19–006

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 108–286

FEDERAL PRISON INDUSTRIES COMPETITION IN 

CONTRACTING ACT OF 2003

SEPTEMBER 25, 2003.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. SENSENBRENNER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 1829] 

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 1829) to amend title 18, United States Code, to require Federal Prison Industries to compete for its contracts minimizing its 

unfair competition with private sector firms and their non-inmate 

workers and empowering Federal agencies to get the best value for 

taxpayers’ dollars, to provide a five-year period during which Federal Prison Industries adjusts to obtaining inmate work opportunities through other than its mandatory source status, to enhance inmate access to remedial and vocational opportunities and other rehabilitative opportunities to better prepare inmates for a successful 

return to society, to authorize alternative inmate work opportunities in support of non-profit organizations, and for other purposes, 

having considered the same, report favorably thereon with an 

amendment and recommend that the bill as amended do pass.

CONTENTS 

Page 

The Amendment ...................................................................................................... 2

Purpose and Summary ............................................................................................ 14

Background and Need for the Legislation ............................................................. 18

Hearings ................................................................................................................... 23

Committee Consideration ........................................................................................ 23

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Vote of the Committee ............................................................................................. 23

Committee Oversight Findings ............................................................................... 25

New Budget Authority and Tax Expenditures ...................................................... 25

Congressional Budget Office Cost Estimate .......................................................... 25

Committee Response to Congressional Budget Office Cost Estimate ................. 29

Performance Goals and Objectives ......................................................................... 34

Constitutional Authority Statement ...................................................................... 34

Section-by-Section Analysis and Discussion .......................................................... 34

Changes in Existing Law Made by the Bill, as Reported ..................................... 50

Markup Transcript .................................................................................................. 63

Dissenting Views ..................................................................................................... 177

THE AMENDMENT

The amendment is as follows:

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Federal Prison Industries Competition in Contracting Act of 2003’’.

(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Governmentwide procurement policy relating to purchases from Federal Prison Industries.

Sec. 3. Public participation regarding expansion proposals by Federal Prison Industries.

Sec. 4. Transitional mandatory source authority.

Sec. 5. Authority to perform as a Federal subcontractor.

Sec. 6. Inmate wages and deductions.

Sec. 7. Clarifying amendment relating to services.

Sec. 8. Conforming amendment.

Sec. 9. Rules of construction relating to chapter 307.

Sec. 10. Providing additional rehabilitative opportunities for inmates.

Sec. 11. Restructuring the Board of Directors.

Sec. 12. Providing additional management flexibility to Federal Prison Industries operations.

Sec. 13. Transitional personnel management authority.

Sec. 14. Federal Prison Industries report to Congress.

Sec. 15. Independent study to determine the effects of eliminating the Federal Prison Industries mandatory

source authority.

Sec. 16. Sense of Congress.

Sec. 17. Definitions.

Sec. 18. Implementing regulations and procedures.

Sec. 19. Rule of construction.

Sec. 20. Effective date and applicability.

Sec. 21. Clerical amendments.

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

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

‘‘§ 4124. Governmentwide procurement policy relating to purchases from

Federal Prison Industries

‘‘(a) IN GENERAL.—Purchases from Federal Prison Industries, Incorporated, a

wholly owned Government corporation, as referred to in section 9101(3)(E) of title

31, may be made by a Federal department or agency only in accordance with this

section.

‘‘(b) SOLICITATION AND EVALUATION OF OFFERS AND CONTRACT AWARDS.—(1) If

a procurement activity of a Federal department or agency has a requirement for a

specific product or service that is authorized to be offered for sale by Federal Prison

Industries, in accordance with section 4122 of this title, and is listed in the catalog

referred to in subsection (g), the procurement activity shall solicit an offer from Federal Prison Industries, if the purchase is expected to be in excess of the micro-purchase threshold (as defined by section 32(f) of the Office of Federal Procurement Policy Act (41 U.S.C. 428(f))).

‘‘(2) A contract award for such product or service shall be made using competitive procedures in accordance with the applicable evaluation factors, unless a determination is made by the Attorney General pursuant to paragraph (3) or an award

using other than competitive procedures is authorized pursuant to paragraph (7).

‘‘(3) The procurement activity shall negotiate with Federal Prison Industries on

a noncompetitive basis for the award of a contract if the Attorney General determines that—

‘‘(A) Federal Prison Industries cannot reasonably expect fair consideration

to receive the contract award on a competitive basis; and

‘‘(B) the contract award is necessary to maintain work opportunities otherwise unavailable at the penal or correctional facility at which the contract is
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to be performed to prevent circumstances that could reasonably be expected to 

significantly endanger the safe and effective administration of such facility. 

‘‘(4) Except in the case of an award to be made pursuant to paragraph (3), a 

contract award shall be made with Federal Prison Industries only if the contracting 

officer for the procurement activity determines that—

‘‘(A) the specific product or service to be furnished will meet the requirements of the procurement activity (including any applicable prequalification requirements and all specified commercial or governmental standards pertaining 

to quality, testing, safety, serviceability, and warranties); 

‘‘(B) timely performance of the contract can be reasonably expected; and 

‘‘(C) the contract price does not exceed a current market price. 

‘‘(5) A determination by the Attorney General pursuant to paragraph (3) shall 

be—

‘‘(A) supported by specific findings by the warden of the penal or correctional institution at which a Federal Prison Industries workshop is scheduled 

to perform the contract; 

‘‘(B) supported by specific findings by Federal Prison Industries regarding 

why it does not expect to win the contract on a competitive basis; and 

‘‘(C) made and reported in the same manner as a determination made pursuant to section 303(c)(7) of the Federal Property and Administrative Services 

Act of 1949 (41 U.S.C. 253(c)(7)). 

‘‘(6) If the Attorney General has not made the determination described in paragraph (3) within 30 days after Federal Prison Industries has been informed of a contracting opportunity by a procurement activity, the procurement activity may proceed to conduct a procurement for the product or service in accordance with the procedures generally applicable to such procurements by the procurement activity. 

‘‘(7) A contract award may be made to Federal Prison Industries using other 

than competitive procedures if such product or service is only available from Federal 

Prison Industries and the contract may be awarded under the authority of section 

2304(c)(1) of title 10 or section 303(c) of the Federal Property and Administrative 

Services Act of 1949 (41 U.S.C. 252(c)(1)), as may be applicable, and pursuant to 

the justification and approval requirements relating to such noncompetitive procurements specified by law and the Governmentwide Federal Acquisition Regulation. 

‘‘(c) OFFERS FROM FEDERAL PRISON INDUSTRIES.—A timely offer received from 

Federal Prison Industries to furnish a product or service to a Federal department 

or agency shall be considered for award without limitation as to the dollar value 

of the proposed purchase. 

‘‘(d) PERFORMANCE BY FEDERAL PRISON INDUSTRIES.—Federal Prison Industries 

shall perform its contractual obligations under a contract awarded by a Federal department or agency to the same extent as any other contractor. 

‘‘(e) FINALITY OF CONTRACTING OFFICER’S DECISION.—(1) A decision by a contracting officer regarding the award of a contract to Federal Prison Industries or relating to the performance of such contract shall be final, unless reversed on appeal 

pursuant to paragraph (2) or (3). 

‘‘(2) The Chief Executive Officer of Federal Prison Industries may appeal to the 

head of a Federal department or agency a decision by a contracting officer not to 

award a contract to Federal Prison Industries pursuant to subsection (b)(4). The decision of the head of a Federal department or agency on appeal shall be final. 

‘‘(3) A dispute between Federal Prison Industries and a procurement activity regarding performance of a contract shall be subject to—

‘‘(A) alternative means of dispute resolution pursuant to subchapter IV of 

chapter 5 of title 5; or 

‘‘(B) final resolution by the board of contract appeals having jurisdiction 

over the procurement activity’s contract performance disputes pursuant to the 

Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.). 

‘‘(f) REPORTING OF PURCHASES.—Each Federal department or agency shall report purchases from Federal Prison Industries to the Federal Procurement Data 

System (as referred to in section 6(d)(4) of the Office of Federal Procurement Policy 

Act (41 U.S.C. 405(d)(4))) in the same manner as it reports to such System any acquisition in an amount in excess of the simplified acquisition threshold (as defined 

by section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11))). 

‘‘(g) CATALOG OF PRODUCTS.—Federal Prison Industries shall publish and maintain a catalog of all specific products and services that it is authorized to offer for 

sale. Such catalog shall be periodically revised as products and services are added 

or deleted by its board of directors (in accordance with section 4122(b) of this title). 

‘‘(h) COMPLIANCE WITH STANDARDS.—Federal Prison Industries shall comply 

with Federal occupational, health, and safety standards with respect to the operation of its industrial operations.’’. 

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

INDUSTRIES. 

Section 4122(b) of title 18, United States Code, is amended—

(1) by redesignating paragraph (6) as paragraph (12); and 

(2) by striking paragraphs (4) and (5) and inserting the following new paragraphs: 

‘‘(4) A decision to authorize Federal Prison Industries to offer a new specific 

product or specific service or to expand the production of an existing product or service shall be made by its board of directors in conformance with the requirements 

of subsections (b), (c), (d), and (e) of section 553 of title 5, and this chapter. 

‘‘(5)(A) Whenever Federal Prison Industries proposes to offer for sale a new specific product or specific service or to expand production of a currently authorized 

product or service, the Chief Operating Officer of Federal Prison Industries shall 

submit an appropriate proposal to the board of directors and obtain the board’s approval before initiating any such expansion. The proposal submitted to the board 

shall include a detailed analysis of the probable impact of the proposed expansion 

of sales within the Federal market by Federal Prison Industries on private sector 

firms and their non-inmate workers. 

‘‘(B)(i) The analysis required by subparagraph (A) shall be performed by an 

interagency team on a reimbursable basis or by a private contractor paid by Federal 

Prison Industries. 

‘‘(ii) If the analysis is to be performed by an interagency team, such team shall 

be led by the Administrator of the Small Business Administration or the designee 

of such officer with representatives of the Department of Labor, the Department of 

Commerce, and the Federal Procurement Data Center. 

‘‘(iii) If the analysis is to be performed by a private contractor, the selection of 

the contractor and the administration of the contract shall be conducted by one of 

the entities referenced in clause (ii) as an independent executive agent for the board 

of directors. Maximum consideration shall be given to any proposed statement of 

work furnished by the Chief Operating Officer of Federal Prison Industries. 

‘‘(C) The analysis required by subparagraph (A) shall identify and consider—

‘‘(i) the number of vendors that currently meet the requirements of the Federal Government for the specific product or specific service; 

‘‘(ii) the proportion of the Federal Government market for the specific product or specific service currently furnished by small businesses during the previous 3 fiscal years; 

‘‘(iii) the share of the Federal market for the specific product or specific 

service projected for Federal Prison Industries for the fiscal year in which production or performance will commence or expand and the subsequent 4 fiscal 

years; 

‘‘(iv) whether the industry producing the specific product or specific service 

in the private sector—

‘‘(I) has an unemployment rate higher than the national average; or 

‘‘(II) has a rate of unemployment for workers that has consistently 

shown an increase during the previous 5 years; 

‘‘(v) whether the specific product is an import-sensitive product; 

‘‘(vi) the requirements of the Federal Government and the demands of entities other than the Federal Government for the specific product or service during the previous 3 fiscal years; 

‘‘(vii) the projected growth or decline in the demand of the Federal Government for the specific product or specific service; 

‘‘(viii) the capability of the projected demand of the Federal Government for 

the specific product or service to sustain both Federal Prison Industries and private vendors; and 

‘‘(ix) whether authorizing the production of the new product or performance 

of a new service will provide inmates with the maximum opportunity to acquire 

knowledge and skill in trades and occupations that will provide them with a 

means of earning a livelihood upon release. 

‘‘(D)(i) The board of directors may not approve a proposal to authorize the production and sale of a new specific product or continued sale of a previously authorized product unless—

‘‘(I) the product to be furnished is a prison-made product; or 

‘‘(II) the service to be furnished is to be performed by inmate workers. 

‘‘(ii) The board of directors may not approve a proposal to authorize the production and sale of a new prison-made product or to expand production of a currently 

authorized product if the product is—

‘‘(I) produced in the private sector by an industry which has reflected during the previous year an unemployment rate above the national average; or 

‘‘(II) an import-sensitive product. 

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‘‘(iii) The board of directors may not approve a proposal for inmates to provide 

a service in which an inmate worker has access to—

‘‘(I) personal or financial information about individual private citizens, including information relating to such person’s real property, however described, 

without giving prior notice to such persons or class of persons to the greatest 

extent practicable; 

‘‘(II) geographic data regarding the location of surface and subsurface infrastructure providing communications, water and electrical power distribution, 

pipelines for the distribution of natural gas, bulk petroleum products and other 

commodities, and other utilities; or 

‘‘(III) data that is classified. 

‘‘(iv)(I) Federal Prison Industries is prohibited from furnishing through inmate 

labor construction services, unless to be performed within a Federal correctional institution pursuant to the participation of an inmate in an apprenticeship or other 

vocational education program teaching the skills of the various building trades. 

‘‘(II) For purposes of this clause, the term ‘construction’ has the meaning given 

such term by section 2.101 of the Federal Acquisition Regulation (48 CFR part 

2.101), as in effect on June 1, 2002, including the repair, alteration, or maintenance 

of real property in being. 

‘‘(6) To provide further opportunities for participation by interested parties, the 

board of directors shall—

‘‘(A) give additional notice of a proposal to authorize the production and sale 

of a new product or service, or expand the production of a currently authorized 

product or service, in a publication designed to most effectively provide notice 

to private vendors and labor unions representing private sector workers who 

could reasonably be expected to be affected by approval of the proposal, which 

notice shall offer to furnish copies of the analysis required by paragraph (5) and 

shall solicit comment on the analysis; 

‘‘(B) solicit comments on the analysis required by paragraph (5) from trade 

associations representing vendors and labor unions representing private sector 

workers who could reasonably be expected to be affected by approval of the proposal to authorize the production and sale of a new product or service (or expand the production of a currently authorized product or service); and 

‘‘(C) afford an opportunity, on request, for a representative of an established 

trade association, labor union, or other private sector representatives to present 

comments on the proposal directly to the board of directors. 

‘‘(7) The board of directors shall be provided copies of all comments received on 

the expansion proposal. 

‘‘(8) Based on the comments received on the initial expansion proposal, the 

Chief Operating Officer of Federal Prison Industries may provide the board of directors a revised expansion proposal. If such revised proposal provides for expansion 

of inmate work opportunities in an industry different from that initially proposed, 

such revised proposal shall reflect the analysis required by paragraph (5)(C) and be 

subject to the public comment requirements of paragraph (6). 

‘‘(9) The board of directors shall consider a proposal to authorize the sale of a 

new specific product or specific service (or to expand the volume of sales for a currently authorized product or service) and take any action with respect to such proposal, during a meeting that is open to the public, unless closed pursuant to section 

552(b) of title 5. 

‘‘(10) In conformity with the requirements of paragraphs (5) through (9) of this 

subsection, the board of directors may—

‘‘(A) authorize the donation of products produced or services furnished by 

Federal industries and available for sale; 

‘‘(B) authorize the production of a new specific product or the furnishing of 

a new specific service for donation; or 

‘‘(C) authorize a proposal to expand production of a currently authorized 

specific product or specific service in an amount in excess of a reasonable share 

of the market for such product or service, if—

‘‘(i) a Federal agency or department, purchasing such product or service, has requested that Federal Prison Industries be authorized to furnish 

such product or service in amounts that are needed by such agency or department; or 

‘‘(ii) the proposal is justified for other good cause and supported by at 

least eight members of the board.’’. 

SEC. 4. TRANSITIONAL MANDATORY SOURCE AUTHORITY. 

(a) IN GENERAL.—Notwithstanding the requirements of section 4124 of title 18, 

United States Code (as amended by section 2 of this Act), a Federal department or 

agency having a requirement for a product that is authorized for sale by Federal 

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Prison Industries and is listed in its catalog (referred to in section 4124(g) of title 

18, United States Code) shall first solicit an offer from Federal Prison Industries 

and make purchases on a noncompetitive basis in accordance with this section. 

(b) PREFERENTIAL SOURCE STATUS.—Subject to the limitations of subsection (d), 

a contract award shall be made on a noncompetitive basis to Federal Prison Industries if the contracting officer for the procurement activity determines that—

(1) the product offered by Federal Prison Industries will meet the requirements of the procurement activity (including commercial or governmental 

standards or specifications pertaining to design, performance, testing, safety, 

serviceability, and warranties as may be imposed upon a private sector supplier 

of the type being offered by Federal Prison Industries); 

(2) timely performance of the contract by Federal Prison Industries can be 

reasonably expected; and 

(3) the negotiated price does not exceed a fair and reasonable price. 

(c) CONTRACTUAL TERMS.—The terms and conditions of the contract and the 

price to be paid to Federal Prison Industries shall be determined by negotiation between Federal Prison Industries and the Federal agency making the purchase. The 

negotiated price shall not exceed a fair and reasonable price determined in accordance with the procedures of the Federal Acquisition Regulation. 

(d) PERFORMANCE OF CONTRACTUAL OBLIGATIONS.— (1) IN GENERAL.—Federal Prison Industries shall perform the obligations of 

the contract negotiated pursuant to subsection (c). 

(2) PERFORMANCE DISPUTES.—If the head of the contracting activity and the 

Chief Operating Officer of Federal Prison Industries are unable to resolve a contract performance dispute to their mutual satisfaction, such dispute shall be resolved pursuant to section 4124(e)(3) of title 18, United States Code (as added 

by section 2 of this Act). 

(e) LIMITATIONS ON USE OF AUTHORITY.—

(1) IN GENERAL.—As a percentage of the sales made by Federal Prison Industries during the base period, the total dollar value of sales to the Government made pursuant to subsection (b) and subsection (c) of this section shall 

not exceed—

(A) 90 percent in fiscal year 2005; 

(B) 85 percent in fiscal year 2006; 

(C) 70 percent in fiscal year 2007; 

(D) 55 percent in fiscal year 2008; and 

(E) 40 percent in fiscal year 2009. 

(2) SALES WITHIN VARIOUS BUSINESS SECTORS.—Use of the authority provided by subsections (b) and (c) shall not result in sales by Federal Prison Industries to the Government that are in excess of its total sales during the base 

year for each business sector. 

(3) LIMITATIONS RELATING TO SPECIFIC PRODUCTS.—Use of the authorities 

provided by subsections (b) and (c) shall not result in contract awards to Federal Prison Industries that are in excess of its total sales during the base period 

for such product. 

(4) CHANGES IN DESIGN SPECIFICATIONS.—The limitations on sales specified 

in paragraphs (2) and (3) shall not be affected by any increases in the unit cost 

of production of a specific product arising from changes in the design specification of such product directed by the buying agency. 

(f) DURATION OF AUTHORITY.—The preferential contracting authorities authorized by subsection (b) may not be used on or after October 1, 2009, and become effective on the effective date of the final regulations issued pursuant to section 18. 

(g) DEFINITIONS.—For the purposes of this section—

(1) the term ‘‘base period’’ means the total sales of Federal Prison Industries during the period October 1, 2001, and September 30, 2002 (Fiscal Year 

2002); 

(2) the term ‘‘business sectors’’ means the eight product/service business 

groups identified in the 2002 Federal Prison Industries annual report as the 

Clothing and Textiles Business Group, the Electronics Business Group, the 

Fleet Management and Vehicular Components Business Group, the Graphics 

Business Group, the Industrial Products Business Group, the Office Furniture 

Business Group, the Recycling Activities Business Group, and the Services 

Business Group; and 

(3) the term ‘‘fair and reasonable price’’ shall be given the same meaning 

as, and be determined pursuant to, part 15.8 of the Federal Acquisition Regulation (48 C.F.R. 15.8). 

(h) FINDING BY ATTORNEY GENERAL WITH RESPECT TO PUBLIC SAFETY.—(1) Not 

later than 60 days prior to the end of each fiscal year specified in subsection (e)(1), 

the Attorney General shall make a finding regarding the effects of the percentage 

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limitation imposed by such subsection for such fiscal year and the likely effects of 

the limitation imposed by such subsection for the following fiscal year. 

(2) The Attorney General’s finding shall include a determination whether such 

limitation has resulted or is likely to result in a substantial reduction in inmate industrial employment and whether such reductions, if any, present a significant risk 

of adverse effects on safe prison operation or public safety. 

(3) If the Attorney General finds a significant risk of adverse effects on either 

safe prison management or public safety, he shall so advise the Congress. 

(4) In advising the Congress pursuant to paragraph (3), the Attorney General 

shall make recommendations for additional authorizations of appropriations to provide additional alternative inmate rehabilitative opportunities and additional correctional staffing, as may be appropriate. 

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

(a) IN GENERAL.—Federal Prison Industries is authorized to enter into a contract with a Federal contractor (or a subcontractor of such contractor at any tier) 

to produce products as a subcontractor or supplier in the performance of a Federal 

procurement contract. The use of Federal Prison Industries as a subcontractor or 

supplier shall be a wholly voluntary business decision by the Federal prime contractor or subcontractor, subject to any prior approval of subcontractors or suppliers 

by the contracting officer which may be imposed by the Federal Acquisition Regulation or by the contract. 

(b) COMMERCIAL SALES PROHIBITED.—The authority provided by subsection (a) 

shall not result, either directly or indirectly, in the sale in the commercial market 

of a product or service resulting from the labor of Federal inmate workers in violation of section 1761(a) of title 18, United States Code. A Federal contractor (or subcontractor at any tier) using Federal Prison Industries as a subcontractor or supplier in furnishing a commercial product pursuant to a Federal contract shall implement appropriate management procedures to prevent introducing an inmate-produced product into the commercial market. 

(c) PROHIBITIONS ON MANDATING SUBCONTRACTING WITH FEDERAL PRISON IN- DUSTRIES.—Except as authorized under the Federal Acquisition Regulation, the use 

of Federal Prison Industries as a subcontractor or supplier of products or provider 

of services shall not be imposed upon prospective or actual Federal prime contractors or a subcontractors at any tier by means of—

(1) a contract solicitation provision requiring a contractor to offer to make 

use of Federal Prison Industries, its products or services; 

(2) specifications requiring the contractor to use specific products or services 

(or classes of products or services) offered by Federal Prison Industries in the 

performance of the contract; 

(3) any contract modification directing the use of Federal Prison Industries, 

its products or services; or 

(4) any other means. 

SEC. 6. INMATE WAGES AND DEDUCTIONS. 

Section 4122(b) of title 18, United States Code (as amended by section 3 of this 

Act), is further amended by adding after paragraph (10) a new paragraph (11) as 

follows: 

‘‘(11)(A) The Board of Directors of Federal Prison Industries shall prescribe the 

rates of hourly wages to be paid inmates performing work for or through Federal 

Prison Industries. The Director of the Federal Bureau of Prisons shall prescribe the 

rates of hourly wages for other work assignments within the various Federal correctional institutions. 

‘‘(B) The various inmate wage rates shall be reviewed and considered for increase on not less than a biannual basis. 

‘‘(C) Wages earned by an inmate worker shall be paid in the name of the inmate. Deductions, aggregating to not more than 80 percent of gross wages, shall be 

taken from the wages due for—

‘‘(i) applicable taxes (Federal, State, and local); 

‘‘(ii) payment of fines and restitution pursuant to court order; 

‘‘(iii) payment of additional restitution for victims of the inmate’s crimes (at 

a rate not less than 10 percent of gross wages); 

‘‘(iv) allocations for support of the inmate’s family pursuant to statute, court 

order, or agreement with the inmate; 

‘‘(v) allocations to a fund in the inmate’s name to facilitate such inmate’s 

assimilation back into society, payable at the conclusion of incarceration; and 

‘‘(vi) such other deductions as may be specified by the Director of the Bureau of Prisons. 

‘‘(D) Each inmate worker working for Federal Prison Industries shall indicate 

in writing that such person—

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‘‘(i) is participating voluntarily; and 

‘‘(ii) understands and agrees to the wages to be paid and deductions to be 

taken from such wages.’’. 

SEC. 7. CLARIFYING AMENDMENT RELATING TO SERVICES. 

(a) IN GENERAL.—Section 1761 of title 18, United States Code, is amended in 

subsection (a), by striking ‘‘any goods, wares, or merchandise manufactured, produced, or mined’’ and inserting ‘‘products manufactured, services furnished, or minerals mined’’. 

(b) COMPLETION OF EXISTING AGREEMENTS.—Any prisoner work program operated by a prison or jail of a State or local jurisdiction of a State which is providing 

services for the commercial market through inmate labor on October 1, 2002, may 

continue to provide such commercial services until—

(1) the expiration date specified in the contract or other agreement with a 

commercial partner on October 1, 2002, or 

(2) until September 30, 2005, if the prison work program is directly furnishing the services to the commercial market. 

(c) APPROVAL REQUIRED FOR LONG-TERM OPERATION.—A prison work program 

operated by a correctional institution operated by a State or local jurisdiction of a 

State may continue to provide inmate labor to furnish services for sale in the commercial market after the dates specified in subsection (b) if such program has been 

certified pursuant to section 1761(c)(1) of title 18, United States Code, and is in 

compliance with the requirements of such subsection and its implementing regulations. 

SEC. 8. CONFORMING AMENDMENT. 

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

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

Chapter 307 of title 18, United States Code, is further amended by adding the 

following: 

‘‘§ 4130. Construction of provisions 

‘‘Nothing in this chapter shall be construed—

‘‘(1) to establish an entitlement of any inmate to—

‘‘(A) employment in a Federal Prison Industries facility; or 

‘‘(B) any particular wage, compensation, or benefit on demand, except 

as otherwise specifically provided by law or regulation; 

‘‘(2) to establish that inmates are employees for the purposes of any law or 

program; or 

‘‘(3) to establish any cause of action by or on behalf of any inmate against 

the United States or any officer, employee, or contractor thereof.’’. 

SEC. 10. PROVIDING ADDITIONAL REHABILITATIVE OPPORTUNITIES FOR INMATES. 

(a) ADDITIONAL EDUCATIONAL, TRAINING, AND RELEASE-PREPARATION OPPORTUNITIES.—

(1) PROGRAM ESTABLISHED.—There is hereby established the Enhanced InPrison Educational and Vocational Assessment and Training Program within 

the Federal Bureau of Prisons. 

(2) COMPREHENSIVE PROGRAM.—In addition to such other components as the 

Director of the Bureau of Prisons deems appropriate to reduce inmate idleness 

and better prepare inmates for a successful reentry into the community upon 

release, the program shall provide—

(A) in-prison assessments of inmates’ needs and aptitudes; 

(B) a full range of educational opportunities; 

(C) vocational training and apprenticeships; and 

(D) comprehensive release-readiness preparation. 

(3) AUTHORIZATION OF APPROPRIATIONS.—For the purposes of carrying out 

the program established by paragraph (1), $75,000,000 is authorized for each 

fiscal year after fiscal year 2003, to remain available until expended. Funds 

shall be allocated from the gross profits within the Federal Prison Industries 

Fund, and, to the extent such amounts are inadequate, from the General Treasury. 

(4) SCHEDULE FOR IMPLEMENTATION.—All components of the program shall 

be established—

(A) in at least 25 percent of all Federal prisons not later than 2 years 

after the date of the enactment of this Act; 

(B) in at least 50 percent of all Federal prisons not later than 4 years 

after such date of enactment; 

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(C) in at least 75 percent of all Federal prisons not later than 6 years 

after such date of enactment; and 

(D) in all Federal prisons not later than 8 years after such date of enactment. 

(b) INMATE WORK OPPORTUNITIES IN SUPPORT OF NOT-FOR-PROFIT ENTITIES.— (1) PROPOSALS FOR DONATION PROGRAMS.—The Chief Operating Officer of 

Federal Prison Industries shall develop and present to the Board of Directors 

of Federal Prison Industries proposals to have Federal Prison Industries donate 

products and services to eligible entities that provide goods or services to lowincome individuals who would likely otherwise have difficulty purchasing such 

products or services in the commercial market. 

(2) SCHEDULE FOR SUBMISSION AND CONSIDERATION OF DONATION PRO- GRAMS.—

(A) INITIAL PROPOSALS.—The Chief Operating Officer shall submit the 

initial group of proposals for programs of the type described in paragraph 

(1) within 180 days after the date of the enactment of this Act. The Board 

of Directors of Federal Prison Industries shall consider such proposals from 

the Chief Operating Officer not later than the date that is 270 days after 

the date of the enactment of this Act. 

(B) ANNUAL OPERATING PLAN.—The Board of Directors of Federal Prison Industries shall consider proposals by the Chief Operating Officer for 

programs of the type described in paragraph (1) as part of the annual operating plan for Federal Prison Industries. 

(C) OTHER PROPOSALS.—In addition to proposals submitted by the Chief 

Operating Officer, the Board of Directors may, from time to time, consider 

proposals presented by prospective eligible entities. 

(3) DEFINITION OF ELIGIBLE ENTITIES.—For the purposes of this subsection, 

the term ‘‘eligible entity’’ means an entity—

(A) that is an organization described in section 501(c)(3) of the Internal 

Revenue Code of 1986 and exempt from taxation under section 501(a) of 

such Code and that has been such an organization for a period of not less 

than 36 months prior to inclusion in a proposal of the type described in 

paragraph (1), or 

(B) that is a religious organization described in section 501(d) of such 

Code and exempt from taxation under section 501(a) of such Code. 

(4) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated $7,000,000 for each of the fiscal years 2004 through 2008 for the purposes of paying the wages of inmates and otherwise carrying out programs of 

the type described in paragraph (1). 

(c) MAXIMIZING INMATE REHABILITATIVE OPPORTUNITIES THROUGH COGNITIVE

ABILITIES ASSESSMENTS.—

(1) DEMONSTRATION PROGRAM AUTHORIZED.—

(A) IN GENERAL.—There is hereby established within the Federal Bureau of Prisons a program to be known as the ‘‘Cognitive Abilities Assessment Demonstration Program’’. The purpose of the demonstration program 

is to determine the effectiveness of a program that assesses the cognitive 

abilities and perceptual skills of Federal inmates to maximize the benefits 

of various rehabilitative opportunities designed to prepare each inmate for 

a successful return to society and reduce recidivism. The demonstration 

program shall be undertaken by a contractor with a demonstrated record 

of enabling the behavioral and academic improvement of adults through the 

use of research-based systems that maximize the development of both the 

cognitive and perceptual capabilities of a participating individual, including 

adults in a correctional setting. 

(B) SCOPE OF DEMONSTRATION PROGRAM.—The demonstration program 

shall to the maximum extent practicable, be—

(i) conducted during a period of three consecutive fiscal years, commencing during fiscal year 2004; 

(ii) conducted at 12 Federal correctional institutions; and 

(iii) offered to 6,000 inmates, who are categorized as minimum security or less, and are within five years of release. 

(C) REPORT ON RESULTS OF PROGRAM.—Not later than 60 days after 

completion of the demonstration program, the Director shall submit to Congress a report on the results of the program. At a minimum, the report 

shall include an analysis of employment stability, stability of residence, and 

rates of recidivism among inmates who participated in the program after 

18 months of release. 

(2) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated $3,000,000 in each of the three fiscal years after fiscal year 2003, to reVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6621 E:\HR\OC\HR286.XXX HR286
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main available until expended, for the purposes of conducting the demonstration program authorized by subsection (a). 

(d) PRERELEASE EMPLOYMENT ASSISTANCE.— (1) IN GENERAL.—The Director of the Federal Bureau of Prisons shall, to 

the maximum extent practicable, afford to inmates opportunities to participate 

in programs and activities designed to help prepare such inmates to obtain employment upon release. 

(2) PRERELEASE EMPLOYMENT PLACEMENT ASSISTANCE.—Such prerelease 

employment placement assistance required by subsection (a) shall include—

(A) training in the preparation of resumes and job applications; 

(B) training in interviewing skills; 

(C) training and assistance in job search techniques; 

(D) conduct of job fairs; and 

(E) such other methods deemed appropriate by the Director. 

(3) PRIORITY PARTICIPATION.—Priority in program participation shall be accorded to inmates who are participating in work opportunities afforded by Federal Prison Industries and are within 24 months of release from incarceration. 

SEC. 11. RESTRUCTURING THE BOARD OF DIRECTORS. 

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

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

‘‘(a) Federal Prison Industries is a government corporation of the District of Columbia organized to carry on such industrial operations in Federal correctional institutions as authorized by its Board of Directors. The manner and extent to which 

such industrial operations are carried on in the various Federal correctional institutions shall be determined by the Attorney General. 

‘‘(b)(1) The corporation shall be governed by a board of 11 directors appointed 

by the President. 

‘‘(2) In making appointments to the Board, the President shall assure that 3 

members represent the business community, 3 members represent organized labor, 

1 member shall have special expertise in inmate rehabilitation techniques, 1 member represents victims of crime, 1 member represents the interests of Federal inmate workers, and 2 additional members whose background and expertise the President deems appropriate. The members of the Board representing the business community shall include, to the maximum extent practicable, representation of firms 

furnishing services as well as firms producing products, especially from those industry categories from which Federal Prison Industries derives substantial sales. The 

members of the Board representing organized labor shall, to the maximum practicable, include representation from labor unions whose members are likely to be 

most affected by the sales of Federal Prison Industries. 

‘‘(3) Each member shall be appointed for a term of 5 years, except that of members first appointed—

‘‘(A) 2 members representing the business community shall be appointed for 

a term of 3 years; 

‘‘(B) 2 members representing labor shall be appointed for a term of 3 years; 

‘‘(C) 2 members whose background and expertise the President deems appropriate for a term of 3 years; 

‘‘(D) 1 member representing victims of crime shall be appointed for a term 

of 3 years; 

‘‘(E) 1 member representing the interests of Federal inmate workers shall 

be appointed for a term of 3 years; 

‘‘(F) 1 member representing the business community shall be appointed for 

a term of 4 years; 

‘‘(G) 1 member representing the business community shall be appointed for 

a term of 4 years; and 

‘‘(H) the members having special expertise in inmate rehabilitation techniques shall be appointed for a term of 5 years. 

‘‘(4) The President shall designate 1 member of the Board as Chairperson. The 

Chairperson may designate a Vice Chairperson. 

‘‘(5) Members of the Board may be reappointed. 

‘‘(6) Any vacancy on the Board shall be filled in the same manner as the original appointment. Any member appointed to fill a vacancy occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed for the remainder of that term. 

‘‘(7) The members of the Board shall serve without compensation. The members 

of the Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 

57 of title 5, United States Code, to attend meetings of the Board and, with the adVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6621 E:\HR\OC\HR286.XXX HR286
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vance approval of the Chairperson of the Board, while otherwise away from their 

homes or regular places of business for purposes of duties as a member of the 

Board. 

‘‘(8)(A) The Chairperson of the Board may appoint and terminate any personnel 

that may be necessary to enable the Board to perform its duties. 

‘‘(B) Upon request of the Chairperson of the Board, a Federal agency may detail 

a Federal Government employee to the Board without reimbursement. Such detail 

shall be without interruption or loss of civil service status or privilege. 

‘‘(9) The Chairperson of the Board may procure temporary and intermittent 

services under section 3109(b) of title 5, United States Code. 

‘‘(c) The Director of the Bureau of Prisons shall serve as Chief Executive Officer 

of the Corporation. The Director shall designate a person to serve as Chief Operating Officer of the Corporation.’’. 

SEC. 12. PROVIDING ADDITIONAL MANAGEMENT FLEXIBILITY TO FEDERAL PRISON INDUSTRIES OPERATIONS. 

Section 4122(b)(3) of title 18, United States Code, is amended—

(1) by striking ‘‘(3)’’ and inserting ‘‘(3)(A)’’; and 

(2) by adding at the end the following new paragraphs: 

‘‘(B) Federal Prison Industries may locate more than one workshop at a Federal 

correctional facility. 

‘‘(C) Federal Prison Industries may operate a workshop outside of a correctional 

facility if all of the inmates working in such workshop are classified as minimum 

security inmates.’’. 

SEC. 13. TRANSITIONAL PERSONNEL MANAGEMENT AUTHORITY. 

Any correctional officer or other employee of Federal Prison Industries being 

paid with nonappropriated funds who would be separated from service because of 

a reduction in the net income of Federal Prison Industries during any fiscal year 

specified in section 4(e)(1) shall be—

(1) eligible for appointment (or reappointment) in the competitive service 

pursuant to title 5, United States Code; 

(2) registered on a Bureau of Prisons reemployment priority list; and 

(3) given priority for any other position within the Bureau of Prisons for 

which such employee is qualified. 

SEC. 14. FEDERAL PRISON INDUSTRIES REPORT TO CONGRESS. 

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

‘‘§ 4127. Federal Prison Industries report to Congress 

‘‘(a) IN GENERAL.—Pursuant to chapter 91 of title 31, the board of directors of 

Federal Prison Industries shall submit an annual report to Congress on the conduct 

of the business of the corporation during each fiscal year and the condition of its 

funds during the fiscal year. 

‘‘(b) CONTENTS OF REPORT.—In addition to the matters required by section 9106 

of title 31, and such other matters as the board considers appropriate, a report 

under subsection (a) shall include—

‘‘(1) a statement of the amount of obligations issued under section 

4129(a)(1) of this title during the fiscal year; 

‘‘(2) an estimate of the amount of obligations that will be issued in the following fiscal year; 

‘‘(3) an analysis of—

‘‘(A) the corporation’s total sales for each specific product and type of 

service sold to the Federal agencies and the commercial market; 

‘‘(B) the total purchases by each Federal agency of each specific product 

and type of service; 

‘‘(C) the corporation’s share of such total Federal Government purchases by specific product and type of service; and 

‘‘(D) the number and disposition of disputes submitted to the heads of 

the Federal departments and agencies pursuant to section 4124(e) of this 

title; 

‘‘(4) an analysis of the inmate workforce that includes—

‘‘(A) the number of inmates employed; 

‘‘(B) the number of inmates utilized to produce products or furnish services sold in the commercial market; 

‘‘(C) the number and percentage of employed inmates by the term of 

their incarceration; and 

‘‘(D) the various hourly wages paid to inmates employed with respect 

to the production of the various specific products and types of services authorized for production and sale to Federal agencies and in the commercial 

market; and 

12

‘‘(5) data concerning employment obtained by former inmates upon release 

to determine whether the employment provided by Federal Prison Industries 

during incarceration provided such inmates with knowledge and skill in a trade 

or occupation that enabled such former inmate to earn a livelihood upon release. 

‘‘(c) PUBLIC AVAILABILITY.—Copies of an annual report under subsection (a) 

shall be made available to the public at a price not exceeding the cost of printing 

the report.’’. 

SEC. 15. INDEPENDENT STUDY TO DETERMINE THE EFFECTS OF ELIMINATING THE FEDERAL 

PRISON INDUSTRIES MANDATORY SOURCE AUTHORITY. 

(a) STUDY REQUIRED.—The Comptroller General shall undertake to have an 

independent study conducted on the effects of eliminating the Federal Prison Industries mandatory source authority. 

(b) SOLICITATION OF VIEWS.—The Comptroller General shall ensure that in developing the statement of work and the methodology for the study, the views and 

input of private industry, organized labor groups, Members and staff of the relevant 

Congressional committees, officials of the executive branch, and the public are solicited. 

(c) SUBMISSION.—Not later than June 30, 2004, the Comptroller General shall 

submit the results of the study to Congress, including any recommendations for legislation. 

SEC. 16. SENSE OF CONGRESS. 

It is the sense of Congress that it is important to study the concept of implementing a ‘‘good time’’ release program for non-violent criminals in the Federal prison system. 

SEC. 17. DEFINITIONS. 

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

the following new section: 

‘‘§ 4131. Definitions 

‘‘As used in this chapter—

‘‘(1) the term ‘assembly’ means the process of uniting or combining articles 

or components (including ancillary finished components or assemblies) so as to 

produce a significant change in form or utility, without necessarily changing or 

altering the component parts; 

‘‘(2) the term ‘current market price’ means, with respect to a specific product, the fair market price of the product within the meaning of section 15(a) of 

the Small Business Act (15 U.S.C. 644(a)), at the time that the contract is to 

be awarded, verified through appropriate price analysis or cost analysis, including any costs relating to transportation or the furnishing of any ancillary services; 

‘‘(3) the term ‘import-sensitive product’ means a product which, according 

to Department of Commerce data, has experienced competition from imports at 

an import to domestic production ratio of 25 percent or greater; 

‘‘(4) the term ‘labor-intensive manufacture’ means a manufacturing activity 

in which the value of inmate labor constitutes at least 10 percent of the estimate unit cost to produce the item by Federal Prison Industries; 

‘‘(5) the term ‘manufacture’ means the process of fabricating from raw or 

prepared materials, so as to impart to those materials new forms, qualities, 

properties, and combinations; 

‘‘(6) the term ‘reasonable share of the market’ means a share of the total 

purchases by the Federal departments and agencies, as reported to the Federal 

Procurement Data System for—

‘‘(A) any specific product during the 3 preceding fiscal years, that does 

not exceed 20 percent of the Federal market for the specific product; and 

‘‘(B) any specific service during the 3 preceding fiscal years, that does 

not exceed 5 percent of the Federal market for the specific service; and 

‘‘(7) the term ‘services’ has the meaning given the term ‘service contract’ by 

section 37.101 of the Federal Acquisition Regulation (48 C.F.R. 36.102), as in 

effect on July 1, 2002.’’. 

SEC. 18. IMPLEMENTING REGULATIONS AND PROCEDURES. 

(a) FEDERAL ACQUISITION REGULATION.—

(1) PROPOSED REVISIONS.—Proposed revisions to the Governmentwide Federal Acquisition Regulation to implement the amendments made by this Act 

shall be published not later than 60 days after the date of the enactment of this 

Act and provide not less than 60 days for public comment. 

13

(2) FINAL REGULATIONS.—Final regulations shall be published not later 

than 180 days after the date of the enactment of this Act and shall be effective 

on the date that is 30 days after the date of publication. 

(3) PUBLIC PARTICIPATION.—The proposed regulations required by subsection (a) and the final regulations required by subsection (b) shall afford an 

opportunity for public participation in accordance with section 22 of the Office 

of Federal Procurement Policy Act (41 U.S.C. 418b). 

(b) BOARD OF DIRECTORS.—

(1) IN GENERAL.—The Board of Directors of Federal Prison Industries shall 

issue regulations defining the terms specified in paragraph (2). 

(2) TERMS TO BE DEFINED.—The Board of Directors shall issue regulations 

for the following terms: 

(A) Prison-made product. 

(B) Prison-furnished service. 

(C) Specific product. 

(D) Specific service. 

(3) SCHEDULE FOR REGULATORY DEFINITIONS.—

(A) Proposed regulations relating to the matter described in subsection 

(b)(2) shall be published not later than 60 days after the date of enactment 

of this Act and provide not less than 60 days for public comment. 

(B) Final regulations relating to the matters described in subsection 

(b)(2) shall be published not less than 180 days after the date of enactment 

of this Act and shall be effective on the date that is 30 days after the date 

of publication. 

(4) ENHANCED OPPORTUNITIES FOR PUBLIC PARTICIPATION AND SCRUTINY.—

(A) ADMINISTRATIVE PROCEDURE ACT.—Regulations issued by the Board 

of Directors shall be subject to notice and comment rulemaking pursuant 

to section 553 of title 5, United States Code. Unless determined wholly impracticable or unnecessary by the Board of Directors, the public shall be afforded 60 days for comment on proposed regulations. 

(B) ENHANCED OUTREACH.—The Board of Directors shall use means designed to most effectively solicit public comment on proposed regulations, 

procedures, and policies and to inform the affected public of final regulations, procedures, and policies. 

(C) OPEN MEETING PROCESSES.—The Board of Directors shall take all 

actions relating to the adoption of regulations, operating procedures, guidelines, and any other matter relating to the governance and operation of 

Federal Prison Industries based on deliberations and a recorded vote conducted during a meeting open to the public, unless closed pursuant to section 552(b) of title 5, United States Code. 

SEC. 19. RULES OF CONSTRUCTION. 

(a) AGENCY BID PROTESTS.—Subsection (e) of section 4124 of title 18, United 

States Code, as amended by section 2, is not intended to alter any rights of any offeror other than Federal Prison Industries to file a bid protest in accordance with 

other law or regulation in effect on the date of the enactment of this Act. 

(b) JAVITS-WAGNER-O’DAY ACT.—Nothing in this Act is intended to modify the 

Javits-Wagner-O’Day Act (41 U.S.C. 46, et seq.). 

SEC. 20. EFFECTIVE DATE AND APPLICABILITY. 

(a) EFFECTIVE DATE.—Except as provided in subsection (b), this Act and the 

amendments made by this Act shall take effect on the date of enactment of this Act. 

(b) APPLICABILITY.—Section 4124 of title 18, United States Code, as amended 

by section 2, shall apply to any requirement for a product or service offered by Federal Prison Industries needed by a Federal department or agency after the effective 

date of the final regulations issued pursuant to section 18(a)(2), or after September 

30, 2004, whichever is earlier. 

SEC. 21. CLERICAL AMENDMENTS. 

The table of sections for chapter 307 of title 18, United States Code, is amended—

(1) by amending the item relating to section 4121 to read as follows:

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

(2) by amending the item relating to section 4124 to read as follows:

‘‘4124. Governmentwide procurement policy relating to purchases from Federal Prison Industries.’’;

(3) by amending the item relating to section 4127 to read as follows:

‘‘4127. Federal Prison Industries report to Congress.’’;

and 

(4) by adding at the end the following new items:

14

‘‘4130. Construction of provisions. 

‘‘4131. Definitions.’’.

PURPOSE AND SUMMARY

H.R. 1829, the ‘‘Federal Prison Industries Competition in Contracting Act of 2003,’’ fundamentally and comprehensively reforms 

the 1934 authorizing statute of Federal Prison Industries, Inc. 

(FPI). The bill redefines the relationship between FPI and its currently captive Federal agency ‘‘customers,’’ by empowering Federal 

agency managers to use competitive contracting procedures to acquire products and services from FPI to improve the prospects of 

getting ‘‘best value’’ for the taxpayer dollars. 

Under H.R. 1829, the buying Federal agency, rather than FPI, 

will now determine whether the product or service being offered by 

FPI best meets the agency’s needs in terms of quality and time of 

delivery. The buying agency, rather than FPI, will now determine 

the reasonableness of FPI’s offered price. The buying agency will 

now be able to require FPI to fully and timely perform its contractual obligations in the same manner as it can currently do with 

any private sector contractor. Like any other supplier to the Government, FPI will now have to be cost-effective and reliable. 

H.R. 1829 opens to competition Federal contracting opportunities 

now reserved for FPI. Private sector firms, and their non-inmate 

workers, will, for the first time, be able to bid on these Federal 

business opportunities funded with their tax dollars. 

Under current law (18 U.S.C. 4124(a)), FPI has the status of a 

mandatory supplier under the Government-wide Federal Acquisition Regulation (FAR) in FAR Subpart 8.6 (Acquisition from Federal Prison Industries, Inc.) (48 CFR 8.6). A Federal agency is currently required to acquire from FPI, on a sole-source basis, any 

product of the type listed in the Schedule of Products published by 

FPI. In order to make a purchase from a source other than FPI, 

FAR 8.605 (Clearances) requires the buying agency to obtain FPI’s 

authorization, referred to by FPI as a ‘‘waiver.’’

Under FPI’s current waiver procedures, the decision to grant a 

waiver is made unilaterally by FPI. FPI, rather than the buying 

agency, determines whether the FPI-offered product meets the buying agency’s needs. Similarly, FPI, rather than the buying agency, 

determines if FPI’s proposed delivery schedule meets the buying 

agency’s needs. Finally, FPI, rather than the buying agency, determines the reasonableness of FPI’s price. FPI’s price must simply 

meet the statutory standard of ‘‘current market.’’ This standard is 

met if FPI’s offered price does not exceed the highest price offered 

to the Government for a comparable item, even if no actual sales 

have been made to the Government at that price. 

Under H.R. 1829, FPI will generally have to competitively win its 

contracts to provide products or services to Federal agencies. To enable FPI to adjust to the requirement that it obtain its contracts 

on a competitive basis, H.R. 1829 provides FPI with a 5-year transitional period to phase-out its sole-source dealings with its Federal 

agency customers. Under the transitional authority, Federal agencies are authorized to contract with FPI on a non-competitive basis, 

subject to annually declining caps on the use of the transitional 

preferential contracting authority. During the first transitional 

year, FY 2005, Federal agencies may make noncompetitive awards 

15

to FPI in amounts not to exceed 90 percent of FPI’s total sales in 

FY 2002. The authorized aggregate levels of noncompetitive awards 

decrease to 85 percent in FY 2006, to 70 percent in FY 2007, to 

55 percent in FY 2008, and to 40 percent in the final transitional 

year, FY 2009. 

During the transitional period, the bill requires the Attorney 

General to annually assess the impact of the phase-out on the 

number of inmates being employed by FPI and to determine whether such reductions, if any, ‘‘present a significant risk of adverse effects on safe prison operation or public safety.’’ If the Attorney General makes such a finding, he shall advise the Congress and make 

recommendations ‘‘for additional authorizations of appropriations 

to provide additional alternative inmate rehabilitative opportunities and additional correctional staffing, as may be appropriate.’’

H.R. 1829 also contains permanent authority for a Federal agency to make a sole-source award of an individual contract to FPI, if 

the Attorney General determines that ‘‘the contract award is necessary to maintain work opportunities otherwise unavailable at the 

penal or correctional facility at which the contract is to be performed to prevent circumstances that could reasonably be expected 

to significantly endanger the safe and effective administration of 

such facility.’’ This provision is designed to be an institutional 

‘‘safety valve’’ to protect correctional officers, other staff, and inmates. To prevent abuse, the determinations must be made on a 

contract-by-contract basis and be supported by findings by the warden of the affected correctional facility. 

To further help FPI to maintain inmate work opportunities, H.R. 

1829, for the first time, provides statutory authority for FPI to 

enter into a contract with a Federal contractor or subcontractor at 

any tier to produce products as a subcontractor or supplier in the 

performance of a Federal contract. The bill makes explicit that Federal prime contractors or subcontractors may not be compelled to 

use FPI as a subcontractor or supplier. 

H.R. 1829, when fully implemented, will generally require FPI to 

compete for its Federal business opportunities. However, the bill 

does not alter a broad array of advantages that FPI now enjoys in 

comparison to private sector firms. Inmate workers of FPI will continue to be paid at wage rates substantially less than the Federal 

minimum wage, prescribed by the Fair Labor Standards Act. Currently, FPI’s highest wage is $1.15 per hour. The bill does not alter 

the current situation in which FPI’s factory space is provided by 

the host correctional institution and is constructed at taxpayer expense. Similarly, FPI will continue to receive its utilities from the 

host institution. As a Government corporation, FPI has a preferential status to receive, without cost, industrial equipment 

deemed to be in excess of the needs of the various Federal departments and agencies, including the substantial quantities of industrial equipment returned to the Department of Defense by its contractors. As a Government-owned corporation, FPI is exempt from 

any Federal and State income tax, gross receipts tax, excise tax, or 

State and local sales taxes on any of its purchases. Finally, FPI has 

had a $20 million line-of-credit from the U.S. Treasury on an interest-free basis since 1988. 

H.R. 1829 builds upon the improvements made during the Committee’s consideration of H.R. 1577 during the 107th Congress to 

16

expand inmates’ access to alternative rehabilitative opportunities. 

The bill reflects the improved access to educational opportunities, 

both remedial and modern ‘‘hands-on’’ vocational programs, which 

were added to H.R. 1577 through a Conyers-Frank amendment. 

That amendment established an Enhanced In-Prison Educational 

and Vocational Assessment and Training Program and provided $ 

75 million annually to fund it. The bill also authorizes a ‘‘Cognitive 

Abilities Assessment Demonstration Program’’ within the Federal 

Bureau of Prisons. Use of such assessment techniques in the special adult education setting has shown important results in better 

matching education and training programs with needs of the individual. H.R. 1829 retains the pre-release employment assistance 

program first added to H.R. 1577 at the suggestion of the AFL-CIO. 

H.R. 1829, for the first time, establishes statutory prioritization 

regarding authorized deductions from inmate wages. The provision 

places a increased focus on deductions associated with restorative 

justice, such as increased deductions for victim restitution, and to 

help the inmate make a successful return to society, such as authorization for so-called ‘‘gate funds,’’ savings payable at the end of 

the term of incarceration. These provisions were first added to H.R. 

1577 based on testimony provided by the President of the Justice 

Fellowship, the public policy arm of Prison Fellowship Ministries. 

H.R. 1829 improves the process through which FPI’s Board of Directors considers expansion proposals from FPI’s career management staff. It improves, and makes independent, the process for 

evaluating the impact on the private sector of a staff-proposed expansion. It increases the opportunity for public comment on proposed expansions and assures that the Board will have direct access to the public comments received. Most importantly, the assessment and public comment process is applied to expansion proposals 

to offer a new service or a product as well as to expand substantially the production of a currently offered product or service. Finally, the bill provides clearer standards to guide the Board’s deliberations regarding a staff-proposed expansion. 

H.R. 1829 substantially modifies the structure of FPI’s Board of 

Directors. Currently, the Board is composed of six members, appointed by the President. Two are public members, one representing the Attorney General and the other representing the Secretary of Defense. Of the four private sector members, representing 

industry, labor, agriculture; and retailers and consumers. 

H.R. 1829 replaces the current board with an 11-member board, 

with three members representing business, three members representing labor, one member with special expertise in inmate rehabilitation techniques, one member representing victims of crime, 

one member representing inmate workers, and two additional 

members ‘‘whose background and expertise the President deems 

appropriate.’’ The restructuring of the Board was modeled after the 

Internal Revenue Service Oversight Board. 

Most importantly, the bill imposes a requirement that the Board 

deliberate and take actions in public and on the record, a fundamental change. Although repeatedly called upon to impose such a 

requirement upon itself by administrative action, no FPI Board of 

Directors has deemed it appropriate to do so. 

H.R. 1829 mandates improvements in the scope of the matters 

contained in FPI’s annual report to the Congress. These improveVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00016 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
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ments to provide more relevant information to facilitate oversight 

by the Congress. The bill also seeks to preserve public access to the 

annual report. 

H.R. 1829 contains a provision making explicit that the statutory 

prohibition on the sale of the results of inmate labor in interstate 

commerce or foreign commerce, 18 U.S.C. 1761(a), applies equally 

to services as well as products. For 65 years, this statute was consistently interpreted to prohibit the commercial sale of the results 

of inmate labor, products as well as services, although the statute 

does not explicitly mention services, which is not surprising given 

that a broad service economy did not exist in the 1930’s. 

A statutory exception to the broad statutory prohibition was provided in 1979 when Congress established the Prison Industry Enhancement (PIE) Program, codified at 18 U.S.C. 1761(c). Under the 

PIE Program, a State and local prison industry authorized to sell 

prison-made products and inmate-furnished services, after receiving approval, referred to as ‘‘certification,’’ from the Bureau of Justice Assistance within the Department of Justice (DOJ), for each 

individual project. 

Eager to provide services in the commercial market, FPI got a 

new interpretation of 18 U.S.C. 1761(a) in February 1998 finding 

no statutory prohibition on the commercial sale of inmate furnished 

services. The new interpretation did not come in the usual form of 

a formal legal opinion from DOJ’s Office of Legal Counsel, but in 

a legal memorandum from a special counsel in the Office of Enforcement Operations in DOJ’s Criminal Division, which provides 

legal services to FPI and the Bureau of Prisons. 

This ‘‘new’’ interpretation provided FPI and the prison industries 

of the States and their local governments, authority to sell inmatefurnished services, either directly or in partnerships with private 

sector firms, without meeting the standards for PIE certification. 

Notable among the restrictions that could now be bypassed are the 

prohibition against displacement of non-inmate workers to provide 

jobs for inmate workers and the requirement to pay inmate workers providing products or services to the commercial market at 

rates comparable to wages being paid non-inmate workers of private firms providing the same types of products or services. Without the protection of a comparable wage requirement, with a floor 

of the minimum wage set by the Fair Labor Standards Act, private 

sector firms using non-inmate workers faced unfair competition 

from firms using inmate workers being paid inmate wages. 

When FPI announced its Commercial Services Market Initiative 

in August 1998, the business community and labor raised strong 

objections. The Subcommittee on Oversight and Investigations of 

the Committee on Education and the Workforce held a hearing on 

September 20, 2000. Efforts to persuade the Executive Office of the 

President to call for a legal review of the new interpretation of 18 

U.S.C. 1761(a) and to impose a moratorium on any additional use 

by FPI have been ignored. 

A number of States have reasonably relied upon the new interpretation of 18 U.S.C. 1761(a) emanating from DOJ and begun offering inmate-furnished services to the commercial market, either 

directly or in partnership with private firms. Recognizing this, H.R. 

1829, like the reported version of H.R. 1577, contains a 

‘‘grandfathering’’ provision, which permits the completion of any exVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00017 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
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isting agreement with a private sector partner or gives a State program making direct sales a 2-year grace period, after which the activity can only be operated pursuant to a PIE Program certification. 

BACKGROUND AND NEED FOR THE LEGISLATION

INMATE WORK PROGRAMS

Prison systems at all levels use work opportunities to combat 

idleness and to impart basic work skills that contribute to an inmate’s successful return to society upon release. In the Federal Bureau of Prisons (BOP), as in most State prison systems, the vast 

majority of inmates work at jobs directly related to the operation 

and maintenance of the correctional facility. Work assignments encompass the full gamut of activities providing basic services, such 

as kitchens, laundries, plumbing, and work repairs, performing carpentry, painting, and groundskeeping to help maintain the Federal 

correctional institution. 

A much smaller percentage of inmates have work assignments in 

prison industry programs, which assemble products or furnish services which are generally sold exclusively to governmental agencies. 

Within the BOP, only about 18 percent of the inmates work for 

FPI. The remaining 82 percent of the able-bodied inmates within 

BOP are engaged in institutional work assignments. It should be 

noted that the percentages of inmates employed by prison industry 

programs at the State and local levels are substantially lower than 

the percentage employed by FPI. 

Proponents of FPI often assert that participating in FPI helps reduce recidivism. The data underlying that assertion are drawn 

from the Post Release Employment Project (PREP) study. Since in 

1983, BOP has conducted a on going study of the effects of vocational training and inmate work experiences on post-release success. The most recent analysis of the Post Release Employment 

Project (PREP) data covering 1984 through 1987, issued in 1997, 

shows that work experiences result in a 24% reduction in recidivism. What is infrequently cited is that same PREP data showed 

that vocational and remedial education programs have an result in 

a larger 33% reduction in recidivism. 

Recognizing the PREP study’s finding regarding the superiority 

of vocational and remedial education to reduce recidivism, H.R. 

1829 contains a broad provision to expand such programs within 

the Federal prison system. This provision was added to H.R. 1577 

by a Conyers-Frank amendment in the 107th Congress. 

Further, the legislation supplements these programs with a demonstration program of cognitive ability assessment techniques 

which improve the application of educational and training resources to maximize the benefits to the recipients in this case Federal inmates. Such programs have a persuasive record of success 

in the special needs adult education setting. 

To further enhance the prospects of Federal inmates making a 

successful return to society, H.R. 1829 makes available pre-release 

assistance to improve their prospects of finding and keeping a job 

upon release. Research has consistently shown that being able to 

find and maintain employment paying a liveable wage is central to 

19

avoiding a return to criminal activity and ultimately returning to 

prison. 

Competition from Prison Industry Programs 

While prison industry programs at the State level presently employ only small percentages of able-bodied inmates, when added to 

the substantial Federal Government sales of FPI, prison industry 

programs are estimated to have generated total sales of almost 

$1.5 billion during 2001, according to statistics reported for 2002 

by the National Correctional Industries Association (NCIA). These 

NCIA statistics do not include the sales of the prison industry programs operated by the Nation’s jails. 

All of these sales by prison industry programs, Federal, State, 

and local, are potential Government business opportunities foreclosed to private sector firms, and their non-inmate workers. Yet, 

all of those foregone Government business opportunities were funded with the tax dollars of those workers and those businesses. 

During 2002, FPI had $678.7 million in ‘‘sales’’ to Federal agen- cies up from $583.5 million during 2001. With such Federal ‘‘sales,’’ 

FPI would rank as the 32nd largest Federal contractor among the 

100 largest Federal contractors listed in the annual report of the 

Federal Procurement Data Center, but FPI’s ‘‘sales’’ are considered 

‘‘interagency transfers’’ and not procurement contract awards that 

must be reported to the Federal Procurement Data System. To put 

FPI’s Federal sales in context, FPI’s Federal ‘‘sales’’ exceeded those 

of Exxon-Mobil Corporation and General Motors Corporation. 

During 2002, FPI operated a centrally-managed chain of 111 factories located at 71 institutions across the Nation. At the end of 

2002, FPI provided work assignments to 21,778 inmates. FPI offers 

over 250 broad categories of products and services through what 

FPI refers to as its eight ‘‘Business Groups.’’ They are: (a) the 

Clothing and Textiles Business Group; (b) the Electronics Business 

Group; (c) the Fleet Management and Vehicular Components Business Group; (d) the Graphics Business Group; (e) the Industrial 

Products Business Group; (f) Office Furniture Business Group; (g) 

the Recycling Business Group; and (h) the Services Business 

Group. 

FPI has been expanding its offerings by entering into contractual 

partnerships with private sector firms, who are able to market 

their products to Federal agencies on a non-competitive basis under 

the authority of FPI’s mandatory source status. Such contractual 

arrangements are helping FPI to improve the quality of the endproducts being delivered to the Federal agencies and the timeliness 

of those deliveries. 

Such arrangements raise substantial questions regarding the 

amount of inmate labor actually represented in the products being 

furnished. In these situations, contract between FPI and its various 

contractual partners generally provides some indication of the 

amount of inmate labor. Most provide simply for some inmate assembly from complete kits furnished by the contractual partner. 

Somewhat mirroring the growth of the Federal inmate population, FPI’s sales have grown exponentially since the mid-1980’s. 

FPI’s sales were $29 million in 1960. They reached $117 million in 

1980. By 1985, they had grown to $240 million. FPI’s sales grew 

to $339 million in 1990, while total Federal procurement expendiVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
20

tures began dropping. By 1995, FPI had grown to $459.1 million 

in sales. By 2000, FPI had sales of $546.3 million. By the next 

year, FPI sales were $583.5 million. 

From the viewpoint of those supporting fundamental and comprehensive reform of FPI’s preferential status within the Federal 

procurement system, growth in FPI sales simply diminishes Federal business opportunities for private sector firms and their noninmate workers. Such diminished Government sales opportunities 

reduce work opportunities for their law-abiding workers. FPI’s unfair competition can be especially job threatening in the context of 

a ‘‘specific product’’ targeted for an FPI expansion, in which FPI 

may ultimately take 100 percent of the Federal market. 

Mandatory Source Status 

FPI’s sales growth would be praiseworthy, if these contract opportunities were won competitively. They are not. Rather they are 

won because FPI has been granted extraordinary preferential treatment in dealing with its Federal agency ‘‘customers’’ as a mandatory source. 

Preferential Status Regarding Contract Performance 

In addition to being able to take contract opportunities on a noncompetitive basis, FPI’s authorizing statute also empowers FPI, 

rather than its Federal agency ‘‘customers’’ to determine the adequacy of FPI’s own contract performance. Under FPI’s statute, if 

any dispute as to ‘‘price, quality, character, or suitability’’ of an 

FPI-furnished product arises it must be referred to a high-level arbitration panel comprised of the President (delegated to the Director of the Office of Management and Budget), the Attorney General, and the Administrator of General Services. According to the 

General Accounting Office (GAO), this Arbitration Board had not 

met since the 1930’s, until it was reactivated at the request of FPI 

in 1998. At that time, the jurisdiction of the arbitration board was 

focused exclusively on reviewing appeals of a denial of a waiver request. FPI refers to the arbitration board as the ‘‘Waiver Review 

Panel.’’

Unique Pricing Standard 

FPI’s authorizing statute requires that the price FPI charges its 

Federal agency customers cannot exceed a ‘‘current market price.’’ 

The statute and the FAR do not define current market price. Rather FPI operates on the basis of a 1931 Arbitration Board decision 

that says that FPI’s price meets the statutory ‘‘current market 

price’’ standard, if the price FPI intends to charge its Federal agency customer does not exceed the highest price at which a comparable product was offered to the Government. FPI the determines the comparability of products as well as the time-period for 

which any price survey it may conduct remains valid. 

Over-Pricing as the Source of FPI’s Asserted Self-sufficiency 

Those advocating reform of FPI’s authorizing statute assert that 

this unique standard permits FPI to charge prices that exceed 

prices that an agency customer could obtain for comparable or 

higher quality products furnished by private sector vendors with 

better performance records of timeliness and compliance with speciVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00020 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
21

fications. FPI routinely asserts that it is wholly self-sufficient 

based on its sales. Proponents of reform respond that FPI’s asserted self-sufficiency is founded upon its ability to overcharge its 

agency customers for products of lesser quality insulated from any 

means of effective challenge by the aggrieved buying agency. 

With regard to over-pricing, corroboration is provided by a 1991 

report by the DOD Inspector General and GAO reports in 1993 and 

1998. On October 11, 1991, the DOD IG issued Audit Report No. 

92–005, DOD PROCUREMENTS FROM FEDERAL PRISON INDUSTRIES. 

The DOD IG reviewed a sample of FPI contracts, over a 7-year period (FY84 to FY90) to supply electronic and electrical cables to 

DOD. The audit report found overpricing in 89% of the contracts 

that averaged 15%. 

On October 5, 1998, the DOD IG issued Audit Report No. 99–

001, DEFENSE LOGISTICS AGENCY PROCUREMENTS FROM FEDERAL

PRISON INDUSTRIES, INC. The DOD IG reviewed 1,786 contracts 

awarded during FY96 and FY97 for items, 87% of the textiles, for 

which DLA made purchases from FPI and commercial sources. 

Even for textiles, items for which FPI is especially competitive due 

to its lower labor costs, FPI’s prices were higher than commercial 

vendors in 42% of the contracts reviewed. 

On July 7, 1993, GAO issued Report No. GGD 93–51R, entitled 

FPI SYSTEMS FURNITURE. In accessing FPI pricing for systems furniture, the GAO compared FPI’s pricing with the prices available 

from commercial vendors through the GSA’s Multiple Award 

Schedule Program. FPI’s prices were higher than the offered prices 

of 9 of the 11 commercial systems furniture vendors under the 

MAS Program. FPI’s prices averaged 15% higher than the prices of 

the three commercial vendors whose sales in 1992 aggregated to 

60% of the systems furniture sales under the MAS Program. Further, the three most successful commercial suppliers were not simply ‘‘low-end product’’ vendors. 

Late Deliveries 

FPI’s captive Federal agency customers have consistently complained about the timeliness of FPI’s deliveries. On July 31, 1998, 

GAO issued FEDERAL PRISON INDUSTRIES: DELIVERY PERFORMANCE IMPROVING BUT PROBLEMS REMAIN (GAO/GGD–98–118; 

June 30, 1998) that provides current support for such criticism. 

Quality Problems 

While FPI asserts that it only provides quality products to its 

Federal agency customers, on time, and at fair prices, these assertions are routinely challenged by those supporting fundamental 

and comprehensive reform of FPI’s authorizing statute. A 1998 report by GAO, FEDERAL PRISON INDUSTRIES: LIMITED DATA

AVAILABLE ON CUSTOMER SATISFACTION (GAO/GGD–98–50; March 

16, 1998) calls into question FPI’s ability to substantiate their assertions of being a quality contractor. GAO found that ‘‘FPI lacks 

sufficient data to support any overall conclusions about whether 

Federal customers who buy and use its products and services are 

satisfied with their timeliness, price, and quality. FPI’s management systems are not designed to systematically collect and analyze Federal customers’ views about its products and services.’’

22

With regard to those who question FPI’s assertion that it only 

deliver to its Federal agency customers products that meets their 

specifications, persuasive corroboration is provided in a comprehensive 1992 report by the DOD Inspector General, QUALITY ASSURANCE ACTIONS RESULTING FROM ELECTRONIC COMPONENT SCREENING, Report No. 92–099. During a review of DOD quality assurance 

programs for accessing the quality of electronic components and cables furnished to DOD during FY 88–90, the DOD IG found that 

among the top-20 suppliers of electronic components, FPI ranked 

8th in terms of sales, but first in number of Product Quality Deficiency Reports (PQDRs) identified, 106 out of 170. Among all the 

contractors furnishing electronic components and cables to DOD 

during the review period, the DOD IG identified the contractors 

with most PQDRs. Three FPI factories were among the top-15 poor 

performers, with 100 PQDRs out of 245, or 40.1% of the total. The 

seriousness of these quality deficiencies by the DOD IG is amplified 

when it is recognized that many contracting officers don’t even 

bother to cite FPI for quality deficiencies, since, in practical terms, 

FPI determines the validity of any quality delinquency report made 

against any FPI product. 

The Federal Prison Industries Competition in Contracting Act of 

2003 thoroughly restructures the relationship between FPI and its 

Federal agency customers. The bill empowers them to use competitive contracting procedures to obtain ‘‘best value’’ for the taxpayer 

dollars being expended. Similarly, H.R. 1829 assures that the buying agencies will be able to avail themselves of generally-applicable 

contract administration tools currently available for use with respect to any private sector supplier. Finally, such a fundamental 

restructuring of the relationship between the Federal agencies and 

FPI will provide opportunities for private sector firms, and their 

non-inmate workers, to compete for Federal contracting opportunities funded with their tax dollars. 

HEARINGS

No hearings were held on H.R. 1829in this Congress. Hopwever, 

H.R. 1829 is substantially identical to H.R. 1577, as reported by 

the Committee in the 107th Congress. The Committee’s Subcommittee on Crime, Terrorism, and Homeland Security held a 

hearing on H.R. 1577 on April 26, 2001. 

COMMITTEE CONSIDERATION

On July 25, 2003, the Committee met in open session and ordered favorably reported the bill H.R. 1829 with an amendment by 

voice vote, a quorum being present. 

VOTE OF THE COMMITTEE

In compliance with clause 3(b) of Rule XIII of the Rules of the 

House of Representatives, the Committee notes that the following 

votes occurred during the Committee’s consideration of H.R. 1829. 

GREEN AMENDMENT

Mr. Green of Wisconsin offered an amendment which was defeated by a roll-call vote of 8 ayes to 19 noes. The Green amendVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
23

ment would have empowered the Attorney General to suspend 

FPI’s transition to competition by making certain findings.

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Hyde ............................................................................................................

Mr. Coble ........................................................................................................... X

Mr. Smith ..........................................................................................................

Mr. Gallegly .......................................................................................................

Mr. Goodlatte .................................................................................................... X

Mr. Chabot ........................................................................................................ X

Mr. Jenkins ........................................................................................................ X

Mr. Cannon ....................................................................................................... X

Mr. Bachus ........................................................................................................ X

Mr. Hostettler .................................................................................................... X

Mr. Green .......................................................................................................... X

Mr. Keller ........................................................................................................... X

Ms. Hart ............................................................................................................ X

Mr. Flake ........................................................................................................... X

Mr. Pence .......................................................................................................... X

Mr. Forbes ......................................................................................................... X

Mr. King ............................................................................................................ X

Mr. Carter .......................................................................................................... X

Mr. Feeney ......................................................................................................... X

Mrs. Blackburn .................................................................................................. X

Mr. Conyers ....................................................................................................... X

Mr. Berman .......................................................................................................

Mr. Boucher .......................................................................................................

Mr. Nadler ......................................................................................................... X

Mr. Scott ........................................................................................................... X

Mr. Watt ............................................................................................................ X

Ms. Lofgren ....................................................................................................... X

Ms. Jackson Lee ................................................................................................ X

Ms. Waters ........................................................................................................ X

Mr. Meehan .......................................................................................................

Mr. Delahunt .....................................................................................................

Mr. Wexler .........................................................................................................

Ms. Baldwin ......................................................................................................

Mr. Weiner .........................................................................................................

Mr. Schiff .......................................................................................................... X

Ms. Sa ́nchez ...................................................................................................... X

Mr. Sensenbrenner, Chairman .......................................................................... X

Total ................................................................................................ 8 19

WATERS AMENDMENT

Ms. Waters offered an amendment which was defeated on a rollcall vote of 5 ayes to 22 noes. The amendment would have mandated a minimum wage of $2.50 for inmates with work assignments with Federal Prison Industries, Inc.

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Hyde ............................................................................................................

Mr. Coble ........................................................................................................... X

Mr. Smith .......................................................................................................... X

Mr. Gallegly .......................................................................................................

Mr. Goodlatte .................................................................................................... X

Mr. Chabot ........................................................................................................ X

Mr. Jenkins ........................................................................................................ X

Mr. Cannon ....................................................................................................... X

Mr. Bachus ........................................................................................................ X

24

ROLLCALL NO. 2—Continued

Ayes Nays Present 

Mr. Hostettler .................................................................................................... X

Mr. Green .......................................................................................................... X

Mr. Keller ........................................................................................................... X

Ms. Hart ............................................................................................................ X

Mr. Flake ........................................................................................................... X

Mr. Pence .......................................................................................................... X

Mr. Forbes ......................................................................................................... X

Mr. King ............................................................................................................ X

Mr. Carter .......................................................................................................... X

Mr. Feeney ......................................................................................................... X

Mrs. Blackburn .................................................................................................. X

Mr. Conyers ....................................................................................................... X

Mr. Berman .......................................................................................................

Mr. Boucher .......................................................................................................

Mr. Nadler .........................................................................................................

Mr. Scott ........................................................................................................... X

Mr. Watt ............................................................................................................ X

Ms. Lofgren ....................................................................................................... X

Ms. Jackson Lee ................................................................................................ X

Ms. Waters ........................................................................................................ X

Mr. Meehan .......................................................................................................

Mr. Delahunt .....................................................................................................

Mr. Wexler .........................................................................................................

Ms. Baldwin ......................................................................................................

Mr. Weiner .........................................................................................................

Mr. Schiff .......................................................................................................... X

Ms. Sa ́nchez ...................................................................................................... X

Mr. Sensenbrenner, Chairman .......................................................................... X

Total ................................................................................................ 5 22

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of Rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of Rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

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

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of Rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 1829, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974:

25

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, September 17, 2003. 

Hon. F. JAMES SENSENBRENNER, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1829, the Federal Prison 

Industries Competition in Contracting Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Lanette J. Walker, who 

can be reached at 226–2860. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN.

Enclosure

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 1829—Federal Prison Industries Competition in Contracting 

Act of 2003. 

SUMMARY

The proposed legislation would amend the laws that authorize 

the Federal Prison Industries (FPI), a Government-owned corporation that produces goods and services for the Federal Government 

with prison labor. Under current law, Federal agencies are required to purchase products from FPI if products are available to 

meet the agencies’ needs and the cost would not exceed current 

market prices. Such products include office furniture, textiles, vehicle tags, and fiber optics. Under the proposed legislation, this requirement would be reduced over the next several years, and the 

share of the Federal market that FPI holds for the products and 

services it provides would be limited to 20 percent and 5 percent, 

respectively. 

CBO estimates that implementing H.R. 1829 would cost $587 

million over the 2004–2008 period, subject to appropriation of the 

necessary amounts. The bill also would affect direct spending by 

FPI, but CBO estimates that net changes in direct spending would 

be insignificant for each year. Major elements of that cost estimate 

are summarized below. 

The legislation would direct FPI to establish a program that 

would produce products that would be donated to nonprofit organizations. It would authorize the appropriation of $7 million a year 

for fiscal years 2004 through 2008 to carry out the new donation 

program. Assuming the appropriation of the authorized amounts, 

CBO estimates that implementing this program would cost about 

$35 million over the 2004–2008 period. All costs of the donation 

program would be subject to appropriation action. 

Section 10 would authorize the Attorney General to establish a 

Federal Enhanced In-Prison Vocational Assessment and Training 

Program in Federal institutions and would authorize the appropriation of $75 million each year beginning in 2004 for such training. Assuming the appropriation of the specified amounts, CBO esVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00025 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
26

timates that implementing this new program would cost $366 million over the 2004–2008 period. 

As FPI operations decline under the legislation, additional security costs paid for with appropriated funds would be incurred. CBO 

estimates that the Federal Bureau of Prisons would initially need 

about 300 security officers to guard the inmates that would no 

longer be working at FPI facilities as a result of the legislation. 

(Some security costs are paid for now out of FPI’s direct spending.) 

We estimate that implementing H.R. 1829 would cost $21 million 

in 2004 and $177 million over the 5-year period for the salaries and 

benefits of security officers, assuming the appropriation of the necessary amounts. 

H.R. 1829 contains an intergovernmental mandate as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

the cost to State, local, and tribal governments for complying with 

this mandate would be insignificant and thus well below the 

threshold established in the act ($59 million in 2003, adjusted for 

inflation). This bill contains no new private-sector mandates as defined in UMRA. 

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of the amendment is shown in 

the following table. The cost of this legislation falls within budget 

function 750 (administration of justice).

By Fiscal Year, in Millions of Dollars 

2004 2005 2006 2007 2008

CHANGES IN SPENDING SUBJECT TO APPROPRIATION

FPI Donation Program 

Authorization Level 7 7 7 7 7

Estimated Outlays 7 7 7 7 7

Enhanced Vocational Assessment and Training 

Authorization Level 75 75 75 75 75

Estimated Outlays 66 75 75 75 75

Cognitive Abilities Assessment Demonstration Program 

Authorization Level 3 3 3 0 0

Estimated Outlays 2 3 3 1 0

Additional Discretionary Security Costs 

Estimated Authorization Level 24 30 37 43 49

Estimated Outlays 21 30 36 42 48

Total Changes 

Estimated Authorization Level 109 115 122 125 131

Estimated Outlays 96 115 121 125 130

CBO assumes that the proposed legislation would be enacted 

near the beginning of fiscal year 2004 and that the authorized 

amounts will be appropriated for each year. We estimate that implementing the programs authorized in section 10 of H.R. 1829 

would cost $410 million over the 2004–2008 period. In addition, 

CBO estimates that implementing H.R. 1829 would cost the Federal Bureau of Prisons $21 million in 2004 and about $177 million 

over the 5-year period for additional security officers to supervise 

inmates that would no longer be working as a result of enacting 

this legislation. The costs to implement the bill’s provisions would 

be subject to appropriation of the necessary amounts. 

27

FPI Donation Program 

The legislation would authorize the Attorney General to establish 

a new FPI program in Federal institutions that, subject to appropriation of the necessary amounts, would produce goods and services to be donated to nonprofit organizations instead of being offered for purchase to the Federal Government. It would authorize 

the appropriation of $7 million in fiscal year 2004 and $35 million 

over the 2004–2008 period to operate the new donation program in 

Federal institutions. Costs would include inmate and civilian salaries, raw materials, maintenance, and other expenses to convert 

manufacturing facilities to produce products desirable to nonprofit 

organizations. 

Enhanced In-Prison Vocational Assessment and Training 

Section 10 would authorize the Attorney General to establish a 

Federal Enhanced In-Prison Vocational Assessment and Training 

Program in Federal institutions and would authorize the appropriation of $75 million each year after 2003 for such program. Federal institutions currently participate in vocational assessment and 

training programs, and we assume that the program that would be 

authorized by the amendment would be an expanded version of the 

current program. Assuming the appropriation of the specified 

amounts, CBO estimates that the enhanced program would cost 

$366 million over the 2004–2008 period to increase the number of 

inmates who participate in the training and to expand the services 

provided by the program. 

Cognitive Abilities Assessment Demonstration Program 

Section 10 also would authorize the appropriation of $3 million 

in fiscal years 2004, 2005, and 2006 to the Bureau to establish the 

Cognitive Abilities Assessment Demonstration Program in 12 Federal institutions. The project would assess inmate cognitive abilities and perceptual skills to determine what rehabilitative activities would be most successful for the project’s participants. CBO estimates that this provision would cost $9 million over the 2004–

2008 period, assuming the appropriation of the authorized 

amounts. 

Additional Discretionary Security Costs 

The bill would restrict the portion of the Federal market for 

goods and services that FPI can serve and reduce the requirement 

for Federal agencies to purchase such goods and services from FPI. 

Based on information from the Department of Justice (DOJ) and 

major Federal customers of FPI, we expect that FPI’s total sales to 

the Federal Government would decrease under the bill by 20 percent of projected sales in 2004 and that such sales would continue 

to decline—eroding by 40 percent of anticipated sales by 2008. Because of the reduction in Federal sales, CBO expects there would 

be a corresponding reduction in the number of inmates employed 

by FPI. 

Because the demand for FPI goods and services is expected to decline under H.R. 1829, FPI would provide security for fewer inmates during work hours. The costs of FPI operations, including security, are directly financed from the sale of its goods and services. 

28

No discretionary costs are incurred to provide security to prisoners 

participating in FPI programs during work hours. 

Based on information from DOJ about the number of prison security personnel needed to guard the prison population, CBO estimates that the Federal Bureau of Prisons would need to increase 

discretionary spending to pay for 300 security officers to supervise 

prisoners no longer supervised by FPI during the work day. We estimate the number of guards required would grow to 600 by 2008 

as the operations of FPI decline. We estimate that implementing 

H.R. 1829 would cost $21 million in 2004 and $177 million over the 

5-year period for the salaries and benefits of such officers, assuming the appropriation of the necessary amounts. 

Changes in FPI Direct Spending 

The legislation would limit the portion of the Federal market for 

any product or service that FPI can provide to the Government to 

20 percent and 5 percent, respectively. For example, FPI provides 

94 percent of all mail carrier bag repair for the U.S. Postal Service. 

The legislation would prevent FPI from providing more than 5 percent of that service. In addition, it would gradually reduce the requirement for Federal agencies to purchase FPI products and services. Based on information from the DOJ, and major Federal customers of FPI, we expect that FPI’s total sales to the Federal Government would decrease by 20 percent of projected sales in 2004 

and that such sales would continue to decline—eroding by 40 percent of anticipated sales by 2008. 

The cost to Federal Prison Industries to manage and produce 

products for the Federal Government is currently funded entirely 

by collections from the agencies that purchase FPI products. Those 

current collections and FPI’s spending are considered direct spending. CBO estimates that the total amount collected by FPI would 

decrease over the 5-year period under the proposed legislation as 

agencies procure fewer FPI products. But that reduction in collections would be offset by a reduction in the cost to produce such 

products. Therefore, CBO estimates that enacting this legislation 

would result in no significant net change in direct spending for 

each year. 

ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

H.R. 1829 contains an intergovernmental mandate as defined in 

UMRA because it would require work programs in State and local 

prisons that provide services in interstate commerce to obtain Federal certification in order to continue operating after September 

2005 or the end of their current contract. CBO estimates that the 

administrative cost to obtain this certification would be insignificant and well below the threshold established in UMRA ($59 million in 2003, adjusted annually for inflation). This bill would impose no other significant costs on State, local, or tribal governments. 

ESTIMATED IMPACT ON THE PRIVATE SECTOR

This bill contains no new private-sector mandates as defined in 

UMRA. 

29

ESTIMATE PREPARED BY: 

Federal Costs: Lanette J. Walker (226–2860) 

Impact on State, Local, and Tribal Governments: Melissa Merrell 

(225–3220) 

Impact on the Private Sector: Paige Piper/Bach (226–2940) 

ESTIMATE APPROVED BY: 

Peter H. Fontaine 

Deputy Assistant Director for Budget Analysis 

COMMITTEE RESPONSE TO

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The Committee disagrees with the cost estimate prepared by the 

Congressional Budget Office (CBO) relating to the reported text of 

H.R. 1829. This response will address matters that the cost estimate fails to address and matters in which CBO’s conclusions regarding the impact of the bill are not supported by the provisions 

of the bill as reported. 

First, the CBO cost estimate fails to acknowledge the savings 

that can be expected from the use of competitive procurement procedures required by the bill rather than sole-source contracting 

procedures that federal agencies now must use in buying from Federal Prison Industry (FPI). 

Use of competitive procurement techniques to obtain goods and 

services, rather than relying on non-competitive contract awards to 

a sole-source supplier, have consistently resulted in procurement 

savings of between 10 and 30 percent. This standard was first established through the substantial work done by the U.S. General 

Accounting Office (GAO) during the mid-1980s in response to the 

case of egregious spare parts overpricing confronted by the Department of Defense. The benefits of competitive acquisition techniques 

have been consistently validated through subsequent work by GAO 

and the various Inspectors General (IG), most notably the DOD IG. 

Some of this subsequent work suggests savings at the higher end 

of the range. 

The Committee understands that CBO has highlighted the benefits of competitive acquisition techniques in estimates related to 

various legislative proposals relating to reforms of the Federal procurement process. Similarly, the Committee understands that CBO 

has highlighted the benefits of a competitive procurement in other 

work. Inexplicably, the CBO cost estimate with respect to H.R. 

1829 failed to do so. 

In FY 2002, FPI had sales of $678.7 million, up from $583.5 in 

FY 2001. Such sales make FPI the 32d largest contractor to the 

Federal Government. All of FPI sales to the Federal agencies are 

on a non-competitive basis. 

H.R. 1829 empowers FPI’s currently captive Federal agency customers to regularly use competitive procurement techniques. Based 

on FPI’s sales in FY 2002 that means that potential savings in acquisition costs in the range of $6.9 million to $203.6 are predictable 

and should have been acknowledged by CBO. 

30

Further, competitive procurement techniques have been consistently shown to improve the quality of the products being offered. 

They, too, should have been acknowledged. 

Competitive procurement techniques also improve the timeliness 

of deliveries by vendors who know that their past performance 

records will have a significant impact on the likelihood of winning 

future business. Timely deliveries can result in savings through 

cost avoidance. If a Federal agency does not have to extend on a 

month-to-month basis the lease on its current space because late 

deliveries preclude the occupancy of its new leased space, the agency avoids paying taxpayer money for space that cannot be occupied. 

Such cost avoidances, too, are real savings and should have been, 

at least, acknowledged. 

Next, the CBO makes a series of conclusions regarding the impact of H.R. 1829 that are directly contradicted by express provisions of the bill, ass reported, or ignore other provisions that provide alternative inmate work opportunities or rehabilitative opportunities that also combat idleness and better prepare inmates for 

a successful return to society. 

The cost estimate concludes that FPI operations will ‘‘decline 

under the legislation’’, necessitating the hiring of additional correctional officers ‘‘to guard the inmates that would no longer be working at FPI facilities as a result of the legislation.’’ Specifically, CBO 

asserts that FPI’s sales will decline due to the enactment of H.R. 

1829 by 20 percent in FY 2004, the year of enactment. CBO goes 

on to assert that such reduced sales will require the hiring of 300 

additional correctional officers in FY 2004 at an estimated cost of 

$21 million. The CBO-forecasted decline in FPI Federal sales and 

the resulting projected need for additional correctional officers in 

FY 2004 projected by CBO have no basis. They are contradicted by 

the provisions of the reported bill. Under Section 20 (Effective Date 

and Applicability) of the bill, there is no change to FPI’s status as 

a mandatory source to its captive Federal agency customers during 

the year following the date of enactment. FY 2004 is devoted to the 

promulgation of modifications to the Government-wide Federal Acquisition Regulation (FAR) and associated rule-making by the FPI 

Board of Directors, with ample opportunity for public comment, as 

prescribed by Section 18 (Implementing Regulations and Procedures). 

The CBO cost estimate goes on to assert that FPI’s sales will 

continue to decline, ‘‘eroding by 40 percent’’ by FY 2008. CBO offers 

two reasons to support its forecasted 40 percent decline in the FPI 

sales. 

First, the cost estimate erroneously asserts that H.R. 1829 would 

‘‘restrict the portion of the federal market for goods and services 

that FPI can serve’’, to 20 percent and 5 percent respectively. The 

CBO estimate specifically cites as an example the fact that FPI 

provides 94 percent of the mail bag repair for the U.S. Postal Services (USPS). CBO then states that ‘‘the legislation would prevent 

FPI from providing more than 5 percent of that service.’’

Again, the plain text of the bill, as reported, contradicts the basis 

for CBO’s assertion. As introduced, the bill defined the term ‘‘reasonable share of the market,’’ specifying that a 20 percent market 

share for a specific product and 5 percent market share for a specific service. As introduced, the bill precluded the FPI Board of DiVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00030 Fmt 6659 Sfmt 6602 E:\HR\OC\HR286.XXX HR286
31

rectors from authorizing FPI sales of a specific product or a specific 

service in amounts in excess of a ‘‘reasonable share of the market’’. 

To address the example cited by CBO, the Chairman, joined by the 

Ranking Democratic Member, offered an amendment that provided 

flexibility to the Board to authorize FPI sales of specific products 

and services at amounts in excess of market shares of 20 percent 

and 5 percent respectively. Such higher sales could be authorized 

when requested by the buying agency, such as the USPS. The provision also provided a broader ‘‘for good cause shown’’ standard, 

that is restricted only by the necessity of being approved by eight 

members of the eleven-member Board rather than a simple majority. 

Second, the CBO erroneously asserts that H.R. 1829 would ‘‘reduce the requirement for federal agencies to purchase goods and 

services from FPI.’’ Again, the text of the bill contradicts CBO’s assertion. 

H.R. 1829 places an affirmative responsibility on a buying agency 

to solicit an offer from FPI whenever it has a requirement to purchase a product or service authorized to be offered by sale by FPI 

and listed in its catalog of offerings. Private sector vendors to the 

Federal Government must find their contracting opportunities on 

their own. FPI’s offer is considered under the same evaluation criteria as a product or service offered by a private sector offeror. 

Award of a contract to the offeror, whether FPI or a private-sector 

offeror, is made after being determined by the buying agency’s contracting officer to represent the ‘‘best value’’ to the taxpayer on the 

basis of the offered-purchase price, past performance evaluation, 

and other price-related selection criteria. 

What is changed by H.R. 1829 is that FPI must now offer a product or service that represents the ‘‘best value’’ for the taxpayer dollars being spent and to fully and timely perform its contractual obligations as required of all other Federal contractors. As CBO 

notes, under FPI’s existing statute, Federal agencies are by statute 

required to purchase products offered by FPI that ‘‘meet their requirements’’, are ‘‘available’’ to meet those needs, and are offered 

at prices that do ‘‘not exceed a current market price’’. 

Under the implementing FAR regulations that essentially created FPI’s status as a mandatory source of supply and FPI’s procedures and practices regarding the exercise of that status, FPI, rather the buying agency, makes the key buying decisions. FPI, rather 

than the buying agency, determines whether the FPI-offered product meets the buying agency’s needs. FPI, rather than the buying 

agency, determines if FPI’s proposed delivery schedule meets the 

buying agency’s needs. FPI, rather than the buying agency, determines the reasonableness of FPI’s price. 

Today, FPI’s price meets ‘‘current market’’ standard, if FPI’s offered price does not exceed the highest price offered to the Government for a comparable item. There is no requirement that actual 

purchases have been made by a Federal agency at that price. 

The amount of FPI’s sales to the various Federal agencies, like 

the sales volume of any private sector contractor, will be determined by the extent that FPI is able to provide a high quality product, when needed, at the best price, all tested in the crucible of 

competition. 

32

If FPI’s sales fall, it confirms that FPI’s captive Federal agency 

customers have been forced by FPI’s mandatory source status to accept products and contract performance at prices that are not even 

an approximation of ‘‘best value’’. In essence, these currently captive federal agencies have been involuntarily subsidizing FPI’s operations with the taxpayer dollars appropriated for the conduct of 

their missions on behalf of the public. 

The CBO cost estimate also ignores that H.R. 1829 provides a 

five-year period during which FPI can phase-out its sole dealings 

with its federal agency customers and adjust to the requirement 

that it obtain its contracts on a competitive basis. Under the transitional authority, Federal agencies are authorized to contract with 

FPI on a non-competitive basis, subject to annually declining caps 

on the use of the transitional preferential contracting authority. 

During the first transitional year, FY 2005, Federal agencies may 

make noncompetitive awards to FPI in amounts not to exceed 90 

percent of FPI’s total sales in FY 2002. The authorized aggregate 

levels of noncompetitive awards decreases to 85 percent in FY 

2006, to 70 percent in FY 2007, to 55 percent in FY 2008, and 40 

percent in the final transitional year, FY 2009. 

This transitional authority raises additional substantial questions regarding the validity of CBO’s dire estimates regarding the 

loss of FPI sales during the period FY 2004 through FY 2008. Obviously, the CBO estimates about additional correctional staff that 

will be required are without basis if their estimate regarding declining sales lacks a credible basis. 

The CBO cost estimate fails to even acknowledge the potential 

to provide alternative inmate work opportunities in performing 

work for non-profit organizations. Inmates derive no benefit from 

the corrosive manner in which FPI is currently able to compel its 

captive Federal agencies to purchase products offered by FPI. Inmates benefit equally in terms of reduced idleness and rehabilitation whether they are doing work for non-profit organizations or 

doing traditional industrial work that has to be sold in the same 

competitive economic environment in which they will have to operate upon release. 

Similarly, CBO has chosen to ignore the benefits of the alternative inmate rehabilitative opportunities provided by the bill. 

Such programs help combat idleness as well. Further, the Bureau 

of Prisons’ own Post Release Employment Project (PREP) study 

confirms that inmates participating in focused remedial and vocational educational programs are 32 percent less likely to return to 

prison than those who participate in traditional industrial programs who are 24 percent less likely to recidivate. 

Finally, the CBO cost estimate erroneously asserts that H.R. 

1829 establishes a new intergovernmental mandate and it does not. 

Rather, it clarifies that long-existing law, which has been called 

into question by an erroneous legal opinion, still applies. There is 

nothing new in that clarification. 

Section 1761(a) of Title 18, United States Code, prohibits the results of inmate labor from being sold in interstate or foreign commerce. This prohibition applies equally to inmates incarcerated by 

State and local governments and the Federal Bureau of Prisons. 

Section 1761(c) of Title 18, first enacted in 1979, provides the 

principal exception to the general prohibition on the commercial 

33

sale of the results of inmate labor contained in 18 U.S.C. 1761(a). 

It authorizes the Prison Industry Enhancement (PIE) Program 

under which a State-sponsored prison industry program may be authorized to sell in the commercial market, either directly or 

through a private-sector partner, products produced, or services 

furnished, by inmates incarcerated by the State or one of its units 

of local government. Each proposed PIE project must apply for PIE 

certification from the Bureau of Justice Assistance (BJA) at the Department of Justice. Application is voluntary. Obtaining PIE Certification requires the PIE-certified program to make quarterly reports to BJA during the term of the program’s operation. 

These reports are compiled for BJA by the National Correctional 

Industries Association (NCIA). A review of those NCIA reports reflects that programs in which State or local inmates are furnishing 

services for sale in the commercial market have sought and been 

granted PIE certification, since the PIE Program’s expansion to all 

50 States, which was statutorily authorized in 1990. 

As previously described, Section 7 (Clarifying Amendment Relating to Services) of H.R. 1829 makes explicit that the statutory prohibition on the sale of the results of inmate labor in interstate commerce or foreign commerce contained in 18 U.S.C. 1761(a) applies 

equally to services as well as products. For 65 years, this statute 

was consistently interpreted to prohibit the commercial sale of inmate-furnished services as well as inmate-produced products. 

In February, 1998, FPI obtained a ‘‘new’’ interpretation of 18 

U.S.C. 1761(a) finding no statutory prohibition on the commercial 

sale of inmate furnished services. The ‘‘new’’ interpretation did not 

come in the usual form of a formal legal opinion from DOJ’s Office 

of Legal Counsel, but in a legal memorandum from a special counsel in the Office of Enforcement Operations in DOJ’s Criminal Division, which provides legal services to FPI and the Bureau of Prisons. 

This ‘‘new’’ interpretation provided FPI and the prison industries 

of the States and their local governments, authority to sell inmatefurnished services, either directly or in partnerships with private 

sector firms, without meeting the standards for PIE certification. 

Notable among the restrictions that could now be bypassed are the 

prohibition against displacement of non-inmate workers to provide 

jobs for inmate workers and the requirement to pay inmate workers providing products or services to the commercial market at creates comparable to wages being paid non-inmate workers of private 

firms providing the same types of products or services. Without the 

protection of a comparable wage requirement, with a floor of the 

minimum wage set by the Fair Labor Standards Act, private sector 

firms using non-inmate workers faced unfair competition from 

firms using inmate workers being paid inmate wages. 

A number of States have reasonably relied upon the new interpretation of 18 U.S.C. 1761(a) emanating from DOJ and began offering inmate-furnished services to the commercial market, either 

directly or in partnership with private firms. Recognizing this, Section 7 contains a ‘‘grandfathering’’ provision, which permits the 

completion of any existing agreement with a private sector partner 

or gives a state program making direct sales a 2-year grace period. 

The provision makes explicit that after the expiration of the specified ‘‘grace periods,’’ a State-sponsored prison industry program 

34

wishing to offer for commercial sale inmate furnished services do 

so pursuant to the existing requirements of the PIE Program. 

Making explicit the continuing application of the prescriptions of 

18 U.S.C. 1761(c), and its implementing procedures on this provision, CBO appears to base its assertion that H.R. 1829 establishes 

a new intergovernmental mandate on this provision Committee respectfully disagrees. 

For the foregoing reasons, the Committee believes the analysis 

provided in the CBO cost estimate suffers from several fundamental flaws that undermine its conclusions.

PERFORMANCE GOALS AND OBJECTIVES

In compliance with clause 3(c)(4) of Rule XIII of the Rules of the 

House of Representatives, the Committee makes the following 

statement of performance goals and objectives. 

H.R. 1829 provides authorizations of appropriations for programs 

relating to improving the prospects for Federal inmates to make a 

successful return to society thus reducing the current levels of recidivism within the Federal Bureau of Prisons. Section 10(a)(3) provides $75 million annually, beginning in FY 2004, to support the 

Enhanced In-Prison Educational and Vocational Assessment and 

Training Program, authorized by section 10(a)(1). Section 10(b)(4) 

provides $7 million for each of the fiscal years 2004 through 2008 

in support of the inmate work opportunities in support of not-forprofit entities authorized by section 10(b) principally to pay the 

wages of inmates performing work for such entities on a non-reimbursable basis. Section 10(c)(2) provides $3 million annually in fiscal year 2004 through 2006 to support the Cognitive Abilities Assessment Demonstration Program established by section 

10(c)(1)(A). Various provisions of the bill provide for on-going monitoring and assessment of the reforms contemplated by the legislation by the Attorney General as well as other external monitoring 

under the direction of the Comptroller General of the United 

States. Taken together, these monitoring requirements as well as 

the enhanced statutorily-mandate annual reports to the Congress 

regarding FPI’s activities, impacts, and benefits will provide the 

Congress with adequate information to conduct effective oversight 

of the various improvements made by H.R. 1829. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8, of the Constitution. 

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Sec. 1. Short Title; Table of Contents 

Subsection (a) of this section establishes the bill’s citation as the 

‘‘Federal Prison Industries Competition in Contracting Act of 

2003.’’

Subsection (b) sets forth a table of contents of headings of the 

various sections of the bill. 

35

Sec. 2. Government-wide Procurement Policy Relating to Purchases 

From Federal Prison Industries 

Section 2 contains a revised section 4124 of title 18. Subsection 

(a) of revised section 4124, makes explicit that a purchase of a 

product or service from Federal Prison Industries, Inc. (FPI) by a 

Federal agency shall be purchased through a procurement made on 

a competitive basis, except to the extent that an other than competitive award is expressly authorized. 

Revised section 4124 is intended to change the mandatory source 

relationship between a Federal agency and FPI and realign that relationship to mirror the business relationship that exists between 

a Federal agency and a private sector supplier and eliminate the 

revised section 4124 also makes explicit that services obtained from 

FPI by a Federal agency must be obtained through procurement 

contracts. 

The proposed substitution of the terms ‘‘Federal departments and 

agencies,’’ defined in 18 U.S.C. 5, for the terms ‘‘Federal departments, agencies, and all other institutions of the United States’’ is 

not intended to alter the overall reach of the current statute. 

New subsection (b) of revised section 4124 addresses the solicitation of offers from FPI by the various Federal agencies and the subsequent award of a contract to FPI on either a competitive or solesource basis. 

New paragraph (1) of subsection (b) places an affirmative responsibility on the various Federal agencies to solicit an offer from FPI 

when making a purchase, above $ 2,500, for any product or service 

authorized by FPI’s Board of Directors to be offered for sale by FPI 

and listed in it’s Schedule of Products. 

New paragraph (2) of subsection (b) requires the use of competitive procedures for the solicitation and award of the contract, unless the use of other than competitive procedures is authorized by 

paragraph (3) or by section 303(c) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C 253(c)). The contract 

shall be awarded to FPI, if the contracting officer determines that 

FPI’s offer represents the ‘‘best value.’’

New paragraph (3) of subsection (b) requires the non-competitive 

negotiation of a contract award to FPI, if the Attorney General 

makes a determination that: (i) there is no reasonable expectation 

that FPI will win the contract award competitively, and (ii) the inmate work opportunities provided by the contract are necessary ‘‘to 

prevent circumstances that could reasonably be expected to significantly endanger the safe and effective administration’’ of the correctional facility at which the contract is to be performed. 

New paragraph (4) of subsection (b) makes explicit the authority 

of the contracting officer to evaluate FPI’s offer with respect to 

whether: (i) FPI’s offered product or service will meet the agency’s 

requirements; (ii) timely performance by FPI can reasonably be expected; and (iii) the price offered by FPI represents a current market price. These authorities of the contracting officer apply equally 

whether the contract is for a product or a service, is to be awarded 

after a competition or on a sole-source basis, unless the award is 

made pursuant to new paragraph (3) of subsection (b). 

New paragraph (4) of subsection (b) is intended to make explicit 

that any product or service offered by FPI must comply with the 

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manded of a product or service furnished by a private sector offeror. For example, FPI or its product or service would have to comply 

with any pre-qualification requirements, such as a QML (Qualified 

Manufacturers List) or QPL (Qualified Products List). Similarly, 

design specifications (relating to quality of materials used or manner of manufacture) or performance specifications (relating to durability, serviceability, or interoperability) would have to be met. Further, products furnished by FPI should be required to conform to 

the same commercial or governmental standards and tests required 

of products furnished by private sector vendors. Finally, any product furnished by FPI should carry a warranty that affords the Federal Government protection equal to that provided the Federal Government by a private sector vendor. FPI’s current status as a preferred source of supply should not diminish, in any degree, its responsibility to furnish to a Federal agency a quality product or 

service that meets the agency’s needs to the same extent as a product or service furnished by a private sector supplier. 

New paragraph (4) of subsection (b) is also intended to make of 

explicit the contracting officer’s authority regarding the time of performance being offered by FPI. Timely performance is frequently as 

important as the quality of the product or service being furnished. 

Under the new provision the contracting officer may independently 

evaluate promises of timely performance being made by FPI. Pursuant to section 1091 of Public Law 103–355, the ‘‘Federal Acquisition Streamlining Act of 1994,’’ and implementing FAR coverage, a 

contracting officer is now required to accord substantial weight to 

each offeror’s history of timely performance with respect to prior 

contracts, especially for the product or service being offered, when 

making the decision to award a new contract. Such an evaluation 

on the basis of ‘‘past performance’’ now applies equally to FPI. 

New subsection (b)(4) is further intended to make explicit the 

contracting officer’s authority to make an independent determination as to whether the price being offered by FPI represents a current market price. This applies equally with regard to whether FPI 

is offering a product or service. Currently, the term ‘‘current market price’’ is not defined in FPI’s authorizing statute or in the Government-wide Federal Acquisition Regulation (FAR) provisions pertaining to purchases from FPI. Section 17(2) of the bill adds such 

a definition. The proposed definition includes explicit recognition of 

the contracting officer’s authority to employ generally available 

price analysis or cost analysis techniques to determine whether 

FPI’s offered price meets the standard. 

The provisions of revised section 4124, making explicit a contracting officer’s authority in dealing with FPI, are intended to 

overturn a sweeping legal opinion by the Assistant Attorney General for the Office of Legal Counsel. Issued on September 13, 1993, 

the opinion, Application of the Federal Acquisition Regulations to 

Procurement from Federal Prison Industries, unequivocally holds 

that FPI is not subject to the Federal Acquisition Regulation 

(FAR), except the FAR provisions relating to FPI as a mandatory 

source of supply. A Federal agency cannot compel FPI, like a private contractor, to meet the agency’s contractual terms and conditions regarding: (i) quality of product delivered or services furnished; (ii) the reasonableness of offered prices (or require the jusVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00036 Fmt 6659 Sfmt 6602 E:\HR\OC\HR286.XXX HR286
37

tification of any price increases); or (iii) delivery schedules for products (or performance schedule for a service). 

The legal opinion was issued at FPI’s request to respond to a 

1991 report by the Inspector General of the Department of Defense. 

In DOD Procurements from Federal Prison Industries, (Audit Report No. 92–005; October 11, 1991), overpricing, averaging 15 percent, was identified in 48 of 54 contracts (89%) awarded to FPI by 

various DOD buying centers for electronic and electrical cables during a 7-year period, FY 1984 through FY 1990. Although the contracts were awarded on a non-competitive basis, FPI did not provide the current, accurate, and complete cost data or pricing data 

needed by the contracting officer to determine whether the Government is being charged a fair and reasonable price. Further, FPI 

was found to lack the accounting systems to generate reliable cost 

or pricing data. DOD recommended that FPI refund the over-pricing. 

The legal opinion specifically held that ‘‘DOD lacks the necessary 

contracting freedom to make FPI accept the FAR’s constraints.’’ 

‘‘[A]s a matter of law, it [FPI] retains ultimate statutory authority 

to set its own prices, subject to arbitration’’ by a statutorily-specified board composed of the President (delegated to the Director of 

the Office of Management and Budget), the Attorney General, and 

the Administrator of General Services, which according to the GAO 

last met in the 1930’s. 

New paragraph (5) of subsection (b) requires that the Attorney 

General’s determination made pursuant to subsection (b)(3) must 

be supported by two specific findings. First, the warden of the correctional institution containing the factory scheduled to perform 

the work required by the contract must provide substantiated findings that without the work the ‘‘safe and effective administration 

of such facility’’ would be ‘‘significantly endangered.’’ Second, FPI’s 

chief operating officer must provide substantiated findings regarding why FPI ‘‘does not expect to win the contract on a competitive 

basis.’’

The requirements proposed in new section 4124(b)(5) mirror the 

current requirements applicable to the Department of Justice in 

order to make a sole-source purchase under the authority of section 

303(c)(7) of the Federal Property and Administrative Services Act 

of 1947 (41 U.S.C. 253(c)(7)), which requires the Attorney General 

to make a personal determination that a contract award cannot be 

made competitively, but is ‘‘necessary in the public interest.’’

New paragraph (6) of subsection (b) provides that the buying 

agency may resume its generally applicable contract solicitation 

and award procedures, if the Attorney General has not authorized 

a sole source negotiation pursuant to new section 4124(b)(3), within 

30 days. 

It is anticipated that any notice of a contracting opportunity published prior to the release of a solicitation for competitive offers will 

specify that an offer is required to be solicited from FPI and that 

the Attorney General may determine that the contracting opportunity must be negotiated non-competitively with FPI. 

New paragraph (7) of subsection (b) provides further authority 

for a Federal agency to make a purchase from FPI on an other 

than competitive basis when the buying agency determines that 

the needed product or service is currently only available from FPI. 

38

New subsection (c) of revised section 4124 makes explicit that a 

competitive offer timely received from FPI will always be considered, even if the competition is restricted, such as in the case of 

a so-called ‘‘small business set-aside,’’ a competition exclusively 

among small firms conducted pursuant to section 15(a) of the Small 

Business Act (15 U.S.C. 644(a)), and its implementing regulations. 

New subsection (d) of revised section 4124 codifies the fundamental principle that FPI is required to perform its contractual obligations to the same extent as any private sector contractor. Attainment of FPI’s prison management and inmate-rehabilitation 

objectives do not authorize FPI to furnish non-conforming products 

or services, perform late, or unilaterally increase prices to the detriment of Federal agency customers who require timely performance of the services or delivery of products to attain their missions 

and program objectives. 

It is intended that the implementation of this provision through 

the Government-wide Federal Acquisition Regulation (FAR) will afford to an agency contracting officer administering a contract with 

FPI the same array of contract administration techniques, authorities, and remedies available when administering a contract with a 

private contractor. Disputes between the administrative contracting officer and FPI regarding whether FPI’s performance conforms to the terms of the contract would be subject to appeal rights 

granted to FPI pursuant to new subsection (e) of revised section 

4124. 

New subsection (e) of revised section 4124 is intended to eliminate the existing bias in favor of FPI in the resolution of disputes 

arising during the negotiation of a sole-source contract award to 

FPI or during the subsequent performance of the contract by FPI. 

Under current section 4124(b), and the FAR provisions implementing the statute, any dispute relating to the ‘‘price, quality, 

character, or suitability of such [FPI] products shall be arbitrated 

by an arbitration board consisting of the President (delegated to 

the Director of the Office of Management and Budget), the Attorney General, and the Administrator of General Services. ‘‘Their decision shall be final and binding upon all parties.’’ This statutory 

disputes resolution provision gives FPI total dominance over its 

Federal agency customers in practical business terms. 

First, if a contracting officer seeks to obtain a FPI-offered product from an alternative source, the contracting officer must obtain 

FPI’s permission through a waiver process. FPI will grant the 

waiver only if the contracting officer proves to FPI’s satisfaction 

that: (i) the FPI-offered product does not meet the agency’s requirements; (ii) FPI’s delivery schedule will not meet the agency’s mission requirements, or (iii) FPI’s price does not represent a ‘‘current 

market price.’’

FPI’s waiver process has no statutory basis. However, it discourages contracting officers from scrutinizing FPI’s offers since disagreements are settled by FPI. Only with respect to FPI must a 

Government buyer meet the seller’s standards, and, in the event of 

a disagreement, live by the seller’s decisions regarding what performance the Government may expect under the contract. 

FPI is accorded the same superior position with respect to disputes arising during the performance of the contract. FPI’s decision 

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39

turned by a decision of the arbitration board. Like the waiver process during the contract-award phase, FPI’s statutorily-sanctioned 

dominance makes futile a contracting officer’s demand for timely 

performance or fully conforming products or services. Except with 

respect to FPI, a contracting officer’s final decision regarding contract performance is otherwise binding with respect to a private 

sector contractor, unless over-turned on appeal by an administrative board of contract appeals or a court-forums available for the 

independent review of such contract performance disputes. 

New paragraph (1) of subsection (e) specifies that the decision of 

a contracting officer regarding the award of a contract to FPI or relating to the performance of a contract awarded to FPI shall be 

final unless the decision is overturned pursuant to new procedures 

regarding the disposition of an appeal made by FPI. The intent of 

the proposed amendments is to eliminate any appeal processes 

other than those specified in paragraphs (2) and (3) of revised section 4124(e). 

New paragraph (2) of subsection (e) authorizes FPI’s Chief Executive Officer to appeal to the agency head an adverse decision of 

the agency contracting officer relating to the award of a contract 

to FPI pursuant to new section 4124(b)(4). The decision of the departmental secretary or agency head shall be final. 

Such a final resolution by the departmental secretary or agency 

head mirrors current procedures under the Small Business Act authorizing an appeal by the Administrator of the Small Business Administration relating to a decision by an agency contracting officer 

that a specific contracting opportunity is not suitable for award to 

a small business through a competition restricted to small firms. 

It is intended that a protest regarding an adverse decision relating to a contracting officer’s decision not to make an award to FPI 

will be handled through the agency protest procedures established 

and conducted pursuant to FAR Part 33.103 (48 C.F.R. 33.103). Authority for FPI to file a protest with the General Accounting Office 

was specifically not granted. 

New paragraph (3) of subsection (e) gives FPI the right to have 

an adverse decision by the agency contracting officer regarding the 

adequacy of FPI’s contract performance subjected to an independent review. 

FPI can have an adverse decision decided through one of the various forms of alternative disputes resolution provided in subchapter 

IV of title 5 which were made permanent by Pub. L. No. 104–320, 

the ‘‘Administrative Dispute Resolution Act of 1996.’’ Such alternative means include mediation or binding arbitration by an independent neutral party. To assure the impartiality of the selected 

neutral, both parties must agree to the use of an alternative disputes resolution technique. 

FPI has the right to appeal an adverse contracting officer’s decision relating to FPI’s performance of a contract to one of the independent administrative boards of contract appeals, already established pursuant the Contract Disputes Act of 1978 (41 U.S.C. 601, 

et seq.), to resolve contract performance disputes between an agency and a private contractor. Thirteen boards currently exist. Certain departments and agencies with very substantial procurement 

activities, such as the Department of Defense and the General 

Services Administration, maintain their own boards. Other agenVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00039 Fmt 6659 Sfmt 6602 E:\HR\OC\HR286.XXX HR286
40

cies, with very limited procurement activities, have entered into 

agreements to have their contract performance disputes handled by 

another agency’s board. 

Given the intra-governmental character of the dispute between 

FPI and one of its agency customers, an appeal to the Court of Federal Claims or the United States District Court is expressly not 

made available to FPI. Similarly, the decision of the independent 

board of contract appeals is final. 

New subsection (f) of revised section 4124 requires each Federal 

agency and department reporting to the Government-wide Federal 

Procurement Data System (FPDS) to report all acquisitions from 

Federal Prison Industries in the same manner it reports purchases 

from private sector vendors in excess of the simplified acquisition 

threshold as defined in section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11), $100,000. Section 2901 of 

the ‘‘Crime Control Act of 1990,’’ Pub. L. No. 101–647, amended 18 

U.S.C. 4124 to provide for the reporting of all purchases from FPI. 

This provision is intended to make explicit the reporting format 

and level of detail. 

Until the 1990 amendment, there was no requirement that purchases from FPI be reported to the FPDS by the various Executive 

agencies because the purchases are considered to be non-reportable 

interagency transfers rather than contracts. The absence of full 

FPDS data on Federal agency purchases from FPI has made virtually unworkable market-share determinations relating to the FPI 

Board’s consideration of proposals to approve new products to be offered for sale by FPI or to expand production of currently approved 

products, pursuant to current section 4122(b). The validity of the 

market share analyses prepared by FPI staff are generally questioned by the private vendor community because of the inability to 

compare agency purchases from private sector sources and those 

made from FPI. 

New subsection (g) of revised section 4124 requires FPI to publish and keep current its UNICOR Schedule of Products which lists 

the products and services it offers. 

Sec. 3. Public Participation Regarding Expansion Proposals by Federal Prison Industries 

This section amends section 4122(b) of title 18, relating to the 

procedures for approving the addition of a new product or service 

to be offered for sale by Federal Prison Industries (FPI) or the expansion of production or performance of a currently approved product or service. The amendments will: (i) conform the public participation processes used by FPI’s Board with those currently used by 

a similar Federal preference program for purchases from rehabilitative work centers employing the blind and severely handicapped; 

(ii) clarify the analytical process to determine if an adverse privatesector impact will result from the approval of an espansion proposal; and (iii) distinguish more clearly between the analytical and 

advisory responsibilities of FPI’s career staff and the decision-making authorities of the FPI Board. 

New paragraph (4) of amended section 4122(b) would apply the 

public notice and comment requirements of the Administrative Procedure Act to the procedures used by FPI’s Board when considering 

a new product or service for authorized sale or any significant exVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00040 Fmt 6659 Sfmt 6602 E:\HR\OC\HR286.XXX HR286
41

pansion of the production or performance of a currently approved 

product or service. These APA requirements, currently apply to almost identical decisions made by the Committee for Purchase from 

the Blind and Other Severely Handicapped. 

New paragraph (5) of amended section 4122(b) specifies the analytical requirements that must accompany an expansion proposal 

from FPI’s career management staff. Rather than being conducted 

by FPI as is presently done, new section (b)(5) would require that 

the impact analysis be conducted by an independent entity—either 

an interagency team or a private contractor. 

The interagency team would consist of representatives of the Department of Labor, the Department of Commerce, and the Federal 

Procurement Data Center, led by a representative of the Small 

Business Administration. If the impact analysis is to be conducted 

by a private contractor, the selection of the contractor and the administration of the contract is to be handled by one of the statutorily designated Federal agencies, operating as an independent executive agent of the FPI Board. To maintain independence, the participation of FPI staff would be limited to submitting to the buying 

agency contracting officer a proposed statement of work for the contractor. 

New subparagraph (C) of revised section 4122(b)(5) specifies the 

matters to be considered in conducting the impact analysis relating 

to the expansion proposed by FPI staff. 

New subparagraph (D) of revised section 4122(b)(5) sets forth 

limitations on the authority of the FPI Board to authorize or expand the production of a product or service. 

First, the provision would preclude the Board from approving a 

proposal for a new product (or continued sale of a previously authorized product) unless the product is a ‘‘prison-made product.’’ 

Prison industry programs are justified, in part, on the basis that 

they keep inmates occupied through labor-intensive work. 

Second, the provision would preclude the Board from approving 

a proposal for a new product or expansion with respect to products 

that are ‘‘import-sensitive products’’ or which are produced by an 

industry with chronic high unemployment. ‘‘Import-sensitive products’’ are designated by the Department of Commerce for other 

statutory purposes. The Department of Labor currently identifies 

such industries for other statutory purposes. 

Third, the provision would preclude the Board from approving a 

proposal to authorize inmates to perform a service if such work 

would provide inmate workers with access to personal or financial 

information about individual private citizens. It would also preclude inmates performing a service that would give them access to 

geographic data regarding the location of surface and subsurface 

infrastructure providing communications, water and electrical 

power distribution, pipelines for the distribution of natural gas, 

bulk petroleum products, and other commodities, as well as other 

utilities. 

Fourth, the provision would preclude the Board from authorizing 

FPI from furnishing construction services to Federal agencies. The 

provision adopts the definition of ‘‘construction’’ that has been a 

part of the Government-wide Federal Acquisition Regulation for 

more than two decades. Construction services, almost always provided on the owner’s property, are manifestly unsuitable for perVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00041 Fmt 6659 Sfmt 6602 E:\HR\OC\HR286.XXX HR286
42

formance by prison labor. The provision would not preclude Federal 

prisoners from continuing to provide maintenance, repair, or even 

minor alteration of the prison facilities in which they are incarcerated. 

New paragraph (6) of amended section 4122(b) places in a separate paragraph the ‘‘outreach’’ mechanisms specified in section 

4122(b)(4) of current law, to emphasize that they are ‘‘supplemental’’ techniques to broaden participation by known interested 

parties. 

New paragraph (7) of amended section 4122(b) specifies in a separate paragraph the requirement in section 4122(b)(4) of current 

law that the FPI staff’s final recommendation to FPI’s Board specify how the staff’s initial production proposal was modified in response to public comments received and the supporting analysis for 

those modifications. 

New paragraph (8) of amended section 4122(b) requires the FPI 

Board to consider and act upon a recommendation to authorize new 

or increased production of products or services at a meeting open 

to the public. 

New paragraph (9) of amended section 4122(b) provides the 

Board authority to authorize the donation rather than sale of products produced by FPI factories. Such a decision by the FPI Board 

would be subject to the analytical, public participation, and other 

safeguards applicable to a decision to authorize production a new 

product or expandsion. 

New paragraph (10) of amended section 4122(b) empowers the 

FPI Board to authorize the donation of products or services. Implementation of this authority is specified in section 10(b) of the bill. 

New paragraph (10)(C) empowers the Board to authorize an expansion that could be expected to result in FPI’s share of the Federal market exceeding a ‘‘reasonable share of the market,’’ as that 

term is defined in section 17(6) of the bill. Such authority could be 

used if such an expansion was specifically requested by the Federal 

agency having a need for the product or service or is justified for 

‘‘other good cause.’’ Eight members of FPI’s eleven-Member Board 

would have to support an expansion above a reasonable share of 

the market justified on the basis of ‘‘other good cause.’’

Sec. 4. Transitional Mandatory Source Authority 

Subsection (a) provides authority to the various Executive agencies to make purchases from FPI on a non-competitive basis during 

a 5-year transition period. This transitional period is intended to 

provide a period during which FPI adjusts to the requirement that 

it obtain its business opportunities on a competitive basis rather 

than a non-competitive basis through its status as a mandatory 

source. Subsequent subsections provide direction to the buying 

agencies regarding the use of this special authority. 

Subsection (b) makes clear that the buying agency, rather than 

FPI, is empowered to determine the product offered by FPI meets 

the needs of the buying agency. The FPI-offered product is expected 

to meet the same standards and specifications as the buying agency would apply to a product being offered by a private sector supplier. Similarly, the buying agency is empowered to determine if 

timely performance by FPI can be reasonably expected before entering into a sole-source negotiation with FPI. Finally, the buying 

43

agency need not make a sole-source award to FPI if the buying 

agency determines that the award price will exceed a ‘‘fair and reasonable price.’’

Subsection (c) makes explicit that Subpart 15.4 (Contract Pricing) of the Government-wide Federal Acquisition Regulation (FAR) 

shall guide the buying agency’s determination of ‘‘fair and reasonable price.’’

Subsection (d) makes explicit that, despite the award of the contract pursuant to the special sole-source authority, FPI remains responsible for fully performing its contractual obligations. Performance disputes between the buying agency and FPI are to be resolved pursuant to 18 U.S.C. 4124(e)(3), as added by section 2 of 

the bill. 

Subsection (e) imposes a number of limitations on the buying 

agencies’ use of the transitional sole-source authority during the 5-

year ‘‘phase-out’’ of FPI’s reliance on contracts awarded on a solesource basis pursuant to FPI’s mandatory source status. In general, 

these limitations are intended to assure that FPI’s sales expand on 

the basis of competitive awards and by taking advantage of this 

transitional sole-source authority. 

First, contract awards to FPI through use of the transitional 

sole-source authority cannot exceed a specified percentage of FPI’s 

total sales during the base year of fiscal year 2002. During the first 

year of the 5-year transitional period, fiscal year 2005, use of the 

special sole source contracting authority cannot aggregate to more 

than 90 percent of FPI’s total sales during the base year. The percentage decreases to 85 percent in fiscal year 2006, to 70 percent 

in fiscal year 2007, to 55 percent in fiscal year 2008, and to 40 percent during the final transition year, fiscal year 2009. 

Second, use of the special transitional sole-source contract authority cannot result in sales by any of FPI’s eight business groups 

that are in excess of the total sales for each such business group 

during the base year. Similarly, the use of the transitional authority is prohibited from increasing FPI’s sales for a specific product 

over its total sales of such products during the base year. Because 

FPI, rather than the buying agency, will have access to information 

regarding the dollar value of various awards made to FPI pursuant 

to the transitional authority, the implementing FAR provision relating to this provision should empower the buying agency’s contracting officer to obtain an appropriate compliance certification 

from FPI prior to contract award. 

The limitations with respect to specific products or business 

groups may be waived in the event that the buying agency has 

modified the design specification of one or more specific products, 

which has increased the unit cost of production. FPI’s compliance 

certification associated with the implementing FAR provisions 

should require FPI to identify the source and specify the cost associated with design-specification based deviations. 

Subsection (f) specifies this special 5-year transition sole-source 

authority may not be used by an buying agency on or after October 

1, 2009. The provision also makes clear that its use is contingent 

upon issuance of the essential implementing FAR provisions, pursuant to section 18 of the bill. 

Subsection (g) defines terms relating to this section. 

44

Subsection (h) requires the Attorney General to monitor FPI’s 

transition from obtaining work exclusively through sole-source 

awards pursuant to its mandatory source authority to obtaining 

them from Federal procurement contracts obtained on a competitive basis. Specifically, the subsection requires the Attorney General to make a determination regarding whether the limitations on 

the use of the special transitional sole-source authority has resulted, or is likely to result, in a substantial reduction in inmate 

work opportunities with FPI and ‘‘whether such reductions, if any, 

present a significant risk of adverse effects on safe prison operations or public safety.’’ Such a determination and finding is to be 

made annually, 60 days prior to the end of each of the five fiscal 

years of the transition period. 

If the Attorney General finds a significant risk of adverse effects 

on either safe prison management or public safety, the Attorney 

General is required to advise Congress. In advising Congress, the 

Attorney General is required to make recommendations for additional funding to provide additional alternative inmate rehabilitative opportunities and additional correctional staffing, as may be 

appropriate. 

Sec. 5. Authority To Perform as a Federal Subcontractor 

Subsection (a) of this section provides, for the first time, explicit 

statutory authority for FPI to perform as a subcontractor or supplier to private-sector firm performing a Federal contract as a 

prime contractor or a subcontractor at any tier. This provision was 

included to provide FPI a clear path to the inmate work opportunities that are available from producing products for the Federal subcontract market. 

FPI’s authorizing statute is silent with respect to its authority to 

act as a subcontractor or supplier. At various times during the 

1990’s, proposals were advanced to grant FPI specific authority to 

operate as a subcontractor. Section 4122(a) only specifically authorizes FPI ‘‘to produce commodities for consumption in such institutions or for sale to the departments of agencies of the United 

States, but not for sale to the public in competition with private enterprise.’’

FPI currently acts as a subcontractor to a number of major prime 

contractors (or major subsystem subcontractors) furnishing equipment to the Department of Defense. FPI also provides inmate-furnished services to these firms. 

At various times, FPI has claimed an inherent authority to operate as a subcontractor derived from 18 U.S.C. 4124(a). When challenged by the Department of Justice Inspector General, FPI cited 

the authority granted by a World War II-era Attorney General’s 

opinion (40 Op. Atty Gen. 207 (1942)). Entitled ‘‘Procurement of 

War Materials from Federal and State Prisons,’’ it was issued on 

May 6, 1942 by Attorney General Francis Biddle in response to an 

inquiry from President Franklin D. Roosevelt regarding ‘‘whether 

industrial facilities at the prisons of the United States can be utilized in the production of essential war materials,’’ despite the prohibition of the Hawes-Cooper Act of 1920, relating to selling convict-made goods in interstate or foreign commerce. 

Given the critical need to maximize the Nation’s total productive 

capacity for the War effort, Attorney General Biddle found that 

45

FPI, and the various States prison industry programs, could operate as a subcontractor. Subsequently, on June 20, 1942, Assistant 

Solicitor General Oscar Cox wrote to the Chairman of the War Production Board further clarifying the authority granted by the opinion of the Attorney General. In pertinent part, he found that a prison industry program could function as a subcontractor or supplier 

only if ‘‘there is no other source of supply readily available to him 

[the Government prime contractor] on the open [commercial] market. 

Given long-prevailing competitive market conditions among subcontractors on Federal contracts, it is highly unlikely that this explicit limitation on the World War II authority could be met today. 

Further, the authority cited by FPI was based on the Nation’s exigent productions needs during the Second World War. 

Subsection (b) makes explicit that exercise of the authority to 

perform as a subcontractor or supplier on a Federal contract shall 

not result, either directly or indirectly, in the sale in the commercial market of a product or service resulting from the labor of Federal inmate workers in violation of 18 U.S.C. 1761(a). A Federal 

contractor or subcontractor using FPI to perform a Federal contract 

to furnish a commercial product is required to have in place management procedures to prevent the introduction of an inmate-produced product into the commercial market. 

Subsection (c) makes explicit that the use of FPI as a subcontractor or supplier is to be a voluntary business decision of the Federal prime contractor or subcontractor. It explicitly prohibits imposing on a Federal prime contractor or subcontractor, directly or indirectly, any requirement to make use of FPI, its products, or services. 

Sec. 6. Inmate Wages and Deductions 

This section provides explicit statutory authority for the FPI 

Board to prescribe the rates of hourly wages to be paid inmates 

with work assignments at FPI. Similarly, it makes explicit the authority of the Director of the Federal Bureau of Prisons to specify 

the hourly wages for inmates with institutional and other work assignments other than with FPI. 

The provision requires a review of inmate wage rates, both those 

for FPI and others, on not less than a biannual basis. Such reviews 

are expected to result in increases in inmate wages, recognizing 

that just compensation is a core element of the work ethic that 

such work assignments seek to develop as a necessary preparation 

for a successful return to society. Similarly, the provision requires 

that the wages earned be paid in the name of the inmate. Finally, 

the provision provides explicit statutory authorization to establish 

a savings account, often referred to as a ‘‘gate fund,’’ payable to the 

inmate upon release. 

The section also establishes a statutory priority for deductions 

that are to be taken from wages earned. Enhanced priority is given 

to deductions for the payment of restitution to the victims of the 

inmates crime. A increased allocation rate for this purpose is specified in furtherance of the concepts of restorative justice. 

The provision also contemplates that the inmate may have deductions from wages taken for the purpose of maintaining contact 

with the inmate’s family during the term of incarceration. Travel 

46

and even telephone costs can be substantial, especially if the inmate is incarcerated a long distance from where the inmate’s family resides. 

Sec. 7. Clarifying Amendment Relating to Services 

Subsection (a) of this section makes explicit that the statutory 

prohibition on the sale of the results of inmate labor in interstate 

commerce or foreign commerce, codified at 18 U.S.C. 1761(a), applies equally to services as well as products. For 65 years, this statute was consistently interpreted to prohibit the commercial sale of 

the results of inmate labor, products as well as services. Section 

1761(a) does not include the word ‘‘service,’’ which is not surprising 

given that a broad service economy did not exist at the time of enactment in the 1930’s. However, it seems implausible that a provision, enacted during the Great Depression, to protect workers 

against unfair competition from low-cost prison labor would have 

been intended to afford no protection to workers providing services 

in the commercial market. 

A statutory exception to the broad statutory prohibition was provided in 1979 when Congress established the Prison Industry Enhancement (PIE) Program, codified at 18 U.S.C. 1761(c). Under the 

PIE Program, a State and local prison industry program may be 

authorized to sell prison-made products and inmate-furnished services, after receiving approval, commonly referred to as ‘‘certification,’’ from the Bureau of Justice Assistance for each individual 

project. 

FPI sought and obtained a new interpretation of 18 U.S.C. 1761 

(a) in February 1998. This interpretation provided FPI, and the 

prison industries of the States and their local governments, authority to sell inmate-furnished services, either directly or in partnerships with private sector firms, without meeting the standards for 

PIE certification. Among the restrictions associated with the PIE 

Program that could now be bypassed is the prohibition against displacement of non-inmate workers to provide jobs for inmate workers. Similarly, there would no longer be any requirement to pay inmate workers providing services to the commercial market at rates 

comparable to wages being paid non-inmate workers of private 

firms providing the same types of services. Without the protection 

of a comparable wage requirement, with a floor of the minimum 

wage, private sector firms using non-inmate workers were faced 

unfair competition from firms using inmate workers being paid inmate wages. 

Subsection (b) of this section provides a ‘‘grandfathering’’ provision, to provide relief to State prison industry programs that reasonably relied upon the new interpretation of 18 U.S.C. 1761(a) 

emanating from DOJ and began offering inmate-furnished services 

to the commercial market. First, the provision permits the completion of an agreement between a private sector firm and a State or 

local prison industry program, for whatever term of years is specified in their agreement on October 1, 2002. Similarly, it permits a 

State program making direct sales to continue until September 30, 

2005, after which the activity can only be operated pursuant to a 

PIE Program certification. 

Subsection (c) makes explicit that any inmate work program operated by a State or a local jurisdiction of a State may continue to 

47

provide inmate labor to furnish services for sale in the commercial 

market if such program has obtained certification pursuant to the 

PIE Program. 

Sec. 8. Conforming Amendment 

This section provides FPI with explicit statutory authority to 

offer services to the various Federal departments and agencies. 

Presently, FPI’s authorizing statute only specifically addresses the 

sale of products. 

Sec. 9. Rules of Construction Relating to Chapter 307

This section adds a new section 4130 to chapter 307 of title 18, 

which establishes a series of rules of construction for such chapter. 

First, it would make explicit that no inmate has a right to a work 

assignment with FPI or the payment any particular wage except as 

provided by law or regulation. Next, the provision makes explicit 

that no inmate worker has the status of an employee for the purposes of any law or regulation. Finally, the new section makes explicit that nothing in chapter 307 establishes any cause of action 

against the United States by or on behalf of any inmate. 

Sec. 10. Providing Additional Rehabilitative Opportunities for Inmates 

H.R. 1829 builds upon the improvements made during the Committee’s consideration of H.R. 1577 during the 107th Congress to 

expand inmates’ access to alternative rehabilitative opportunities. 

The bill reflects the improved access to educational opportunities, 

both remedial and modern ‘‘hands-on’’ vocational programs, which 

were added to H.R. 1577 through a Conyers-Frank amendment establishing an Enhanced In-Prison Educational and Vocational Assessment and Training Program and providing $75 million annually to fund it. The bill also authorizes a ‘‘Cognitive Abilities Assessment Demonstration Program’’ within the Federal Bureau of 

Prisons. H.R. 1829 retains the pre-release employment assistance 

program first added to H.R. 1577 at the suggestion of the AFL-CIO. 

Sec. 11. Restructuring the Board of Directors 

This section fundamentally restructures FPI’s governing Board of 

Directors. It replaces the current 6-member Board, unchanged 

since 1934, with an eleven-member Board. The Board’s members 

would continue to be appointed by the President, but not be subject 

to Senate confirmation. 

The current six-member Board has two public members and four 

private sector members. One of the public members represents the 

Attorney General and the other represents the Secretary of Defense. Of the four private sector members, one represents industry, 

one represents labor, one represents agriculture and one represents 

retailers and consumers. 

Under this section, the new 11-member Board would be comprised of three members representing business, three members representing labor, one member with special expertise in inmate rehabilitation techniques, one member representing victims of crime, 

one member representing inmate workers, and two additional 

members ‘‘whose background and expertise the President deems 

appropriate.’’

48

The provision establishes procedures for the initial appointment 

of each of the eleven members, with staggered terms, and provides 

for their reappointment. It also provides for the filling of any Board 

vacancies that may occur. 

The section empowers the President to designate a Chairperson, 

who in turn is empowered to designate the Vice Chairperson. 

To provide the Board with needed staff support, in addition to 

the staff of the corporation, the provision authorizes the Chairperson to procure temporary and intermittent personal services 

and to utilize Federal detailees on a non-reimbursable basis. 

The provision recognizes the Director of the Bureau of Prisons as 

the Chief Executive Officer of the corporation and empowers the 

Director to designate a person as the Chief Operating Officer of the 

Corporation. The Chief Operating Officer need not necessarily be 

the incumbent Assistant Director of the Federal Bureau of Prisons 

for Industries, Education, and Vocational Training, which has been 

the past practice. 

Sec. 12. Providing Additional Management Flexibility to Federal 

Prison Industries Operations 

This section makes explicit FPI’s authority to locate more than 

one factory at a single Federal correction institution. It also provides statutory authority for FPI to operate a factory outside of a 

correctional institution if all of its inmate workers are classified as 

minimum security inmates. 

Sec. 13. Transitional Personnel Management Authority 

This section provides some relief to correctional officers and other 

staff whose salaries are paid from the revenues of the corporation 

and who might be separated from service due to a reduction in the 

income derived from FPI activities. Such reductions might arise 

from an unexpectedly rapid shift to alternative rehabilitative work 

opportunities with non-profit entities, which may maintain inmate 

work opportunities but result in reduced corporate income. Under 

the provision, such correctional officers and other staff would be eligible for appointment or reappointment in the competitive services 

and given priority for placement for available positions within the 

Federal Bureau of Prisons through a priority placement list. 

Sec. 14. Federal Prison Industries Report to Congress 

This section amends section 4127 of title 18, to substantially enhance the existing requirement for FPI’s Annual Report to the Congress. It adds specificity to the information to be reported regarding FPI sales of products and services and FPI’s resulting share of 

the total Federal Government market. For the first time, it requires FPI to report some data regarding the inmates with rehabilitative work opportunities with FPI and their post-release employment. Finally, the provision seeks to maintain the guarantee of 

public access to the annual report. 

Sec. 15. Independent Study To Determine the Effects of Eliminating 

the Federal Prison Industries mandatory Source Authority 

Subsection (a) of this section directs the Comptroller General of 

the United States to have undertaken an independent study of the 

effects of eliminating the mandatory source authority of FPI. This 

49

study may be conducted by the General Accounting Office or by another entity selected by the Comptroller General, provided that the 

Comptroller General warrants that the conduct of the study by 

such other entity can reasonably be expected to result in an assessment that meets statutory standard of being ‘‘independent.’’

Subsection (b) requires the Comptroller General to develop the 

statement of work and assessment methodology for the conduct of 

the study, whether the resulting study is conducted by the General 

Accounting Office or by another entity. It is intended that in developing the statement of work and the assessment methodology for 

the study, the Comptroller General will, to the maximum extent 

practicable, provide for suggestions by the general public, organizations representing business organizations and labor unions, especially those adversely affected by FPI’s current status as a mandatory source of supply. Similarly, the provision expects that the 

Comptroller General will solicit, and carefully consider, suggestions 

submitted by the Congress, and by representatives of the Executive 

Branch. 

Subsection (c) prescribes June 30, 2004 as the date by which the 

Comptroller General must submit to the Congress a report on the 

results of the study, including such recommendations for legislation 

as deemed appropriate. 

Sec. 16. Sense of Congress 

This section expresses the sense of the Congress that it is timely 

and important to undertake a review of the concept of again implementing a program for good time early release program for Federal 

inmates incarcerated for non-violent offenses. Currently, the term 

of incarceration of any inmate within the Federal system is not 

subject to being reduced on the basis of the quality of the inmate’s 

conduct during the term of incarceration. 

Sec. 17. Definitions 

This section amends chapter 307 of title 18, by adding a new section 4130 specifying definitions for key terms used in sections 4122 

and 4124. 

Paragraph (1) of proposed new section 4130 adds a definition of 

the term ‘‘assembly’’ derived from Department of Labor regulations 

implementing the Walsh-Healey Public Contracts Act (41 U.S.C. 

35). 

Paragraph (2) of proposed new section 4130 adds a definition of 

the term ‘‘current market price.’’ The definition equates the term 

‘‘current market price’’ to the term ‘‘fair market price’’ as defined 

in the Small Business Act (15 U.S.C. 644(a)), which is the standard 

that must be met by a small business concern selling to the Government. 

Paragraph (3) of proposed new section 4130 adds a definition of 

the term ‘‘import-sensitive product’’ derived from a standard used 

by the Office of the United States Trade Representative. 

Paragraph (4) of proposed new section 4130 adds a definition of 

the term ‘‘labor-intensive manufacture’’ derived from a standard 

used by the Bureau of Economic Analysis at the Department of 

Commerce. 

Paragraph (5) of proposed new section 4130 adds a definition of 

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50

tions implementing the Walsh-Healey Public Contracts Act (41 

U.S.C. 35) 

Paragraph (7) of proposed new section 4130 adds a definition of 

the term ‘‘reasonable share of the market.’’ FPI’s share of the Federal market for a specific product would be recognized as a ‘‘reasonable share of the market,’’ if FPI’s share of the total Federal purchases for a specific product, averaged over a 3-year period, does 

not exceed 20 percent. 

It should be noted that new section 4122(b)(10)(C), added by section 3, provides to the FPI Board limited authority to approve, on 

a case-by-case basis, a proposed FPI expansion that would result 

in FPI sales in excess of percentages specified. 

Paragraph (8) of proposed new section 4130 adds a definition of 

the term ‘‘services’’ through a cross-reference to the Governmentwide Federal Acquisition Regulation (FAR). 

Sec. 18. Implementation Regulations and Procedures 

Subsection (a) of this section requires regulatory implementation 

through the Government-wide Federal Acquisition Regulation 

(FAR), specifying a schedule for the publication of proposed and 

final regulations and their effective date. The provision provides for 

60 days for public comment on the proposed regulations. 

Subsection (b) directs the FPI Board to issue, through a notice 

and comment rulemaking, definitions relating to four terms: (a) 

‘‘prison-made product;’’ (b) ‘‘prison-furnished service;’’ (c) ‘‘specific 

product;’’ and ‘‘specific service.’’ The public is accorded 60 days to 

comment on the Board’s proposals. 

Subsection (b)(4)(C) also requires that the Board act on the basis 

of deliberations and a recorded vote conducted during a public 

meeting unless the meeting is closed pursuant to the standards of 

the Administrative Procedure Act. This requirement applies to the 

full range of regulations, procedures, and guidelines relating to the 

governance of the corporation. 

Sec. 19. Rule of Construction 

This section set forth a rule of construction relating to new section 4124(e)(2), added by section 2. New section 4124(e)(2) specifies 

FPI’s right to appeal an adverse decision by an agency contracting 

officer regarding an agency’s decision not to make a contract award 

to FPI. This provision applies exclusively to FPI. There is no intention to alter the existing bid protest processes available to a private 

sector vendor with the agency making the purchase, the U.S. General Accounting Office, or the Federal courts. 

Sec. 20. Effective Date and Applicability 

This section establishes the effective dates for the various provisions of H.R. 1829. 

Sec. 21. Clerical Amendments 

This section makes clerical amendments to the table of sections 

for chapter 307 of title 18. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of Rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

51

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman):

TITLE 18, UNITED STATES CODE 

* * * * * * *

PART I—CRIMES 

* * * * * * *

CHAPTER 85—PRISON-MADE GOODS 

* * * * * * *

§ 1761. Transportation or importation 

(a) Whoever knowingly transports in interstate commerce or 

from any foreign country into the United States øany goods, wares, 

or merchandise manufactured, produced, or mined¿ products manufactured, services furnished, or minerals mined, wholly or in part 

by convicts or prisoners, except convicts or prisoners on parole, supervised release, or probation, or in any penal or reformatory institution, shall be fined under this title or imprisoned not more than 

two years, or both. 

* * * * * * *

PART III—PRISONS AND PRISONERS 

* * * * * * *

CHAPTER 307—EMPLOYMENT

Sec. 

ø4121. Federal Prison Industries; board of directors.¿

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

* * * * * * *

ø4124. Purchase of prison-made products by Federal departments.¿

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

* * * * * * *

ø4127. Prison Industries report to Congress.¿

4127. Federal Prison Industries report to Congress. 

* * * * * * *

4130. Construction of provisions. 

4131. Definitions.

* * * * * * *

ø§ 4121. Federal Prison Industries; board of directors 

ø‘‘Federal Prison Industries’’, a government corporation of the 

District of Columbia, shall be administered by a board of six directors, appointed by the President to serve at the will of the President without compensation. 

øThe directors shall be representatives of (1) industry, (2) 

labor, (3) agriculture, (4) retailers and consumers, (5) the Secretary 

of Defense, and (6) the Attorney General, respectively.¿

52

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

(a) Federal Prison Industries is a government corporation of the 

District of Columbia organized to carry on such industrial operations in Federal correctional institutions as authorized by its 

Board of Directors. The manner and extent to which such industrial 

operations are carried on in the various Federal correctional institutions shall be determined by the Attorney General. 

(b)(1) The corporation shall be governed by a board of 11 directors appointed by the President. 

(2) In making appointments to the Board, the President shall 

assure that 3 members represent the business community, 3 members represent organized labor, 1 member shall have special expertise in inmate rehabilitation techniques, 1 member represents victims of crime, 1 member represents the interests of Federal inmate 

workers, and 2 additional members whose background and expertise the President deems appropriate. The members of the Board 

representing the business community shall include, to the maximum 

extent practicable, representation of firms furnishing services as 

well as firms producing products, especially from those industry categories from which Federal Prison Industries derives substantial 

sales. The members of the Board representing organized labor shall, 

to the maximum practicable, include representation from labor 

unions whose members are likely to be most affected by the sales of 

Federal Prison Industries. 

(3) Each member shall be appointed for a term of 5 years, except that of members first appointed—

(A) 2 members representing the business community shall 

be appointed for a term of 3 years; 

(B) 2 members representing labor shall be appointed for a 

term of 3 years; 

(C) 2 members whose background and expertise the President deems appropriate for a term of 3 years; 

(D) 1 member representing victims of crime shall be appointed for a term of 3 years; 

(E) 1 member representing the interests of Federal inmate 

workers shall be appointed for a term of 3 years; 

(F) 1 member representing the business community shall be 

appointed for a term of 4 years; 

(G) 1 member representing the business community shall be 

appointed for a term of 4 years; and 

(H) the members having special expertise in inmate rehabilitation techniques shall be appointed for a term of 5 years. 

(4) The President shall designate 1 member of the Board as 

Chairperson. The Chairperson may designate a Vice Chairperson. 

(5) Members of the Board may be reappointed. 

(6) Any vacancy on the Board shall be filled in the same manner as the original appointment. Any member appointed to fill a vacancy occurring before the expiration of the term for which the member’s predecessor was appointed shall be appointed for the remainder of that term. 

(7) The members of the Board shall serve without compensation. The members of the Board shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, 

53

United States Code, to attend meetings of the Board and, with the 

advance approval of the Chairperson of the Board, while otherwise 

away from their homes or regular places of business for purposes of 

duties as a member of the Board. 

(8)(A) The Chairperson of the Board may appoint and terminate any personnel that may be necessary to enable the Board to 

perform its duties. 

(B) Upon request of the Chairperson of the Board, a Federal 

agency may detail a Federal Government employee to the Board 

without reimbursement. Such detail shall be without interruption or 

loss of civil service status or privilege. 

(9) The Chairperson of the Board may procure temporary and 

intermittent services under section 3109(b) of title 5, United States 

Code. 

(c) The Director of the Bureau of Prisons shall serve as Chief 

Executive Officer of the Corporation. The Director shall designate a 

person to serve as Chief Operating Officer of the Corporation.

§ 4122. Administration of Federal Prison Industries 

(a) Federal Prison Industries shall determine in what manner 

and to what extent industrial operations shall be carried on in Federal penal and correctional institutions for the øproduction of commodities¿ production of products or furnishing of services for consumption in such institutions or for sale to the departments or 

agencies of the United States, but not for sale to the public in competition with private enterprise. 

(b)(1)***

* * * * * * *

ø(3)¿ (3)(A) Federal Prison Industries shall diversify its products so that its sales are distributed among its industries as broadly as possible.

(B) Federal Prison Industries may locate more than one workshop at a Federal correctional facility. 

(C) Federal Prison Industries may operate a workshop outside 

of a correctional facility if all of the inmates working in such workshop are classified as minimum security inmates.

ø(4) Any decision by Federal Prison Industries to produce a 

new product or to significantly expand the production of an existing 

product shall be made by the board of directors of the corporation. 

Before the board of directors makes a final decision, the corporation 

shall do the following: 

ø(A) The corporation shall prepare a detailed written analysis of the probable impact on industry and free labor of the 

plans for new production or expanded production. In such written analysis the corporation shall, at a minimum, identify and 

consider—

ø(i) the number of vendors currently meeting the requirements of the Federal Government for the product; 

ø(ii) the proportion of the Federal Government market 

for the product currently served by small businesses, small 

disadvantaged businesses, or businesses operating in labor 

surplus areas; 

ø(iii) the size of the Federal Government and non-Federal Government markets for the product; 

54

ø(iv) the projected growth in the Federal Government 

demand for the product; and 

ø(v) the projected ability of the Federal Government 

market to sustain both Federal Prison Industries and private vendors. 

ø(B) The corporation shall announce in a publication designed to most effectively provide notice to potentially affected 

private vendors the plans to produce any new product or to significantly expand production of an existing product. The announcement shall also indicate that the analysis prepared 

under subparagraph (A) is available through the corporation 

and shall invite comments from private industry regarding the 

new production or expanded production. 

ø(C) The corporation shall directly advise those affected 

trade associations that the corporation can reasonably identify 

the plans for new production or expanded production, and the 

corporation shall invite such trade associations to submit comments on those plans. 

ø(D) The corporation shall provide to the board of directors—

ø(i) the analysis prepared under subparagraph (A) on 

the proposal to produce a new product or to significantly 

expand the production of an existing product, 

ø(ii) comments submitted to the corporation on the 

proposal, and 

ø(iii) the corporation’s recommendations for action on 

the proposal in light of such comments. 

In addition, the board of directors, before making a final decision 

under this paragraph on a proposal, shall, upon the request of an 

established trade association or other interested representatives of 

private industry, provide a reasonable opportunity to such trade association or other representatives to present comments directly to 

the board of directors on the proposal. 

ø(5) Federal Prison Industries shall publish in the manner 

specified in paragraph (4)(B) the final decision of the board with respect to the production of a new product or the significant expansion of the production of an existing product.¿

(4) A decision to authorize Federal Prison Industries to offer a 

new specific product or specific service or to expand the production 

of an existing product or service shall be made by its board of directors in conformance with the requirements of subsections (b), (c), (d), 

and (e) of section 553 of title 5, and this chapter. 

(5)(A) Whenever Federal Prison Industries proposes to offer for 

sale a new specific product or specific service or to expand production of a currently authorized product or service, the Chief Operating Officer of Federal Prison Industries shall submit an appropriate proposal to the board of directors and obtain the board’s approval before initiating any such expansion. The proposal submitted 

to the board shall include a detailed analysis of the probable impact 

of the proposed expansion of sales within the Federal market by 

Federal Prison Industries on private sector firms and their non-inmate workers. 

(B)(i) The analysis required by subparagraph (A) shall be performed by an interagency team on a reimbursable basis or by a private contractor paid by Federal Prison Industries. 

55

(ii) If the analysis is to be performed by an interagency team, 

such team shall be led by the Administrator of the Small Business 

Administration or the designee of such officer with representatives 

of the Department of Labor, the Department of Commerce, and the 

Federal Procurement Data Center. 

(iii) If the analysis is to be performed by a private contractor, 

the selection of the contractor and the administration of the contract 

shall be conducted by one of the entities referenced in clause (ii) as 

an independent executive agent for the board of directors. Maximum 

consideration shall be given to any proposed statement of work furnished by the Chief Operating Officer of Federal Prison Industries. 

(C) The analysis required by subparagraph (A) shall identify 

and consider—

(i) the number of vendors that currently meet the requirements of the Federal Government for the specific product or specific service; 

(ii) the proportion of the Federal Government market for 

the specific product or specific service currently furnished by 

small businesses during the previous 3 fiscal years; 

(iii) the share of the Federal market for the specific product 

or specific service projected for Federal Prison Industries for the 

fiscal year in which production or performance will commence 

or expand and the subsequent 4 fiscal years; 

(iv) whether the industry producing the specific product or 

specific service in the private sector—

(I) has an unemployment rate higher than the national 

average; or 

(II) has a rate of unemployment for workers that has 

consistently shown an increase during the previous 5 years; 

(v) whether the specific product is an import-sensitive product; 

(vi) the requirements of the Federal Government and the 

demands of entities other than the Federal Government for the 

specific product or service during the previous 3 fiscal years; 

(vii) the projected growth or decline in the demand of the 

Federal Government for the specific product or specific service; 

(viii) the capability of the projected demand of the Federal 

Government for the specific product or service to sustain both 

Federal Prison Industries and private vendors; and 

(ix) whether authorizing the production of the new product 

or performance of a new service will provide inmates with the 

maximum opportunity to acquire knowledge and skill in trades 

and occupations that will provide them with a means of earning a livelihood upon release. 

(D)(i) The board of directors may not approve a proposal to authorize the production and sale of a new specific product or continued sale of a previously authorized product unless—

(I) the product to be furnished is a prison-made product; or 

(II) the service to be furnished is to be performed by inmate 

workers. 

(ii) The board of directors may not approve a proposal to authorize the production and sale of a new prison-made product or to 

expand production of a currently authorized product if the product 

is—

56

(I) produced in the private sector by an industry which has 

reflected during the previous year an unemployment rate above 

the national average; or 

(II) an import-sensitive product. 

(iii) The board of directors may not approve a proposal for inmates to provide a service in which an inmate worker has access 

to—

(I) personal or financial information about individual private citizens, including information relating to such person’s 

real property, however described, without giving prior notice to 

such persons or class of persons to the greatest extent practicable; 

(II) geographic data regarding the location of surface and 

subsurface infrastructure providing communications, water and 

electrical power distribution, pipelines for the distribution of 

natural gas, bulk petroleum products and other commodities, 

and other utilities; or 

(III) data that is classified. 

(iv)(I) Federal Prison Industries is prohibited from furnishing 

through inmate labor construction services, unless to be performed 

within a Federal correctional institution pursuant to the participation of an inmate in an apprenticeship or other vocational education 

program teaching the skills of the various building trades. 

(II) For purposes of this clause, the term ‘‘construction’’ has the 

meaning given such term by section 2.101 of the Federal Acquisition 

Regulation (48 CFR part 2.101), as in effect on June 1, 2002, including the repair, alteration, or maintenance of real property in 

being. 

(6) To provide further opportunities for participation by interested parties, the board of directors shall—

(A) give additional notice of a proposal to authorize the 

production and sale of a new product or service, or expand the 

production of a currently authorized product or service, in a 

publication designed to most effectively provide notice to private 

vendors and labor unions representing private sector workers 

who could reasonably be expected to be affected by approval of 

the proposal, which notice shall offer to furnish copies of the 

analysis required by paragraph (5) and shall solicit comment 

on the analysis; 

(B) solicit comments on the analysis required by paragraph 

(5) from trade associations representing vendors and labor 

unions representing private sector workers who could reasonably be expected to be affected by approval of the proposal to 

authorize the production and sale of a new product or service 

(or expand the production of a currently authorized product or 

service); and 

(C) afford an opportunity, on request, for a representative 

of an established trade association, labor union, or other private sector representatives to present comments on the proposal 

directly to the board of directors. 

(7) The board of directors shall be provided copies of all comments received on the expansion proposal. 

(8) Based on the comments received on the initial expansion 

proposal, the Chief Operating Officer of Federal Prison Industries 

may provide the board of directors a revised expansion proposal. If 

57

such revised proposal provides for expansion of inmate work opportunities in an industry different from that initially proposed, such 

revised proposal shall reflect the analysis required by paragraph 

(5)(C) and be subject to the public comment requirements of paragraph (6). 

(9) The board of directors shall consider a proposal to authorize 

the sale of a new specific product or specific service (or to expand 

the volume of sales for a currently authorized product or service) 

and take any action with respect to such proposal, during a meeting 

that is open to the public, unless closed pursuant to section 552(b) 

of title 5. 

(10) In conformity with the requirements of paragraphs (5) 

through (9) of this subsection, the board of directors may—

(A) authorize the donation of products produced or services 

furnished by Federal industries and available for sale; 

(B) authorize the production of a new specific product or 

the furnishing of a new specific service for donation; or 

(C) authorize a proposal to expand production of a currently authorized specific product or specific service in an 

amount in excess of a reasonable share of the market for such 

product or service, if—

(i) a Federal agency or department, purchasing such 

product or service, has requested that Federal Prison Industries be authorized to furnish such product or service in 

amounts that are needed by such agency or department; or 

(ii) the proposal is justified for other good cause and 

supported by at least eight members of the board. 

(11)(A) The Board of Directors of Federal Prison Industries 

shall prescribe the rates of hourly wages to be paid inmates performing work for or through Federal Prison Industries. The Director 

of the Federal Bureau of Prisons shall prescribe the rates of hourly 

wages for other work assignments within the various Federal correctional institutions. 

(B) The various inmate wage rates shall be reviewed and considered for increase on not less than a biannual basis. 

(C) Wages earned by an inmate worker shall be paid in the 

name of the inmate. Deductions, aggregating to not more than 80 

percent of gross wages, shall be taken from the wages due for—

(i) applicable taxes (Federal, State, and local); 

(ii) payment of fines and restitution pursuant to court 

order; 

(iii) payment of additional restitution for victims of the inmate’s crimes (at a rate not less than 10 percent of gross wages); 

(iv) allocations for support of the inmate’s family pursuant 

to statute, court order, or agreement with the inmate; 

(v) allocations to a fund in the inmate’s name to facilitate 

such inmate’s assimilation back into society, payable at the conclusion of incarceration; and 

(vi) such other deductions as may be specified by the Director of the Bureau of Prisons. 

(D) Each inmate worker working for Federal Prison Industries 

shall indicate in writing that such person—

(i) is participating voluntarily; and 

(ii) understands and agrees to the wages to be paid and deductions to be taken from such wages.

58

ø(6)¿ (12) Federal Prison Industries shall publish, after the end 

of each 6-month period, a list of sales by the corporation for that 

6-month period. Such list shall be made available to all interested 

parties. 

* * * * * * *

ø§ 4124. Purchase of prison-made products by Federal departments 

ø(a) The several Federal departments and agencies and all 

other Government institutions of the United States shall purchase 

at not to exceed current market prices, such products of the industries authorized by this chapter as meet their requirements and 

may be available. 

ø(b) Disputes as to the price, quality, character, or suitability 

of such products shall be arbitrated by a board consisting of the Attorney General, the Administrator of General Services, and the 

President, or their representatives. Their decision shall be final 

and binding upon all parties. 

ø(c) Each Federal department, agency, and institution subject 

to the requirements of subsection (a) shall separately report acquisitions of products and services from Federal Prison Industries to 

the Federal Procurement Data System (as referred to in section 

6(d)(4) of the Office of Federal Procurement Policy Act) in the same 

manner as it reports other acquisitions. Each report published by 

the Federal Procurement Data System that contains the information collected by the System shall include a statement to accompany the information reported by the department, agency, or institution under the preceding sentence as follows: ‘‘Under current law, 

sales by Federal Prison Industries are considered 

intragovernmental transfers. The purpose of reporting sales by 

Federal Prison Industries is to provide a complete overview of acquisitions by the Federal Government during the reporting period.’’. 

ø(d) Within 90 days after the date of the enactment of this subsection, Federal Prison Industries shall publish a catalog of all 

products and services which it offers for sale. This catalog shall be 

updated periodically to the extent necessary to ensure that the information in the catalog is complete and accurate.¿

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

(a) IN GENERAL.—Purchases from Federal Prison Industries, 

Incorporated, a wholly owned Government corporation, as referred 

to in section 9101(3)(E) of title 31, may be made by a Federal department or agency only in accordance with this section. 

(b) SOLICITATION AND EVALUATION OF OFFERS AND CONTRACT

AWARDS.—(1) If a procurement activity of a Federal department or 

agency has a requirement for a specific product or service that is authorized to be offered for sale by Federal Prison Industries, in accordance with section 4122 of this title, and is listed in the catalog 

referred to in subsection (g), the procurement activity shall solicit an 

offer from Federal Prison Industries, if the purchase is expected to 

be in excess of the micro-purchase threshold (as defined by section 

59

32(f) of the Office of Federal Procurement Policy Act (41 U.S.C. 

428(f))). 

(2) A contract award for such product or service shall be made 

using competitive procedures in accordance with the applicable evaluation factors, unless a determination is made by the Attorney General pursuant to paragraph (3) or an award using other than competitive procedures is authorized pursuant to paragraph (7). 

(3) The procurement activity shall negotiate with Federal Prison 

Industries on a noncompetitive basis for the award of a contract if 

the Attorney General determines that—

(A) Federal Prison Industries cannot reasonably expect fair 

consideration to receive the contract award on a competitive 

basis; and 

(B) the contract award is necessary to maintain work opportunities otherwise unavailable at the penal or correctional 

facility at which the contract is to be performed to prevent circumstances that could reasonably be expected to significantly 

endanger the safe and effective administration of such facility. 

(4) Except in the case of an award to be made pursuant to paragraph (3), a contract award shall be made with Federal Prison Industries only if the contracting officer for the procurement activity 

determines that—

(A) the specific product or service to be furnished will meet 

the requirements of the procurement activity (including any applicable prequalification requirements and all specified commercial or governmental standards pertaining to quality, testing, safety, serviceability, and warranties); 

(B) timely performance of the contract can be reasonably expected; and 

(C) the contract price does not exceed a current market 

price. 

(5) A determination by the Attorney General pursuant to paragraph (3) shall be—

(A) supported by specific findings by the warden of the 

penal or correctional institution at which a Federal Prison Industries workshop is scheduled to perform the contract; 

(B) supported by specific findings by Federal Prison Industries regarding why it does not expect to win the contract on a 

competitive basis; and 

(C) made and reported in the same manner as a determination made pursuant to section 303(c)(7) of the Federal Property 

and Administrative Services Act of 1949 (41 U.S.C. 253(c)(7)). 

(6) If the Attorney General has not made the determination described in paragraph (3) within 30 days after Federal Prison Industries has been informed of a contracting opportunity by a procurement activity, the procurement activity may proceed to conduct a 

procurement for the product or service in accordance with the procedures generally applicable to such procurements by the procurement 

activity. 

(7) A contract award may be made to Federal Prison Industries 

using other than competitive procedures if such product or service 

is only available from Federal Prison Industries and the contract 

may be awarded under the authority of section 2304(c)(1) of title 10 

or section 303(c) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252(c)(1)), as may be applicable, and 

60

pursuant to the justification and approval requirements relating to 

such noncompetitive procurements specified by law and the Governmentwide Federal Acquisition Regulation. 

(c) OFFERS FROM FEDERAL PRISON INDUSTRIES.—A timely offer 

received from Federal Prison Industries to furnish a product or 

service to a Federal department or agency shall be considered for 

award without limitation as to the dollar value of the proposed purchase. 

(d) PERFORMANCE BY FEDERAL PRISON INDUSTRIES.—Federal 

Prison Industries shall perform its contractual obligations under a 

contract awarded by a Federal department or agency to the same extent as any other contractor. 

(e) FINALITY OF CONTRACTING OFFICER’S DECISION.—(1) A decision by a contracting officer regarding the award of a contract to 

Federal Prison Industries or relating to the performance of such 

contract shall be final, unless reversed on appeal pursuant to paragraph (2) or (3). 

(2) The Chief Executive Officer of Federal Prison Industries 

may appeal to the head of a Federal department or agency a decision by a contracting officer not to award a contract to Federal Prison Industries pursuant to subsection (b)(4). The decision of the head 

of a Federal department or agency on appeal shall be final. 

(3) A dispute between Federal Prison Industries and a procurement activity regarding performance of a contract shall be subject 

to—

(A) alternative means of dispute resolution pursuant to subchapter IV of chapter 5 of title 5; or 

(B) final resolution by the board of contract appeals having 

jurisdiction over the procurement activity’s contract performance disputes pursuant to the Contract Disputes Act of 1978 (41 

U.S.C. 601 et seq.). 

(f) REPORTING OF PURCHASES.—Each Federal department or 

agency shall report purchases from Federal Prison Industries to the 

Federal Procurement Data System (as referred to in section 6(d)(4) 

of the Office of Federal Procurement Policy Act (41 U.S.C. 

405(d)(4))) in the same manner as it reports to such System any acquisition in an amount in excess of the simplified acquisition 

threshold (as defined by section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11))). 

(g) CATALOG OF PRODUCTS.—Federal Prison Industries shall 

publish and maintain a catalog of all specific products and services 

that it is authorized to offer for sale. Such catalog shall be periodically revised as products and services are added or deleted by its 

board of directors (in accordance with section 4122(b) of this title). 

(h) COMPLIANCE WITH STANDARDS.—Federal Prison Industries 

shall comply with Federal occupational, health, and safety standards with respect to the operation of its industrial operations.

* * * * * * *

ø§ 4127. Prison Industries report to Congress 

øThe board of directors of Federal Prison Industries shall submit an annual report to the Congress on the conduct of the business of the corporation during each fiscal year, and on the condition of its funds during such fiscal year. Such report shall include 

a statement of the amount of obligations issued under section 

61

4129(a)(1) during such fiscal year, and an estimate of the amount 

of obligations that will be so issued in the following fiscal year.¿

§ 4127. Federal Prison Industries report to Congress 

(a) IN GENERAL.—Pursuant to chapter 91 of title 31, the board 

of directors of Federal Prison Industries shall submit an annual report to Congress on the conduct of the business of the corporation 

during each fiscal year and the condition of its funds during the fiscal year. 

(b) CONTENTS OF REPORT.—In addition to the matters required 

by section 9106 of title 31, and such other matters as the board considers appropriate, a report under subsection (a) shall include—

(1) a statement of the amount of obligations issued under 

section 4129(a)(1) of this title during the fiscal year; 

(2) an estimate of the amount of obligations that will be 

issued in the following fiscal year; 

(3) an analysis of—

(A) the corporation’s total sales for each specific product and type of service sold to the Federal agencies and the 

commercial market; 

(B) the total purchases by each Federal agency of each 

specific product and type of service; 

(C) the corporation’s share of such total Federal Government purchases by specific product and type of service; 

and 

(D) the number and disposition of disputes submitted 

to the heads of the Federal departments and agencies pursuant to section 4124(e) of this title; 

(4) an analysis of the inmate workforce that includes—

(A) the number of inmates employed; 

(B) the number of inmates utilized to produce products 

or furnish services sold in the commercial market; 

(C) the number and percentage of employed inmates by 

the term of their incarceration; and 

(D) the various hourly wages paid to inmates employed 

with respect to the production of the various specific products and types of services authorized for production and 

sale to Federal agencies and in the commercial market; and 

(5) data concerning employment obtained by former inmates upon release to determine whether the employment provided by Federal Prison Industries during incarceration provided such inmates with knowledge and skill in a trade or occupation that enabled such former inmate to earn a livelihood 

upon release. 

(c) PUBLIC AVAILABILITY.—Copies of an annual report under 

subsection (a) shall be made available to the public at a price not 

exceeding the cost of printing the report.

* * * * * * *

§ 4130. Construction of provisions 

Nothing in this chapter shall be construed—

(1) to establish an entitlement of any inmate to—

(A) employment in a Federal Prison Industries facility; 

or 

62

(B) any particular wage, compensation, or benefit on 

demand, except as otherwise specifically provided by law or 

regulation; 

(2) to establish that inmates are employees for the purposes 

of any law or program; or 

(3) to establish any cause of action by or on behalf of any 

inmate against the United States or any officer, employee, or 

contractor thereof. 

§ 4131. Definitions 

As used in this chapter—

(1) the term ‘‘assembly’’ means the process of uniting or 

combining articles or components (including ancillary finished 

components or assemblies) so as to produce a significant change 

in form or utility, without necessarily changing or altering the 

component parts; 

(2) the term ‘‘current market price’’ means, with respect to 

a specific product, the fair market price of the product within 

the meaning of section 15(a) of the Small Business Act (15 

U.S.C. 644(a)), at the time that the contract is to be awarded, 

verified through appropriate price analysis or cost analysis, including any costs relating to transportation or the furnishing of 

any ancillary services; 

(3) the term ‘‘import-sensitive product’’ means a product 

which, according to Department of Commerce data, has experienced competition from imports at an import to domestic production ratio of 25 percent or greater; 

(4) the term ‘‘labor-intensive manufacture’’ means a manufacturing activity in which the value of inmate labor constitutes 

at least 10 percent of the estimate unit cost to produce the item 

by Federal Prison Industries; 

(5) the term ‘‘manufacture’’ means the process of fabricating 

from raw or prepared materials, so as to impart to those materials new forms, qualities, properties, and combinations; 

(6) the term ‘‘reasonable share of the market’’ means a 

share of the total purchases by the Federal departments and 

agencies, as reported to the Federal Procurement Data System 

for—

(A) any specific product during the 3 preceding fiscal 

years, that does not exceed 20 percent of the Federal market 

for the specific product; and 

(B) any specific service during the 3 preceding fiscal 

years, that does not exceed 5 percent of the Federal market 

for the specific service; and 

(7) the term ‘‘services’’ has the meaning given the term 

‘‘service contract’’ by section 37.101 of the Federal Acquisition 

Regulation (48 C.F.R. 36.102), as in effect on July 1, 2002.

* * * * * * *

63

MARKUP TRANSCRIPT

BUSINESS MEETING 

FRIDAY, JULY 25, 2003

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:40 a.m., in Room 

2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr., [Chairman of the Committee] presiding. 

[Intervening business.] 

Chairman SENSENBRENNER. The last bill on the agenda is H.R. 

1829, and pursuant to notice I now call up the bill H.R. 1829, the 

‘‘Federal Prison Industries Competition in Contracting Act of 

2003,’’ for purposes of markup and move its favorable recommendation to the House. 

Without objection, the bill will be considered as read and open 

for amendment at any point. 

[The bill, H.R. 1829, follows:]

64

1

I

108TH CONGRESS

1ST SESSION H. R. 1829

To amend title 18, United States Code, to require Federal Prison Industries

to compete for its contracts minimizing its unfair competition with private sector firms and their non-inmate workers and empowering Federal

agencies to get the best value for taxpayers’ dollars, to provide a fiveyear period during which Federal Prison Industries adjusts to obtaining

inmate work opportunities through other than its mandatory source status, to enhance inmate access to remedial and vocational opportunities

and other rehabilitative opportunities to better prepare inmates for a

successful return to society, to authorize alternative inmate work opportunities in support of non-profit organizations, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 12, 2003

Mr. HOEKSTRA (for himself, Mr. FRANK of Massachusetts, Mr. COLLINS, Mrs.

MALONEY, Mr. SENSENBRENNER, Mr. CONYERS, Mr. COBLE, Mr. WATT,

Mr. MANZULLO, Ms. VELA ́ZQUEZ, Mr. BOEHNER, Mr. GEORGE MILLER

of California, Mr. TOM DAVIS of Virginia, Mr. RANGEL, Mr. TOOMEY,

Mr. NADLER, Mr. EHLERS, Mr. DINGELL, Mr. LOBIONDO, Mr. CANTOR,

Ms. BALDWIN, Mr. NORWOOD, Ms. WOOLSEY, Mr. SOUDER, Mr. FERGUSON, Ms. SCHAKOWSKY, Mr. SHADEGG, Mr. KINGSTON, Ms. HART,

Ms. LEE, Mr. HOSTETTLER, Mr. FILNER, Mr. BARTLETT of Maryland,

Mr. OXLEY, Mr. ENGLISH, Mr. MCINTYRE, Mr. DEMINT, Mr. FLAKE,

Mr. SMITH of New Jersey, Mr. RYAN of Wisconsin, Mr. CULBERSON, Mr.

EMANUEL, Mr. FORBES, Mr. GOODE, Mrs. NORTHUP, Mr. OLVER, Mr.

BLUNT, Ms. PRYCE of Ohio, Mrs. MILLER of Michigan, Mr. CRAMER,

Mr. CAMP, Mr. ROGERS of Michigan, Mr. LEACH, Mr. PENCE, Mr. HILL,

Mr. UPTON, Mr. MCCOTTER, Mr. LANGEVIN, Mr. NETHERCUTT, Mr.

OSBORNE, Mr. HAYES, Mr. WAMP, Mr. TERRY, Mr. KLECZKA, Mrs.

MYRICK, Mr. NEY, Mr. BRADY of Pennsylvania, Mr. BRADY of Texas,

Mrs. JONES of Ohio, Mr. JONES of North Carolina, Mr. SESSIONS, Mrs.

CUBIN, Mrs. CAPITO, Mr. BURR, Mr. CLAY, Mr. KNOLLENBERG, Mr.

MORAN of Kansas, Mr. TIBERI, Mr. PORTER, Mr. MCGOVERN, Mr.

BALLENGER, Mr. DEAL of Georgia, Mr. EVERETT, Mr. KENNEDY of

Rhode Island, Mr. MCKEON, Mr. ISAKSON, Mr. LATOURETTE, Mr.

THORNBERRY, Mrs. WILSON of New Mexico, Mr. ROYCE, Mr. KLINE, Mr.

KUCINICH, Mr. DUNCAN, Mr. TIAHRT, Mr. QUINN, Mr. WILSON of South

Carolina, Mr. DOOLITTLE, Mr. MCDERMOTT, Mrs. BIGGERT, Mrs.

MUSGRAVE, Mr. CHOCOLA, Mr. GINGREY, Mr. NUNES, and Mr. BURNS)


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introduced the following bill; which was referred to the Committee on the

Judiciary

A BILL

To amend title 18, United States Code, to require Federal

Prison Industries to compete for its contracts minimizing

its unfair competition with private sector firms and their

non-inmate workers and empowering Federal agencies

to get the best value for taxpayers’ dollars, to provide

a five-year period during which Federal Prison Industries

adjusts to obtaining inmate work opportunities through

other than its mandatory source status, to enhance inmate access to remedial and vocational opportunities and

other rehabilitative opportunities to better prepare inmates for a successful return to society, to authorize

alternative inmate work opportunities in support of nonprofit organizations, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Federal Prison Industries Competition in Contracting

6 Act of 2003’’.

7 (b) TABLE OF CONTENTS.—The table of contents for

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Governmentwide procurement policy relating to purchases from Federal

Prison Industries.

Sec. 3. Public participation regarding expansion proposals by Federal Prison

Industries.


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Sec. 4. Transitional mandatory source authority.

Sec. 5. Authority to perform as a Federal subcontractor.

Sec. 6. Inmate wages and deductions.

Sec. 7. Clarifying amendment relating to services.

Sec. 8. Conforming amendment.

Sec. 9. Rules of construction relating to chapter 307.

Sec. 10. Providing additional rehabilitative opportunities for inmates.

Sec. 11. Restructuring the Board of Directors.

Sec. 12. Providing additional management flexibility to Federal Prison Industry

operations.

Sec. 13. Transitional personnel management authority.

Sec. 14. Federal Prison Industries report to Congress.

Sec. 15. Independent study to determine the effects of eliminating the Federal

Prison Industries mandatory source authority.

Sec. 16. Definitions.

Sec. 17. Implementing regulations and procedures.

Sec. 18. Rule of construction.

Sec. 19. Effective date and applicability.

Sec. 20. Clerical amendments.

1 SEC. 2. GOVERNMENTWIDE PROCUREMENT POLICY RELAT2 ING TO PURCHASES FROM FEDERAL PRISON

3 INDUSTRIES.

4 Section 4124 of title 18, United States Code, is

5 amended to read as follows:

6 ‘‘§ 4124. Governmentwide procurement policy relat7 ing to purchases from Federal Prison In8 dustries

9 ‘‘(a) IN GENERAL.—Purchases from Federal Prison

10 Industries, Incorporated, a wholly owned Government cor11 poration, as referred to in section 9101(3)(E) of title 31,

12 may be made by a Federal department or agency only in

13 accordance with this section.

14 ‘‘(b) SOLICITATION AND EVALUATION OF OFFERS

15 AND CONTRACT AWARDS.—(1) If a procurement activity

16 of a Federal department or agency has a requirement for


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1 a specific product or service that is authorized to be of2 fered for sale by Federal Prison Industries, in accordance

3 with section 4122 of this title, and is listed in the catalog

4 referred to in subsection (g), the procurement activity

5 shall solicit an offer from Federal Prison Industries, if the

6 purchase is expected to be in excess of the micro-purchase

7 threshold (as defined by section 32(f) of the Office of Fed8 eral Procurement Policy Act (41 U.S.C. 428(f))).

9 ‘‘(2) A contract award for such product or service

10 shall be made using competitive procedures in accordance

11 with the applicable evaluation factors, unless a determina12 tion is made by the Attorney General pursuant to para13 graph (3) or an award using other than competitive proce14 dures is authorized pursuant to paragraph (7).

15 ‘‘(3) The procurement activity shall negotiate with

16 Federal Prison Industries on a noncompetitive basis for

17 the award of a contract if the Attorney General determines

18 that—

19 ‘‘(A) Federal Prison Industries cannot reason20 ably expect fair consideration to receive the contract

21 award on a competitive basis; and

22 ‘‘(B) the contract award is necessary to main23 tain work opportunities otherwise unavailable at the

24 penal or correctional facility at which the contract is

25 to be performed to prevent circumstances that could


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1 reasonably be expected to significantly endanger the

2 safe and effective administration of such facility.

3 ‘‘(4) Except in the case of an award to be made pur4 suant to paragraph (3), a contract award shall be made

5 with Federal Prison Industries only if the contracting offi6 cer for the procurement activity determines that—

7 ‘‘(A) the specific product or service to be fur8 nished will meet the requirements of the procure9 ment activity (including any applicable

10 prequalification requirements and all specified com11 mercial or governmental standards pertaining to

12 quality, testing, safety, serviceability, and warran13 ties);

14 ‘‘(B) timely performance of the contract can be

15 reasonably expected; and

16 ‘‘(C) the contract price does not exceed a cur17 rent market price.

18 ‘‘(5) A determination by the Attorney General pursu19 ant to paragraph (3) shall be—

20 ‘‘(A) supported by specific findings by the war21 den of the penal or correctional institution at which

22 a Federal Prison Industries workshop is scheduled

23 to perform the contract;


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1 ‘‘(B) supported by specific findings by Federal

2 Prison Industries regarding why it does not expect

3 to win the contract on a competitive basis; and

4 ‘‘(C) made and reported in the same manner as

5 a determination made pursuant to section 303(c)(7)

6 of the Federal Property and Administrative Services

7 Act of 1949 (41 U.S.C. 253(c)(7)).

8 ‘‘(6) If the Attorney General has not made the deter9 mination described in paragraph (3) within 30 days after

10 Federal Prison Industries has been informed of a con11 tracting opportunity by a procurement activity, the pro12 curement activity may proceed to conduct a procurement

13 for the product or service in accordance with the proce14 dures generally applicable to such procurements by the

15 procurement activity.

16 ‘‘(7) A contract award may be made to Federal Pris17 on Industries using other than competitive procedures if

18 such product or service is only available from Federal

19 Prison Industries and the contract may be awarded under

20 the authority of section 2304(c)(1) of title 10 or section

21 303(c) of the Federal Property and Administrative Serv22 ices Act of 1949 (41 U.S.C. 252(c)(1)), as may be applica23 ble, and pursuant to the justification and approval re24 quirements relating to such noncompetitive procurements


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1 specified by law and the Governmentwide Federal Acquisi2 tion Regulation.

3 ‘‘(c) OFFERS FROM FEDERAL PRISON INDUS4 TRIES.—A timely offer received from Federal Prison In5 dustries to furnish a product or service to a Federal de6 partment or agency shall be considered for award without

7 limitation as to the dollar value of the proposed purchase.

8 ‘‘(d) PERFORMANCE BY FEDERAL PRISON INDUS9 TRIES.—Federal Prison Industries shall perform its con10 tractual obligations under a contract awarded by a Fed11 eral department or agency to the same extent as any other

12 contractor.

13 ‘‘(e) FINALITY OF CONTRACTING OFFICER’S DECI14 SION.—(1) A decision by a contracting officer regarding

15 the award of a contract to Federal Prison Industries or

16 relating to the performance of such contract shall be final,

17 unless reversed on appeal pursuant to paragraph (2) or

18 (3).

19 ‘‘(2) The Chief Executive Officer of Federal Prison

20 Industries may appeal to the head of a Federal depart21 ment or agency a decision by a contracting officer not to

22 award a contract to Federal Prison Industries pursuant

23 to subsection (b)(4). The decision of the head of a Federal

24 department or agency on appeal shall be final.


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1 ‘‘(3) A dispute between Federal Prison Industries

2 and a procurement activity regarding performance of a

3 contract shall be subject to—

4 ‘‘(A) alternative means of dispute resolution

5 pursuant to subchapter IV of chapter 5 of title 5;

6 or

7 ‘‘(B) final resolution by the board of contract

8 appeals having jurisdiction over the procurement ac9 tivity’s contract performance disputes pursuant to

10 the Contract Disputes Act of 1978 (41 U.S.C. 601

11 et seq.).

12 ‘‘(f) REPORTING OF PURCHASES.—Each Federal de13 partment or agency shall report purchases from Federal

14 Prison Industries to the Federal Procurement Data Sys15 tem (as referred to in section 6(d)(4) of the Office of Fed16 eral Procurement Policy Act (41 U.S.C. 405(d)(4))) in the

17 same manner as it reports to such System any acquisition

18 in an amount in excess of the simplified acquisition thresh19 old (as defined by section 4(11) of the Office of Federal

20 Procurement Policy Act (41 U.S.C. 403(11))).

21 ‘‘(g) CATALOG OF PRODUCTS.—Federal Prison In22 dustries shall publish and maintain a catalog of all specific

23 products and services that it is authorized to offer for sale.

24 Such catalog shall be periodically revised as products and


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1 services are added or deleted by its board of directors (in

2 accordance with section 4122(b) of this title).

3 ‘‘(h) COMPLIANCE WITH STANDARDS.—Federal Pris4 on Industries shall comply with Federal occupational,

5 health, and safety standards with respect to the operation

6 of its industrial operations.’’.

7 SEC. 3. PUBLIC PARTICIPATION REGARDING EXPANSION

8 PROPOSALS BY FEDERAL PRISON INDUS9 TRIES.

10 Section 4122(b) of title 18, United States Code, is

11 amended—

12 (1) by redesignating paragraph (6) as para13 graph (12); and

14 (2) by striking paragraphs (4) and (5) and in15 serting the following new paragraphs:

16 ‘‘(4) A decision to authorize Federal Prison Indus17 tries to offer a new specific product or specific service or

18 to expand the production of an existing product or service

19 shall be made by its board of directors in conformance

20 with the requirements of subsections (b), (c), (d), and (e)

21 of section 553 of title 5, and this chapter.

22 ‘‘(5)(A) Whenever Federal Prison Industries pro23 poses to offer for sale a new specific product or specific

24 service or to expand production of a currently authorized

25 product or service, the Chief Operating Officer of Federal


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1 Prison Industries shall submit an appropriate proposal to

2 the board of directors and obtain the board’s approval be3 fore initiating any such expansion. The proposal submitted

4 to the board shall include a detailed analysis of the prob5 able impact of the proposed expansion of sales within the

6 Federal market by Federal Prison Industries on private

7 sector firms and their non-inmate workers.

8 ‘‘(B)(i) The analysis required by subparagraph (A)

9 shall be performed by an interagency team on a reimburs10 able basis or by a private contractor paid by Federal Pris11 on Industries.

12 ‘‘(ii) If the analysis is to be performed by an inter13 agency team, such team shall be led by the Administrator

14 of the Small Business Administration or the designee of

15 such officer with representatives of the Department of

16 Labor, the Department of Commerce, and the Federal

17 Procurement Data Center.

18 ‘‘(iii) If the analysis is to be performed by a private

19 contractor, the selection of the contractor and the admin20 istration of the contract shall be conducted by one of the

21 entities referenced in clause (ii) as an independent execu22 tive agent for the board of directors. Maximum consider23 ation shall be given to any proposed statement of work

24 furnished by the Chief Operating Officer of Federal Prison

25 Industries.


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1 ‘‘(C) The analysis required by subparagraph (A) shall

2 identify and consider—

3 ‘‘(i) the number of vendors that currently meet

4 the requirements of the Federal Government for the

5 specific product or specific service;

6 ‘‘(ii) the proportion of the Federal Government

7 market for the specific product or specific service

8 currently furnished by small businesses during the

9 previous 3 fiscal years;

10 ‘‘(iii) the share of the Federal market for the

11 specific product or specific service projected for Fed12 eral Prison Industries for the fiscal year in which

13 production or performance will commence or expand

14 and the subsequent 4 fiscal years;

15 ‘‘(iv) whether the industry producing the spe16 cific product or specific service in the private

17 sector—

18 ‘‘(I) has an unemployment rate higher

19 than the national average; or

20 ‘‘(II) has a rate of unemployment for

21 workers that has consistently shown an increase

22 during the previous 5 years;

23 ‘‘(v) whether the specific product is an import24 sensitive product;


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1 ‘‘(vi) the requirements of the Federal Govern2 ment and the demands of entities other than the

3 Federal Government for the specific product or serv4 ice during the previous 3 fiscal years;

5 ‘‘(vii) the projected growth or decline in the de6 mand of the Federal Government for the specific

7 product or specific service;

8 ‘‘(viii) the capability of the projected demand of

9 the Federal Government for the specific product or

10 service to sustain both Federal Prison Industries

11 and private vendors; and

12 ‘‘(ix) whether authorizing the production of the

13 new product or performance of a new service will

14 provide inmates with the maximum opportunity to

15 acquire knowledge and skill in trades and occupa16 tions that will provide them with a means of earning

17 a livelihood upon release.

18 ‘‘(D)(i) The board of directors may not approve a

19 proposal to authorize the production and sale of a new

20 specific product or continued sales of a previously author21 ized product unless—

22 ‘‘(I) the product to be furnished is a prison23 made product; or

24 ‘‘(II) the service to be furnished is to be per25 formed by inmate workers.


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1 ‘‘(ii) The board of directors may not approve a pro2 posal to authorize the production and sale of a new prison3 made product or to expand production of a currently au4 thorized product if the product is—

5 ‘‘(I) produced in the private sector by an indus6 try which has reflected during the previous year an

7 unemployment rate above the national average; or

8 ‘‘(II) an import-sensitive product.

9 ‘‘(iii) The board of directors may not approve a pro10 posal for inmates to provide a service in which an inmate

11 worker has access to—

12 ‘‘(I) personal or financial information about in13 dividual private citizens, including information relat14 ing to such person’s real property, however de15 scribed, without giving prior notice to such persons

16 or class of persons to the greatest extent practicable;

17 ‘‘(II) geographic data regarding the location of

18 surface and subsurface infrastructure providing com19 munications, water and electrical power distribution,

20 pipelines for the distribution of natural gas, bulk pe21 troleum products and other commodities, and other

22 utilities; or

23 ‘‘(III) data that is classified.

24 ‘‘(iv)(I) Federal Prison Industries is prohibited from

25 furnishing through inmate labor construction services, unVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00076 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 less to be performed within a Federal correctional institu2 tion pursuant to the participation of an inmate in an ap3 prenticeship or other vocational education program teach4 ing the skills of the various building trades.

5 ‘‘(II) For purposes of this clause, the term ‘construc6 tion’ has the meaning given such term by section 2.101

7 of the Federal Acquisition Regulation (48 CFR part

8 2.101), as in effect on June 1, 2002, including the repair,

9 alteration, or maintenance of real property in being.

10 ‘‘(6) To provide further opportunities for participa11 tion by interested parties, the board of directors shall—

12 ‘‘(A) give additional notice of a proposal to au13 thorize the production and sale of a new product or

14 service, or expand the production of a currently au15 thorized product or service, in a publication designed

16 to most effectively provide notice to private vendors

17 and labor unions representing private sector workers

18 who could reasonably be expected to be affected by

19 approval of the proposal, which notice shall offer to

20 furnish copies of the analysis required by paragraph

21 (5) and shall solicit comment on the analysis;

22 ‘‘(B) solicit comments on the analysis required

23 by paragraph (5) from trade associations rep24 resenting vendors and labor unions representing pri25 vate sector workers who could reasonably be exVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00077 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 pected to be affected by approval of the proposal to

2 authorize the production and sale of a new product

3 or service (or expand the production of a currently

4 authorized product or service); and

5 ‘‘(C) afford an opportunity, on request, for a

6 representative of an established trade association,

7 labor union, or other private sector representatives

8 to present comments on the proposal directly to the

9 board of directors.

10 ‘‘(7) The board of directors shall be provided copies

11 of all comments received on the expansion proposal.

12 ‘‘(8) Based on the comments received on the initial

13 expansion proposal, the Chief Operating Officer of Federal

14 Prison Industries may provide the board of directors a re15 vised expansion proposal. If such revised proposal provides

16 for expansion of inmate work opportunities in an industry

17 different from that initially proposed, such revised pro18 posal shall reflect the analysis required by paragraph

19 (5)(C) and be subject to the public comment requirements

20 of paragraph (6).

21 ‘‘(9) The board of directors shall consider a proposal

22 to authorize the sale of a new specific product or specific

23 service (or to expand the volume of sales for a currently

24 authorized product or service) and take any action with

25 respect to such proposal, during a meeting that is open


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1 to the public, unless closed pursuant to section 552(b) of

2 title 5.

3 ‘‘(10) In conformity with the requirements of para4 graphs (5) through (9) of this subsection, the board of

5 directors may—

6 ‘‘(A) authorize the donation of products pro7 duced or services furnished by Federal industries

8 and available for sale; or

9 ‘‘(B) authorize the production of a new specific

10 product or the furnishing of a new specific service

11 for donation.’’.

12 SEC. 4. TRANSITIONAL MANDATORY SOURCE AUTHORITY.

13 (a) IN GENERAL.—Notwithstanding the require14 ments of section 4124 of title 18, United States Code (as

15 amended by section 2 of this Act), a Federal department

16 or agency having a requirement for a product that is au17 thorized for sale by Federal Prison Industries and is listed

18 in its catalog (referred to in section 4124(g) of title 18,

19 United States Code) shall first solicit an offer from Fed20 eral Prison Industries and make purchases on a non21 competitive basis in accordance with this section.

22 (b) PREFERENTIAL SOURCE STATUS.—Subject to

23 the limitations of subsection (d), a contract award shall

24 be made on a noncompetitive basis to Federal Prison InVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00079 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 dustries if the contracting officer for the procurement ac2 tivity determines that—

3 (1) the product offered by Federal Prison In4 dustries will meet the requirements of the procure5 ment activity (including commercial or governmental

6 standards or specifications pertaining to design, per7 formance, testing, safety, serviceability, and warran8 ties as may be imposed upon a private sector sup9 plier of the type being offered by Federal Prison In10 dustries);

11 (2) timely performance of the contract by Fed12 eral Prison Industries can be reasonably expected;

13 and

14 (3) the negotiated price does not exceed a fair

15 and reasonable price.

16 (c) CONTRACTUAL TERMS.—The terms and condi17 tions of the contract and the price to be paid to Federal

18 Prison Industries shall be determined by negotiation be19 tween Federal Prison Industries and the Federal agency

20 making the purchase. The negotiated price shall not ex21 ceed a fair and reasonable price determined in accordance

22 with the procedures of the Federal Acquisition Regulation.

23 (d) PERFORMANCE OF CONTRACTUAL OBLIGA24 TIONS.—


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1 (1) IN GENERAL.—Federal Prison Industries

2 shall perform the obligations of the contract nego3 tiated pursuant to subsection (c).

4 (2) PERFORMANCE DISPUTES.—If the head of

5 the contracting activity and the Chief Operating Of6 ficer of Federal Prison Industries are unable to re7 solve a contract performance dispute to their mutual

8 satisfaction, such dispute shall be resolved pursuant

9 to section 4124(e)(3) of title 18, United States Code

10 (as added by section 2 of this Act).

11 (e) LIMITATIONS ON USE OF AUTHORITY.—

12 (1) IN GENERAL.—As a percentage of the sales

13 made by Federal Prison Industries during the base

14 period, the total dollar value of sales to the Govern15 ment made pursuant to subsection (b) and sub16 section (c) of this section shall not exceed—

17 (A) 90 percent in fiscal year 2005;

18 (B) 85 percent in fiscal year 2006;

19 (C) 70 percent in fiscal year 2007;

20 (D) 55 percent in fiscal year 2008; and

21 (E) 40 percent in fiscal year 2009.

22 (2) SALES WITHIN VARIOUS BUSINESS SEC23 TORS.—Use of the authority provided by subsections

24 (b) and (c) shall not result in sales by Federal Pris25 on Industries to the Government that are in excess


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1 of its total sales during the base year for each busi2 ness sector.

3 (3) LIMITATIONS RELATING TO SPECIFIC PROD4 UCTS.—Use of the authorities provided by sub5 sections (b) and (c) shall not result in contract

6 awards to Federal Prison Industries that are in ex7 cess of its total sales during the base period for such

8 product.

9 (4) CHANGES IN DESIGN SPECIFICATIONS.—

10 The limitations on sales specified in paragraphs (2)

11 and (3) shall not be affected by any increases in the

12 unit cost of production of a specific product arising

13 from changes in the design specification of such

14 product directed by the buying agency.

15 (f) DURATION OF AUTHORITY.—The preferential

16 contracting authorities authorized by subsection (b) may

17 not be used on or after October 1, 2009, and become effec18 tive on the effective date of the final regulations issued

19 pursuant to section 17.

20 (g) DEFINITIONS.—For the purposes of this

21 section—

22 (1) the term ‘‘base period’’ means the total

23 sales of Federal Prison Industries during the period

24 October 1, 2001, and September 30, 2002 (Fiscal

25 Year 2002);


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1 (2) the term ‘‘business sectors’’ means the eight

2 product/service business groups identified in the

3 2002 Federal Prison Industries annual report as the

4 Clothing and Textile Business Group, the Elec5 tronics Business Group, the Fleet Management and

6 Vehicular Components Business Group, the Graphics

7 Business Group, the Industrial Products Business

8 Group, the Office Furniture Business Group, the

9 Recycling Activities Business Group, and the Serv10 ices Business Group; and

11 (3) the term ‘‘fair and reasonable price’’ shall

12 be given the same meaning as, and be determined

13 pursuant to, part 15.8 of the Federal Acquisition

14 Regulation (48 C.F.R. 15.8).

15 (h) FINDING BY ATTORNEY GENERAL WITH RE16 SPECT TO PUBLIC SAFETY.—(1) Not later than 60 days

17 prior to the end of each fiscal year specified in subsection

18 (e)(1), the Attorney General shall make a finding regard19 ing the effects of the percentage limitation imposed by

20 such subsection for such fiscal year and the likely effects

21 of the limitation imposed by such subsection for the fol22 lowing fiscal year.

23 (2) The Attorney General’s finding shall include a de24 termination whether such limitation has resulted or is like25 ly to result in a substantial reduction in inmate industrial


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1 employment and whether such reductions, if any, present

2 a significant risk of adverse effects on safe prison oper3 ation or public safety.

4 (3) If the Attorney General finds a significant risk

5 of adverse effects on either safe prison management or

6 public safety, he shall so advise the Congress.

7 (4) In advising the Congress pursuant to paragraph

8 (3), the Attorney General shall make recommendations for

9 additional authorizations of appropriations to provide ad10 ditional alternative inmate rehabilitative opportunities and

11 additional correctional staffing, as may be appropriate.

12 SEC. 5. AUTHORITY TO PERFORM AS A FEDERAL SUBCON13 TRACTOR.

14 (a) IN GENERAL.—Federal Prison Industries is au15 thorized to enter into a contract with a Federal contractor

16 (or a subcontractor of such contractor at any tier) to

17 produce products as a subcontractor or supplier in the per18 formance of a Federal procurement contract. The use of

19 Federal Prison Industries as a subcontractor or supplier

20 shall be a wholly voluntary business decision by the Fed21 eral prime contractor or subcontractor, subject to any

22 prior approval of subcontractors or suppliers by the con23 tracting officer which may be imposed by the Federal Ac24 quisition Regulation or by the contract.


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1 (b) COMMERCIAL SALES PROHIBITED.—The author2 ity provided by subsection (a) shall not result, either di3 rectly or indirectly, in the sale in the commercial market

4 of a product or service resulting from the labor of Federal

5 inmate workers in violation of section 1762(a) of title 18,

6 United States Code. A Federal contractor (or subcon7 tractor at any tier) using Federal Prison Industries as a

8 subcontractor or supplier in furnishing a commercial prod9 uct pursuant to a Federal contract shall implement appro10 priate management procedures to prevent introducing an

11 inmate-produced product into the commercial market.

12 (c) PROHIBITIONS ON MANDATING SUBCONTRACTING

13 WITH FEDERAL PRISON INDUSTRIES.—Except as author14 ized under the Federal Acquisition Regulation, the use of

15 Federal Prison Industries as a subcontractor or supplier

16 of products or provider of services shall not be imposed

17 upon prospective or actual Federal prime contractors or

18 a subcontractors at any tier by means of—

19 (1) a contract solicitation provision requiring a

20 contractor to offer to make use of Federal Prison

21 Industries, its products or services;

22 (2) specifications requiring the contractor to

23 use specific products or services (or classes of prod24 ucts or services) offered by Federal Prison Indus25 tries in the performance of the contract;


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1 (3) any contract modification directing the use

2 of Federal Prison Industries, its products or serv3 ices; or

4 (4) any other means.

5 SEC. 6. INMATE WAGES AND DEDUCTIONS.

6 Section 4122(b) of title 18, United States Code (as

7 amended by section 3 of this Act), is further amended by

8 adding a new paragraph (11) as follows:

9 ‘‘(11)(A) The Board of Directors of Federal Prison

10 Industries shall prescribe the rates of hourly wages to be

11 paid inmates performing work for or through Federal

12 Prison Industries. The Director of the Federal Bureau of

13 Prisons shall prescribe the rates of hourly wages for other

14 work assignments within the various Federal correctional

15 institutions.

16 ‘‘(B) The various inmate wage rates shall be reviewed

17 and considered for increase on not less than a biannual

18 basis.

19 ‘‘(C) Wages earned by an inmate worker shall be paid

20 in the name of the inmate. Deductions, aggregating to not

21 more than 80 percent of gross wages, shall be taken from

22 the wages due for—

23 ‘‘(i) applicable taxes (Federal, State, and local);

24 ‘‘(ii) payment of fines and restitution pursuant

25 to court order;


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1 ‘‘(iii) payment of additional restitution for vic2 tims of the inmate’s crimes (at a rate not less than

3 10 percent of gross wages);

4 ‘‘(iv) allocations for support of the inmate’s

5 family pursuant to statute, court order, or agree6 ment with the inmate;

7 ‘‘(v) allocations to a fund in the inmate’s name

8 to facilitate such inmate’s assimilation back into so9 ciety, payable at the conclusion of incarceration; and

10 ‘‘(vi) such other deductions as may be specified

11 by the Director of the Bureau of Prisons.

12 ‘‘(D) Each inmate worker working for Federal Prison

13 Industries shall indicate in writing that such person—

14 ‘‘(i) is participating voluntarily; and

15 ‘‘(ii) understands and agrees to the wages to be

16 paid and deductions to be taken from such wages.’’.

17 SEC. 7. CLARIFYING AMENDMENT RELATING TO SERVICES.

18 (a) IN GENERAL.—Section 1761 of title 18, United

19 States Code, is amended in subsection (a), by striking

20 ‘‘any goods, wares, or merchandise manufactured, pro21 duced, or mined’’ and inserting ‘‘products manufactured,

22 services furnished, or minerals mined’’.

23 (b) COMPLETION OF EXISTING AGREEMENTS.—Any

24 prisoner work program operated by a prison or jail of a

25 State or local jurisdiction of a State which is providing


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1 services for the commercial market through inmate labor

2 on October 1, 2002, may continue to provide such com3 mercial services until—

4 (1) the expiration date specified in the contract

5 or other agreement with a commercial partner on

6 October 1, 2002, or

7 (2) until September 30, 2005, if the prison

8 work program is directly furnishing the services to

9 the commercial market.

10 (c) APPROVAL REQUIRED FOR LONG-TERM OPER11 ATION.—A prison work program operated by a correc12 tional institution operated by a State or local jurisdiction

13 of a State may continue to provide inmate labor to furnish

14 services for sale in the commercial market after the dates

15 specified in subsection (b) if such program has been cer16 tified pursuant to section 1761(c)(1) of title 18, United

17 States Code, and is in compliance with the requirements

18 of such subsection and its implementing regulations.

19 SEC. 8. CONFORMING AMENDMENT.

20 Section 4122(a) of title 18, United States Code, is

21 amended by striking ‘‘production of commodities’’ and in22 serting ‘‘production of products or furnishing of services’’.


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1 SEC. 9. RULES OF CONSTRUCTION RELATING TO CHAPTER

2 307.

3 Chapter 307 of title 18, United States Code, is fur4 ther amended by adding the following:

5 ‘‘§ 4130. Construction of provisions

6 ‘‘Nothing in this chapter shall be construed—

7 ‘‘(1) to establish an entitlement of any inmate

8 to—

9 ‘‘(A) employment in a Federal Prison In10 dustries facility; or

11 ‘‘(B) any particular wage, compensation,

12 or benefit on demand, except as otherwise spe13 cifically provided by law or regulation;

14 ‘‘(2) to establish that inmates are employees for

15 the purposes of any law or program; or

16 ‘‘(3) to establish any cause of action by or on

17 behalf of any inmate against the United States or

18 any officer, employee, or contractor thereof.’’.

19 SEC. 10. PROVIDING ADDITIONAL REHABILITATIVE OPPOR20 TUNITIES FOR INMATES.

21 (a) ADDITIONAL EDUCATIONAL, TRAINING, AND RE22 LEASE-PREPARATION OPPORTUNITIES.—

23 (1) PROGRAM ESTABLISHED.—There is hereby

24 established the Enhanced In-Prison Educational and

25 Vocational Assessment and Training Program within

26 the Bureau of Prisons.


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1 (2) COMPREHENSIVE PROGRAM.—In addition to

2 such other components as the Director of the Bu3 reau of Prisons deems appropriate to reduce inmate

4 idleness and better prepare inmates for a successful

5 reentry into the community upon release, the pro6 gram shall provide—

7 (A) in-prison assessments of inmates’

8 needs and aptitudes;

9 (B) a full range of educational opportuni10 ties;

11 (C) vocational training and apprentice12 ships; and

13 (D) comprehensive release-readiness prepa14 ration.

15 (3) AUTHORIZATION OF APPROPRIATIONS.—For

16 the purposes of carrying out the program established

17 by paragraph (1), $75,000,000 is authorized for

18 each fiscal year after fiscal year 2003, to remain

19 available until expended. Funds shall be allocated

20 from the gross profits within the Federal Prison In21 dustries Fund, and, to the extent such amounts are

22 inadequate, from the General Treasury.

23 (b) INMATE WORK OPPORTUNITIES IN SUPPORT OF

24 NOT-FOR-PROFIT ENTITIES.—


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1 (1) PROPOSALS FOR DONATION PROGRAMS.—

2 The Chief Operating Officer of Federal Prison In3 dustries shall develop and present to the Board of

4 Directors of Federal Prison Industries proposals to

5 have Federal Prison Industries donate products and

6 services to eligible entities that provide goods or

7 services to low-income individuals who would likely

8 otherwise have difficulty purchasing such products

9 or services in the commercial market.

10 (2) SCHEDULE FOR SUBMISSION AND CONSID11 ERATION OF DONATION PROGRAMS.—

12 (A) INITIAL PROPOSALS.—The Chief Oper13 ating Officer shall submit the initial group of

14 proposals for programs of the type described in

15 paragraph (1) within 180 days after the date of

16 the enactment of this Act. The Board of Direc17 tors of Federal Prison Industries shall consider

18 such proposals from the Chief Operating Officer

19 not later than the date that is 270 days after

20 the date of the enactment of this Act.

21 (B) ANNUAL OPERATING PLAN.—The

22 Board of Directors of Federal Prison Industries

23 shall consider proposals by the Chief Operating

24 Officer for programs of the type described in


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1 paragraph (1) as part of the annual operating

2 plan for Federal Prison Industries.

3 (C) OTHER PROPOSALS.—In addition to

4 proposals submitted by the Chief Operating Of5 ficer, the Board of Directors may, from time to

6 time, consider proposals presented by prospec7 tive eligible entities.

8 (3) DEFINITION OF ELIGIBLE ENTITIES.—For

9 the purposes of this subsection, the term ‘‘eligible

10 entity’’ means an entity—

11 (A) that is an organization described in

12 section 501(c)(3) of the Internal Revenue Code

13 of 1986 and exempt from taxation under sec14 tion 501(a) of such Code and that has been

15 such an organization for a period of not less

16 than 36 months prior to inclusion in a proposal

17 of the type described in paragraph (1), or

18 (B) that is a religious organization de19 scribed in section 501(d) of such Code and ex20 empt from taxation under section 501(a) of

21 such Code.

22 (4) AUTHORIZATION OF APPROPRIATIONS.—

23 There are authorized to be appropriated $7,000,000

24 for each of the fiscal years 2004 through 2008 for

25 the purposes of paying the wages of inmates and


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1 otherwise carrying out programs of the type de2 scribed in paragraph (1).

3 (c) MAXIMIZING INMATE REHABILITATIVE OPPORTU4 NITIES THROUGH COGNITIVE ABILITIES ASSESSMENTS.—

5 (1) DEMONSTRATION PROGRAM AUTHORIZED.—

6 (A) IN GENERAL.—There is hereby estab7 lished within the Federal Bureau of Prisons a

8 program to be known as the ‘‘Cognitive Abili9 ties Assessment Demonstration Program’’. The

10 purpose of the demonstration program is to de11 termine the effectiveness of a program that as12 sesses the cognitive abilities and perceptual

13 skills of Federal inmates to maximize the bene14 fits of various rehabilitative opportunities de15 signed to prepare each inmate for a successful

16 return to society and reduce recidivism. The

17 demonstration program shall be undertaken by

18 a contractor with a demonstrated record of ena19 bling the behavioral and academic improvement

20 of adults through the use of research-based sys21 tems that maximize the development of both the

22 cognitive and perceptual capabilities of a par23 ticipating individual, including adults in a cor24 rectional setting.


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1 (B) SCOPE OF DEMONSTRATION PRO2 GRAM.—The demonstration program shall to

3 the maximum extent practicable, be—

4 (i) conducted during a period of three

5 consecutive fiscal years, commencing dur6 ing fiscal year 2004;

7 (ii) conducted at 12 Federal correc8 tional institutions; and

9 (iii) offered to 6,000 inmates, who are

10 categorized as minimum security or less,

11 and are within five years of release.

12 (2) AUTHORIZATION OF APPROPRIATIONS.—

13 There is authorized to be appropriated $3,000,000

14 in each of the three fiscal years after fiscal year

15 2003, to remain available until expended, for the

16 purposes of conducting the demonstration program

17 authorized by subsection (a).

18 (d) PRERELEASE EMPLOYMENT ASSISTANCE.—

19 (1) IN GENERAL.—The Director of the Bureau

20 of Prisons shall, to the maximum extent practicable,

21 afford to inmates opportunities to participate in pro22 grams and activities designed to help prepare such

23 inmates to obtain employment upon release.

24 (2) PRERELEASE EMPLOYMENT PLACEMENT

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1 ment assistance required by subsection (a) shall

2 include—

3 (A) training in the preparation of resumes

4 and job applications;

5 (B) training in interviewing skills;

6 (C) training and assistance in job search

7 techniques;

8 (D) conduct of job fairs; and

9 (E) such other methods deemed appro10 priate by the Director of the Bureau of Prisons.

11 (3) PRIORITY PARTICIPATION.—Priority in pro12 gram participation shall be accorded to inmates who

13 are participating in work opportunities afforded by

14 Federal Prison Industries and are within 24 months

15 of release from incarceration.

16 (e) PROVIDING ADDITIONAL OPPORTUNITIES FOR

17 POST INCARCERATION VOCATIONAL AND REMEDIAL EDU18 CATIONAL OPPORTUNITIES FOR INMATES.—

19 (1) FEDERAL REENTRY CENTER DEMONSTRA20 TION.—

21 (A) AUTHORITY AND ESTABLISHMENT OF

22 DEMONSTRATION PROJECT.—From funds made

23 available to carry out this subsection, the Attor24 ney General, in consultation with the Director

25 of the Administrative Office of the United


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1 States Courts, shall establish the Federal Re2 entry Center Demonstration project. The

3 project shall involve appropriate prisoners from

4 the Federal prison population and shall utilize

5 community corrections facilities, home confine6 ment, and a coordinated response by Federal

7 agencies to assist participating prisoners in pre8 paring for and adjusting to reentry into the

9 community.

10 (B) PROJECT ELEMENTS.—The project au11 thorized by subparagraph (A) shall include the

12 following core elements:

13 (i) A Reentry Review Team for each

14 prisoner, consisting of representative from

15 the Bureau of Prisons, the United States

16 Probation System, the United States Pa17 role Commission, and the relevant commu18 nity corrections facility, who shall initially

19 meet with the prisoner to develop a reentry

20 plan tailored to the needs of the prisoner.

21 (ii) A system of graduated levels of

22 supervision within the community correc23 tions facility to promote community safety,

24 provide incentives for prisoners to complete

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1 tion, and provide a reasonable method for

2 imposing sanctions for a prisoner’s viola3 tion of the conditions of participation in

4 the project.

5 (iii) Substance abuse treatment and

6 aftercare, mental and medical health treat7 ment and aftercare, vocational and edu8 cational training, life skills instruction,

9 conflict resolution skills training, batterer

10 intervention programs, assistance obtaining

11 suitable affordable housing, and other pro12 gramming to promote effective reintegra13 tion into the community as needed.

14 (C) PROBATION OFFICERS.—From funds

15 made available to carry out this subsection, the

16 Director of the Administrative Office of the

17 United States Courts shall assign one or more

18 probation officers from each participating judi19 cial district to the Reentry Demonstration

20 project. Such officers shall be assigned to and

21 stationed at the community corrections facility

22 and shall serve on the Reentry Review Teams.

23 (D) PROJECT DURATION.—The Reentry

24 Center Demonstration project shall begin not

25 later than 6 months following the availability of


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1 funds to carry out this subsection, and shall

2 last 3 years.

3 (2) DEFINITIONS.—For the purposes of this

4 subsection, the term ‘‘appropriate prisoner’’ shall

5 mean a person who is considered by prison

6 authorities—

7 (A) to pose a medium to high risk of com8 mitting a criminal act upon reentering the com9 munity; and

10 (B) to lack the skills and family support

11 network that facilitate successful reintegration

12 into the community.

13 (3) AUTHORIZATION OF APPROPRIATIONS.—To

14 carry out this subsection, there are authorized to be

15 appropriated, to remain available until expended—

16 (A) to the Federal Bureau of Prisons—

17 (i) $1,375,000 for fiscal year 2004;

18 (ii) $1,110,000 for fiscal year 2005;

19 (iii) $1,130,000 for fiscal year 2006;

20 (iv) $1,155,000 for fiscal year 2007;

21 and

22 (v) $1,230,000 for fiscal year 2008;

23 and

24 (B) to the Federal Judiciary—

25 (i) $3,380,000 for fiscal year 2004;


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1 (ii) $3,540,000 for fiscal year 2005;

2 (iii) $3,720,000 for fiscal year 2006;

3 (iv) $3,910,000 for fiscal year 2007;

4 and

5 (v) $4,100,000 for fiscal year 2008.

6 SEC. 11. RESTRUCTURING THE BOARD OF DIRECTORS.

7 Section 4121 of title 18, United States Code, is

8 amended to read as follows:

9 ‘‘§ 4121. Federal Prison Industries; Board of Direc10 tors: executive management

11 ‘‘(a) Federal Prison Industries is a government cor12 poration of the District of Columbia organized to carry

13 on such industrial operations in Federal correctional insti14 tutions as authorized by its Board of Directors. The man15 ner and extent to which such industrial operations are car16 ried on in the various Federal correctional institutions

17 shall be determined by the Attorney General.

18 ‘‘(b)(1) The corporation shall be governed by a board

19 of 11 directors appointed by the President.

20 ‘‘(2) In making appointments to the Board, the

21 President shall assure that 3 members represent the busi22 ness community, 3 members represent organized labor, 1

23 member shall have special expertise in inmate rehabilita24 tion techniques, 1 member represents victims of crime, 1

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1 ers, and 2 additional members whose background and ex2 pertise the President deems appropriate. The members of

3 the Board representing the business community shall in4 clude, to the maximum extent practicable, representation

5 of firms furnishing services as well as firms producing

6 products, especially from those industry categories from

7 which Federal Prison Industries derives substantial sales.

8 The members of the Board representing organized labor

9 shall, to the maximum practicable, include representation

10 from labor unions whose members are likely to be most

11 affected by the sales of Federal Prison Industries.

12 ‘‘(3) Each member shall be appointed for a term of

13 5 years, except that of members first appointed—

14 ‘‘(A) 2 members representing the business com15 munity shall be appointed for a term of 3 years;

16 ‘‘(B) 2 members representing labor shall be ap17 pointed for a term of 3 years;

18 ‘‘(C) 2 members whose background and exper19 tise the President deems appropriate for a term of

20 3 years;

21 ‘‘(D) 1 member representing victims of crime

22 shall be appointed for a term of 3 years;

23 ‘‘(E) 1 member representing the interests of

24 Federal inmate workers shall be appointed for a

25 term of 3 years;


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1 ‘‘(F) 1 member representing the business com2 munity shall be appointed for a term of 4 years;

3 ‘‘(G) 1 member representing the business com4 munity shall be appointed for a term of 4 years; and

5 ‘‘(H) the members having special expertise in

6 inmate rehabilitation techniques shall be appointed

7 for a term of 5 years.

8 ‘‘(4) The President shall designate 1 member of the

9 Board as Chairperson. The Chairperson may designate a

10 Vice Chairperson.

11 ‘‘(5) Members of the Board may be reappointed.

12 ‘‘(6) Any vacancy on the Board shall be filled in the

13 same manner as the original appointment. Any member

14 appointed to fill a vacancy occurring before the expiration

15 of the term for which the member’s predecessor was ap16 pointed shall be appointed for the remainder of that term.

17 ‘‘(7) The members of the Board shall serve without

18 compensation. The members of the Board shall be allowed

19 travel expenses, including per diem in lieu of subsistence,

20 at rates authorized for employees of agencies under sub21 chapter I of chapter 57 of title 5, United States Code,

22 to attend meetings of the Board and, with the advance

23 approval of the Chairperson of the Board, while otherwise

24 away from their homes or regular places of business for

25 purposes of duties as a member of the Board.


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1 ‘‘(8)(A) The Chairperson of the Board may appoint

2 and terminate any personnel that may be necessary to en3 able the Board to perform its duties.

4 ‘‘(B) Upon request of the Chairperson of the Board,

5 a Federal agency may detail a Federal Government em6 ployee to the Board without reimbursement. Such detail

7 shall be without interruption or loss of civil service status

8 or privilege.

9 ‘‘(9) The Chairperson of the Board may procure tem10 porary and intermittent services under section 3109(b) of

11 title 5, United States Code.

12 ‘‘(c) The Director of the Bureau of Prisons shall

13 serve as Chief Executive Officer of the Corporation. The

14 Director shall designate a person to serve as Chief Oper15 ating Officer of the Corporation.’’.

16 SEC. 12. PROVIDING ADDITIONAL MANAGEMENT FLEXI17 BILITY TO FEDERAL PRISON INDUSTRY OP18 ERATIONS.

19 Section 4122(b)(3) of title 18, United States Code,

20 is amended—

21 (1) by striking ‘‘(3)’’ and inserting ‘‘(3)(A)’’;

22 and

23 (2) by adding at the end the following new

24 paragraphs:


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1 ‘‘(B) Federal Prison Industries may locate more than

2 one workshop at a Federal correctional facility.

3 ‘‘(C) Federal Prison Industries may operate a work4 shop outside of a correctional facility if all of the inmates

5 working in such workshop are classified as minimum secu6 rity inmates.’’.

7 SEC. 13. TRANSITIONAL PERSONNEL MANAGEMENT AU8 THORITY.

9 Any correctional officer or other employee of Federal

10 Prison Industries being paid with nonappropriated funds

11 who would be separated from service because of a reduc12 tion in the net income of Federal Prison Industries during

13 any fiscal year specified in section 4(e)(1) shall be—

14 (1) eligible for appointment (or reappointment)

15 in the competitive service pursuant to title 5, United

16 States Code;

17 (2) registered on a Bureau of Prisons reemploy18 ment priority list; and

19 (3) given priority for any other position within

20 the Bureau of Prisons for which such employee is

21 qualified.

22 SEC. 14. FEDERAL PRISON INDUSTRIES REPORT TO CON23 GRESS.

24 Section 4127 of title 18, United States Code, is

25 amended to read as follows:


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1 ‘‘§ 4127. Federal Prison Industries report to Congress

2 ‘‘(a) IN GENERAL.—Pursuant to chapter 91 of title

3 31, the board of directors of Federal Prison Industries

4 shall submit an annual report to Congress on the conduct

5 of the business of the corporation during each fiscal year

6 and the condition of its funds during the fiscal year.

7 ‘‘(b) CONTENTS OF REPORT.—In addition to the

8 matters required by section 9106 of title 31, and such

9 other matters as the board considers appropriate, a report

10 under subsection (a) shall include—

11 ‘‘(1) a statement of the amount of obligations

12 issued under section 4129(a)(1) of this title during

13 the fiscal year;

14 ‘‘(2) an estimate of the amount of obligations

15 that will be issued in the following fiscal year;

16 ‘‘(3) an analysis of—

17 ‘‘(A) the corporation’s total sales for each

18 specific product and type of service sold to the

19 Federal agencies and the commercial market;

20 ‘‘(B) the total purchases by each Federal

21 agency of each specific product and type of

22 service;

23 ‘‘(C) the corporation’s share of such total

24 Federal Government purchases by specific prod25 uct and type of service; and


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1 ‘‘(D) the number and disposition of dis2 putes submitted to the heads of the Federal de3 partments and agencies pursuant to section

4 4124(e) of this title;

5 ‘‘(4) an analysis of the inmate workforce that

6 includes—

7 ‘‘(A) the number of inmates employed;

8 ‘‘(B) the number of inmates utilized to

9 produce products or furnish services sold in the

10 commercial market;

11 ‘‘(C) the number and percentage of em12 ployed inmates by the term of their incarcer13 ation; and

14 ‘‘(D) the various hourly wages paid to in15 mates employed with respect to the production

16 of the various specific products and types of

17 services authorized for production and sale to

18 Federal agencies and in the commercial market;

19 and

20 ‘‘(5) data concerning employment obtained by

21 former inmates upon release to determine whether

22 the employment provided by Federal Prison Indus23 tries during incarceration provided such inmates

24 with knowledge and skill in a trade or occupation


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1 that enabled such former inmate to earn a livelihood

2 upon release.

3 ‘‘(c) PUBLIC AVAILABILITY.—Copies of an annual re4 port under subsection (a) shall be made available to the

5 public at a price not exceeding the cost of printing the

6 report.’’.

7 SEC. 15. INDEPENDENT STUDY TO DETERMINE THE EF8 FECTS OF ELIMINATING THE FEDERAL PRIS9 ON INDUSTRIES MANDATORY SOURCE AU10 THORITY.

11 (a) STUDY REQUIRED.—The Comptroller General

12 shall undertake to have an independent study conducted

13 on the effects of eliminating the Federal Prison Industries

14 mandatory source authority.

15 (b) SOLICITATION OF VIEWS.—The Comptroller Gen16 eral shall ensure that in developing the statement of work

17 and the methodology for the study, the views and input

18 of private industry, organized labor groups, Members and

19 staff of the relevant Congressional committees, officials of

20 the executive branch, and the public are solicited.

21 (c) SUBMISSION.—Not later than January 31, 2005,

22 the Comptroller General shall submit the results of the

23 study to Congress, including any recommendations for leg24 islation.


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1 SEC. 16. DEFINITIONS.

2 Chapter 307 of title 18, United States Code, is

3 amended by adding at the end the following new section:

4 ‘‘§ 4131. Definitions

5 ‘‘As used in this chapter—

6 ‘‘(1) the term ‘assembly’ means the process of

7 uniting or combining articles or components (includ8 ing ancillary finished components or assemblies) so

9 as to produce a significant change in form or utility,

10 without necessarily changing or altering the compo11 nent parts;

12 ‘‘(2) the term ‘current market price’ means,

13 with respect to a specific product, the fair market

14 price of the product within the meaning of section

15 15(a) of the Small Business Act (15 U.S.C. 644(a)),

16 at the time that the contract is to be awarded, veri17 fied through appropriate price analysis or cost anal18 ysis, including any costs relating to transportation

19 or the furnishing of any ancillary services;

20 ‘‘(3) the term ‘import-sensitive product’ means

21 a product which, according to Department of Com22 merce data, has experienced competition from im23 ports at an import to domestic production ratio of

24 25 percent or greater;

25 ‘‘(4) the term ‘labor-intensive manufacture’

26 means a manufacturing activity in which the value


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1 of inmate labor constitutes at least 10 percent of the

2 estimate unit cost to produce the item by Federal

3 Prison Industries;

4 ‘‘(5) the term ‘manufacture’ means the process

5 of fabricating from raw or prepared materials, so as

6 to impart to those materials new forms, qualities,

7 properties, and combinations;

8 ‘‘(6) the term ‘reasonable share of the market’

9 means a share of the total purchases by the Federal

10 departments and agencies, as reported to the Fed11 eral Procurement Data System for—

12 ‘‘(A) any specific product during the 3 pre13 ceding fiscal years, that does not exceed 20 per14 cent of the Federal market for the specific

15 product; and

16 ‘‘(B) any specific service during the 3 pre17 ceding fiscal years, that does not exceed 5 per18 cent of the Federal market for the specific serv19 ice; and

20 ‘‘(7) the term ‘services’ has the meaning given

21 the term ‘service contract’ by section 37.101 of the

22 Federal Acquisition Regulation (48 C.F.R. 36.102),

23 as in effect on July 1, 2002.’’.

24 SEC. 17. IMPLEMENTING REGULATIONS AND PROCEDURES.

25 (a) FEDERAL ACQUISITION REGULATION.—


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1 (1) PROPOSED REVISIONS.—Proposed revisions

2 to the Governmentwide Federal Acquisition Regula3 tion to implement the amendments made by this Act

4 shall be published not later than 60 days after the

5 date of the enactment of this Act and provide not

6 less than 60 days for public comment.

7 (2) FINAL REGULATIONS.—Final regulations

8 shall be published not later than 180 days after the

9 date of the enactment of this Act and shall be effec10 tive on the date that is 30 days after the date of

11 publication.

12 (3) PUBLIC PARTICIPATION.—The proposed

13 regulations required by subsection (a) and the final

14 regulations required by subsection (b) shall afford

15 an opportunity for public participation in accordance

16 with section 22 of the Office of Federal Procurement

17 Policy Act (41 U.S.C. 418b).

18 (b) BOARD OF DIRECTORS.—

19 (1) IN GENERAL.—The Board of Directors of

20 Federal Prison Industries shall issue regulations de21 fining the terms specified in paragraph (2).

22 (2) TERMS TO BE DEFINED.—The Board of Di23 rectors shall issue regulations for the following

24 terms:

25 (A) Prison-made product.


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1 (B) Prison-furnished service.

2 (C) Specific product.

3 (D) Specific service.

4 (3) SCHEDULE FOR REGULATORY DEFINI5 TIONS.—

6 (A) Proposed regulations relating to the

7 matter described in subsection (b)(2) shall be

8 published not later than 60 days after the date

9 of enactment of this Act and provide not less

10 than 60 days for public comment.

11 (B) Final regulations relating to the mat12 ters described in subsection (b)(2) shall be pub13 lished not less than 180 days after the date of

14 enactment of this Act and shall be effective on

15 the date that is 30 days after the date of publi16 cation.

17 (4) ENHANCED OPPORTUNITIES FOR PUBLIC

18 PARTICIPATION AND SCRUTINY.—

19 (A) ADMINISTRATIVE PROCEDURE ACT.—

20 Regulations issued by the Board of Directors

21 shall be subject to notice and comment rule22 making pursuant to section 553 of title 5,

23 United States Code. Unless determined wholly

24 impracticable or unnecessary by the Board of


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1 Directors, the public shall be afforded 60 days

2 for comment on proposed regulations.

3 (B) ENHANCED OUTREACH.—The Board

4 of Directors shall use means designed to most

5 effectively solicit public comment on proposed

6 regulations, procedures, and policies and to in7 form the affected public of final regulations,

8 procedures, and policies.

9 (C) OPEN MEETING PROCESSES.—The

10 Board of Directors shall take all actions relat11 ing to the adoption of regulations, operating

12 procedures, guidelines, and any other matter re13 lating to the governance and operation of Fed14 eral Prison Industries based on deliberations

15 and a recorded vote conducted during a meeting

16 open to the public, unless closed pursuant to

17 section 552(b) of title 5, United States Code.

18 SEC. 18. RULE OF CONSTRUCTION.

19 Subsection (e) of section 4124 of title 18, United

20 States Code, as amended by section 2, is not intended to

21 alter any rights of any offeror other than Federal Prison

22 Industries to file a bid protest in accordance with other

23 law or regulation in effect on the date of the enactment

24 of this Act.


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1 SEC. 19. EFFECTIVE DATE AND APPLICABILITY.

2 (a) EFFECTIVE DATE.—Except as provided in sub3 section (b), this Act and the amendments made by this

4 Act shall take effect on the date of enactment of this Act.

5 (b) APPLICABILITY.—Section 4124 of title 18, United

6 States Code, as amended by section 2, shall apply to any

7 requirement for a product or service offered by Federal

8 Prison Industries needed by a Federal department or

9 agency after the effective date of the final regulations

10 issued pursuant to section 17(a)(2), or after September

11 30, 2004, whichever is earlier.

12 SEC. 20. CLERICAL AMENDMENTS.

13 The table of sections for chapter 307 of title 18,

14 United States Code, is amended—

15 (1) by amending the item relating to section

16 4121 to read as follows:

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

17 (2) by amending the item relating to section

18 4124 to read as follows:

‘‘4124. Governmentwide procurement policy relating to purchases from Federal

Prison Industries.’’;

19 (3) by amending the item relating to section

20 4127 to read as follows:

‘‘4127. Federal Prison Industries report to Congress.’’;

21 and

22 (4) by adding at the end the following new

23 items:


I1829.ABX
113

50

•HR 1829 IH

‘‘4130. Construction of provisions.

‘‘4131. Definitions.’’.

Æ


I1829.ABY
114

Chairman SENSENBRENNER. The Chair recognizes himself briefly 

to explain this bill. 

This bill is similar to legislation which the Committee reported 

in the last Congress and includes improvements agreed to by the 

Committee last year. 

Today we take up the issue of reform of Federal Prison Industries. FPI enjoys a mandatory market for its goods, a facility to 

produce them and a large workforce that can be forced to manufacture them. They pay their workers less than the minimum wage, 

and they force the workers to work for the profit of Federal Prison 

Industries. The result is that Federal Prison Industries is able to 

drive tax-paying, law-abiding small businesses out of the market. 

At a time when we are facing a recovering economy, driving 

small business out of the marketplace and costing the economy jobs 

is not the thing that we want to do. 

One of the reasons that FPI is able to do what it does is that 

for nondefense contracting, it allows FPI to have mandatory source 

supply for Government agencies that are in the market to buy 

things that are produced by the Federal Prison Industries. And 

even when a private sector firm makes a low bid, Federal Prison 

Industries can match the bid and then require that the Federal 

Government procure the goods from FPI rather than the low bidder. 

Now, if this type of bid-rigging was done anyplace else, it would 

probably land those who were responsible in jail. I think most 

Members of the Committee have received complaints about Federal 

Prison Industries going into markets that have been well served by 

small businesses within their constituency. It is my hope that we 

can pass this legislation not to put FPI out of business, but to level 

the playing field so that FPI is able to compete with small business 

on an even playing field, and that would be a victory for labor, for 

business, for industry and for the American taxpayer. 

And I yield back the balance of my time. 

The gentleman from Michigan Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. 

This bill presents one of the more difficult problems. How do you 

take people who have been imprisoned and engage them in the 

kinds of activity behind prison walls that will rehabilitate? Now, 

that is not an easy job in some of our prisons where there may be 

as much errant conduct going on within the prison as without a 

prison, and so we have been struggling with this. 

One way was through the idea of retraining people incarcerated; 

that is to say that they learn skills that they did not possess. I 

think most people realize how little education, formal education, 

that many people incarcerated have. It is abysmal, and so what we 

were trying to do in this measure—and this started in the last Congress—was to come up with constructive activity in terms of preparing people to return to our communities. And so it was with 

that generally in mind that the Federal Prison Industries was conceived as a way to do this. 

What it involves is taking realtime work and having prisoners 

trained, and then having their products, which are absolute products, brought back into the market. Well, there is where the problems began, because what we have to do then is determine what 

the relationship of Prison Industries is to the rest of the commerVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00114 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
115

cial market in America. Prison Industries, I think, pays about $1 

an hour. 

Then there was some exclusivity in terms of the contracts, another problem. And then to really make things unnecessarily difficult, we began to have the Federal Prison Industries bidding on 

competitive contracts against businesses that do not have the benefit of $1-an-hour workers, and the program grew from 29 million 

to 675 million. And they were sole-source sales, and so we had a 

problem that we have tried to resolve in 1829. 

The amendment that has been worked out by the Chairman of 

this Committee, and the Subcommittee Chairman, and Ranking 

Member and many of the Members of Judiciary, and with the prison systems correctional leaders themselves, and I think with CURE 

and Mr. Charlie Sullivan and other groups that work in this area, 

we have come up with a plan to establish a reentry demonstration 

project for inmates to prepare their successful return to society, a 

vocational education training program, $75 million toward educating inmates and teaching vocational skills, and to provide the 

Federal Prison Industries program with the resources to construct 

and donate industry profits to not-for-profit organizations. So this 

is a very important new direction that I think that we are all heading to take care of the problems that exist. 

Now, all of that being said, there is a much larger challenge facing us. The prison systems in America are in—and especially the 

Federal prisons—need a lot of assistance. We need far more attention than is being given them at this point. And so for those who 

think that this is the only way we can—may I get an additional 

minute? 

Chairman SENSENBRENNER. Without objection. 

Mr. CONYERS. For those who think that the only way you can rehabilitate inmates is through the Federal Prison Industries is seriously mistaken. There are many other ways. There are many training and educational activities and programs that can be introduced 

into the prison system, and so this is a small, modest step towards 

the Industries’ component of this, and I am hoping that our colleagues will join in in getting this back onto the—out of the Committee and onto the floor and to get the other body’s approval. 

Thank you, Mr. Chairman. 

[Intervening business.] 

[The prepared statement of Mr. Coble follows:]

PREPARED STATEMENT OF THE HONORABLE HOWARD COBLE, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. Chairman and Members of the Committee, 

Current federal statute authorizes Federal Prison Industries (FPI), the government corporation that employs federal inmates, to sell the goods and services produced by these inmates to federal agencies but not to the public in competition with 

the private sector. Federal law also mandates that federal agencies purchase FPI 

products. This requirement is generally referred to as ‘‘FPI’s mandatory source status.’’

While I support efforts to train prisoners to become productive members of society, I strongly believe that such efforts should take great care not to threaten the 

jobs of hard-working taxpayers. This issue is especially important to the 6th Congressional District of North Carolina, home to more than 40,000 textile and furniture workers, since two major classes of items produced by FPI are textiles and 

furniture. The mandatory source status gives FPI an unfair advantage over private 

manufacturers contending for federal contracts. Therefore, many of my constituents 

are deprived of employment opportunities in order to give work to federal inmates. 

116

The furniture industry in North Carolina is already competing with an increasing 

number of furniture imports arriving to the U.S. from countries such as China. In 

addition, the North Carolina textile industry has suffered over 10,000 job losses in 

the past year. 

For these reasons, I am greatly concerned about FPI’s proposal to begin selling 

inmate-furnished services in the commercial marketplace. It is my opinion that FPI 

is in need of reform before it is allowed to expand. 

I am a strong proponent of H.R. 1829 because it does just that—eliminates FPI’s 

mandatory source advantage. It also limits FPI’s ability to enter the commercial 

market which I believe may have an adverse effect on private companies not able 

to compete with the low wages and cost benefits enjoyed by FPI. Further, the bill 

incorporates vocational and educational programs to teach inmates job-hunting and 

professional skills and coordinates funding to help inmates transition back into society. 

In my opinion, these are real and necessary reforms that will preserve FPI’s goal 

of providing inmates with essential skills while allowing for a better marketplace 

for competition. I have cosponsored legislation similar to H.R. 1829 in past Congress 

and will continue to be a strong and vocal proponent of eliminating mandatory 

source privileges and reforming FPI. 

Hardworking, taxpaying citizens of the 6th District of North Carolina who are employed in the furniture and textile industries can compete with anyone in the world. 

They should not have to compete with their own government which is using their 

tax dollars to train federal prisoners how to be textile and furniture workers. It is 

not fair and is not right.

[The prepared statement of Ms. Jackson Lee follows:]

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS

I would like to thank Chairman Sensenbrenner and Ranking Member Conyers for 

convening this Full Committee Markup opportunity concerning ‘‘Federal Prison Industries.’’ Prison reform is an important matter that deserves serious review by this 

Subcommittee. 

Over 2 million offenders are incarcerated in the nation’s prisons and jails. At midyear 2002, 665,475 inmates were held in the Nation’s local jails, up from 631,240 

at midyear 2001. Projections indicate that the inmate population will unfortunately 

continue to rise over the years to come. 

The Bureau of Prisons of the U.S. Department of Justice administers the federal 

prison system. Clearly, the Bureau is expanding the capacity of the federal system 

in anticipating of accommodating an inmate population exceeding 178,000 by the 

year 2006. Clearly, the overcrowding of prisons is a serious matter. 

To illustrate the impact that this bill will potentially have on Texas, the Federal 

prison population for the years 2000, 2001, and 2002 reached 39,679, 36,138, and 

36,635 persons respectively; the State prison population for the same years reached 

20,200, 20,898, and 23,561 persons. These numbers have grown since 2002, so the 

impact is indeed significant and the State of Texas is an important stakeholder. 

In 1934, Congress established Federal Prison Industries (FPI). FPI is a government corporation that employs offenders incarcerated in federal prisons. FPI provides job-training opportunities to federal inmates in the form of goods production 

and services for federal agencies. Currently, the state of Texas alone employs 7,700 

inmates in prison industries. Nationally, 25% of those held in federal prisons are 

employed by FPI. Items produced by inmates include furniture, metal products, textile items, optical and plastic hardware, and electronic cable assemblies. Inmates 

are also able to use automated systems to prepare data and information aids. 

By statute, FPI products and services must be purchased by federal agencies (a 

requirement referred to as a ‘‘mandatory source’’ or ‘‘sole source’’) and not available 

for sale in interstate commerce or to non-federal entities. Federal agencies can obtain products from the private sector through a waiver issued by FPI if the corporation is unable to make the needed product or provide the required service. 

FPI is a self-supporting government operation. Revenue generated by the corporation is used to purchase equipment and raw materials, pay wages to inmates and 

staff, and expand facilities. Last year, FPI generated over $566 million in revenue, 

$418 million of which went to purchasing goods and services from the private sector, 

74% of which went to small and minority owned businesses in local communities 

across this country. 

The Bureau of Prisons clearly appreciates the advantage the program can have 

on inmates and society at large. First, there is some security benefit to FPI system 

because inmates are productively occupied. Second, FPI programs are said to proVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00116 Fmt 6659 Sfmt 6621 E:\HR\OC\HR286.XXX HR286
117

vide inmates with training and experience that develop job skills and a strong work 

ethic. This is certainly important. 

On the other hand, there are some groups that represent working Americans that 

suggest that job opportunities, particularly jobs needed by low-income families, are 

lost because FPI receives federal contracts. However, current law prohibits FPI from 

dominating the federal market, and there are currently congressional mandates 

placed on FPI to ‘‘avoid capturing more than a reasonable share of the market’’ 

among federal agencies, departments, and institutions for any specific product, determining the appropriate share of the federal market remains contentious. Nevertheless, we must endeavor to take into account the concerns by working Americans 

across the nation so that we can pass a bill that simultaneously protects jobs and 

keeps inmates productive. 

The bill before us today provides for a five-year phase-out of mandatory source 

preference by granting to FPI’s Federal agency customer’s authority to first solicit 

on a non-competitive basis. However, at the end of the phase-out period there is no 

existing substitute for the services and program. Looking to the states, there simply 

is not enough program participation to accommodate the 25% that is currently accommodated under FPI. 

Mr. Chairman, while there other initiatives which may accomplish the goal of 

eliminating the mandatory source preference more quickly, I believe we can work 

together to reach a compromise that is both timely and also enhances opportunities 

for U.S. workers. We may not all agree on the specific phase-in period but let us 

try to find a workable solution on this critical issue.

[The prepared statement of Mr. King follows:]

PREPARED STATEMENT OF THE HONORABLE STEVE KING, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF IOWA

Chairman Sensenbrenner, Thank you for holding a markup for this important 

piece of legislation of which I am pleased to co-sponsor. 

Federal Prison Industries (‘‘FPI’’) is a government agency in desperate need of reform. The special mandatory source preference in the government procurement process, given only to FPI, forces government agencies to buy from FPI—without the 

benefit of competition. I am appalled by the fact that government agencies are 

forced to buy these products and services from FPI even though the private sector 

can better meet the needs of agencies with better products at a cheaper price. 

I believe in the private sector. As a small business owner for over 28 years, I 

know the challenges that small businesses face and their value to the US economy. 

Business owners must deal with a myriad of regulations and laws. However, FPI 

is not held to those same standards. FPI pays its inmate workers between 23 cents 

and $1.15 an hour, is exempt from OSHA, taxes and does not have to provide employee benefits. Private sector entrepreneurs cannot compete with this! There is no 

justification or excuse for undermining small business with a government subsidized 

competitor on an uneven playing field. FPI should have to compete for its contracts 

just like everyone else. 

I urge you to vote for HR 1829. Thank you Mr. Chairman.

Chairman SENSENBRENNER. Consideration now resumes of the 

bill H.R. 1829, the ‘‘Federal Prison Industries Competition in Contracting Act of 2003,’’ and the Chair has a manager’s amendment 

at the desk which the clerk will report. 

The CLERK. Amendment to H.R. 1829 offered by Chairman Sensenbrenner for himself and Mr. Conyers. Page 12, line 20, strike 

sales and——

Chairman SENSENBRENNER. Without objection, the amendment 

will be considered as read. 

[The amendment follows:]

118 H.L.C.

AMENDMENT TO H.R. 1829

OFFERED BY MR. SENSENBRENNER (FOR HIMSELF

AND MR. CONYERS)

Page 12, line 20, strike ‘‘sales’’ and insert ‘‘sale’’.

Page 16, line 8, strike ‘‘or’’.

Page 16, strike line 11 and insert the following:

1 for donation; or

2 ‘‘(C) authorize a proposal to expand production

3 of a currently authorized specific product or specific

4 service in an amount in excess of a reasonable share

5 of the market for such product or service, if—

6 ‘‘(i) a Federal agency or department, pur7 chasing such product or service, has requested

8 that Federal Prison Industries be authorized to

9 furnish such product or service in amounts that

10 are needed by such agency or department; or

11 ‘‘(ii) the proposal is justified for other good

12 cause and supported by at least eight members

13 of the board.’’.

Page 20, line 4, strike ‘‘Textile’’ and insert ‘‘Textiles’’.

Page 26, line 26, insert ‘‘Federal’’ before ‘‘Bureau’’.


A1829.AAB
119

2

H.L.C.

Page 31, line 19, insert ‘‘Federal’’ before ‘‘Bureau’’.

Page 32, line 10, strike ‘‘of the Bureau of Prisons’’.

Page 32, strike line 16 and all that follows through

page 36, line 5.

Page 48, line 18, strike ‘‘RULE’’ and insert

‘‘RULES’’.

Page 48, line 19, insert ‘‘(a) AGENCY BID PROTESTS.—’’ before ‘‘Subsection’’.

Page 48, insert after line 24 the following:

1 (b) JAVITS-WAGNER-O’DAY ACT.—Nothing in this

2 Act is intended to modify the Javits-Wagner-O’Day Act

3 (41 U.S.C. 46, et seq.).


A1829.AAC
120

Chairman SENSENBRENNER. And the Chair recognizes himself for 

5 minutes to strike the last word. 

I offer this amendment for myself and Mr. Conyers. The amendment makes a notable improvement to the bill as introduced and 

makes a number of clarifications. First, the amendment empowers 

the FPI Board of Directors to authorize an expansion with respect 

to a specific product or a specific service offered by FPI in excess 

of the maximum specified by the bill. Under current law the FPI 

Board may not authorize FPI to make more than a reasonable 

share of the market for any specific product. Currently neither 

term is defined in the FPI’s authorizing statute or any implementing regulations. 

The bill as introduced provides a statutory definition of reasonable share of the markets, that of 20 percent of the Federal market 

for a specific item and 5 percent for a specific service. The bill requires the Board of Directors to issue a regulatory definition to a 

specific product subject to the full notice and comment rulemaking 

procedures under the Administrative Procedure Act. 

Critics note that the base bill would force FPI to forego service 

work that it is currently performing for Federal agencies. Most 

often cited is the fact that the FPI now provides the U.S. Postal 

Service with 90 percent of its needs for the service of repairing 

mail bags. Under the amendment the Board would be given the 

flexibility to permit FPI to provide a specific product or a specific 

service in excess of the reasonable share of the market under two 

circumstances: First, that the Board was requested by a Federal 

agency to be able to offer such quantities as are needed to meet the 

buying agency’s requirements; and secondly, the Board could authorize higher sales levels for other good cause, but it requires the 

approval of 8 members of the 11-member Board rather than a simple majority. Such Board actions would be subject to the enhanced 

analytical and public participation requirements in the base bill. 

Second, the amendment clarifies that the bill as introduced 

makes no changes to the Javits-Wagner-O’Day Act, which provides 

work opportunities for the blind and other severely handicapped 

persons. This clarification has been requested by the National Industries for the Blind and is appropriate. I would note that the 

NIB is especially supportive of the provisions of this bill that protect Federal contractors from being forced to use FPI as a subcontractor. 

Finally, the amendment makes a series of word changes and 

other textual clarifications. 

That describes the amendment. I yield back the balance of my 

time. 

The gentleman from Virginia Mr. Scott. 

Mr. SCOTT. Move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. SCOTT. Mr. Chairman, I just wanted to say a word about the 

Federal Prison Industries program, or FPI. It has been around 

since the 1930’s. Under the law Federal agencies are required to 

buy needed products from FPI if FPI can meet their orders. The 

purpose of the program is to teach prisoners real work skills so 

that when they are released from prison, they will be able to find 

121

and hold a job to support themselves, their families, and they will 

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 more likely to be 

employed and less likely to commit crimes than others who did not 

participate in the program. This certainly benefits offenders and 

their families. That is beside the point from a public policy perspective. The real benefit is to the rest of us, as a result of the program, 

we will be less likely to be victims of crime. 

Now, we are prepared to spend billions of dollars in prison construction and prisoner upkeep in order to reduce crime. This is a 

program which reduces crime and pays for itself in the process. The 

total revenues from FPI represent a very small percentage, currently about one-fourth of 1 percent of Federal agency procurement 

dollars. Furniture and apparel industries are the two industries in 

which the FPI does most of its work, and when asked, representatives of those industries conceded that FPI sales represent an insignificant and negligible portion of their industries. 

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

FPI. In textiles, for example, I was told that 600,000 jobs have 

been lost over the last 10 years. There are approximately 7,000 

prisoners working in textiles, in FPI. Certainly you can’t blame a 

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

The program generates almost as much business as it takes in 

by pumping about three-quarters of its revenues back into the 

economy to purchase—to make purchases, to a large extent from 

small, minority and women-owned businesses by buying raw materials and services it needs to produce its products. FPI has received 

awards for spending in excess of 40 percent of expenditures in this 

sector of the economy. 

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

law to work. Few offenders in a prison have marketable work 

skills. The vast majority don’t even have credible work habits, such 

as showing up for work on time, working cooperatively and productively with others; but such habits are required to maintain an FPI 

job. With the elimination of parole, good conduct credits, Pell 

Grants and other incentives, the prison system has very little to 

offer an inmate as an incentive for self-development. 

One shining exception is FPI. Non-FPI inmates get paid about 12 

cents to 30 cents an hour, while FPI jobs pay about $1.25. Now, 

to hold down an FPI job, an inmate must have completed high 

school or be making steady progress towards obtaining a GED and 

maintain a record of good behavior. This is not only for those who 

are already on FPI jobs, but also for those on the waiting list, as 

well as those seeking to establish eligibility to be placed on the 

waiting list. 

As some suggest, the vocational education is a good substitute for 

FPI work. Now, while vocational education is important and ought 

to be available to all inmates, no amount of education and course 

work can substitute for real-world work experience on the job. The 

average sentence for prisoners in the Federal system is about 8 

years. Vocational educational programs typically runs 2 years or 

less and is generally thought to be better towards the end of a sentence. In any case, the question comes what do you do to the other 

122

6 years on average of the sentence prior to or after the completion 

of the vocational education program? 

Now, I am the first to concede there are problems with FPI 

which should be fixed, but a small business is making a single client product such as Army helmets, it depends on DOD contracts 

for its operations, FPI should not be able to take that business 

away. But this bill should be fixing the program, not gutting it by 

taking away all of the primary source of business all at once. 

While the bill suggests that the lack of competition is a problem, 

the bill seeks to stranglehold FPI as a competitor by not only 

strengthening the prohibition against activities in the commercial 

market, but also in the Government market as well. We are already seeing the effects of the DOD restrictions on FPI procurement passed last year. Information I have obtained from the program indicates that it has had to close 13 factories and eliminate 

1,700 inmate jobs. They expect to eliminate 500 additional jobs before the end of the year, and this is at a time when the prison population is growing, so we need more jobs, not fewer. 

The viability of the program at the rate we are going is already 

at risk even without this bill——

Chairman SENSENBRENNER. The gentleman’s time has expired. 

Mr. SCOTT. Could I ask unanimous consent for 30 more seconds? 

Chairman SENSENBRENNER. Without objection. 

Mr. SCOTT. We should fix the problems, and we should be able 

to do it in a way that ensures the viability of this vital crime-reducing program. With additional prisons scheduled to come online for 

the next few years, we can ill afford to diminish the successful 

crime reduction program. But for their crime and imprisonment, 

prisoners are indistinguishable from the rest of us. Treating them 

as if they are foreign competitors and viewing work of FPI as a 

business, a private business, should not be the policy of the Committee with oversight responsibility for the safe and efficient operation of our prisoners and the rehabilitation and productive return 

of the prisoners to our society. 

Mr. Chairman, we can do better than this, and I think we 

should. So I would hope that we would defeat the bill when the 

final passage comes up. I yield back. 

Mr. CONYERS. Mr. Chairman, could the gentleman be given an 

additional minute? 

Chairman SENSENBRENNER. Without objection. 

Mr. CONYERS. And would he yield to me, please? 

I wanted to make it clear that the gentleman from Virginia has 

worked harder on this issue and longer than anyone I know in the 

Congress, and we have been working on a variety of approaches 

here. And I don’t think we have reached the end of the road yet, 

and so I wanted to urge my colleague to continue to give us the 

benefit of the viewpoints that—of his that have already been incorporated in the bill and hope that we can continue to make further 

progress. 

I would also like to note, Mr. Chairman, that our former colleague from Cleveland, Ohio, Mary Rose Oakar, is in the Judiciary 

Committee room, and I know a lot of us remember her long and 

faithful service to the Congress. 

Chairman SENSENBRENNER. The gentleman’s time is expired. 

123

For what purpose does the gentleman from Wisconsin seek recognition? 

Mr. GREEN. Move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I will be brief. 

First I would like to associate myself with the remarks of the 

gentleman from Virginia. I had to get that out on the table because 

I don’t think I have actually said that before, but I do associate myself with his remarks, because I think on this subject he is right 

on the mark, and I think it demonstrates the interesting dynamics 

on this issue. Those who support the Federal Prison Industries program come from all parts of the political spectrum, from Mr. Scott, 

to myself, to Mr. Hyde, the distinguished former Chairman of this 

Committee who could not be here, but wanted to express his support for some of the amendments, the amendment I will be bringing forward, and his opposition to the underlying legislation. 

And outside of these halls a variety of groups and a variety of 

observers support Federal Prison Industries, and some of you have 

on your desk today a copy of a Los Angeles Times editorial from 

yesterday strongly in favor of Federal Prison Industries and strongly opposed to the underlying legislation that is before us. 

In my case the support for FPI is because of some of the subjects 

that Mr. Conyers talked about, my support for the work ethic as 

a means of rehabilitation and prison management. It offers a 

chance to reinforce the work ethic and to teach the work ethic to 

some inmates who may not have had the opportunity previously. 

It is a chance for them to learn valuable skills. It is also a chance 

to create some restitution for victims. 

It is important to remember that every dollar of FPI goes back 

to the private sector, something that is often lost in this debate. 

Seventy-four percent is spent on the purchase of raw materials, 

equipment, services and supplies from private sector companies. 

Sixty-two percent of those purchases are made from small and disadvantaged businesses owned by women and minorities. Twenty 

percent is paid to the staff, most of whom spend that money in the 

local community near the prison, and only 6 percent is paid to inmates. But that money is used to pay fines, child support and victim restitution. So the money is in that sense very well spent. 

So, Mr. Chairman, I am one of those who believes that we have 

to find ways to continue to make FPI work. It is a very important 

part of our prison system management, and it is a very important 

part of ensuring that those who will leave the prison system one 

day, as nearly every single inmate will. They have some of the experience, some of the skills and some of the values that they will 

need to avoid being back in prison someday, and with that I yield 

back. 

Chairman SENSENBRENNER. Can we do the manager’s amendment first? 

The question is on agreeing to the manager’s amendment. Those 

in favor will say aye. 

Opposed, no. 

The ayes appear to have it. The ayes have it. The manager’s 

amendment is agreed to. 

Are there further amendments to the bill? 

124

The gentleman from New York moves to strike the last word and 

is recognized for 5 minutes. 

Mr. NADLER. I won’t speak 5 minutes. 

Mr. Chairman, I support this legislation. I support the Federal 

Prison Industries, but the fact is that we have to be very careful 

in this society about generating substandard wage and condition 

competition with American workers. Federal Prison Industries pays 

inmates between 23 cents and $1.15 an hour. It is exempt from 

OSHA regulations, from Federal, State gross receipts and excise 

taxes, and does not provide any benefits to its workers. FPI carries 

no insurance and pays no Social Security taxes. It goes without 

saying that many businesses cannot compete with this, but what 

is worse, they are not even allowed to try to compete since FPI gets 

Federal preferential status in Government procurement. 

Now, I work very closely with the members of UNITE in my district. The garment workers in New York are hurting, and they 

have suffered huge job losses in recent years, especially in Chinatown in the aftermath of 9/11. We should do everything we can to 

allow them to compete for Government contracts to make uniforms 

and other items purchased by the U.S. Government. We need to be 

doing much more, frankly, to support manufacturing in this country. In fact, we have lost about 10 percent of manufacturing jobs 

in the country in the last 3 years, in case anyone hadn’t noticed, 

and I am disappointed that the trade deals we approved this past 

few days will probably do considerably more harm to our industrial 

workers than this bill will do to help them. 

Some people have portrayed this legislation as an attempt to put 

voiceless prisoners out of work. I don’t see the issue in those terms. 

The prison population should be allowed to work, obviously, and to 

study, both to improve their own lives and to make it easier for 

prison guards to do their jobs. And we should appropriate, frankly, 

considerably more money for opportunities for vocational training 

and study and other training for prisoners in jail, but we should 

not be doing so in a way that enabled—that gives a preference to 

prison materials, to prison products at the expense of driving down 

wages and driving down standards in society at large. 

You know, from the days—frankly, from the days of the chain 

gangs in some of the southern States which were used to keep 

down wages and the population out of prison, this is a step—this 

is a different form of the same thing. We need ways for prisoners 

to work. We need ways for them to get educated so that they can 

better their condition and so that when they get out of prison, they 

can become more productive members of society, but we must not 

do it at the expense of driving down wages and working conditions 

for our population. And the way—I think this bill strikes a better 

balance than the current law, and that is why I support it, and I 

yield back the balance of my time. 

Mr. GREEN. Would the gentleman yield? 

Mr. NADLER. Yes, I will. 

Mr. GREEN. You are not meaning to suggest that those who participate in Prison Industries these days are similar to the chain 

gangs and forced labor of years gone by? 

Mr. NADLER. Well, in two ways they are similar. 

Mr. GREEN. So you are——

125

Mr. NADLER. Let me just say, in two ways they are similar. In 

other ways—in all other ways, they are not. They are similar that 

they are both prisoners, and that is one way. And secondly, they 

are similar in that the labor of what they do makes products and 

makes available their work—their work in the one case and their 

products at the other—at much substandard wages, and therefore 

drives down wages and working conditions for everyone else. Now, 

in that way they are similar. 

In other ways certainly—I would oppose chain gangs as evil institutions where its present work is a good institution, but the economic effect outside goes in the same direction. Therefore, I said 

I would rather, frankly, have education programs and work programs even if we don’t sell those products outside in competition, 

even if we——

Mr. GREEN. I just wanted to make sure we were using the same 

terminology here. 

Mr. NADLER. I think we are, sir. 

Chairman SENSENBRENNER. Are there amendments? 

Ms. JACKSON LEE. Mr. Chairman. 

Chairman SENSENBRENNER. The gentleman from North Carolina 

Mr. Coble. 

Mr. COBLE. Mr. Chairman, move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. COBLE. Mr. Chairman, the gentleman from Wisconsin and 

the gentleman from Virginia make compelling arguments, as do 

you. I am in favor of this bill, however, and I think it is important 

to note that just because one may speak out in favor of the bill does 

not mean that he is an opponent to FPI. I worked on this bill, Mr. 

Chairman, in excess of a decade, and I will admit I come to the 

table subjectively, because I represent a significant textile and furniture workforce in my district, and I believe these two private sector industries are exposed to unfair competition as a result of mandatory sourcing. I think mandatory sourcing obviously gives FPI a 

leg up. 

I believe furthermore, Mr. Chairman, that your manager’s 

amendment addresses a situation that may afford relief to the FPI 

through the mail bag exception that appears in your manager’s 

amendment, but I do think it is important to note that we don’t 

need to have another Federal entity opposing private sector and 

probably costing jobs in the private sector, and I am referring specifically to textiles and furniture. 

And with that, Mr. Chairman, I yield back. 

Ms. JACKSON LEE. Mr. Chairman. 

Chairman SENSENBRENNER. Are there amendments? 

The gentlewoman from Texas. 

Ms. JACKSON LEE. Mr. Chairman, I would like to strike the last 

word. 

Chairman SENSENBRENNER. The gentlewoman is recognized for 5 

minutes. 

Ms. JACKSON LEE. I thank the Chairman very much. 

I think what is before us—and certainly appreciate the work of 

my colleague in the manager’s amendment of Mr. Sensenbrenner 

and Mr. Conyers—is a real dilemma. A few weeks ago I visited one 

of our Federal prisons in the Beaumont area. It was the minimum 

126

security prison, of course, and it was a large complex that had 

three levels, medium and maximum security. And one of the dilemmas of those facilities is the budget cuts that the Federal Bureau 

of Prisons has experienced over the years and the lack of activities, 

educational activities, training activities and even work activities, 

for the persons incarcerated. These are the very same persons that, 

of course, we are punishing under the mandatory sentencing structure, but the very same persons that may ultimately be released 

into society. 

And I am reading an article that talks about the degree of recidivism in our prison inmate population and as well a particular note 

that says that 74 percent of the prison’s 679 million in sales in 

2002 went back into the private sector for the purchase of tools, 

goggles and other equipment. These are the same individuals that 

we are suggesting are undermining small, minority and womenowned businesses, which I think is an issue. 

But we have another dilemma in this Committee, and that is 

that in our past legislative actions—maybe before I came to this 

Committee, we started to dumb down the prisons as it relates to 

physical exercise equipment, because that was too luxurious. Of 

course, televisions were thrown out. I think I saw one or two there, 

but I saw a huge population of incarcerated persons for nonviolent 

offenses idly sitting down in extreme frustration, losing a great 

deal of their talent. 

So I am sort of at a mixed point on this legislation, because I certainly have great sensitivities for small, medium and minorityowned businesses and women-owned businesses, to the extent that 

I have amended several pieces of legislation on that to provide opportunities for them, particularly in the science areas. But what do 

we do with this huge and growing population in our Federal system 

of prisoners who need something to do? 

Might I also say to my colleagues—and when I say that, again, 

I focused on large numbers of nonviolent criminals for a variety of 

offenses who are under the mandatory sentencing structure. I 

would hope that my colleagues in this Committee would entertain 

a proposal that I expect to offer in the coming weeks, coming 

months, a proposal that has been similarly presented in the Senate. Senator Sessions, I believe, has presented legislation, and I believe Senator Hatch has made comments about the burdensomeness of the mandatory sentencing and the fact that the Federal 

prison system does not have a good-time proposal. And I believe we 

should be looking at, with the Federal system growing to 200,000, 

with the financial burden on this Administration—excuse me, on 

this Government being excessive and growing, particularly with the 

population aging, getting older, requiring the degree of medical 

services such as kidney transplants, amputations for diabetics, 

treatment for cancer in our aging prison population, to look at the 

concept of a good-time program. A day of good time for a day of—

a day of good time equals a day off of one’s sentence. 

We are afraid of that. We are afraid of being called light on 

crime. We are afraid of the idea of releasing violent perpetrators 

out on our society in this time of homeland security. We are, if you 

will, frozen in our steps. But I believe that we are going to have 

to look at this in a lot of different ways; and certainly presenting 

a proposal that diminishes further the opportunity for these indiVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00126 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
127

viduals to work, to feel productive, to be rehabilitated, to respond 

to our civilian population is a Catch-22, and, frankly, I don’t know 

where we come down in this dilemma, because it is important to 

release individuals back into our mainstream, into our families and 

communities who have a sense of purpose and have a sense that 

they have something to live for, to do other than——

Chairman SENSENBRENNER. The gentlewoman’s time has expired. 

Ms. JACKSON LEE. I hope my colleagues will consider this proposal. 

Chairman SENSENBRENNER. Are there amendments? 

The gentleman from California Mr. Schiff. Gentleman from California Mr. Schiff has an amendment. 

Mr. SCHIFF. Mr. Chairman, I have an amendment at the desk. 

Chairman SENSENBRENNER. The clerk will report the amendment. 

Does the gentleman have two amendments that he wishes to 

offer en bloc? 

Mr. SCHIFF. Well, I think perhaps I should offer them singly, Mr. 

Chairman, unless the Chair has guidance for me on that. 

Chairman SENSENBRENNER. The Chair suggests that the gentleman offer them en bloc. 

Mr. SCHIFF. I would be glad to offer them en bloc, Mr. Chairman. 

Chairman SENSENBRENNER. Clerk will report the amendments. 

The CLERK. Amendments to H.R. 1829 offered by Mr. Schiff en 

bloc. Page 27, insert after line 22——

Mr. SCHIFF. Mr. Chairman request that——

Chairman SENSENBRENNER. Without objection, the amendments 

will be considered en bloc. Without objection, the amendments are 

considered as read, and the gentleman from California is recognized for 5 minutes. 

[The amendments follow:]

128 H.L.C.

AMENDMENT TO H.R. 1829

OFFERED BY MR. SCHIFF

Page 27, insert after line 22 the following:

1 (4) SCHEDULE FOR IMPLEMENTATION.—All

2 components of the program shall be established—

3 (A) in at least 25 percent of all Federal

4 prisons not later than 2 years after the date of

5 the enactment of this Act;

6 (B) in at least 50 percent of all Federal

7 prisons not later than 4 years after such date

8 of enactment;

9 (C) in at least 75 percent of all Federal

10 prisons not later than 6 years after such date

11 of enactment; and

12 (D) in all Federal prisons not later than 8

13 years after such date of enactment.


B1829.AAB
129


A1829E.eps
130

Mr. SCHIFF. Thank you, Mr. Chairman. 

As the Ranking Member indicated, this is a difficult issue. On 

the one hand we want to ensure that good law-abiding citizens and 

employees are not at a competitive disadvantage with those that 

break the law and participate in Prison Labor Industries. At the 

same time, we want to make sure that we satisfy the rehabilitative 

goals. We recognize the fact that two-thirds of those in prison are 

going to get out—or two-thirds of them are going to recidivate after 

they get out, and we have got to attack that problem by making 

sure that people get the skills they need to be meaningfully employed once they are released from custody. 

There is a trade-off in the bill that addresses this issue; and the 

trade-off is in exchange for taking away the competitive advantage 

for prison labor, we strengthen the rehabilitative programs, the 

educational vocational programs within prison. The amendments 

that I am offering are designed both to ensure that that trade-off 

is a real one, that is, that we have meaningful timetables to ensure 

that these enhanced in-prison educational, vocational assessment 

and training programs are actually implemented, and that we have 

an after-the-fact assessment to make sure they do the job they are 

intended to do. 

My amendment would ensure that all the components of the program, the in-prison assessments of inmate needs and aptitudes, the 

full range of educational opportunities, vocational training and apprenticeships, comprehensive release readiness preparation, are actually established in a timely basis in all Federal prisons. This provides a phase-in schedule for the establishment of these important 

rehabilitative components within a responsible period of time. 

To the effect that at least 25 percent of all Federal prisons not 

later than 2 years after the date of the act should have established 

each of the components of the program——

Chairman SENSENBRENNER. Would the gentleman yield? 

Mr. SCHIFF. I would be delighted to yield, Mr. Chairman. 

Chairman SENSENBRENNER. I believe that both of these amendments are very worthwhile, and I am prepared to accept them. 

One, it establishes a schedule for implementation. The other establishes a report by the Director of the Bureau of Prisons on the results of the program. I think that both of these constructive additions——

Mr. CONYERS. Would the gentleman yield? 

Mr. SCHIFF. I would be delighted to yield. 

Mr. CONYERS. I would just join with the Chairman in accepting 

these amendments. I like the part that at least 25 percent of all 

Federal prisons not later than 2 years after the date of enactment 

will have this kind of an accounting mechanism that you have 

brought in, and I think this is very important coming from the gentleman from California, because as a previous U.S. attorney, you 

had some experience with what happens to people who violate the 

law and are sent to prison to be improved, and frequently that 

doesn’t happen. And so I am happy that you have joined with us 

in this consideration. 

Mr. WATT. Would the gentleman yield? 

Mr. SCHIFF. Yes. 

Mr. WATT. I have some reservations, but I won’t even state them. 

The question I have was on the second amendment, 055, line 6 and 

131

7, where you are asking the Director to report on the stability of 

residents. I am just trying to figure out what the rationale for that 

is. Our society is so mobile, I am wondering whether we are asking 

the Director to report on something that is meaningless, really. 

What is the rationale for that particular part of the study? 

Mr. SCHIFF. The rationale is that according to the participants 

and the stakeholders in these rehabilitative efforts, there are several indicia of likely success in attacking the problem of recidivism. 

Stability and employment is certainly an obvious one, but also stability of residence, that people have a stake in a community, that 

they are not continually drifting from place to place, that they have 

a place of residence that they can come back to, and that also tends 

to be an indicia of likelihood of success. 

I do agree with the gentleman that probably of the three that we 

have mentioned, it is the least significant, but as the language 

points out, these are minimal requirements. We would expect the 

analysis to go much further. And the main point of the amendment 

is that I think really with every effort of this kind, we ought to 

have a rigorous assessment component to make sure that what we 

think will work is actually, in fact, working. But that, at least according to the experts we have consulted in the area, is why this 

is included. 

Mr. WATT. Thank the gentleman for yielding. 

Mr. SCHIFF. I thank the Chair and Ranking Member for their 

support and yield back whatever time I have remaining. 

Chairman SENSENBRENNER. The question is on the Schiff amendments en bloc. Those in favor will say aye. 

Opposed, no. 

The ayes appear to have it. The ayes have it. The Schiff amendments en bloc are agreed to. 

Are there further amendments? 

Mr. CHABOT. Mr. Chairman. 

Chairman SENSENBRENNER. The gentleman from Ohio. 

Mr. CHABOT. Move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. CHABOT. Thank you, Mr. Chairman. 

I won’t use the entire 5 minutes, but I just wanted to respond 

to something that the gentlelady from Texas said in her statement. 

She mentioned some of the things that occurred in the Federal 

prisons lately. One thing that she referred to that she felt was a 

negative thing was the removal of the exercise or weight-lifting 

equipment in the Federal prisons and is one of the principal sponsors of that along with Congresswoman Deborah Pryce some years 

back. I wanted to again remind folks as to why many of us thought 

that that action was appropriate. 

We had many of our prisoners who spent significant amounts of 

time building themselves up and were becoming quite dangerous. 

We had the case of an Ohio woman who, after a Federal prisoner 

got out and had built himself up and was, you know, weight-lifting 

a considerable amount of time while he was in prison, overpowered 

her and repeatedly raped her, and this is something that she is 

still obviously dealing with and will for the rest of her life. She testified before our Committee. 

132

Mr. CHABOT. Secondly, another case that happened in my State 

in Ohio in the Lucasville Prison riots that happened some years 

back, a number of the prisoners who were rioting used the barbells 

and the weight lifting equipment to break through concrete walls 

to get at some of the guards who were waiting for reinforcements 

to come in and they did break through the walls and got to one of 

the guards and murdered him and that particular—the one who instigated that is on death row and waiting execution for having 

done that. But there was, I think, very good reason for us to take 

that action in taking away the weight lifting equipment from some 

of these prisoners who became particularly dangerous. 

And secondly, I wanted to associate myself with the comments of 

the gentleman of Wisconsin, Mr. Green, who I think very 

articulately stated the reason that some of us have some real concerns with this legislation, and I think that the Prison Industries 

is a very important program and whereas I would agree that there 

are things that could be reformed and could be made better, I think 

it is important that we do allow these prisoners—and again I want 

to associate myself with the gentleman from Virginia as well. We 

do need to rehabilitate these folks to the degree that we are able 

to. Most of them will come out some day and they will be our fellow 

citizens and we have to make sure they do have job skills. 

Ms. JACKSON LEE. Would the gentleman yield? My comment was 

in no way to suggest that there had not been some valid reasons 

for bringing forth that legislation. My point is that as we incarcerate these individuals, regularly we should review the circumstances. This legislation is an attempt to review the circumstances. I tend to agree with the comments made earlier about 

the difficulty of the choice because they need to be rehabilitated. 

And my point was that we also need to assess this growing population, if you will, and whether or not there can be some relief for 

these nonviolent minimum security individuals who are under 

mandatory sentencing and whether or not this Committee needs to 

review this question. 

Mr. CHABOT. Reclaiming my time, I just conclude by saying, as 

I said, these folks are going to be out, most of them, on the street 

again, and while they are in there they ought to be getting skills 

to the extent that we are able to assist them in doing that, and 

their time ought to be productively spent. And if it is making furniture, whatever it might be, I think that is generally important. 

When I was at the local level, when I was on city council and 

I was county commissioner, I was very active in my community in 

Cincinnati and having them do all kinds of work out there, cleaning up parks, highways and many other things. And I think it is 

important we do this, and I yield back the balance of my time. 

Chairman SENSENBRENNER. Are there amendments? Gentleman 

from Virginia, Mr. Scott. 

Mr. SCOTT. I have an amendment at the desk, number 4. 

[The amendment follows:]

133

Chairman SENSENBRENNER. Clerk will report the amendment. 

The CLERK. Amendment to H.R. 1829 offered by Mr. Scott of Virginia. On page 43, line 21, strike January 21, 2005 and insert June 

30, 2004. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. SCOTT. Mr. Chairman, this is in the section of independent 

study to determine the effects of eliminating Federal Prison Industries’ mandatory source authority. 

Chairman SENSENBRENNER. Gentleman yield? 

Mr. SCOTT. I yield. 

Chairman SENSENBRENNER. I believe this is a good amendment 

and am prepared to accept it. 

Mr. CONYERS. I commend the gentleman from Virginia on his 

amendment. 

Mr. SCOTT. Thank you, Mr. Chairman. I yield back. 

Chairman SENSENBRENNER. Question is on the Scott amendment. 

Those in favor will say aye. Opposed no. The ayes appear to have 

it. The ayes have it. The amendment is agreed to. 

Are there further amendments? Gentleman from Wisconsin, Mr. 

Green. 

Mr. GREEN. Mr. Chairman, I have an amendment at the desk. 

Chairman SENSENBRENNER. Clerk will report the amendment. 

The CLERK. Amendment to H.R. 1829 offered by Mr. Green of 

Wisconsin. Page 21——

Mr. GREEN. Unanimous consent to be considered as read. 

Chairman SENSENBRENNER. Without objection, so ordered. The 

gentleman is recognized for 5 minutes. 

[The amendment follows:]


A1829B.eps
134 H.L.C.

AMENDMENT TO H.R. 1829

OFFERED BY MR. GREEN OF WISCONSIN

Page 21, strike lines 4 through 11 and insert the

following:

1 (3) If the Attorney General finds a significant risk

2 of adverse effects on either safe prison management or

3 public safety, he shall so advise the Congress before the

4 end of the fiscal year in which the finding is made, and

5 such finding shall serve to postpone for one year any fur6 ther percentage limitation under subsection (e)(1).

7 (4) Any percentage limitation postponed under para8 graph (3) shall take effect in the fiscal year immediately

9 following the fiscal year for which it is postponed, if not

10 later than 60 days before the first day of such following

11 fiscal year the Attorney General makes a determination

12 under paragraph (2)—

13 (A) that such limitation is not likely to result

14 in a substantial reduction in inmate industrial em15 ployment; or

16 (B) that any such reduction will not present a

17 significant risk of adverse effects on safe prison op18 eration or public safety.


C1829.AAB
135

Mr. GREEN. Thank you, Mr. Chairman. Those who are pushing 

this legislation, 1829, mostly claim to support many of the same 

principles that those who are critics of this legislation have put forward. They argue that this legislation will not end the FPI program. They argue that it will not hurt materially or diminish the 

FPI program. In fact they maintain and they argue that this legislation will merely make FPI more competitive and stronger in the 

long run. 

Mr. Chairman, I respectfully disagree with their assessment. 

This amendment that I offer on behalf of myself and the former 

Chairman of this Committee, Congressman Hyde, offers us a way 

out of that disagreement as to whether or not this legislation will 

actually strengthen the program. The amendment that I offer does 

not block the plans of the bill’s supporters. Instead, what it does 

is to provide a safety valve in case the bill doesn’t work as its proponents promise. As the Member from California, Mr. Schiff, suggested just a few moments ago, it is a good thing for us to assess 

programs and to measure them and should try to determine whether or not they work as intended. 

Well, that is really what this amendment would do with respect 

to the mandatory source rule and FPI. My amendment would require the Attorney General to make a determination each year 

about whether or not phasing out FPI’s procurement preference 

has led to a reduction in the number of inmates working. If and 

only if the employment numbers are substantially lower, the Attorney General would then be required to determine whether or not 

this drop-off poses a significant threat to prison operations or to 

general public safety. If the Attorney General concludes that all of 

this has occurred, he may postpone the phasing out of the mandatory source—the preference for at least a year and then it would 

only—the phaseout would only continue when the Attorney General has determined that it is safe for it to proceed. 

So my amendment says that if, in fact, this legislation were to 

strengthen FPI, fine, let us move forward. Many of us are afraid 

it will not. And if it does not work, this legislation as advertised, 

there could be serious risks for prison operations and for the safety 

of those who work in prisons. If, in fact, that significant risk appears, if in fact the Attorney General sees that it is there, then it 

would only be wise for us to allow the Attorney General to suspend 

that phaseout. And again if he or she determines that, in fact, the 

stability and safety has been restored, then it would continue. 

What I want to do here is create a safety valve to make sure that 

those negative consequences that many of us fear will not in fact 

take place. 

Mr. Chairman, I yield back. 

Chairman SENSENBRENNER. The Chair recognizes himself for 5 

minutes in opposition of the amendment. I believe this to be a cop 

out amendment because what the amendment proposes to do is to 

delegate the authority that belongs to the Congress and more specifically this Committee to the Attorney General to make a determination on whether the programs contained in this legislation are 

working or not. 

Now one of the things I have prided myself in is doing vigorous 

oversight, and we will do oversight over Federal Prison Industries 

just like we have done oversight over practically everything else 

136

that is under the jurisdiction of this Committee. If the programs 

are not working and an amendment to this law is necessary, then 

I believe it is the duty of this Committee to make whatever amendments to the law the oversight determines to be necessary. But I 

don’t want to pump the ball down the street to the Justice Department and have that determination be made unilaterally by the Attorney General. 

Now what this bill does is to level the playing field so that FPI 

would compete on the same playing field with private tax paying, 

job creating industry. And if FPI can’t do that despite all of the 

preferences that it has with low wages and not paying taxes and 

not paying rent and all of that other stuff, then there is going to 

be less work for FPI to do and there will end up being fewer prisoners that are employed by FPI. And to say that if that happens 

because FPI can’t compete, it ends up losing contracts and losing 

jobs that the Attorney General can say, hey, wait a minute, because they couldn’t compete, then we are going to go back to the 

sole source procurement for the Federal Government simply blows 

a hole in this bill that is big enough to drive an 18-wheeler 

through. And I think if the bill is unworkable and it is determined 

in the future that we made a mistake of approving this bill, then 

we ought to be the ones that fix it rather than the Justice Department, and specifically the Attorney General saying, no, I didn’t like 

that bill, so I am going to make a certification to make sure that 

the bills, reforms of the procurement practices don’t work. In the 

interest of having Congress and this Committee do the job that the 

Constitution and the rules intend for us to do, let us keep the decision making power here rather than sending it down to the Justice 

Department. 

I urge opposition to this amendment and yield back the balance 

of my time. Gentleman from New York, Mr. Nadler. Gentleman 

strike the last word? 

Mr. NADLER. Indeed I do. Thank you, Mr. Chairman. Mr. Chairman, I cannot resist the opportunity rare as it is to speak in agreement with the Chair and there isn’t much else to say. There is no 

reason to give the Attorney General the absolute discretion to shut 

down what we are doing today. The Committee can judge that. We 

had a debate on that subject in the last Congress. The Chairman 

has made the points. We will see how well it works. We will review 

it next year and we can reserve that judgment for this Committee. 

Chairman SENSENBRENNER. Will the gentleman yield? Obviously 

this is not the Ways and Means Committee. Mr. Nadler and Mr. 

Watt are agreeing with me. Mr. Chabot and Mr. Green are agreeing with Mr. Scott, and that never happens in the Ways and Means 

Committee, and let us hope it never does. And I thank the gentleman for yielding. The gentleman from Alabama, Mr. Bachus. 

Mr. BACHUS. Mr. Chairman, I don’t know how many Members of 

the Committee have been around the prisons on a daily or weekly 

basis. As a State Attorney General, I spent a lot of time in the prisons, I spent a lot of time prosecuting people who went to prisons, 

I spent a lot of time talking to prisoners. And I can tell you without 

a doubt, I have absolutely no doubt in my mind it is best for those 

prisoners to work. They want to work. They have more self-esteem. 

They are calmer, they are easier to manage. If they do not work 

in prison, when they get out of prison they are not going to work. 

137

Now that is a broad generalization. If they work in prison, the 

chances of them working when they get out of prison are much 

greater. 

I am going to share a story—this is not a story of what I learned 

from working around the prisoners and in my job as a State’s Attorney General. This is a story that my uncle told me about 15 

years ago. I was at a little hunting camp. It was a shack that he 

owned in south Alabama and as we left one day, somebody asked 

him if he was going to lock the place up and he said no. He had 

two neighbors that watched the place. And somebody said, well, 

you know, who are they? He said they are the best neighbors somebody could get. He said they have been out of prison 2 years, and 

we thought he was kind of joking. He said they were ex-cons. What 

he went on to explain is they had been out of prison 2 years, black 

gentlemen, and they learned how to farm when they were in prison 

and both of them were farmers. And he said if there were two guys 

you could trust, it was these two gentlemen because they spent the 

first 25 years of their life in prison but they had learned to farm 

when they were in prison. And they came out and they were farming. And there were two guys that were not going to go back to 

prison. One reason is they learned a craft when they were in there. 

Now I am most concerned for our society and safety today. And 

as some of the Members have said, we are warehousing prisoners 

and we are putting tremendous numbers, hundreds of thousands of 

people, behind bars. Many of them before they went never were 

gainfully employed. They never knew the joy of actually going to 

work and earning money or making a product or accomplishing 

something. 

I would urge this Committee not to do anything, and I think Mr. 

Green’s amendment is a safety valve. And I think the Attorney 

General, if anybody—if an Attorney General in an Attorney General’s Office, if anybody is going to understand other than the Bureau of Prisons, that these prisoners need to be working, it is the 

Attorney General’s office. And the legislation—the underlying legislation scares me because if it does anything to eliminate or discourage these prisoners working every day and building self-esteem and 

getting experience, then I hope we don’t pass the underlying legislation. But if we do, I certainly hope that we pass Mr. Green’s 

amendment. And if we don’t, it may be one of our neighbors and 

one of our family members that pays the price when somebody that 

stays in prison for 10 or 15 years and sits there and does nothing 

and comes out with a lot of anger and an inability or not in a habit 

of working, takes that frustration out on one of our loved ones, and 

I yield back the balance of my time. 

Chairman SENSENBRENNER. The question is on the Green 

amendment—the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. I move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. WATT. Thank you, Mr. Chairman. Let me use this amendment in the context in which I make some comments about this 

whole situation because I think it illustrates the points that I want 

to make more than any of the other amendments. 

First of all, I should say that Mr. Scott and I have been friends 

since before we came to Congress going all the way back to the 

138

mid-80’s when he was in the State legislature and I was in the 

North Carolina legislature, and we have sat beside each other on 

this Committee ever since we have been in Congress. And when I 

go to the floor and debate, his phone lights up. When he goes to 

the floor and debates, my phone lights up because half the public 

thinks I am Mr. Scott and Mr. Scott is Mr. Watt. So there is seldom an occasion on which there is much light between us on a personal friendship level or on an issues level. And I have learned a 

long time ago that when Mr. Scott has strong opinions about something, I need to listen carefully to what he is saying and understand if I believe I have a different opinion than him. And I have 

listened carefully to what he has said, and today he has not said 

a thing that I disagree with except that he is going to vote against 

this bill and I am going to vote for it. I have analyzed our differences and I think they are wise in the context of this amendment more than anywhere else and in the context of a disagreement that Mr. Chabot and Ms. Jackson Lee had in the course of 

their debate. 

I think that Prison Industries and employing people in prison is 

important and valuable for rehabilitative purposes and for training 

purposes. I do not think that Prison Industries is an appropriate 

means of controlling prisoners, just giving them something to do to 

keep them busy so they don’t disrupt the prison system. And I 

don’t like this amendment for that reason because it clearly acknowledges that that is one aspect of what this Prison Industries 

stuff is all about. I don’t think that is an appropriate purpose to 

be served by Prison Industries. If we are going to put people in 

prison, I think we ought to give them constructive things to do 

without doing detriment to private enterprise, and that is where 

Mr. Chabot and I disagree. I think, you know, if they are exercising, they are watching television, that is fine. If they are working for the purpose of training and rehabilitation, that is wonderful, and I would be absolutely supportive of that. The problem is 

that the Prison Industries has lost sight of that and it has gone off 

in a different direction, and a lot of what they are doing has to do 

with just keeping people occupied so they don’t make trouble. It is 

not about rehabilitation. It is not about preparing them to go back 

into society. It is about kind of keeping them out of trouble, and 

that is where I think the dividing line is. It is a tough dividing line. 

And so I don’t think this debate is about whether you support 

Prison Industries or not. I support Prison Industries for the purposes for which it was intended. I don’t support Prison Industries 

for purposes other than that. And so I think the bill represents a 

good compromise. Mr. Schiff’s amendment is going to phase it in 

over a period of time. Mr. Green’s amendment would, as the Chairman said, allow a Mack truck to drive through it and undermine 

the whole purpose of the bill. I think we should defeat Mr. Green’s 

amendment, support the bill, and I yield back. 

Mr. BACHUS. Would the gentleman yield? 

Mr. WATT. One additional minute. 

Mr. BACHUS. Most of us I think when we were teenagers our fathers got us up and they told us we were going to work and I don’t 

know if you all had that experience, but my father would get me 

up at 6 o’clock and if I wasn’t in school, I was working. And I believe there were two purposes for sending me to work every mornVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00138 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
139

ing. And I think one purpose was to teach me work ethic and a 

skill. I mean I learned to do something and that was a part of it, 

but I also think part of it was to keep me occupied. 

Mr. WATT. Reclaiming my time, I acknowledge that that was 

probably true. 

Mr. BACHUS. And I don’t think they are mutually exclusive. 

Mr. WATT. I don’t have a problem with keeping prisoners occupied. I draw the line when I start keeping them occupied at the expense of people in the private sector, and I am the first to acknowledge that that is a difficult line to draw. But I think that may be 

where—I don’t know. Maybe Mr. Scott has a different opinion 

about this, but I haven’t seen much difference between where Mr. 

Scott and I are except on possibly that one issue. 

Chairman SENSENBRENNER. Gentleman’s time has once again expired. The question is on the Green amendment. Gentleman from 

Virginia is recognized for 5 minutes. 

Mr. SCOTT. Thank you, Mr. Chairman. First of all, with regard 

to the comments from the gentleman from North Carolina about 

these unprecedented alliances. I point out, Mr. Chairman, for the 

last 3 days we have been in session well past midnight and are 

sleep deprived and I wonder if that has anything to do with these 

strange alliances, but in any case we want to get to this amendment and look at the bill and look at the amendment. 

The bill, if you look at page 4, says that you can grant sole 

source contracts if the Attorney General determines—makes certain determinations. But part of the determination is that the warden has to tell the Attorney General that he is unable to maintain 

safety or can’t manage the prison. You can’t expect a warden to 

publicly certify that he is unable to do his job. So that makes that 

provision somewhat unworkable. Without this amendment where 

the Attorney General can make the finding on his own, you have 

the situation in which the Attorney General has affirmatively concluded that there is a significant risk to public safety if we don’t 

have a Federal Prison Industries program and there is nothing he 

can do about it. This amendment I think is well taken. It would 

give him something that he can’t do to protect the public safety. I 

would remind the Members of, I guess, the last few sentences in 

the L.A. Times editorial that the gentleman, Mr. Green, mentioned. 

And I just—it is from a California Republican who apparently did 

have some experience with the prisons from the inside. He said, do 

we want them unskilled and angry after years of forced idleness or 

do we want them capable of contributing to society with skills they 

have learned during their confinement? How we treat them in prison will determine what kind of neighbors they will be. 

Finally, Mr. Chairman, I just note that we are talking about giving inmates constructive things to do with their time. That is not 

really the point of Federal Prison Industries. The fact is that Prison Industries has been shown to reduce crime. And to the extent 

that there are other ways maybe you can do it, but we know this 

works. So if we get rid of Prison Industries, we will be increasing 

crime. I would hate to read the paper in a couple of years and see 

that somebody has been murdered or robbed. I would have to say 

H.R. 1829 is working, the crime rate is going up. 

140

So this amendment allows the Attorney General to make the appropriate findings, and I would hope that we would adopt the 

amendment. 

I yield to my friend from North Carolina. 

Mr. WATT. I just want to focus on line 14 and 15 of Mr. Green’s 

amendment and ask Mr. Green and Mr. Scott whether that should 

be the criteria, whether you have a substantial reduction in inmate 

industrial employment? Is that the objective or are we trying to 

talk about training and rehabilitation? I don’t think the criteria 

ought to be—I think we ought to be working our way toward a situation where you are decreasing inmate industrial employment if 

Prison Industries is working as well as you all think it is working. 

Ultimately, I just don’t think that should be the criteria, and I 

want you all to focus on that particular language. Is that the appropriate criteria that should stop reform of this program? And I 

will yield to Mr. Green or Mr. Scott—well, it is Mr. Scott’s time. 

Mr. SCOTT. I yield back. 

Chairman SENSENBRENNER. Question is on the Green amendment. Those in favor will say aye. Opposed no. The knows appear 

to have it. 

Mr. GREEN. Mr. Chairman. 

Chairman SENSENBRENNER. Gentleman from Wisconsin. 

Mr. GREEN. On that I would like a rollcall vote. 

Chairman SENSENBRENNER. A recorded vote will be ordered. 

Those in favor of the Green amendment will as your name is called 

answer aye. Those opposed no, and the Clerk will call the roll. 

The CLERK. Mr. Hyde. 

[no response.] 

The CLERK. Mr. Coble. 

Mr. COBLE. No. 

The CLERK. Mr. Coble votes no. 

Mr. Smith. 

[no response.] 

The CLERK. Mr. Gallegly. 

[no response.] 

The CLERK. Mr. Goodlatte. 

Mr. GOODLATTE. Aye. 

The CLERK. Mr. Goodlatte votes aye. 

Mr. Chabot. 

Mr. CHABOT. Aye. 

The CLERK. Mr. Chabot votes aye. 

Mr. Jenkins. 

Mr. JENKINS. No. 

The CLERK. Mr. Jenkins votes no. 

Mr. Cannon. 

[no response.] 

The CLERK. Mr. Bachus. 

Mr. BACHUS. Aye. 

The CLERK. Mr. Bachus votes aye. 

Mr. Hostettler. 

Mr. HOSTETTLER. No. 

The CLERK. Mr. Hostettler votes no. 

Mr. Green. 

Mr. GREEN. Aye. 

The CLERK. Mr. Green votes aye. 

141

Mr. Keller. 

Mr. KELLER. No. 

The CLERK. Mr. Keller votes no. 

Ms. Hart. 

Ms. HART. No. 

The CLERK. Ms. Hart votes no. 

Mr. Flake. 

Mr. FLAKE. No. 

The CLERK. Mr. Flake votes no. 

Mr. Pence. 

Mr. PENCE. No. 

The CLERK. Mr. Pence votes no. 

Mr. Forbes. 

Mr. FORBES. No. 

The CLERK. Mr. Forbes votes no. 

Mr. King. 

Mr. KING. No. 

The CLERK. Mr. King votes no. 

Mr. Carter. 

Mr. CARTER. No. 

The CLERK. Mr. Carter votes no. 

Mr. Feeney. 

Mr. FEENEY. No. 

The CLERK. Mr. Feeney votes no. 

Mrs. Blackburn. 

Mrs. BLACKBURN. No. 

The CLERK. Mrs. Blackburn votes no. 

Mr. Conyers. 

Mr. CONYERS. No. 

The CLERK. Mr. Conyers votes no. 

Mr. Berman. 

[no response.] 

The CLERK. Mr. Boucher. 

[no response.] 

The CLERK. Mr. Nadler. 

[no response.] 

The CLERK. Mr. Scott. 

Mr. SCOTT. Aye. 

The CLERK. Mr. Scott votes aye. 

Mr. Watt. 

Mr. WATT. No. 

The CLERK. Mr. Watt votes no. 

Ms. Lofgren. 

Ms. LOFGREN. Aye. 

The CLERK. Ms. Lofgren votes aye. 

Ms. Jackson Lee. 

Ms. JACKSON LEE. Aye. 

The CLERK. Ms. Jackson Lee votes aye. 

Ms. Waters. 

Ms. WATERS. Aye. 

The CLERK. Ms. Waters votes aye. 

Mr. Meehan. 

[no response.] 

The CLERK. Mr. Delahunt. 

[no response.] 

142

The CLERK. Mr. Wexler. 

[no response.] 

The CLERK. Ms. Baldwin. 

[no response.] 

The CLERK. Mr. Weiner. 

[no response.] 

The CLERK. Mr. Schiff. 

Mr. SCHIFF. No. 

The CLERK. Mr. Schiff votes no. 

Ms. Sa ́nchez. 

Ms. SA ́ NCHEZ. No. 

The CLERK. Ms. Sa ́nchez votes no. 

Mr. Chairman. 

Chairman SENSENBRENNER. No. 

The CLERK. Mr. Chairman votes no. 

Chairman SENSENBRENNER. Members in the chamber wish to 

cast or change their vote. Gentleman from Utah, Mr. Cannon. 

Mr. CANNON. No. 

The CLERK. Mr. Cannon, no. 

Chairman SENSENBRENNER. Gentleman from New York, Mr. 

Nadler. 

Mr. NADLER. No. 

The CLERK. Mr. Nadler, no. 

Chairman SENSENBRENNER. Further Members who wish to cast 

or change their vote? If not, the Clerk will report. 

Ms. WATERS. Mr. Chairman. 

Chairman SENSENBRENNER. Gentlewoman, Ms. Waters, from 

California. 

Ms. WATERS. I am sorry. I thought you were calling for additional amendments. 

Chairman SENSENBRENNER. In a minute. Clerk will report. 

The CLERK. There are 8 ayes and 19 noes. 

Chairman SENSENBRENNER. And the amendment is not agreed 

to. Are there further amendments? 

Chairman SENSENBRENNER. Gentlewoman from Texas, Ms. Jackson Lee. 

Ms. JACKSON LEE. I have an amendment at the desk. 

Chairman SENSENBRENNER. Clerk will report the amendment. 

[The amendment follows:]

The CLERK. Amendment to H.R. 1829 offered by Ms. Jackson 

Lee. At the end insert the following: It is the sense of Congress 

that it is important to study the concept of implementing a ‘‘good 


A1829C.eps
143

time’’ release program for nonviolent criminals in the Federal prison system. 

Chairman SENSENBRENNER. The gentlewoman is recognized for 5 

minutes. 

Ms. JACKSON LEE. I just want my colleagues to know, and I 

thank the distinguished Chairman. 

Chairman SENSENBRENNER. Would the gentlewoman yield? I am 

happy to accept the amendment. 

Ms. JACKSON LEE. I cannot thank the distinguished gentleman 

more. Let me just say a word, Mr. Distinguished Chairman. And 

I will say that word briefly. Thank you, Mr. Chairman, a sentence, 

and an end. 

My colleagues, I recognize the role of this Committee and the 

role of prisons, and on behalf of the families of prisoners, many of 

whom are incarcerated for nonviolent offenses and many of whom 

have family responsibilities but many of whom would be able to 

come under this good conduct or good time effort, I thank you for 

accepting an amendment that would suggest that it is important 

to study a good time release program for the Federal Bureau of 

Prisons. I thank my colleagues. 

Chairman SENSENBRENNER. And the question is on the Jackson 

Lee amendment. Those in favor will say aye. Opposed no. The ayes 

appear to have it. The ayes have it and the amendment is agreed 

to. 

Are there further amendments? The gentlewoman from California, Ms. Waters. 

Ms. WATERS. Mr. Chairman and Members, on this issue——

Chairman SENSENBRENNER. You have an amendment at the 

desk? 

Ms. WATERS. I have an amendment at the desk. 

Chairman SENSENBRENNER. Clerk will report the amendment. 

[The amendment follows:]

The CLERK. Amendment to H.R. 1829 offered by Ms. Waters. 

Page 23, line 15, after ‘‘institutions.’’ insert ‘‘Such hourly wages 

shall not be less than $2.50 per hour.’’. 

Chairman SENSENBRENNER. Gentlewoman is recognized for 5 

minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman. I have listened as some of our Members have agonized about this legislation. 

And of course we have of course Members of this Committee who 

are long time supporters of organized labor and I am one of them. 

I think you will rarely find an issue where I disagree with organized labor and have worked many years to try and increase wages 

and benefits and create fairness in the workplace. However, I find 

myself in a very interesting position with this issue and I have labored with this over the years. 

Today I have come to some conclusion about what I should be 

doing. I am offering this amendment to increase the amount of 


A1829D.eps
144

wages for any number of reasons, number one, because of complaints by prisoners about the amount of wages. Number two, I am 

interested in prisoners being able to save money so that upon release they have money to be able to find shelter and food and to 

be able to maintain themselves until they can find employment. I 

also believe it is extremely important for inmates to be able to 

work even if the jobs seem meaningless because it is important to 

have a work schedule. It is important to get up knowing that you 

have to be someplace at a certain time and perform certain kinds 

of activities. It is important to know that you got to follow some 

rules and you got to produce something or you got to do something 

to earn some money. So I am not really concerned about whether 

or not one prisoner is making furniture or whether they are sweeping the floor. I want them working, I want them active, I want 

them doing something so that they are involved and they can make 

some money. 

Now, let me tell you what is extremely important about all of 

this. Even after some of our inmates are trained, even after they 

learn a skill, I don’t know how many of you understand what it is 

like to look for a job once you have been incarcerated. If there is 

one thing that just tears at my heart it is ex-felons, former inmates 

who are trying to go right, who are trying to do something who are 

begging for jobs. Can you help me find a job? The applications are 

torn up and they are thrown in the waste basket, and particularly 

in a competitive labor market where employers don’t have to hire 

anybody less than people who are highly educated or people who 

have good work records, ex-felons and formerly incarcerated persons find it very, very difficult. They stand a little bit of a better 

chance if they have developed a skill, if they have learned something, if they are able to go and sell themselves to an employer 

that they know how to produce a product, they know how to operate some machinery, they understand the workplace. We are all at 

risk when we are turning out formerly incarcerated folks who have 

no money, nowhere to go and very little chances of being employed. 

What do you think is going to happen? We cannot control crime 

and recidivism if we don’t think about this in ways that will help 

us to move those people from having been incarcerated into jobs so 

that they can be mainstreamed. 

So while I certainly am supportive of organized labor, we may 

disagree on this. But on this one, I have no permanent friends or 

permanent enemies. I like Mr. Watt. I like Mr. Scott, but it has 

nothing to do with any of this. This has to do with the unprecedented number of prisoners that are hitting our streets who need 

to find jobs, and we are doing nothing that would help them to get 

into those jobs. Don’t forget, every application says have you served 

time. And once they say yes, the chances are they are not going to 

get that job. The only hope again that they have is that an employer may take a chance with them if they have a skill, they have 

learned something and they can present themselves in ways that 

will help the employers to understand. 

Chairman SENSENBRENNER. The gentlewoman’s time has expired. 

Ms. WATERS. So I would ask that you would support the increase 

in hourly wages. And let me just say somebody said, well, Prison 

Industries won’t like this because this means they have to pay out 

145

more money. So be it. The fact of the matter is they should be more 

competitive, we should have more jobs, we should have more training. And I would ask for support for this amendment. 

Chairman SENSENBRENNER. The Chair recognizes himself in opposition to the amendment. The amendment of the gentlewoman 

from California, I believe, is very well-intentioned, but will end up 

being counterproductive. The purpose of this bill is to reduce the 

mandatory sourcing of FPI sales and Federal agency procurement. 

This amendment does not change that policy decision that is contained in H.R. 1829. What it does do is that it makes FPI noncompetitive in the nonmandatory sourcing competitive bid procurement, and thus it will end up reducing the amount of business FPI 

has and the amount of money that FPI can pay for its workers, the 

prisoners who are working in Federal Prison Industries. 

The bill already allows periodic adjustment wage rates by the 

Board of Directors of Federal Prison Industries. To put this fixed 

dollar amount in is going to result in fewer jobs in the prisons and 

probably end up destroying Federal Prison Industries. The purpose 

of this bill is not to destroy FPI, but to reform it. 

Ms. WATERS. Would the gentleman yield? 

Chairman SENSENBRENNER. I yield to the gentleman from Virginia. 

Mr. SCOTT. Thank you, Mr. Chairman. I think it is a good idea 

to give prisoners more money. The money they make goes to victims, restitution, child support and fines, and that is the good part 

of the amendment. 

Mr. Chairman, you pointed out some of the concerns because if 

you are not competitive, you won’t get any contracts at all so there 

won’t be any money coming in. So I am not exactly sure what impact it may have. One of the problems is that the effective labor—

the labor productivity is not as effective as it is in the private sector. Private sectors don’t have security guards they have to hire to 

look over people, the excess oversight. Some of the machinery may 

not be the best. And it takes, therefore, on average 4 inmates to 

provide the productivity of one private sector worker. If the rate is 

competitive, 2.50, 4, $5 an hour for each one, it may adversely affect the number of contracts and therefore, Mr. Chairman, although I agree that the inmates ought to be making more money, 

I am not able to support the amendment at this time. 

Chairman SENSENBRENNER. Chair yields back. Gentlewoman 

from California, Ms. Lofgren, is recognized for 5 minutes. 

Ms. LOFGREN. I understand what my colleague from Virginia has 

said and obviously we don’t want to impair the viability of the prison industry activity. However, you know, I have long been troubled 

about inmates and there are always going to be nonviolent inmates 

because otherwise they are not going to get out at all, get released 

from prison and have actually nothing. And we have set up a situation where they are just bound to face failure in the integration 

back into society. So I guess I am searching for a way to provide 

some income to people who paid their debt to society to allow them 

to actually stay clean and become productive Americans. And I 

thought the gentlelady’s amendment really addressed that. 

And I would like to yield to the gentlelady and address the 

issues. 

146

Ms. WATERS. You are absolutely correct. Listen, Members, we 

can’t have it all ways. We have a lot of Members who talk about 

law and order and how they want to make our streets safe, yet we 

really don’t do anything to make our streets safe. We simply talk 

about locking people up and we wish—some of us wish we could 

throw the key away. But guess what, they are coming back out. We 

moan and groan about recidivism, but we don’t prepare them to 

come back into our society, get jobs and become competitive. We 

want them to work but we have applications that say have you 

ever served time, are you a felon, and they answer yes, they get 

no job, and then we wonder why they don’t work. 

We can’t have it all ways. We have got to do something. Now you 

can’t love organized labor so much that you aren’t willing to provide some training and work opportunities for these inmates. You 

can’t love the prison industry so much that you aren’t willing to 

say to them, if you have some products, be competitive. They 

should be market rate products. Be competitive with your products 

and pay enough wages where people will at least have an opportunity to have some money in their pockets so that they can rent 

a place and they can get some food and they can try and look for 

a job using those skills that they have learned working in your industries. 

So I stand by my amendment. Those people who say it will drive 

them out of business, what you are basically saying is you want 

some special kind of relationship that does not require Prison Industries to charge market rate for their products. If they are making products for the Federal Government or anybody else, they 

should be market rate, they should be competitive. If they do a 

good job, they should be able to earn money, should be able to pay 

the prisoners more and I don’t want to hear about their overhead 

costs. They are doing it on our property. They are doing it without 

having to pay for, you know, additional costs for electricity and air 

conditioning. Don’t tell me about the guard. We already pay for the 

guard. We already pay for that guard. So their overhead is a lot 

less than it would be if they were out there having to, you know, 

rent venues and places and pay all of the costs that go along with 

it. 

There is time for us for us to shed all of our political alliances 

and think about getting rid of crime, think about getting rid of recidivism. And if we can’t explain that to our friends, we aren’t 

worth our salt and we don’t deserve to be here, and I yield back. 

Ms. LOFGREN. Actually it is my time. 

Chairman SENSENBRENNER. The gentlewoman has lost it. 

Ms. LOFGREN. In my experience, which again is not running a 

Federal prison but in local government where we ran a very large 

facility for 14 years and had thousands of inmates engaged in very 

productive work, what we found is if you have a financial incentive 

you also end up having the bureaucracy becoming more entrepreneurial. And I think that is what the gentlelady is suggesting, is 

having a wage that does not undercut the private sector’s part of 

getting to an entrepreneurial approach within the Federal Prison 

Industry Program. And I fear that if we don’t do something to support this whole industrial effort—we have already done terrible 

things to our educational programs within institutions, we are just 

creating a whole lot of problems for society. And potentially, alVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00146 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286
147

though I am sure this is not the intent, I wouldn’t even suggest 

this is the intent, but a whole lot of victims for when these individuals are not integrated back into society. 

Chairman SENSENBRENNER. The gentlewoman’s time has expired. The question is on the amendment of the gentlewoman from 

California, Ms. Waters. Those in favor will say aye. Opposed no. 

The noes appear to have it, the noes have it. 

Ms. WATERS. Rollcall, please. 

Chairman SENSENBRENNER. rollcall will be ordered. Those in 

favor of the Waters amendment will as your name is called answer 

aye. Those opposed no. And the Clerk will call the roll. 

The CLERK. Mr. Hyde. 

[no response.] 

The CLERK. Mr. Coble. 

[no response.] 

The CLERK. Mr. Smith. 

[no response.] 

The CLERK. Mr. Gallegly. 

[no response.] 

The CLERK. Mr. Goodlatte. 

[no response.] 

The CLERK. Mr. Chabot. 

Mr. CHABOT. No. 

The CLERK. Mr. Chabot votes no. 

Mr. Jenkins. 

Mr. JENKINS. No. 

The CLERK. Mr. Jenkins votes no. 

Mr. Cannon. 

[no response.] 

The CLERK. Mr. Bachus. 

[no response.] 

The CLERK. Mr. Hostettler. 

Mr. HOSTETTLER. No. 

The CLERK. Mr. Hostettler votes no. 

Mr. Green. 

Mr. GREEN. No. 

The CLERK. Mr. Green votes no. 

Mr. Keller. 

[no response.] 

The CLERK. Ms. Hart. 

[no response.] 

The CLERK. Mr. Flake. 

Mr. FLAKE. No. 

The CLERK. Mr. Flake votes no. 

Mr. Pence. 

Mr. Pence. No. 

The CLERK. Mr. Pence votes no. 

Mr. Forbes. 

Mr. FORBES. No. 

The CLERK. Mr. Forbes votes no. 

Mr. King. 

Mr. KING. No. 

The CLERK. Mr. King votes no. 

Mr. Carter. 

Mr. CARTER. No. 

148

The CLERK. Mr. Carter votes no. 

Mr. Feeney. 

Mr. FEENEY. No. 

The CLERK. Mr. Feeney votes no. 

Mrs. Blackburn. 

Mrs. BLACKBURN. No. 

The CLERK. Mrs. Blackburn votes no. 

Mr. Conyers. 

[no response.] 

The CLERK. Mr. Berman. 

[no response.] 

The CLERK. Mr. Boucher. 

[no response.] 

The CLERK. Mr. Nadler. 

[no response.] 

The CLERK. Mr. Scott. 

Mr. SCOTT. No. 

The CLERK. Mr. Scott votes no. 

Mr. Watt. 

Mr. WATT. Undecided—aye. 

The CLERK. Mr. Watt votes aye. 

Ms. Lofgren. 

Ms. LOFGREN. Aye. 

The CLERK. Ms. Lofgren votes aye. 

Ms. Jackson Lee. 

Ms. JACKSON LEE. Aye. 

The CLERK. Ms. Jackson Lee votes aye. 

Ms. WATERS. Ms. WATERS. Aye. 

The CLERK. Ms. Waters votes aye. 

Mr. Meehan. 

[no response.] 

The CLERK. Mr. Delahunt. 

[no response.] 

The CLERK. Mr. Wexler. 

[no response.] 

The CLERK. Ms. Baldwin. 

[no response.] 

The CLERK. Mr. Weiner. 

[no response.] 

The CLERK. Mr. Schiff. 

Mr. SCHIFF. No. 

The CLERK. Mr. Schiff votes no. 

Ms. Sa ́nchez. 

Ms. SA ́ NCHEZ. No. 

The CLERK. Ms. Sa ́nchez votes no. 

Mr. Chairman. 

Chairman SENSENBRENNER. No. 

The CLERK. Mr. Chairman votes no. 

Chairman SENSENBRENNER. Members who wish to cast or change 

their vote. Gentleman from North Carolina, Mr. Coble. 

Mr. COBLE. No. 

The CLERK. Mr. Coble, no. 

Chairman SENSENBRENNER. Gentleman from Texas, Mr. Smith. 

Mr. SMITH. I vote no. 

149

The CLERK. Mr. Smith, no. 

Chairman SENSENBRENNER. Gentleman from Virginia, Mr. Goodlatte. 

Mr. GOODLATTE. No. 

The CLERK. Mr. Goodlatte, no. 

Chairman SENSENBRENNER. Gentleman from Utah, Mr. Cannon. 

Mr. CANNON. No. 

The CLERK. Mr. Cannon, no. 

Chairman SENSENBRENNER. Gentleman from Alabama, Mr. 

Bachus. 

Mr. BACHUS. No. 

The CLERK. Mr. Bachus, no. 

Chairman SENSENBRENNER. Gentleman from Florida, Mr. Keller. 

Mr. KELLER. No. 

The CLERK. Mr. Keller, no. 

Chairman SENSENBRENNER. Gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Aye. 

The CLERK. Mr. Conyers, aye. 

Chairman SENSENBRENNER. Gentlewoman from Pennsylvania, 

Ms. Hart. 

Ms. HART. No. 

The CLERK. Ms. Hart, no. 

Chairman SENSENBRENNER. Further Members wish to cast or 

change their vote? If not, the Clerk will report. 

The CLERK. Mr. Chairman, there are 5 ayes and 22 noes. 

Chairman SENSENBRENNER. And the amendment is not agreed 

to. 

Are there further amendments? Gentleman from Virginia, Mr. 

Scott. 

Mr. SCOTT. Mr. Chairman, I have three amendments I would like 

to offer en bloc. 

Chairman SENSENBRENNER. Without objection, they will be considered en bloc and the Clerk will report the amendments. 

The CLERK. Amendments to H.R. 1829 offered en bloc by Mr. 

Scott of Virginia. Page 16, strike line 22 and all that follows; page 

18. 

Mr. SCOTT. I ask unanimous consent. 

[The amendments follow:]

150 H.L.C.

AMENDMENT TO H.R. 1829

OFFERED BY MR. SCOTT OF VIRGINIA

Page 16, strike line 22 and all that follows through

page 18, line 3.

Page 18, line 4, strike ‘‘(2)’’ and insert ‘‘(b)’’ (and

adjust the margin and redesignate subsequent subsections accordingly).

Page 18, lines 15 and 16, strike ‘‘subsection (b) and

subsection (c) of’’.

Page 18, lines 23 and 24, and page 19, lines 4 and

5, strike ‘‘subsections (b) and (c)’’ and insert ‘‘this section’’.

Page 19, line 15, strike ‘‘preferential’’.

Page 19, line 16, strike ‘‘subsection (b)’’ and insert

‘‘this section’’.


D1829.AAB
151 H.L.C.

AMENDMENT TO H.R. 1829

OFFERED BY MR. SCOTT OF VIRGINIA

Page 24, strike section 7 (line 17 and all that follows through page 25, line 18).


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AMENDMENT TO H.R. 1829

OFFERED BY MR. SCOTT OF VIRGINIA

Page 27, insert after line 22 the following new subsection (and redesignate subsequent subsections accordingly):

1 (b) ADDITIONAL INMATE WORK OPPORTUNITIES

2 THROUGH PUBLIC SERVICE ACTIVITIES.—

3 (1) IN GENERAL.—Chapter 307 of title 18,

4 United States Code, is further amended by inserting

5 after section 4124 the following new section:

6 ‘‘§ 4124a. Additional inmate work opportunities

7 through public service activities

8 ‘‘(a) IN GENERAL.—Inmates with work assignments

9 within Federal Prison Industries may perform work for

10 an eligible entity pursuant to an agreement between such

11 entity and the Inmate Work Training Administrator in ac12 cordance with the requirements of this section.

13 ‘‘(b) DEFINITION OF ELIGIBLE ENTITIES.—For the

14 purposes of this section, the term ‘eligible entity’ means

15 an entity—

16 ‘‘(1) that is an organization described in section

17 501(c)(3) of the Internal Revenue Code of 1986 and

18 exempt from taxation under section 501(a) of such

19 Code and that has been such an organization for a


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1 period of not less than 36 months prior to inclusion

2 in an agreement under this section;

3 ‘‘(2) that is a religious organization described

4 in section 501(d) of such Code and exempt from tax5 ation under section 501(a) of such Code; or

6 ‘‘(3) that is a unit of local government, a school

7 district, or another special purpose district.

8 ‘‘(c) INMATE WORK TRAINING ADMINISTRATOR.—

9 ‘‘(1) The Federal Prison Industries Board of

10 Directors shall designate an entity as the Inmate

11 Work Training Administrator to administer the

12 work-based training program authorized by this sec13 tion.

14 ‘‘(2) In selecting the Inmate Work Training

15 Administrator, the Board of Directors shall select an

16 entity—

17 ‘‘(A) that is an organization described in

18 section 501(c)(3) of the Internal Revenue Code

19 of 1986 and exempt from taxation under sec20 tion 501(a) of such Code; and

21 ‘‘(B) that has demonstrated, for a period

22 of not less than 5 years, expertise in the theory

23 and practice of fostering inmate rehabilitation

24 through work-based programs in cooperation

25 with private sector firms.


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1 ‘‘(3) With respect to the formation and per2 formance of an agreement authorized by this section,

3 the Director of the Bureau of Prisons and the Chief

4 Operating Officer of Federal Prison Industries shall

5 be responsible only for—

6 ‘‘(A) maintaining appropriate institutional

7 and inmate security; and

8 ‘‘(B) matters relating to the selection and

9 payment of participating inmates.

10 ‘‘(d) PROPOSED AGREEMENTS.—An eligible entity

11 seeking to enter into an agreement pursuant to subsection

12 (a) shall submit a detailed proposal to the Inmate Work

13 Training Administrator. Each such agreement shall

14 specify—

15 ‘‘(1) types of work to be performed;

16 ‘‘(2) the proposed duration of the agreement,

17 specified in terms of a base year and number of op18 tion years;

19 ‘‘(3) the number of inmate workers expected to

20 be employed in the specified types of work during

21 the various phases of the agreement;

22 ‘‘(4) the wage rates proposed to be paid to var23 ious classes of inmate workers; and

24 ‘‘(5) the facilities, services and personnel (other

25 than correctional personnel dedicated to the security


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1 of the inmate workers) to be furnished by Federal

2 Prison Industries or the Bureau of Prisons and the

3 rates of reimbursement, if any, for such facilities,

4 services, and personnel.

5 ‘‘(e) REPRESENTATIONS.—

6 ‘‘(1) ELEEMOSYNARY WORK ACTIVITIES.—Each

7 proposed agreement shall be accompanied by a writ8 ten certification by the chief executive officer of the

9 eligible entity that—

10 ‘‘(A) the work to be performed by the in11 mate workers will be limited to the eleemosy12 nary work of such entity in the case of an enti13 ty described in paragraph (1) or (2) of sub14 section (b);

15 ‘‘(B) the work would not be performed but

16 for the availability of the inmate workers;

17 ‘‘(C) the work performed by the inmate

18 workers will not result, either directly or indi19 rectly, in the production of a new product or

20 the furnishing of a service that is to be offered

21 for other than resale or donation by the eligible

22 entity or any affiliate of the such entity.

23 ‘‘(2) PROTECTIONS FOR NON-INMATE WORK24 ERS.—Each proposed agreement shall also be acVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00155 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 companied by a written certification by the chief ex2 ecutive officer of the eligible entity that—

3 ‘‘(A) no non-inmate employee or volunteer

4 of the eligible entity (or any affiliate of the enti5 ty) will have his or her job abolished or work

6 hours reduced as a result of the entity being

7 authorized to utilize inmate workers; and

8 ‘‘(B) the work to be performed by the in9 mate workers will not supplant work currently

10 being performed by a contractor of the eligible

11 entity.

12 ‘‘(f) APPROVAL BY BOARD OF DIRECTORS.—

13 ‘‘(1) IN GENERAL.—Each such proposed agree14 ment shall be presented to the Board of Directors,

15 be subject to the same opportunities for public com16 ment, and be publicly considered and acted upon by

17 the Board in a manner comparable to that required

18 by paragraphs (6) and (7) of section 4122(b).

19 ‘‘(2) MATTERS TO BE CONSIDERED.—In deter20 mining whether to approve a proposed agreement,

21 the Board shall—

22 ‘‘(A) give priority to an agreement that

23 provides inmate work opportunities that will

24 provide participating inmates with the best


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1 prospects of obtaining employment paying a liv2 able wage upon release;

3 ‘‘(B) give priority to an agreement that

4 provides for maximum reimbursement for in5 mate wages and for the costs of supplies and

6 equipment needed to perform the types of work

7 to be performed;

8 ‘‘(C) not approve an agreement that will

9 result in the displacement of non-inmate work10 ers or volunteers contrary to the representa11 tions required by subsection (e)(2) as deter12 mined by the Board or by the Secretary of

13 Labor (pursuant to subsection (i)); and

14 ‘‘(D) not approve an agreement that will

15 result, either directly or indirectly, in the pro16 duction of a new product or the furnishing of

17 a service for other than resale or donation.

18 ‘‘(g) WAGE RATES AND DEDUCTIONS FROM INMATE

19 WAGES.—

20 ‘‘(1) IN GENERAL.—Inmate workers shall be

21 paid wages for work under the agreement at a basic

22 hourly rate to be negotiated between the eligible en23 tity and Federal Prison Industries and specified in

24 the agreement. The wage rates set by the Director

25 of the Federal Bureau of Prisons to be paid inmates


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1 for various institutional work assignments are spe2 cifically authorized.

3 ‘‘(2) PAYMENT TO INMATE WORKER AND AU4 THORIZED DEDUCTIONS.—Wages shall be paid and

5 deductions taken pursuant to section

6 4122(b)(11)(C).

7 ‘‘(3) VOLUNTARY PARTICIPATION BY INMATE.—

8 Each inmate worker to be utilized by an eligible en9 tity shall indicate in writing that such person—

10 ‘‘(A) is participating voluntarily; and

11 ‘‘(B) understands and agrees to the wages

12 to be paid and deductions to be taken from

13 such wages.

14 ‘‘(h) ASSIGNMENT TO WORK OPPORTUNITIES.—As15 signment of inmates to work under an approved agree16 ment with an eligible entity shall be subject to the Bureau

17 of Prisons Program Statement Number 1040.10 (Non18 Discrimination Toward Inmates), as contained in section

19 551.90 of title 28 of the Code of Federal Regulations (or

20 any successor document).

21 ‘‘(i) ENFORCEMENT OF PROTECTIONS FOR NON-IN22 MATE WORKERS.—

23 ‘‘(1) PRIOR TO BOARD CONSIDERATION.—Upon

24 request of any interested person, the Secretary of

25 Labor may promptly verify a certification made purVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00158 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 suant subsection (e)(2) with respect to the displace2 ment of non-inmate workers so as to make the re3 sults of such inquiry available to the Board of Direc4 tors prior to the Board’s consideration of the pro5 posed agreement. The Secretary and the person re6 questing the inquiry may make recommendations to

7 the Board regarding modifications to the proposed

8 agreement.

9 ‘‘(2) DURING PERFORMANCE.—

10 ‘‘(A) IN GENERAL.—Whenever the Sec11 retary deems appropriate, upon request or oth12 erwise, the Secretary may verify whether the

13 actual performance of the agreement is result14 ing in the displacement of non-inmate workers

15 or the use of inmate workers in a work activity

16 not authorized under the approved agreement.

17 ‘‘(B) SANCTIONS.—Whenever the Sec18 retary determines that performance of the

19 agreement has resulted in the displacement of

20 non-inmate workers or employment of an in21 mate worker in an unauthorized work activity,

22 the Secretary may—

23 ‘‘(i) direct the Inmate Work Training

24 Administrator to terminate the agreement

25 for default, subject to the processes and


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1 appeals available to a Federal contractor

2 whose procurement contract has been ter3 minated for default; and

4 ‘‘(ii) initiate proceedings to impose

5 upon the person furnishing the certifi6 cation regarding non-displacement of non7 inmate workers required by subsection

8 (d)(2)(B) any administrative, civil, and

9 criminal sanctions as may be available.’’.

10 (2) AUTHORIZATION OF APPROPRIATION.—

11 There is authorized to be appropriated $5,000,000

12 for each of the fiscal years 2004 through 2008 for

13 the purposes of paying the wages of inmates and

14 otherwise undertaking the maximum number of

15 agreements with eligible entities pursuant to section

16 4124a of title 18, United States Code, as added by

17 paragraph (1).

18 (3) CLERICAL AMENDMENT.—The table of sec19 tions for chapter 307 of title 18, United States

20 Code, is amended by inserting after the item relating

21 to section 4124 the following new item:

‘‘4124a. Additional inmate work opportunities through public service activities.’’.

Page 36, insert after line 5 the following (and redesignate subsequent subsections and clerical amendments

accordingly):


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1 SEC. 11. ADDITIONAL PILOT AUTHORITIES FOR INMATE

2 WORK OPPORTUNITIES.

3 (a) IN GENERAL.—Chapter 307 of title 18, United

4 States Code, as amended by section 9, is further amended

5 by adding at the end the following new section:

6 ‘‘§ 4131. Additional pilot authorities for inmate work

7 opportunities

8 ‘‘(a) PILOT AUTHORITIES.—Federal Prison Indus9 tries may contract with private or public sector entities

10 for Federal inmates to produce products or perform serv11 ices for those entities. Under these pilot authorities, and

12 pursuant to the terms and conditions specified in section

13 4122, Federal inmates may, under the direct supervision

14 of Federal Prison Industries staff—

15 ‘‘(1) produce products or perform services for

16 commercial companies which have been otherwise

17 produced or performed for the companies by foreign

18 labor outside the United States for at least 3 years

19 before the proposed effective date of the business

20 agreement;

21 ‘‘(2) produce products or perform services for

22 commercial companies which would otherwise be per23 formed for the companies by domestic labor, if avail24 able; or


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1 ‘‘(3) produce products or perform services for

2 not-for-profit agencies in support of the charitable

3 activities of those agencies.

4 ‘‘(b) LIMITATIONS ON USE OF AUTHORITIES.—(1)

5 Federal Prison Industries is prohibited from directly offer6 ing for commercial sale products produced or services fur7 nished by Federal inmates, including through any form

8 of electronic commerce.

9 ‘‘(2) The number of Federal inmates working under

10 the pilot authority provided in subsection (a)(1) shall not

11 exceed—

12 ‘‘(A) 4,000 during fiscal year 2005;

13 ‘‘(B) 8,000 during fiscal year 2006;

14 ‘‘(C) 12,000 during fiscal year 2007;

15 ‘‘(D) 16,000 during fiscal year 2008;

16 ‘‘(E) 20,000 during fiscal year 2009; or

17 ‘‘(F) 25 percent of the work-eligible Federal in18 mate population in any fiscal year beginning after

19 September 30, 2008.

20 ‘‘(3) The number of Federal inmates working under

21 the pilot authority provided in subsection (a)(3) shall not

22 exceed—

23 ‘‘(A) 2,000 during fiscal year 2005;

24 ‘‘(B) 4,000 during fiscal year 2006;

25 ‘‘(C) 6,000 during fiscal year 2007;


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1 ‘‘(D) 8,000 during fiscal year 2008;

2 ‘‘(E) 10,000 during fiscal year 2009; or

3 ‘‘(F) 10 percent of the work eligible Federal in4 mate population in any fiscal year beginning after

5 September 30, 2009.

6 ‘‘(c) INMATE WAGES.—

7 ‘‘(1) IN GENERAL.—Each Federal inmate work8 er participating in industrial operations authorized

9 by the Corporation shall be paid at a wage rate pre10 scribed by the Board of Directors. The Director of

11 the Federal Bureau of Prisons shall prescribe the

12 wage rates for other Federal inmate work assign13 ments within the various Federal correctional insti14 tutions. The Board shall give priority to approving

15 Federal inmate work opportunities which maximize

16 inmate earnings. Inmate wage rates shall be re17 viewed by the Board at least biannually.

18 ‘‘(2) WORK PURSUANT TO SUBSECTION

19 (a)(1).—For Federal inmate work performed for

20 commercial companies pursuant to subsection (a)(1),

21 the wage rate paid to Federal inmates must be the

22 Federal Prison Industries wage rate in effect on the

23 date of the enactment of this section or twice the

24 rate paid for work of a similar nature in the foreign


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1 locality in which the work would otherwise be per2 formed, whichever is higher.

3 ‘‘(3) WORK PURSUANT TO SUBSECTION

4 (a)(2).—For work performed by Federal inmates

5 pursuant to subsection (a)(2), the wage rate paid to

6 inmates shall be not less than the rate paid for work

7 of a similar nature in the locality in which the work

8 is to be performed, but in no event less than the

9 minimum wage required pursuant to the Fair Labor

10 Standards Act (29 U.S.C. 201 et seq). The deter11 mination of this wage rate shall be approved by the

12 Secretary of Labor or by the State or local govern13 ment entity with authority to approve such deter14 minations.

15 ‘‘(d) DEDUCTIONS FROM INMATE WAGES.—Inmate

16 wages paid by commercial companies shall be paid to the

17 Corporation in the name and for the benefit of the Federal

18 inmate. Except as specified in subsection (e), the Corpora19 tion may deduct, withhold, and disburse from the gross

20 wages paid to inmates, aggregate amounts of not less than

21 50 percent and not more than 80 percent of gross wages

22 for—

23 ‘‘(1) applicable taxes (Federal, State, and

24 local);


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1 ‘‘(2) payment of fines, special assessments, and

2 any other restitution owed by the inmate worker

3 pursuant to court order;

4 ‘‘(3) payment of additional restitution for vic5 tims of the inmate’s crimes (at a rate not less than

6 10 percent of gross wages);

7 ‘‘(4) allocations for support of the inmate’s

8 family pursuant to statute, court order, or agree9 ment with the inmate;

10 ‘‘(5) allocations to a fund in the inmate’s name

11 to facilitate such inmate’s assimilation back into so12 ciety, payable at the conclusion of incarceration;

13 ‘‘(6) such other deductions as may be specified

14 by the Board of Directors.

15 ‘‘(e) EXCEPTION FOR HIGHER DEDUCTIONS.—The

16 aggregate deduction authorized in subsection (d) may,

17 with the written consent of an inmate, exceed the max18 imum limitation, if the amounts in excess of such limita19 tion are for the purposes described in paragraphs (4) or

20 (5) of that subsection.

21 ‘‘(f) CONVERSIONS.—Commercial market services au22 thorized by the Federal Prison Industries Board of Direc23 tors and being provided by Federal Prison Industries on

24 the date of enactment of this section may be continued

25 until converted to a private sector contract pursuant to


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1 the authority in this Act. The Board of Directors of Fed2 eral Prison Industries shall ensure these conversions occur

3 at the earliest practicable date.

4 ‘‘(g) PROPOSALS FROM PRIVATE COMPANIES.—Fed5 eral Prison Industries may solicit, receive and approve

6 proposals from private companies for Federal inmate work

7 opportunities. Federal Prison Industries shall establish

8 and publish for comment criteria to be used in evaluating

9 and approving such proposals. In developing criteria, pri10 ority shall be given to those proposals which offer Federal

11 inmates the highest wages, the most marketable skills, and

12 the greatest prospects for post-release reintegration.

13 ‘‘(h) APPROVAL OF PROPOSALS.—The Board must

14 approve all proposals in advance of their implementation.

15 ‘‘(i) CONTENT OF PROPOSALS.—Any business or eli16 gible not-for-profit entity seeking to contract with Federal

17 Prison Industries for Federal inmate workforce participa18 tion shall submit a detailed proposal to the Chief Oper19 ating Officer of Federal Prison Industries. Each such pro20 posal shall specify—

21 ‘‘(1) the product or service to be produced or

22 furnished;

23 ‘‘(2) the proposed duration of the business

24 agreement, specified in terms of a base period and

25 number of option period;


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1 ‘‘(3) the number of Federal inmate workers ex2 pected to be employed during the various phases of

3 the agreement;

4 ‘‘(4) the number of foreign workers, if any, out5 side the United States currently performing for the

6 proposing entity the work proposed for performance

7 by Federal inmate workers, and the wage rates paid

8 to those workers;

9 ‘‘(5) the wage rates proposed to be paid to var10 ious classes of Federal inmate workers, at not less

11 than the rates required by subsection (c); and

12 ‘‘(6) the facilities, services and personnel (other

13 than correctional personnel dedicated to the security

14 of the inmate workers) to be furnished by the Fed15 eral Prison Industries or the Bureau of Prisons and

16 the rates of reimbursement for such facilities, serv17 ices, and personnel, if any.

18 ‘‘(j) WRITTEN CERTIFICATION FOR PROPOSED COM19 MERCIAL BUSINESS AGREEMENT.—Each proposed com20 mercial business agreement shall be accompanied by a

21 written certification by the chief executive officer of the

22 business entity proposing the agreement that—

23 ‘‘(1) no noninmate employee of the business (or

24 any affiliate) working within the United States will


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1 have their job abolished or their work hours reduced

2 as a direct result of the agreement;

3 ‘‘(2) inmate workers will be paid wages at rates

4 in accordance with subsection (c); and

5 ‘‘(3) any domestic workforce reductions carried

6 out by the business entity affecting employees per7 forming work comparable to the work being per8 formed by inmates pursuant to the agreement shall

9 first apply to inmate workers employed pursuant to

10 the agreement.

11 ‘‘(k) WRITTEN CERTIFICATION FOR PROPOSED

12 AGREEMENT WITH NOT-FOR-PROFIT ENTITY.—Each pro13 posed agreement with an eligible not-for-profit entity shall

14 be accompanied by a written certification by the chief ex15 ecutive officer of the eligible entity that—

16 ‘‘(1) the work to be performed by the inmate

17 workers will be limited to the eleemosynary work of

18 such entity;

19 ‘‘(2) the work would not be performed on a

20 compensated basis but for the availability of the in21 mate workers;

22 ‘‘(3) the work performed by the inmate workers

23 will not result, either directly or indirectly, in the

24 production of a product or the furnishing of a servVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00168 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 ice that is to be offered for commercial sale by the

2 eligible entity or any affiliate of such entity;

3 ‘‘(4) no noninmate employees of the eligible en4 tity (or any affiliate of the entity) will have their job

5 abolished or their work hours reduced as a result of

6 the entity entering into an agreement to utilize in7 mate workers; and

8 ‘‘(5) the work to be performed by the inmate

9 workers will not supplant work currently being per10 formed by a contractor of the eligible entity.

11 ‘‘(l) PUBLIC NOTICE AND COMMENT.—

12 ‘‘(1) IN GENERAL.—The Board shall make rea13 sonable attempts to provide opportunities for notice

14 and comment to the widest audience of potentially

15 interested parties as practicable. At a minimum, the

16 Board shall—

17 ‘‘(A) give notice of a proposed business

18 agreement on the Corporation’s web site and in

19 a publication designed to most effectively pro20 vide notice to private businesses and labor

21 unions representing private sector workers who

22 could reasonably be expected to be affected by

23 approval of the proposed agreement, which no24 tice shall offer to furnish copies of the proposal

25 (excluding any proprietary information) and


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1 chief executive certifications and shall solicit

2 comments on same;

3 ‘‘(B) solicit comments on the business pro4 posal from trade associations representing busi5 nesses and labor unions representing workers

6 who could reasonably be expected to be affected

7 by approval of the proposal; and

8 ‘‘(C) afford an opportunity, on request, for

9 a representative of an established trade associa10 tion, labor union, or other representatives of

11 private industry to present comments on the

12 proposal directly to the Board of Directors.

13 ‘‘(2) COPIES.—The Board of Directors shall be

14 provided copies of all comments received on the pro15 posal.

16 ‘‘(3) REVISED PROPOSAL.—Based on the com17 ments received on the initial business proposal, the

18 business or nonprofit entity or Federal Prison In19 dustries Chief Operating Officer may provide the

20 Board of Directors a revised proposal. If the revised

21 proposal presents new issues or potential effects on

22 the private sector which were not addressed in the

23 original proposal and comments received thereon,

24 the Board shall provide another public notice and

25 comment opportunity pursuant to paragraph (1).


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1 ‘‘(4) OPEN MEETING.—The Board of Directors

2 shall consider all inmate work opportunity proposals

3 submitted and take any action with respect to such

4 proposals, during a meeting that is open to the pub5 lic, unless closed pursuant to section 552(b) of title

6 5.

7 ‘‘(m) BOARD APPROVAL.—(1) In determining wheth8 er to approve a proposed business agreement for Federal

9 inmate work opportunities, the Board shall—

10 ‘‘(A) not approve any agreement that would re11 sult in the displacement of noninmate workers con12 trary to the certifications required in subsections (j)

13 and(k) or pay less than the wages required by sub14 section (c).

15 ‘‘(B) not approve an agreement which the

16 Board determines contains terms and conditions

17 which would subject domestic noninmate workers to

18 unfair competition;

19 ‘‘(C) request a determination from the Inter20 national Trade Commission, the Department of

21 Commerce or such other Executive Branch entities

22 as may be appropriate, whenever the Board ques23 tions the representations by a commercial company

24 or a not-for-profit entity regarding whether a par25 ticular product or service has been produced by forVerDate jul 14 2003 06:44 Sep 26, 2003 Jkt 019006 PO 00000 Frm 00171 Fmt 6659 Sfmt 6601 E:\HR\OC\HR286.XXX HR286

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1 eign labor outside the United States for the commer2 cial company or not-for profit entity for at least 3

3 years before the proposed effective date of the busi4 ness agreement;

5 ‘‘(D) not approve an agreement which would

6 cause Federal Prison Industries sales revenue de7 rived from any specific industry to exceed 50 percent

8 of Federal Prison Industries total revenue.

9 ‘‘(E) not approve any agreement which provides

10 for direct supervision of Federal inmate workers by

11 non-Federal Prison Industries employees; and

12 ‘‘(H) not approve any agreement which would

13 provide for products or services produced by Federal

14 inmates to be sold to agencies of State government

15 without the written consent of the Governor or des16 ignee.

17 ‘‘(n) REVIEW AND ENFORCEMENT.—(1) Upon re18 quest of any interested person, the Secretary of Labor

19 may promptly verify a certification pursuant to subsection

20 (j)(1) with respect to the displacement of noninmate work21 ers or a certification with respect to the wages proposed

22 to be paid Federal inmate workers pursuant to subsection

23 (j)(2) so as to make the results of such inquiry available

24 to the Board of Directors prior to the Board’s consider25 ation of the proposed agreement. The Secretary and the


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1 person requesting the inquiry may make recommendations

2 to the Board regarding modifications to the proposed

3 agreement.

4 ‘‘(2) Whenever the Secretary deems appropriate, the

5 Secretary may verify whether the actual performance of

6 the agreement is resulting in the displacement of non7 inmate workers and whether the wages being paid the

8 Federal inmate workers meet the standards of subsection

9 (c).

10 ‘‘(3) Whenever the Secretary determines that per11 formance of the agreement has resulted in the displace12 ment of noninmate workers or the payment of Federal in13 mate workers at less than the required wage rates, the

14 Secretary may—

15 ‘‘(A) direct the Chief Operating Officer of the

16 Corporation to terminate the agreement for default,

17 subject to the processes and appeals available to a

18 Federal contractor whose procurement contract has

19 been terminated for default;

20 ‘‘(B) direct that the Federal inmate workers be

21 retroactively paid the wages that were due; and

22 ‘‘(C) initiate proceedings to impose upon the

23 person furnishing the certifications made pursuant

24 to subsection (j), any administrative, civil, and

25 criminal sanctions as may be available.’’.


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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for chapter 307 of title 18, United States Code, is amend3 ed by adding at the end the following new item:

‘‘4131. Additional pilot authorities for inmate work opportunities.’’.


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Chairman SENSENBRENNER. Without objection the amendments 

en bloc will be considered as read and the gentleman from Virginia 

is recognized for 5 minutes. 

Mr. SCOTT. Mr. Chairman, amendment No. 19 is what I call a 

truth in legislating amendment. It would provide for a 5-year 

phaseout of mandatory source, which is what the proponents say 

the bill does. It actually doesn’t phase out anything. The fact of the 

matter is, Mr. Chairman, that it actually abruptly ends the program. And those that think it has a phaseout should just read page 

4, line 5, where the bill says agencies shall solicit an offer, unquote, 

from FPI. There is nothing wrong with that but that is all it says, 

you shall solicit an offer. Doesn’t say that they will actually be 

awarded an offer. Amendment No. 19 provides for a gradual phaseout over 5 years, which gives the program an opportunity to find 

the work. 

Amendment No. 20 deals with services. The bill limits the ability 

of Federal Prison Industries and State Prison Industries to do services and suggest that there ought to be competition. The fact is 

there is no mandatory source on services, so competition is the only 

way they can get contracts. So in fact there is no need to have section 7 limiting access to services. 

Finally, Mr. Chairman, amendment No. 23 opens up—would 

open up new opportunities trying to find work for charitable organizations or others. This would be a pilot project similar to the one 

in Ohio where work has been obtained. Last year with your support, Mr. Chairman, discussion——

Chairman SENSENBRENNER. Gentleman yield? 

Mr. SCOTT. I yield. 

Chairman SENSENBRENNER. I believe many of these ideas are 

good ones, but I don’t think they have been properly vetted and I 

would be happy to work with the gentleman from Virginia before 

this bill gets to the floor to see if we could reach a happy accommodation on these ideas should he decide to withdraw the amendment. 

Mr. SCOTT. Thank you, Mr. Chairman, and I appreciate your 

willingness to work, and I think there may be some common 

ground and I would be delighted to work with you and ask that the 

amendments be considered withdrawn. 

Chairman SENSENBRENNER. Without objection, so ordered. The 

amendments are withdrawn. 

Are there further amendments? If not, a reporting quorum is 

present. The question is on the motion to report the bill H.R. 1829 

favorably, as amended. Those in favor will say aye. Opposed no. 

The ayes appear to have it. The ayes have it. And the motion to 

report favorably, as amended, is agreed to. Without objection, the 

bill will be reported favorably to the House in the form of a single 

amendment in the nature of a substitute incorporating the amendments adopted here today. 

Without objection, the Chairman is authorized to move to go to 

conference pursuant to House rules. Without objection, the staff is 

directed to make any technical and conforming changes and all 

Members will be given 2 days, as provided by the rules, in which 

to submit additional dissenting, supplemental or minority views. 

The Chair would like to thank everybody for their cooperation 

during this markup where five bills have been reported on a very 

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sleep deprived day. Have a good recess, and the Committee is adjourned. 

[Whereupon, at 11:30 a.m., the Committee was adjourned.] 

(177)

DISSENTING VIEWS

These views dissent from the Committee Report on H.R. 1829. 

INTRODUCTION

The Federal Prison Industries program, or FPI, has been around 

since the 1930’s. Under the law, and based on certain conditions, 

Federal agencies are required to buy needed products from FPI if 

FPI can meet their order. The purpose of the program is to teach 

prisoners real work skills so that when they are released from prison they will be able to find and hold jobs to support themselves and 

families, and thus, be less likely to commit more crimes. 

And it is clear that the program works to do just that. Followup 

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

be employed and 25% less likely to commit crimes than like cohorts 

who did not participate in the program. While the program certainly benefits offenders and their families, that is not the primary 

benefit of FPI from a public policy perspective. The real benefit to 

all of us is that, as a result of this program, we are less likely to 

be victims of crime. 

WHAT THE BILL DOES

H.R. 1829 would immediately eliminate the current ‘‘mandatory 

source’’ procurement authority for Federal agency purchases from 

FPI. While the bill provides for an agency option to purchase goods 

from FPI on a non-competitive basis which is phased out over a 5-

year period, there should be no mistake—the mandatory source 

rule in effect today would be eliminated immediately upon this bill 

becoming law. The 1934 law required purchases by Federal agencies to ensure work opportunities for inmates. The law recognizes 

that prison work operations are necessarily less efficient, less productive and more costly to run when compared to private work conditions, given the high level of security and control that must be 

maintained, no or very low beginning work skills among the workforce, and the objective of labor intensive activities to maximize the 

number of inmates employed. It is estimated that it takes about 4 

inmates to equate to the production of one private worker. 

Ironically, most of the adverse impact of this bill will fall on private sector companies and their workers. FPI would not exist, and 

certainly could not offer quality products and services, without the 

direct support of private sector companies that provide the raw materials and services FPI needs to produce its products. Each of 

these companies responded to solicitations issued by FPI (as a Federal agency, FPI follows all the Federal procurement regulations) 

and were awarded the contracts through competitive procedures. In 

order to fulfill their contractual obligations, these companies have 

hired law-abiding citizens as staff, added equipment, and some 

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have even opened entire new plants. Many of these companies have 

FPI contracts which extend 5–10 years. FPI estimates that approximately 5,000 U.S. jobs, of which many are unionized, are generated 

by the program. 

Last year, FPI spent 74 percent of its sales revenue on purchases 

of raw materials, equipment, supplies, and services from private 

sector companies, 62% of which were purchased from small businesses including women, minorities and those who are disadvantaged. These expenditures exceeded $500 million last year. The private sector companies involved have played by the rules, competing 

fair and square for the contracts. They and their employees do not 

deserve to be on the receiving end of an unjustified animus toward 

inmates or FPI. 

In addition to restrictions on FPI’s ability to produce products for 

Federal agency sales, the bill severely restricts the ability of FPI 

to obtain service contracts. An alternative currently employed by 

FPI to increase Federal market share for products, one that also 

reduces reliance on mandatory source, is performing services for 

companies which are currently being performed in foreign countries 

(mandatory source has never applied to services). Service contracts 

will be prohibited under the bill, except for Federal Government 

service contracts competitively acquired. 

The bill, which is purportedly designed to reform Federal prison 

industries, also prohibits state service contracts. These restrictions 

will also hurt private sector businesses more than prisoners. The 

combined impact of the Federal and state prohibitions on service 

contracts with private businesses will have the effect of eliminating 

a substantial number of Federal and state prison industries service 

contracts where free workers will lose their jobs. One such example 

involves contracts with Delco Remy wherein prisoners perform 

services that companies are not able to get free workers to perform 

such as stripping useful materials from old parts which are then 

reused in products constructed by free workers. In Virginia alone, 

it is estimated that hundreds of free workers will lose their jobs. 

It is likely that these jobs will end up leaving the U.S. as the services performed by inmates are moved to foreign operations where 

the company can find workers willing to do work only inmates will 

do in this country. 

Further, the bill will have an unintended discriminatory effect 

upon small, minority and women-owned businesses. As noted 

above, roughly two-thirds of FPI purchases are made from small, 

women and minority owned and disadvantaged businesses. This is 

one of the highest rates among all Federal agencies. It is well established that small businesses create more jobs per dollar of revenue than large businesses. Accordingly, to the extent that FPI’s 

sales decline, the hardest hit will be the socio-economically disadvantaged businesses which are deliberately targeted to provide 

them Federal procurement opportunities. 

Of course, the adverse effects of program reduction will also disproportionately affect minority inmates since racial and ethnic minorities are disproportionately represented among the inmate population. Their representation in FPI jobs, however, mirrors this overrepresentation in the prison population. Important, research on the 

value to inmates of working in prison industries jobs demonstrates 

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that these minority inmates benefit at a higher rate than majority 

group members regarding their likelihood of remaining crime-free 

and being successfully employed upon release. Thus, job reductions 

in FPI of the magnitude certain to occur under the bill will fall 

hardest on racial and ethnic minorities. 

Some suggest that vocational education is a good substitute for 

FPI work experience. The bill provides authority for increased vocational training programs. A vocational education program typically runs for 2 years or less and is generally thought better to be 

provided toward the end of the sentence. The average sentence for 

prisoners in the Federal system is 8 years. Whenever the vocational training is provided, the question becomes what to do with 

the other 6 years of the sentence prior to or after completion of 

what is considered a beneficial period of vocational education. Furthermore, unlike FPI, such vocational programs are in no way selfsupporting. 

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

law to work. Yet, few offenders enter prison with marketable work 

skills. The vast majority do not have even credible work habits 

such as showing up for work on time each day, and working cooperatively and productively with others. Such habits are required to 

maintain an FPI job just as they are required to obtain and maintain a job in the free world. While vocational education is important and ought to be available to all inmates, no amount of educational course work can substitute the real world workplace experience of a job. 

The bill also provides an authorization for FPI to make products 

and donate them to non-profit organizations as a way to maintain 

work opportunities for inmates. Producing products to give to charitable organizations simply means replacing the business generated 

from their now having to purchase the items from a private business, and it means transferring to the tax payer costs for a program that is currently wholly self-supporting. Funding for these 

two initiatives—increased vocational education and donating inmate made products to charitable organizations—is authorized 

from FPI or appropriated funds. Although it is improbable that any 

funding will be made available from these two sources, even with 

funding, the programs are not likely to make up for many of the 

jobs that will be lost due to elimination of the mandatory source 

program. 

Leading up to and during markup of the bill before the full Judiciary Committee, compromises were offered by Rep. Bobby Scott 

and Rep. Mark Green to preserve a reasonable level of inmate work 

opportunities through a reformed, but viable, FPI program. Rep. 

Scott requested that the bill be amended to authorize the piloting 

of certain new sources of inmate work opportunities through FPI, 

including Federal ‘‘PIE’’ (Prison Industries Enterprise) program 

making products for companies that are now wholly made outside 

the US, to authorize contracts with charitable organizations for 

products and services to assist the charities, to eliminate the restrictions on service contracts and allowing a phase out of the mandatory source provision as these operations replaced it. Rep. Green 

offered an amendment at full committee to allow the Attorney General to re-institute mandatory source should he deem it necessary 

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to avoid disorder or disruption in a prison. Neither offer was accepted. Several other compromises were put forth, as well, but none 

was accepted and no compromise was offered by proponents of the 

bill that affected the basic provisions of the bill. A final offer was 

made by the Chairman of the Committee to further discuss a possible compromise during the pendency of the bill for floor consideration in exchange for Rep. Scott withdrawing his amendments 

(which he did), but no compromise has emerged. 

FPI OPERATIONS

The total revenues of FPI represent a very small percent (currently about 1⁄4 of one 1%) of total Federal agency procurement dollars and only 4.5% of the overall Federal market in the approximately 250 products it produces within the Federal supply.. The 

furniture and apparel industries are the two industries in which 

FPI produces the highest volume of work. When asked, representatives of these industries conceded that FPI sales represent an ‘‘insignificant’’ and ‘‘negligible’’ portion of their industries, respectively. If such industries are having problems, it is clearly not due 

to the impact of FPI. In textiles, for example, it is said that over 

600,000 jobs were lost during the past 10 years. There are roughly 

7,000 prisoners working in textiles in FPI. Clearly, the blame for 

the loss of 600,000 jobs cannot be a few thousand prisoners. The 

same is true of revenue reductions and job loss due to economic 

downturns in the office furniture business. 

With the elimination of parole, good conduct credits, Pell grants, 

and other positive incentive programs, the Federal prison system 

has little to offer as ongoing incentives for self development. The 

one shining exception is FPI. Non-FPI inmate jobs pay from about 

$.12 an hour to about $.44 cents an hour. The average non-FPI inmate job pays $.23 an hour. The majority of non-FPI inmates work 

for less than $.23 per hour. FPI jobs pay from $.23 to $1.5 per hour 

with the average pay being $.93 per hour. To hold down an FPI job, 

an inmate must have completed high school or be making steady 

progress toward obtaining a GED, and maintain a record of good 

behavior. This is true not only for those already in an FPI job, but 

also for those on the waiting list for a job, as well as those seeking 

to establish eligibility to be placed on the waiting list. Contributions to inmate development and prison management are important, but the least important of FPI’s contributions. Reductions in 

crime, restitution payments to crime victims and support payments 

to inmate dependants are far more compelling reasons for the program. Last year, inmate workers paid more than $3 million toward 

these obligations. 

It is readily conceded that there are problems with FPI which 

should be fixed. When a small business making a single product 

depends upon a government contract for its operations, FPI should 

not be able to take that business away. But this bill should be fixing the program—not gutting it by taking away all of its primary 

business sources all at once. While the bill suggests that the lack 

of competition is the problem, the bill seeks to strangle-hold FPI 

as a competitor not only by strengthening the prohibition against 

activities in the commercial market, but in the government market, 

as well. We are already seeing the effects of the DoD restrictions 

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on FPI procurement passed last Congress. Information obtained 

from the program indicates that it has had to close 13 factories and 

eliminate over 1700 inmate jobs and expects to eliminate 500 additional inmate jobs before the end of this year. 

We should fix the problems, but we should do so in ways that 

assure the viability of this vital crime reducing program. With additional prisons scheduled to come on line over the next few years, 

we can ill afford to diminish this successful crime reduction program. But for their crimes and imprisonment, prisoners are indistinguishable from the rest of us. Treating them as if they are foreign competitors and viewing contracts in FPI as contracts a private business could have, should not be the policy of the Committee 

with oversight responsibility for the safe and efficient operation of 

our prisons, or of the Congress, which ultimately has that responsibility. About 98% of prisoners serving time will eventually return 

to society and our oversight focus should be on their rehabilitation 

and productive return as a matter of public safety. We can do better than this bill, and we should.

ROBERT C. SCOTT. 

MARK GREEN. 

SHEILA JACKSON LEE. 

HENRY J. HYDE.

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