congress has recognized these concerns, and has taken action. Section 811 of the 

Fiscal Year 2002 Defense Authorization Act requires the Department of Defense 

(DOD) to conduct market research before purchasing products which are listed in 

the catalog for the Federal Prison Industries (FPI), to determine whether the FPI 

product is comparable in price, quality and time of delivery to products available 

in the private sector. If the FPI product is not comparable, DOD must use competitive procedures to acquire the product - and NO waiver (from FPI) is required 

should DOD determine FPI is not comparable. The determination of comparability 

is ‘‘a unilateral decision made solely at the discretion of the department or agency’’

(e.g., the Department, Service or defense agency). Furthermore, the comparability 

determination is based on whether FPI can provide the product on the basis of 

price, quality AND time of delivery. Additional clarifying language (section 810) was 

included in the conference report for the Fiscal Year 2003 Defense Authorization 

Act. An interim rule to implement this provision was published in the Defense Federal Acquisition Regulation Supplement (DFARS) on April 26, 2002. 

For DOD, Section 811 ensures that contracting offices have the freedom to explore 

the market for products to see if FPI’s pricing is reasonable, and compares in terms 

of cost and quality to the private sector, or other agency providers. Thus, Section 

811applies the acquisition reform initiatives (including market research) to FPI - 

and by doing so FPI and the Department of Defense will benefit. In the Fiscal Year 

2005 Consolidated Appropriations Act (P.L. 108–447), Section 367 extended this authority permanent government-wide. In April 2005, the FAR Council issued a proposed rule to implement this statue.

Vocational Training

Certainly, CSA does recognize that FPI must balance two legitimate needs currently defined in the law:

1) The need to provide work opportunities to help combat idleness and recurrence of law-breaking through the TRAINING of prisoners for gainful 

employment so they may become productive members of society upon 

their release from prison; and

2) The need to minimize the effect of the FPI’s work program on the private sector and its non-inmate employees.

However, these goals are not being met. A number of individuals have testified 

at various hearings that FPI’s current operations fail at inmate rehabilitation while 

hurting businesses and non-inmate workers. The inmate workers of FPI are not receiving the vocational training that will prepare them for viable jobs upon release. 

Much of the Government contract work that FPI obtains often is not actually performed by the prisoners, but rather outside the prison, and simply stamped with 

the FPI label; or the prisoners are only minimally involved in the product. For example, screwing legs onto already-made tables (manufactured outside the prison) is 

not a life-sustaining skill. Furthermore, the equipment used by the prisoners often 

is out-dated, and not used in any modern facility in which they may hope to work 

upon release. 

CSA believes that vocational skills training is extremely important to a prisoner’s 

future once he/she has returned to the ‘‘real world.’’ Yet such training does not apVerDate 0ct 09 2002 12:29 Oct 04, 2005 Jkt 000000 PO 00000 Frm 00066 Fmt 6601 Sfmt 6621 G:\WORK\CRIME\070105\22258.000 HJUD2 PsN: 22258
63

pear to exist. That is why CSA and its members continue to support this commonsense proposal sponsored by Representative Peter Hoekstra (R-MI). Among its many 

provisions, training and education are primary components of that bill. 

In 2004, the House of Representatives overwhelmingly passed the Hoekstra FPI 

reform bill, the ‘‘Federal Prison Industries Competition in Contracting Act’’ (H.R. 

1829), which also would eliminate the mandatory source requirement for the FPI, 

forcing it to follow the same competitive procedures that are required of all Federal 

government contractors. In addition, the bill calls for deductions to be made from 

wages earned by the prisoners to cover such purposes as payment of fines, restitution of victims, support for an inmate’s family, and for a fund that will facilitate 

the inmate’s assimilation into society. While this measure did not receive final congressional action in the last Congress, we are hopeful final passage will occur this 

year.

Conclusion

If FPI is to become a vehicle for reducing idleness and preparing inmates for the 

private sector, it should prepare those inmates for the reality of the competitive 

pressures faced by real life employers and employees, and the need to respond to, 

rather than dictate, customer needs. 

As the association that represents the broadest sector of service companies, CSA 

believes that both industry and the Government benefit from fair competition based 

on the price and quality of the produce or service in question. CSA looks forward 

to working with you to promote that goal.

64

STATEMENT SUBMITTED BY THE COALITION FOR GOVERNMENT PROCUREMENT


cgp0001.eps
65


cgp0002.eps
66


cgp0003.eps
67


cgp0004.eps
68

STATEMENT BY REMY INTERNATIONAL, INC. 

We appreciate the opportunity to submit a written statement for the record regarding Remy International’s correctional industries program as it pertains to 

House Bill 2965, Federal Prison Industries Competition in Contracting Act of 2005.

Remy International, Inc. (formerly ‘‘Delco Remy International’’) is one of the leading manufacturers and refurbishers of automotive components in the world. Integrating correctional industries along with a variety of lean industrial engineering 

initiatives has enabled Remy to survive in a highly competitive global marketplacea marketplace that has not only slashed Remy’s sales prices but has resulted in the 

insolvency of many of Remy’s competitors during the past decade. 

Remy respectfully submits that Section 7 of H.R. 2965 (Federal Prison Industries 

Competition in Contracting Act of 2005) pertaining to the prohibition of service 

agreements should be deleted. If service agreements were prohibited, Remy - which 

currently has two such agreements in Virginia - would be forced to pay offenders the 

higher of minimum wage or the prevailing wage for the area in which such jobs are 

located. This is tantamount to compelling Remy to move these operations abroad. In 

today’s global economy, there simply is no way in which Remy can competitively 

price its products without the use of low-cost labor. Many major companies are in 

the process of moving a portion of their operations abroad; some have moved their 

entire operations to foreign countries.

Correctional Industries Preserves Civilian Jobs

We live and work in a different world now, and it has forced us to look to countries with lower labor costs, as we are continually pressured by our customer base 

to reduce costs in the products that we produce and refurbish. Through the use of 

correctional services, Remy has been able to preserve 600 civilian jobs in Virginia. 

(A former Remy subsidiary, Williams Technologies preserved 500 civilian jobs in 

South Carolina by entering into a Services Agreement with the State of South Carolina) With a total of nearly 3,000 civilian employees in the United States, Remy continues to maintain a strong presence in this country; correctional industries is one 

of many initiatives exercised to maintain this presence and to ensure the company 

survives intense competition from abroad. 

As presently composed, H.R. 2965 will result in the loss of 600 civilian jobs in Virginia. This is because the operations that employ these workers are dependent upon 

the refurbishment of automotive components produced in the correctional facilities 

that would be closed through the passage of this Bill. If these correctional facility 

operations were to be closed, this work would NOT be placed in the United States. 

Rather, it would be relocated to existing factories in Xiamen, China and San Luis 

Potosi, Mexico. 

We respectfully urge you to consider deleting Section 7 of H.R. 2965 to preserve 

not only the 360 offender jobs in Virginia but also the 600 civilian jobs that are supported by our correctional industries operations. 

Remy is committed to employing American workers. Using service agreements 

with correctional institutions helps ensure that Remy can keep both civilian and inmate jobs here in the United States, and provides significant work experience to 

participating inmates that helps reduce recidivism once they are released from confinement.

Remy’s Virginia Correctional Industries Program

Remy’s agreement with the Virginia Department of Corrections and Federal Prison Industries has provided 360 jobs for inmates in Virginia (230 offenders with the 

state and 130 offenders with Federal Prison Industries). The Commonwealth of Virginia receives $1,732,224 annually in Remy payments, and Federal Prison Industries receives $2,471,0040 annually. 

Since opening a factory in Leiber Correctional Facility in South Carolina, Remy 

has opened refurbishment factories in a state correctional facility in Culpeper, Virginia and a federal correctional facility in Petersburg, Virginia. The Petersburg and 

Culpeper operations are worthy substitutes for our traditional production model of 

having low-variety, high-volume production capacity in low-labor-cost countries 

while maintaining high-variety, low volume production in the United States. Again, 

these operations were initiated with the understanding that civilian workers would 

not be displaced by such operations. For the Culpeper operation, Remy pays $3.47 

per offender hour to Virginia, and Virginia pays either 65 cents or $1.25 (depending 

on length of service) per hour to the offender workers. For the Petersburg operation, 

Remy pays $3.60 per offender hour to Federal Prison Industries and Federal Prison 

Industries pays either 65 cents or $1.25 (depending on length of service) per hour 

69

to the offender workers. (The difference between what we pay and amount the offenders receive is used to help fund a program for victim restitution as well as help 

pay the cost of operating the correctional institution).

Why A Subminimum Wage?

The services agreement with the Commonwealth of Virginia ensures that we can 

keep both civilian and offender jobs within the United States. Because of challenges 

unique to operating a factory in correctional facility (versus a civilian factory), Remy 

utilizes more offenders for jobs in the correctional facility operations than it would 

ordinarily require in its civilian factories and, therefore, to ensure financial viability 

of the program, the offenders are paid a sub-minimum wage. It is not uncommon 

to have ‘‘lockdowns’’ within the entire correctional facility, causing us to lose productivity for several days at a time. If there is a heavy fog, offenders are not released 

from their dormitories to work. Offenders are frequently transferred from our correctional facility to other correctional facilities with little or no notice, causing a disruption to our operations. Many of the offenders suffer medical problems that require special accommodation through frequent medical treatment. Moving product 

in and out of the correctional facility is a very time-consuming procedure with costly 

delays. Contractors charge us a premium to service our equipment and machinery 

because of delays to enter and exit the factory within the walls of the correctional 

institution. With the significant inefficiencies inherent in a correctional industries 

environment, it is most difficult for a ‘‘for-profit’’ company to develop a business case 

for operating a factory within a correctional facility. A sub-minimum wage, as afforded by service agreements, enables correctional industries to be competitive with 

foreign labor and, as such, Remy has repatriated work from China and Malaysia 

to the United States. 

If service agreements were to be prohibited, we would be required to close both 

correctional facility operations in Virginia, and these jobs would be relocated to existing operations in San Luis Potosi, Mexico and/or Xiamen, China, resulting in the 

loss of 330 offender jobs in Virginia. 

In addition, through our service agreements with the Virginia Department of Corrections and Federal Prison Industries, we currently pay $1,732,224 annually to the 

Commonwealth of Virginia and $2,471,040 to Federal Prison Industries for offender 

workers. These revenues would disappear if service agreements were to be prohibited.

Why Remy’s Correctional Institutional Programs Work

1. Service agreements with correctional facilities add jobs for American civilian citizens, and prevent the relocation of these jobs to other countries.

As described above, our correctional facility operations actually add jobs, rather 

than displace American workers. Our contracts with the Commonwealth of Virginia 

and Federal Prison Industries state that civilian workers shall not be displaced by 

the activities we place in the correctional facility operations. In addition, when we 

service products in correctional facilities we tend to source a majority of our component parts from U.S.-based vendors. Since beginning our correctional industries programs, we have added 65 civilian jobs in Virginia. . 

Moreover, the location of these jobs in the United States helps ensure that related 

parts and support services foster activity in both the local and national economy. 

The competitive realities of today’s automotive parts manufacturing and refurbishment world is that this is work that would otherwise be performed, as much of it 

currently is, in Mexico and Asia. Like our competitors, much of our refurbishment 

of parts is done so abroad. And when these products are serviced in Mexico and 

China, a majority of the component parts and materials used in the servicing process are procured from vendors in these countries. Therefore, servicing our products 

in U.S. correctional facilities is much better for the U.S. economy and the U.S. job 

market than servicing them in Mexico or China. If H.R. 2965 becomes law without 

deletion of Section 7, it will most certainly result in the loss of U.S. jobs.

2. Since any of Remy’s competitors can enter into service agreements with 

correctional facilities, these agreements are well within the realm of fair 

competition.

U.S. companies, including our competitors, are flocking to develop operations in 

Mexico and Asia. Some of them also have operations in correctional facilities. Both 

small and large businesses can participate in correctional industries with service 

70

agreements and, in fact, most companies that have operations within correctional 

facilities are small businesses. 

In Virginia, there are over 30,000 offenders incarcerated at any one time and 

there are over 2,000,000 people incarcerated nationwide. Remy employs a total of 

230 offenders in its state correctional operations and 130 offenders in its federal correctional operation, leaving hundreds of thousands of offenders seeking gainful 

work. Any of our competitors who are not currently using offender labor have the 

same opportunity to use it as we do. (Recently, one competitor ceased using correctional industries labor because they secured lower costs by relocating to Mexico.)

3. Remy’s program of employing offenders provides them with valuable 

work experience and reduces recidivism.

Since 94% of all those incarcerated will eventually be released into society, work 

experience assists our correctional institutions in preparing offenders for a stable 

transition into society. According to some studies, work experience can reduce recidivism by up to 60% (Pride Enterprises of Florida). Most offenders learn what it 

means to ‘‘get up each morning and go to a job’’ for the first time in their lives. This 

would not be possible if service agreements were to be prohibited.

It is important to note that all of the workers in our correctional facility operations are working because they desire to work. No one is required to work for us 

and any offender may resign at any time without providing notice to us. Offenders 

consider Remy jobs very desirable because they provide:

* real-life work experience (the first ‘‘real’’ job for many offenders) 

* hand-tool skills amenable to various trade jobs 

* compensation that is significantly more than traditional correctional 

work programs such as floor sweeping, food preparation, and litter collection.

In fact, some offenders have come to work for Remy following their release from 

incarceration. 

Remy provides a safe working environment for all of its offenders, as our correctional industry factories must adhere to the same high standards for safety and 

cleanliness as our civilian factories. Offenders receive the same mandatory safety 

education and training programs that are provided to our civilian employees. The 

environmental regulations in our correctional facility operations are just as strict as 

in our civilian operations. (Our operation in the Federal institution in Petersburg 

was delayed by more than six months in obtaining all of the necessary operating 

permits from the Virginia Department of Environmental Quality.) Moreover, because Remy’s staff within the correctional facility must work in an OSHA-compliant 

environment, the correctional facility factories adhere to OSHA rules and regulations. 

We are very proud of our correctional industry programs and we strongly encourage those who are interested to tour these operations. Although Remy is a USowned company with a 110-year history, there are no government mandates requiring our continued existence. Surviving in the new global economy has been a struggle despite our significant capital investments to procure state-of-the-art equipment 

and machinery, as well as having introduced the most modern lean refurbishment 

techniques to all of our factories. These items, in-and-of themselves, have not been 

sufficient to be competitive. Our continued survival has required us to develop production capacity abroad. Correctional industries have enabled us to slow down, and 

we hope halt long-term, the exodus of many jobs leaving U.S. soil for Mexico and 

Asia.

71

STATEMENT SUBMITTED BY MICHAEL B. STYLES, NATIONAL PRESIDENT, FEDERAL

MANAGERS ASSOCIATION(FMA) 

Chairman Howard Coble, Ranking Member Bobby Scott and distinguished members of the Subcommittee: 

My name is Michael B. Styles and I am the National President of the Federal 

Managers Association (FMA). On behalf of the nearly 200,000 executives, managers, 

and supervisors in the Federal Government whose interests are represented by 

FMA, I would like to thank you for allowing us to submit our views regarding the 

Federal Prison Industries (FPI) reform measure, H.R. 2965, before your subcommittee. 

Established in 1913, FMA is the largest and oldest Association of managers and 

supervisors in the Federal Government. FMA has representation in nearly 30 different Federal departments and agencies. We are a non-profit advocacy organization 

dedicated to promoting excellence in government. As those who are responsible for 

the daily management and supervision of government programs and personnel, our 

members are keenly aware of the important role they play in ensuring efficient and 

effective service to the American people.

FEDERAL MANAGERS CARE ABOUT HOW TAXPAYER DOLLARS ARE 

SPENT

The main message that FMA wants to convey to you and Members of the Subcommittee is that Federal managers and supervisors - and the civil servants we lead 

- try extremely hard to be good stewards of the tax dollars entrusted to us. We dedicate ourselves daily to delivering to the American people the most value for their 

hard-earned dollars. Routinely, we are called upon to do it ‘‘better,’’ ‘‘faster,’’ and 

‘‘cheaper.’’ ‘‘Doing more with less’’ is the norm, not the exception. 

In our view, the FPI mandatory-source requirement ties the hands of Federal 

managers when it comes to making smart purchasing decisions. While combating 

inmate idleness and providing 21 percent of the inmate work opportunities for Federal prisoners are important public policy objectives, the cost of the FPI program 

should not be transferable to the increasingly tight budgets of other agencies with 

their own missions in service to the American people. 

That is why FMA supports passage of H.R. 2965, which would eliminate this mandatory-source requirement burdening Federal agencies. 

No doubt that you will hear from the FPI staff about how many waivers FPI 

grants, permitting Federal agency managers to make purchases from the private 

sector. The statistics may sound impressive, but I would ask you to consider some 

fundamental questions about the waiver process and how it works. 

To begin, why should Federal managers be required to seek FPI’s permission before being able to spend the money of American taxpayers in the best possible manner? Under the waiver process, FPI - rather than the buying agency - determines 

whether FPI’s offered product, delivery schedule, and reasonableness of FPI’s offered 

price meet the needs of the agency. Waivers are not granted on the basis of price 

unless FPI’s offered price exceeds the statutory standard of ‘‘current market price.’’

Current market price is not the same thing as a ‘‘fair market price’’ and is substantially different from the ‘‘best value’’ standard that applies to competitive procurements. Rather, the buying agency can be required to pay FPI’s offered price provided that FPI’s offered price does not exceed the highest price offered to the government for a comparable product. Therefore, no actual sales need to be made for 

the standard to be met. 

A 1998 General Accounting Office study (GAO/GGD-98–151) of 20 FPI products 

found that ‘‘FPI generally did not offer Federal agencies the lowest prices for products that they purchased. Therefore, if it were not for FPI’s mandatory source status, customer agencies might have decided to purchase comparable products at less 

cost.’’ This assessment is consistent with the anecdotal experiences of our members. 

FMA members are also concerned that it frequently takes longer to receive products from FPI than from other commercial vendors. Another GAO report (GAO/

GGD-98-118) regarding the timeliness of FPI deliveries showed similar results. In 

more than 50 percent of the cases reviewed the actual delivery date was later than 

the buying agency had originally requested. Again, this is congruent with the experiences of our members. 

Small businesses in the private sector, on the other hand, strive hard to keep 

costs low, quality good, and delivery services efficient. Otherwise, they would find 

themselves out of business. Consumers benefit from their efforts. These benefits do 

not exist when a business holds its customers hostage, as is the case with FPI and 

Federal agencies. 

72

Aside from the questionable policy of placing the burden on a Federal manager 

to have to request and justify a waiver request, the waiver process itself raises substantial issues. The initial consideration of the request is undertaken by the FPI 

sales division, which will take the contract if the waiver is not granted. More recently, FPI has begun to utilize contract sales representatives, paid on a commission 

basis, to augment its own marketing staff. Thus, it seems reasonable to FMA to presume that neither FPI’s own marketing force nor its contract sales force have much 

incentive to initially grant a waiver. 

A Federal manager willing to invest yet more time and effort can take an appeal 

of a waiver denial to FPI’s Ombudsman, a member of FPI’s senior management 

team. Federal managers feel that the decision to grant a waiver - either initially 

or on appeal - is a unilateral decision made by FPI without the benefit of any standards upon which to independently assess FPI’s actions. 

Like the underlying mandatory-source status it is designed to buttress, FPI’s 

waiver process presents the Federal manager with a ‘‘stacked deck’’ that may not 

be worth pursuing, unless accepting FPI’s product or delivery schedule would substantially impede the attainment of the buying agency’s mission, or FPI’s price constitutes an egregious waste of the buying agency’s limited operating budget. 

Some have sought to cast the ongoing debate regarding FPI reform as a simple 

economic clash over government business between FPI and the business community. 

I am here to tell you that the current system also places an unacceptable burden 

on Federal managers in terms of both mission accomplishment and the quality of 

work life. If FPI were to deliver a quality product, on time, and at a reasonable 

price, then FPI will be able to compete, Federal agencies would give the American 

taxpayer more ‘‘bang for their buck,’’ and inmates would be given an opportunity 

to truly learn the skills they will need in the outside job market. 

If FPI’s product does not represent the ‘‘best value’’ for the tax dollars expended, 

FPI’s captive Federal agency customers are then being forced to use their scarce resources to subsidize FPI’s program to create inmate work opportunities. In turn, 

Federal workers are being forced to make do with products of lesser quality and suffer the consequences of delayed deliveries - consequences that can adversely affect 

their ability to perform their jobs as well as the quality of their services.

SCARCE RESOURCES GREATLY HEIGHTENS COST CONSCIOUSNESS

As taxpayers first and civil servants second FMA members want to see their tax 

dollars used in the most productive manner possible. A factor in our heightened concern about making the best use of scarce agency resources is the mandated increase 

in public-private competition for Federal functions. 

Federal functions performed by civil servants are being subjected to unprecedented competition with the private sector. As part of the President’s Management 

Agenda and in subsequent memoranda from the Office of Management and Budget, 

Federal agencies have been called on to increase public-private competitions as well 

as provide more in-depth justification of what constitutes an ‘‘inherently governmental’’ position in adhering to revision to OMB Circular A-76. 

The Bush administration has called for up to 850,000 Federal jobs to be put up 

for competition in the coming years, yet Federal prisoners do not have to compete 

- they are guaranteed a job. Hardworking Federal employees not only have to worry 

about their job being put up for public-private competition, but the same government that is mandating the competition is placing Federal workers at a disadvantage by not allowing them to purchase needed goods at a reasonable price. 

In this time of increased scrutiny on the use of taxpayer dollars by the government, it is necessary to remove the mandatory-source status held by FPI so that 

Federal agencies are able to purchase the products they need at the best value possible.

LIFTING MANDATORY SOURCE WOULD ENABLE AGENCIES TO GET 

BETTER DEALS

The Federal Government spends more than $235 billion a year on goods and services. Between $110 and $120 billion of this amount is spent on contracting-out for 

services. The remainder is spent on products. Current law requires us to purchase 

over half a billion dollars’ worth of supplies from FPI. The almost $700 million in 

annual sales for FPI in this context is significant. 

Section 811 of the fiscal 2002 National Defense Authorization Act removed FPI’s 

mandatory-source status for the Department of Defense (DOD). The provision allows 

the Secretary of Defense to conduct market research before being forced to purchase 

inmate-manufactured goods from FPI. If prisoner-manufactured products are not 

73

comparable to private-sector products in price, quality, and time of delivery, DOD 

contracting officers can purchase with taxpayer dollars the best and most cost-efficient goods from other private vendors rather than be forced to buy from FPI. 

As part of the fiscal 2003 National Defense Authorization Act, Congress passed 

language (Sec. 819) which strengthened the enforcement of the provision passed in 

the FY02 Defense Authorization bill. Section 819 will:

* make explicit that DOD contracting officers are empowered to determine 

if a product offered by FPI is ‘‘comparable to products available from the 

private sector that best meet the Department’s needs in terms of price, 

quality, and time of delivery’’;

* provide DOD contracting officers the full range of ‘‘market research’’

tools to make the required comparability determination;

* make explicit that the full range of competitive procurement techniques 

are available to a DOD contracting officer, including making a purchase 

through a GSA Multiple Award Schedule contract;

* prevent FPI from referring to the FPI Arbitration Review Panel, established by Section 4124(b) of FPI’s 1934 authorizing statute, allowing an 

FPI challenge of a DOD contracting officer’s determination regarding the 

comparability of a product offered by FPI; and,

* empower DOD contracting officers to ensure that FPI ‘‘performs its contractual obligations to the same extent as any other contractor for the 

Department of Defense.’’

Last year, Congress approved a provision in the Consolidated Appropriations bill 

for fiscal year 2005 (H.R. 4818), which ended FPI’s mandatory-sourcing status for 

all non-DOD agencies. This is another step in the right direction. The House has 

also passed similar authorizing legislation in the form of H.R. 1829 on November 

6, 2005, but the measure stalled in the Senate. We must see a final end through 

the codification of this issue into law. As has been done with DOD, H.R. 2965 is 

the final step in releasing the rest of the Federal government from the captivity of 

mandatory-sourcing through FPI.

CONCLUSION

In closing, Mr. Chairman, Federal managers and supervisors are currently receiving two conflicting messages from Washington, DC. On the one hand, we are being 

asked to ‘‘do more with less.’’ From Congress, we frequently hear that the bureaucracy should act more like the private sector. In contrast, the law requires us to purchase over half a billion dollars’ worth of supplies from a non-competitive source 

that frequently charges more than other commercial vendors. 

We are simply asking that the FPI Board of Directors and the FPI management 

staff allow us to be better stewards of the taxpayers’ hard-earned dollar by untying 

our hands when it comes to making smart purchasing decisions for the Federal government. 

Thank you again for providing FMA an opportunity to present our views and we 

look forward to working with you on this important issue.

74

LETTER FROM MATTHEW T. POWERS, GENERAL MANAGER, PRISON INDUSTRY

AUTHORITY (PIA) TO THE HONORABLE HOWARD COBLE

July 8, 2005

The Honorable Howard Coble, Chair 

Subcommittee on Crime, Terrorism, and Homeland Security 

207 Cannon House Office Building 

Washington, D. C. 20515

Dear Mr. Coble:

I am writing you today to oppose H.R. 2965, the Federal Prison Industries Competition in Contracting Act of 2005, due to the detrimental impact of this proposal 

on correctional industries throughout the nation. I would urge you to delay its passage and work towards legislation that enhances rather than constrains prison industries. Prison industries programs provide inmates with productive employment 

and teach marketable skills, which can be used to transition to meaningful jobs 

upon parole. 

Prison industries are an investment in public safety because employed inmates 

and parolees mean safer prisons and safer communities. These programs provide inmates with productive marketable skills that can assist them in obtaining meaningful jobs upon parole. Additionally, prison industries help to reduce idleness, thereby 

decreasing violence and tension in correctional institutions. 

Thank you for your assistance in assuring the success of correctional programs. 

Please contact me at (916) 358–2699, if I can provide you or your staff with additional information.

Sincerely, 

Original signed by 

MATTHEW T. POWERS 

General Manager

75

SUPPLEMENTAL ATTACHMENTS SUBMITTED BY PHILIP GLOVER, PRESIDENT OF COUCIL

OF PRISON LOCALS, AMERICAN FEDERAL OF GOVERNMENT EMPLOYEES


glover1.eps
76


glover2.eps
77


glover3.eps
78


glover4.eps
79


glover5.eps
80


glover6.eps
81


glover7.eps
82


glover8.eps
83


glover9.eps
84


glover10.eps
85


glover11.eps
86


glover12.eps
87


glover13.eps
88

SUPPLEMENTAL ATTACHMENTS SUBMITTED BY PAUL A. MILLER, DIRECTOR OF GOVERNMENT AFFAIRS, INDEPENDENT OFFICE PRODUCTS & FURNITURE DEALERS ASSOCIATION


miller1.eps
89


miller2.eps
90


miller3.eps
91


miller4.eps
92


miller5.eps
93


miller6.eps
94


miller7.eps
95


miller8.eps
96


miller9.eps
97

STATEMENT SUBMITTED BY KEVIN M. BURKE, PRESIDENT AND CEO, AMERICAN

APPAREL AND FOOTWEAR ASSOCIATION (AAFA) 

Chairman Coble, Ranking Member Robert C. Scott, and members of the Subcommittee: 

The American Apparel & Footwear Association (AAFA) is pleased to submit the 

following statement in strong support of H.R. 2965, the Federal Prison Industries 

(FPI) Competition in Contracting of 2005. AAFA is the national trade association 

representing over 700 apparel, footwear and other sewn products companies, and 

their suppliers. These companies represent approximately 80% of U.S. wholesale apparel sales and over 100 of these companies supply specialized sewn goods and products to the military. These companies depend on a fair process to compete for the 

limited number of contracts from the U.S. military. FPI has long been a major producer of military uniforms, further depleting the contracts available to sustain the 

warm industrial base of apparel and footwear manufacturers. Comprehensive reform of FPI will benefit AAFA members by opening up more of these contracts for 

fair competition. AAFA members thank you for having this hearing and for your 

support for this legislation. 

I would also like to thank the sponsors of H.R. 2965, Representatives Peter Hoekstra (MI), Barney Frank (MA), Carolyn Maloney (NY), John Conyers (MI), Chairman Jim Sensenbrenner (WI) and former Representative Mac Collins (GA) for their 

leadership on FPI reform and continued support. The business community owes this 

team a debt of gratitude for the years of work on this issue and the ongoing commitment to more comprehensive FPI reform. 

H.R. 2965 is almost identical to H.R. 1829, which passed overwhelming in the 

House during the 108th Congress by a vote of 350–65. This legislation will require 

FPI to compete for federal contracts and allow agencies to make a qualified determination on whether or not FPI provides the best value. It deserves immediate consideration and enactment. 

In order to minimize any adverse impact of this reform on the prison community, 

H.R. 2965 has a five-year phase-in period. Safeguard provisions to protect prison 

guards, their jobs and the prisons are also included. Additionally, this legislation 

provides for additional educational and vocational opportunities for inmates to further their development in preparation for their productive contributions to society 

upon release. This legislation is balanced and will benefit the U.S. government, private industry as well as FPI. All benefit when the market principles of competition 

are unimpeded. 

FPI will likely always retain advantages over private industry, which unlike FPI, 

is regulated by the Department of Labor, Internal Revenue Service and the Environmental Protection Agency. From a cost perspective, businesses are burdened with 

meeting minimum wage requirements (compared to pennies on the hour for FPI), 

providing health benefits, contributing to social security and the most basic costs of 

plant and equipment. FPI enjoys an tremendous edge and it is clear that a mandatory source is not essential for FPI to compete with the private industry. 

H.R. 2965 is needed because recent reforms have had little effect on FPI’s reach. 

FPI continues to grow by leaps and bounds - increasing sales in clothing and textiles 

from $158,399 million in FY 2003 to $184,465 million in FY 2004 - and increasing 

total sales by $136 million in the same span. Further, FPI continues to finds ways 

to cut private industry out of the competitive process. The Federal Prison Industries 

is well known for their creative interpretations of the law and only clarification and 

more comprehensive reform will counter such interpretations. For example, earlier 

this year the Bureau of Prisons issued a solicitation (No. CT1703–05) for the distribution of uniforms rather than the production. It was stated in the solicitation 

that the uniforms would be provided by FPI, though previously the BOP uniforms 

were supplied by private industry. FAR regulation 8.607(a) restricts agencies from 

requiring contractors to use FPI; however, because this is not an actual contract but 

an ‘‘arrangement’’ that FPI has with BOP their interpretation is that this does not 

violate FAR 8.6. 

There are so many examples of FPI’s ingenuity in maneuvering around current 

reforms to the detriment of private industry. One of the best is their supposed commitment to take not more than a 20% market share of any particular product. 

Under current law, FPI must ‘‘operate . . . [so] that no single private industry shall 

be forced to bear an undue burden of competition from the products of the prison 

workshops and to reduce to a minimum competition with private industry or free 

labor.’’ (18 US Code 4122) This has not kept FPI from taking more than 20% and 

much more due once again to their creative interpretations. In this instance, it is 

the definition of a ‘‘specific product’’ that has enabled the manipulation of market 

share statistics. FPI has stated that, ‘‘a specific product . . . may include a number 

98

of different items.’’ Specifically, with regard to AAFA, this interpretation allowed a 

significant expansion into work clothing. Several Federal Supply Classification 

(‘‘FSC’’) codes were combined in order to create larger product concentration under 

one category. This enabled FPI to mask the actual percentage of the marketplace 

of a particular product produced by FPI. In this example, ‘‘work clothing’’ included 

at least four different FSC codes. FPI has stated that it is their intention to use 

the product classifications used by the Defense Supply Center in Philadelphia; however, we have yet to see any documentation. 

In the past year, FPI has also increased their approved sales ceiling and units 

on uniforms due respectively to the increased cost of material for the army combat 

uniform and an exigency referencing the crisis of war. AAFA has member companies 

that are struggling for enough contract work to keep their employees on the payroll 

and yet FPI continues to come up with ways to infringe upon arguably the last significant source of demand for apparel manufacturing in the U.S. - military contracts. ‘‘The vast majority of FPI’s clothing/textiles sales were in support of the Department of Defense’s war effort.’’ (U.S. Department of Justice, Federal Prison Industries, Inc. FY 2004 Annual Report) These sales to the DoD by FPI are in direct 

competition with AAFA members and a serious detriment to the industrial base as 

military contracts continue to be a primary source of income for a majority of the 

remaining domestic textile and apparel manufacturers. These manufacturers have 

retained a presence in the United States due primarily to the Berry Amendment, 

which requires the military to buy their uniforms and sewn products from U.S. companies containing all U.S. inputs. The current level of purchasing from the military 

has increased due to the war effort, yet that is not enough to sustain the industrial 

base of apparel and textile suppliers and especially not in competition with FPI. 

AAFA members will be severely impacted when spending for the war effort decreases and thus will the industrial base. In support of these suppliers, FPI should 

pursue the government contracts outside of the DoD in order to retain the market 

for the domestic base of textile and apparel producers supplying the military. This 

will not happen unless directed by Congress. 

The ability of FPI to bid on solicitations for small business set-asides is yet another reason for comprehensive reform. Currently, when an FPI product is found to 

be non-comparable to a private sector product, FPI is then able to bid on solicitations for those products reserved for competition among small business. Surely this 

is an unintended loophole that should be rectified by Congress in a more comprehensive reform bill. Small businesses can not be expected to compete with a company whose sales were approximately $803 million in FY 2004. 

In conclusion, AAFA supports the mandate of FPI to rehabilitate inmates for their 

reintroduction into society as productive citizens. However, we are confident that it 

was not the intent of Congress to create a nongovernmental agency to stymie competition, private industry development and take jobs away taxpaying citizens. H.R. 

2965 provides access to educational opportunities that will be even more beneficial 

to inmates by training and preparing them for more viable vocational opportunities 

in industries that are more likely to have available jobs, rather than having them 

learn outdated textile manufacturing processes in an industry that does not have 

the demand it once had in the U.S. for jobs. 

Thank you for the opportunity to submit this statement on behalf of the American 

Apparel & Footwear Association and the companies we represent and to share our 

point of view on FPI reform.

Kevin M. Burke 

President & CEO

99

LETTER FROM KEVIN M. BURKE, PRESIDENT AND CEO, AMERICAN APPAREL AND

FOOTWEAR ASSOCIATION (AAFA) TO THE HONORABLE F. JAMES SENSENBRENNER, JR.


aafa.eps
100

LETTER SUBMITTED BY VARIOUS DEALERS


deal1.eps
101


deal2.eps
102


deal3.eps
103


deal4.eps
104


deal5.eps
105


deal6.eps
106


deal7.eps
107


deal8.eps
108


deal9.eps
109


deal10.eps
110


deal11.eps
111


deal12.eps
112

STATEMENT SUBMITTED BY MANAGEMENT ASSOCIATION FOR PRIVATE

PHOTOGRAMMETRIC SURVEYORS (MAPPS)


mapps1.eps
113


mapps2.eps
114

FACT SHEET SUBMITTED BY THE CORRECTIONAL VENDORS ASSOCIATION, ‘‘FPI FACT

OR FICTION?’’


cva1.eps
115

SUMMARY STATEMENT SUBMITTED BY THE NATIONAL CITIZENS UNITED FOR

REHABILITATION OF ERRANTS (CURE)


cure1.eps
116


cure2.eps
117


cure3.eps
118


cure4.eps
119


cure5.eps
120


cure6.eps
121


cure7.eps
122


cure8.eps
123


cure9.eps
124


cure10.eps
125


cure11.eps
126


cure12.eps
127


cure13.eps
128


cure14.eps
129

Æ


cure15.eps