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42–213 PDF 2009

FEDERAL PRISON INDUSTRIES—EXAMINING THE 

EFFECTS OF SECTION 827 OF THE NATIONAL 

DEFENSE AUTHORIZATION ACT OF 2008 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CRIME, TERRORISM, 

AND HOMELAND SECURITY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

MAY 6, 2008 

Serial No. 110–150 

Printed for the use of the Committee on the Judiciary 

( 

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

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON CRIME, TERRORISM, AND HOMELAND SECURITY

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia, Chairman 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

JERROLD NADLER, New York 

HANK JOHNSON, Georgia 

ANTHONY D. WEINER, New York 

SHEILA JACKSON LEE, Texas 

ARTUR DAVIS, Alabama 

TAMMY BALDWIN, Wisconsin 

BETTY SUTTON, Ohio 

LOUIE GOHMERT, Texas 

J. RANDY FORBES, Virginia 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

BOBBY VASSAR, Chief Counsel 

CAROLINE LYNCH, Minority Counsel 

(III) 

C O N T E N T S 

MAY 6, 2008 

Page 

OPENING STATEMENTS 

The Honorable Robert C. ‘‘Bobby’’ Scott, a Representative in Congress from 

the State of Virginia, and Chairman, Subcommittee on Crime, Terrorism, 

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

The Honorable Louie Gohmert, a Representative in Congress from the State 

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

Homeland Security ............................................................................................... 3 

WITNESSES 

Mr. Harley G. Lappin, Director, Federal Bureau of Prisons, U.S. Department 

of Justice, Washington, DC, accompanied by Mr. Paul Laird, Chief Operating Officer, Federal Prison Industries 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 8 

Mr. John Gage, National President, American Federation of Government 

Employees, Washington, DC 

Oral Testimony ..................................................................................................... 21 

Prepared Statement ............................................................................................. 23 

Mr. Marc H. Morial, Director, National Urban League, New York, NY 

Oral Testimony ..................................................................................................... 40 

Prepared Statement ............................................................................................. 42 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 65 

(1) 

FEDERAL PRISON INDUSTRIES—EXAMINING 

THE EFFECTS OF SECTION 827 OF THE NATIONAL DEFENSE AUTHORIZATION ACT OF 

2008 

TUESDAY, MAY 6, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON CRIME, TERRORISM,

AND HOMELAND SECURITY

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 1:55 p.m., in Room 

2237, Rayburn House Office Building, the Honorable Robert C. 

‘‘Bobby’’ Scott (Chairman of the Subcommittee) presiding. 

Present: Representatives Scott, Johnson, Sutton, Gohmert, Coble, 

and Lungren. 

Staff present: Bobby Vassar, Majority Chief Counsel; Ameer 

Gopalani, Majority Counsel; Rachel King, Majority Counsel; Mario 

Dispenza, (Fellow) ATF Detailee; Karen Wilkinson, (Fellow) Federal Public Defender Office Detailee; Veronica Eligan, Majority Professional Staff Member; Caroline Lynch, Minority Counsel; Kimani 

Little, Minority Counsel; and Kelsey Whitlock, Minority Staff Assistant. 

Mr. SCOTT. The Subcommittee will come to order. 

I am pleased to welcome you here today to the hearing before the 

Subcommittee on Crime, Terrorism, and Homeland Security on the 

‘‘Federal Prison Industries—Examining the Effects of Section 827 

of the National Defense Authorization Act of 2008.’’ 

Last year, the senator from Michigan, Carl Levin, introduced section 827, an amendment to H.R. 1585, the ‘‘National Defense Authorization Act of 2007.’’ This amendment passed without going 

through the Judiciary Committee on either the House or the Senate side. It eventually became law on January 28, 2008 as part of 

H.R. 4986, the ‘‘National Defense Authorization Act of 2008.’’ 

The amendment altered the mandatory source requirement 

which had required the Federal Government to purchase a product 

from the Federal Prison Industries, or FPI. FPI is the government 

corporation that Congress established in 1934 for the purpose of 

providing jobs and training opportunities to prisoners in Federal 

prisons by producing goods and services for Federal agencies. 

FPI is administered by a six-person board of directors appointed 

by the president. It is self-sustaining and receives no taxpayer support for its operations. Under the new law, the Department of DeVerDate Aug 31 2005 13:44 Jan 08, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\050608\42213.000 HJUD1 PsN: 42213
2 

fense is required to research products to determine if what the FPI 

makes is comparable to the products needed by the Department of 

Defense in terms of price, quality and production time. 

If comparable and the FPI’s Federal market share is less than 

5 percent of the Federal market for that product, then the mandatory source rule applies and DOD must purchase products through 

FPI. If FPI’s market share is greater than 5 percent, then that 

product must be put out for competitive bidding. FPI may take part 

in that process. 

The Bureau of Prisons and prisoner advocate organizations believe that this amendment will have an effect of drastically reducing the number of jobs available for prisoners who work for FPI. 

The purpose of this hearing is to hear expert opinions on the likely 

effect of this change and as to the value of keeping the program 

vibrant and solvent. 

Unfortunately, this hearing is being held after the adoption of 

the amendment, not before, but in any event it is important to 

know what the effects may be. 

Besides the loss of inmates’ jobs, the Levin amendment may also 

make it more difficult for officials to manage prison facilities. While 

earlier House Judiciary Committee-passed bills have made reductions in FPI operations, they were always tempered with vocational 

training or other work or work-related alternatives, as well as 

emergency authority for the attorney general or other officials to 

assure the job losses resulting in drastic impacts could be avoided. 

None of these alternatives are provided for in section 827. 

FPI contributes significantly to the safety and security of Federal 

correctional facilities by keeping prisoners constructively occupied. 

Today’s Federal prison population is approximately 200,000 inmates, confined in 214 Bureau of Prisons facilities. This population 

has been steadily increasing, up from 25,000 in 1980, 58,000 in 

1990, 145,000 in 2000, and now approximately 200,000 prisoners. 

All able-bodied prisoners are required by law to work. Over 80 

percent of them work for menial, mostly make-work jobs which are 

paid 12 cents to 40 cents per hour. In comparison, Federal Prison 

Industry jobs are held by about 18 percent of the prisoners and 

they earn from 24 cents to $1.15 per hour. This additional pay is 

a significant financial incentive, making FPI jobs most desirable. 

Also, prisoners in FPI—those on the waiting list and those seeking to be eligible for the waiting list—must have their high school 

diploma or a GED or show that they are making progress to obtain 

a GED. That is why prisoners in the FPI program are less likely 

to engage in institutional misconduct, thereby enhancing the safety 

of staff and other prisoners and lessening the management burden 

and expense. 

More important, for citizens and taxpayers, vigorous research 

shows that participation in FPI and vocational training programs 

will have a positive effect on post-release employment and on recidivism reduction in both the short and the long run. In the short 

run, that is up to 1 year, prisoners who participated in FPI were 

14 percent more likely to be employed and 35 percent less likely 

to recidivate than those who had not participated. 

Following prisoners up to 12 years after release, the results were 

that those who participated in FPI were 24 percent less likely to 

3 

recidivate than non-program participants. In fiscal year 2004, prisoners who worked in FPI factories contributed over $3 million of 

their earnings toward meeting their financial obligations, that is 

child support restitution or court-ordered fines, so that it has the 

positive effect from that perspective. 

I am going to now recognize the esteemed Ranking Member of 

the Subcommittee, the gentleman from Texas, Judge Gohmert. 

Mr. GOHMERT. Thank you, Chairman Scott. 

It is interesting when we have hearings on amendments after we 

pass them. In the tradition of the Congress, no matter who is in 

the majority, our procedure is ready, fire, aim, it seems. But this 

is an important hearing to have, and I am glad that you are having 

it. 

Federal Prison Industries employs offenders in a variety of manufacturing jobs to teach management skills, provide vocational 

training, and rehabilitate inmates within the Federal prison system. UNICOR is a government-owned corporation that employs 

Federal offenders to manufacture products that are then sold to executive agencies in the Federal Government. Eighteen percent or 

roughly 23,152 of the eligible inmates in Federal prisons were employed by UNICOR in fiscal year 2007. 

UNICOR has 110 factories in Federal prisons, representing seven 

different industrial operations, including clothing and textiles, electronics, fleet management, vehicular operations, industrial products, office furniture, recycling and data entry, and encoding services. UNICOR is economically self-sustaining, as the Chairman 

mentioned, and in fiscal year 2007 did generate $852.7 million in 

sales. 

They used the revenue to purchase raw materials and equipment, pay wages to inmates and staff, and invest in the expansion 

of its facilities. Inmates may earn from 23 cents per hour to a maximum of $1.15 per hour. 

In addition to compensating inmates for their work, FPI also 

holds them accountable for their debts. Under the Bureau of Prisons’ Inmate Financial Responsibility Program, all inmates with 

court-ordered financial obligations must use at least half of their 

FPI income to satisfy those debts, which accounted for $2.7 million 

in 2007. 

I am a strong believer in the need to provide vocational skills 

and encourage a strong work ethic among inmates. Programs such 

as FPI not only prepare prisoners for life after prison, but also reduce idleness and the potential for violence in prison. 

At the same time, I appreciate the argument by many that FPI 

prohibits full and open competition by preventing Federal agencies 

from purchasing products in a free enterprise market. I share their 

concerns that FPI’s mandatory source clause has caused U.S. workers to be displaced from their jobs. FPI can set its own prices and 

is not subject to many of the same Federal or State regulatory 

laws. 

I am pleased we are holding this hearing on FPI and section 827 

of the fiscal year 2008 Defense Authorization Act. That provision 

reduces the impact of FPI’s mandatory source requirement for purchases by the Department of Defense, one of the largest customers 

of FPI. 

4 

Prior to enactment of section 827, FPI was prohibited from applying its mandatory source requirement to products whose share 

of the Federal market exceeded 20 percent. Section 827 reduced 

this percentage to 5 percent. According to the Department of Defense, products that have a market share above 5 percent and thus 

require competitive procedures are laundry and dry cleaning equipment, hardware, electrical, communication equipment, office furniture and household furnishings. 

Through this, we have to struggle for balance here. As a former 

judge who spent time going to prisons and seeing what was going 

on there, I know if we don’t train people for jobs that are viable 

jobs and trades once they come out, then they are extremely more 

likely to re-offend once they are out, which creates vast problems 

for society as we have seen. 

On the other hand, if we create an unfair advantage, then the 

result can be, as just happened in my district, where we lost a 

bunch of good union jobs because a prison unit was building trailers cheaper than they could. So we set up the scenario of law-abiding citizens being put out of work by law-breakers who are put into 

work when they are in prison. 

So achieving that delicate balance of making sure we maximize 

rehabilitation while not putting law-abiding citizens into desperate 

economic situations is what we have to strive for. 

I look forward to hearing from the witnesses, particularly regarding the impact of section 827, and I yield back the balance of my 

time. 

Mr. SCOTT. Thank you. 

We have a distinguished panel of witnesses today to help us consider the issues before us. Our first witness is Harley Lappin, director of the Bureau of Prisons. He is a native of Akron, Ohio, 

where he received his B.A. degree in forensic studies from Indiana 

University in 1978, and a master’s in criminal justice and correctional administration from Kent State University in 1985. 

In 1985, he began working in corrections. In 1996, he was promoted to warden of the Federal correctional institution in Butner, 

NC. He was sworn in as director of the Federal Bureau of Prisons 

on April 4, 2003. He is a career public administrator in the Federal 

Bureau of Prisons and is only the seventh director of the bureau 

since its establishment in 1930. He is responsible for the oversight 

and management of the bureau’s 114 institutions, and with the 

safety and security of approximately more than 193,000 inmates 

under the agency’s jurisdiction. 

Joining him at the table is Paul Laird, chief operating officer of 

Federal Prison Industries and the assistant director of the Industries’ education and vocational training division of the Bureau of 

Prisons. 

Our next witness is John Gage, national president of the American Federation of Government Employees. He graduated from 

Wheeling Jesuit University and his career includes a brief stint as 

a professional baseball player with the Baltimore Orioles. He has 

been long involved with AFGE and the labor movement. He has 

committed over 20 years of service as president of AFGE Local 

1923, and as national vice president of AFGE’s Fourth District. 

5 

Under his leadership, Local 1923 experienced robust growth, making it the largest local within the federation. 

Our last witness will be Marc Morial, executive director of the 

National Urban League. He is a graduate of the University of 

Pennsylvania with a degree in economics and African American 

studies. He also holds a law degree from Georgetown University 

Law Center in Washington, DC, as well as honorary degrees from 

Xavier University, Wilberforce, and the University of South Carolina—Upstate. 

In a distinguished professional career that has spanned 25 years, 

he has been an entrepreneur, a lawyer, professor, legislator and 

the mayor of the city of New Orleans. He is now the CEO of the 

National Urban League, the nation’s largest civil rights organization. His energetic and skilled leadership has expanded the 

League’s work around an empowerment agenda, which is redefining civil rights in the 21st century with a renewed emphasis on 

closing economic gaps between Whites and Blacks, as well as rich 

and poor Americans. 

Now, all of our witnesses’ written statements will be entered into 

the record in their entirety. I would ask that each of the witnesses 

summarize their testimony within 5 minutes or less. To help you 

stay within that timetable, there is a lighting device there which 

will go from green to yellow when you have 1 minute left, and red 

when the 5 minutes have expired. 

We have been joined by the gentleman from California, Mr. Lungren. Thank you. 

Mr. Lappin? 

TESTIMONY OF HARLEY G. LAPPIN, DIRECTOR, FEDERAL BUREAU OF PRISONS, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, DC, ACCOMPANIED BY MR. PAUL LAIRD, CHIEF OPERATING OFFICER, FEDERAL PRISON INDUSTRIES 

Mr. LAPPIN. Good afternoon, Chairman Scott and Members of the 

Subcommittee. Mr. Laird and I greatly appreciate the opportunity 

to appear before you today. 

Mr. SCOTT. Is your mic on? 

Mr. LAPPIN. Yes. 

Mr. SCOTT. Okay. Can you bring it a little closer to you? 

Mr. LAPPIN. Good afternoon, Chairman Scott and Members of the 

Subcommittee. 

Can you hear now? Okay. 

Mr. Laird and I greatly appreciate the opportunity to appear before you today to discuss Federal Prison Industries and the effects 

of section 827 of the National Defense Authorization Act of 2008. 

As you have indicated, the Federal Prison Industries is one of the 

bureau’s most important correctional management programs. The 

primary goals of the Federal Prison Industries program are to improve public safety and inmate reentry. The program accomplishes 

this by providing inmates with jobs, skills, training and work experience, thereby reducing recidivism among ex-inmates and relieving 

inmate idleness within our institutions. 

FPI is not a business. Its main purpose is not to generate revenue. There are many ways in which FPI programs do not and 

should not operate as a business. The FPI program limits its adverVerDate Aug 31 2005 13:44 Jan 08, 2009 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\050608\42213.000 HJUD1 PsN: 42213
6 

tising and marketing. The program spreads its operations across 

multiple business areas and the FPI program is deliberately laborintensive in order to provide job skills training to the largest possible number of inmates. 

Another benefit of the FPI program is its ability to help with the 

effort to provide restitution to victims of crime. Inmates who work 

in FPI are required to contribute 50 percent of their wages to pay 

court-ordered fines, victim restitution, and child support. The FPI 

program also contributes significantly to reducing inmate idleness. 

Inmate idleness undermines other rehabilitation programs and increases the risk of violence and other disruptive activities. Idle inmates require more staff to monitor, which increases the cost to 

taxpayers. 

Federal Prison Industries is unique among other inmate programs and it receives no appropriated funding. Earnings from FPI 

programs are used for operating costs, including the purchase of 

raw materials and equipment, staff salaries and benefits, and compensation to inmates. 

Last year, FPI spent more than a half-billion dollars buying raw 

materials, equipment, and services from private vendors. As a result of these purchases, there are thousands of jobs in the private 

sector that are tied directly to the continued viability of the FPI 

program. 

Recent legislation and the FPI board of director decisions, which 

I detail in my written statement, have had a dramatic effect on 

FPI’s operations. Provisions in the National Defense Authorization 

Act of 2002 and 2003 and in two more recent omnibus appropriation bills require that Federal agencies who wish to purchase an 

item that is offered by the FPI program, the contractor must first 

conduct market research to determine if FPI’s product is comparable to that offered by private sector vendors in terms of quality, price and delivery. If the buying agency determines that the 

product is not comparable, then competitive procurement procedures apply. 

The impact of these provisions was felt primarily by FPI’s office 

furniture program, where sales decreased by nearly 40 percent 

since 2002. As a result of these sales decreases, FPI has eliminated 

almost 2,400 jobs in office furniture factories. 

More recently, the National Defense Authorization Act of 2008 

included a provision that amends the process by which the Department of Defense purchases certain products from FPI. This provision requires DOD to use competitive procedures for products for 

which FPI has a significant market share, defined as more than 5 

percent of the DOD purchases in a product category. 

DOD recently issued a listing of the Federal supply classification 

codes in which FPI sales met this market share criteria. Based on 

that, we believe a minimum of $140 million in sales and commensurate 3,250 inmate jobs are potentially at risk. This would represent approximately 17 percent of the FPI program’s annual sales 

and 14 percent of its inmate workforce. 

It is difficult to say with certainty how much of the FPI program 

sales that are potentially affected by section 827 may be lost. While 

sales in some product areas may decline, the product impact of this 

7 

provision will be difficult to predict until DOD is fully aware of 

these procurement changes. 

Modernization of the FPI program should be accomplished 

through a comprehensive strategy guided by Congress’ judiciary 

Committees. As the Administration has previously articulated, any 

modifications of the FPI program should simultaneously provide 

Federal agencies with this balance that the judge and you have referenced with greater flexibility in buying products, increased access 

by private sector companies to government purchases, and ensure 

that the attorney general maintains adequate work opportunities 

in prisons to reduce recidivism and counter the potential dangerous 

effects of inmate idleness. 

Chairman Scott, this concludes my formal comments. Mr. Laird 

and I would be pleased to answer questions for you and other 

Members of the Subcommittee. 

[The prepared statement of Mr. Lappin follows:] 

8 

PREPARED STATEMENT OF HARLEY G. LAPPIN


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Mr. SCOTT. Thank you. 

We have been joined by the gentlelady from Ohio, Ms. Sutton. 

Mr. Gage? 

TESTIMONY OF JOHN GAGE, NATIONAL PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, WASHINGTON, DC 

Mr. GAGE. Thank you, Mr. Chairman. 

On behalf of the more than 39,000 Federal correctional officers 

and staff who work in the Bureau of Prisons, thank you for the opportunity to testify today on the Federal Prisons Industries inmate 

work program and its critical importance to the safety and security 

of Federal correctional officers, Federal prison inmates, and the 

local communities surrounding our BOP correctional institutions. 

Prison inmate overcrowding and correctional officer understaffing 

are creating dangerous conditions inside the walls of Federal prisons. As the Chairman noted, and I reiterate, more than 200,000 

prison inmates are confined in the 114 BOP institutions today, up 

from 25,000 in 1980, 58,000 in 1990, and 145,000 in 2000. By 2010, 

it is expected there will be 250,000 inmates incarcerated in Federal 

prisons. 

To make matters worse, the number of Federal correctional officers and staff who work in BOP institutions is failing to keep pace 

with this tremendous growth in the prison inmate population. The 

BOP system is currently staffed at an 86.6 percent level, as contrasted with the 95 percent staffing levels in the mid-1990’s. 

Moreover, the current 86.6 percent staffing level, or 34,098 filled 

positions, is well below the 90 percent staffing level, or 35,444 filled 

positions, that BOP believes is the point where the safety and security of correctional officers, as well as prison inmates, could be in 

jeopardy. 

This inmate overcrowding and correctional officer understaffing 

is resulting in the significant increase in Federal prison inmate assaults against correctional officers and against other inmates. In 

December, 2007, the BOP intelligence section of the Department of 

Justice issued a report documenting that inmate-on-inmate assaults in fiscal year 2007 had increased 15.5 percent over the previous year, and inmate-on-staff assaults in fiscal year 2007 had increased 6 percent over the previous year. 

This unsafe work environment is the reason why we at AFGE 

strongly support the FPI prison inmate work program. FPI is a 

self-supporting government corporation that provides work opportunities and job skills training to BOP prison inmates by producing 

goods and performing services for Federal agencies. By statute, 

Federal agencies are required to purchase from FPI any product 

listed in the FPI schedule of products, a sole-source requirement 

referred to as mandatory source preference. 

The FPI prison inmate work program is the essential management tool that Federal correctional officers and staff use to help 

deal with the huge increase in the prison inmate population. This 

program keeps 23,152 prison inmates, or about 18 percent of the 

eligible population, productively occupied in labor-intensive activities, thereby reducing inmate idleness and the violence associated 

with that idleness. 

22 

It also provides strong incentives to encourage good inmate behavior, as those who want to work in FPI factories must maintain 

a record of good conduct. Unfortunately, last year Congress approved section 827 in the National Defense Authorization Act that 

will significantly reduce the application of the FPI mandatory 

source preference with regard to DOD. This reduction will necessarily result in a substantial decrease in the number of FPI prison inmate jobs. 

The FPI board in 2003 adopted a resolution that ended the application of the FPI mandatory source preference for those products 

where FPI’s share of the Federal market exceeds 20 percent. Section 827 ends the application of mandatory source preference with 

regard to DOD purchases for those products where FPI’s share of 

the Federal market is greater than 5 percent. 

It is estimated that this reduction from 20 percent to 5 percent 

will result in the potential loss of up to $241 million in FPI sales, 

or a 33.6 percent decrease in total FPI sales revenues. This FPI 

sales decrease in turn will result in a potential loss of up to 6,500 

prison inmate jobs, or a 30.6 percent decrease in the number of 

prison inmates employed by FPI. 

AFGE has long opposed any legislative attempt to eliminate the 

mandatory source preference for FPI-produced goods because it 

would seriously endanger the safety of our members, the Federal 

correctional officers and staff who work inside BOP institutions. 

However, in the past couple of years we have come to accept the 

idea of eliminating the FPI mandatory source if and only if a 

strong work-based training program is developed to supplement the 

FPI program. This strong work-based training program must necessarily create a sufficient number of new Federal prison inmate 

jobs to replace the prison inmate job positions that would be lost 

if the FPI mandatory source preference is eliminated. 

A meritorious reform proposal was included in the May 11, 2006 

discussion draft of Representative Hoekstra’s H.R. 2965. The proposal would authorize a private business to train participating Federal prison inmates by producing a product or performing a service 

if such product or service is being currently produced or performed 

outside the U.S. by or for private business and has been so produced or performed for a period of 3 years. 

This proposal would be intended to provide employment for the 

greatest number of Federal prison inmates as long as no single private industry is forced to bear an undue burden of competition 

from the products or services of Federal prison factories or workshops, and competition with private industry or labor is reduced to 

a minimum. 

This concludes my statement. I thank you for your attention and 

would be happy to answer any questions. 

[The prepared statement of Mr. Gage follows:] 

23 

PREPARED STATEMENT OF JOHN GAGE


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Mr. SCOTT. Thank you. 

Mr. Morial? 

TESTIMONY OF MARC H. MORIAL, DIRECTOR, 

NATIONAL URBAN LEAGUE, NEW YORK, NY 

Mr. MORIAL. Thank you very much, Chairman Scott and Ranking 

Member Gohmert. 

I am Marc Morial, president and CEO of the National Urban 

League. The National Urban League is the nation’s largest civil 

rights organization, with affiliates in over 100 cities from coast to 

coast. Each year, we serve about 800,000 people in workforce development, youth and education programs, health and wellness initiatives, civil rights, and diversity training. 

At present, we work very closely in about 30 cities with about 

2,000 people who were formerly incarcerated. So we know a little 

bit about not only rehabilitation, but habilitation of people who 

have been in prison. 

I come before you today to express strong support for this FPI 

program. I do so and ask you to consider that this program has 

been around since 1934 and represented an effort that long ago to 

rehabilitate Federal prisoners on a large scale without an appropriation of Federal dollars. Consider that this is the kind of innovation and initiative we talk about a lot in the 21st century—finding 

ways to confront difficult challenges without an appropriation of 

taxpayer dollars. 

Now, the Bureau of Justice statistics tell us that six times as 

many Black men as White men are incarcerated in this nation’s 

penal institutions. Without a question, for the African American 

community in this nation, any sensible effort which helps people 

who are incarcerated to get a GED, secure skills, and do something 

productive will go a long way in ensuring that recidivism, which is 

a problem in America today, is not enhanced or increased. 

By the very same token, I would suggest to you that this initiative, as the statistics demonstrate, helps to reduce recidivism and 

help to make inmates much more productive in society. I would 

point out that a very important feature of this program is the idea 

that those who participate in it have to attain a high school diploma, and that half of the money that they earn goes to pay debts 

in many cases toward child support and other very important 

things. 

I also urge this Congress to separate and not scapegoat this program because of foreign competition and failed trade policy. We 

should keep a focus on the fact that this is a program which works, 

which gets the kind of results it was intended to get, and which 

should remain not overly fettered and overly burdened because of 

some concerns that really arise out of what is happening in the 

global economy today. 

So the National Urban League supports this initiative. We support this program. I would also urge this Committee to reassert its 

authority and its jurisdiction, not only over this program, but over 

this very important issue. This problem of an increasing number of 

citizens in this nation who find themselves incarcerated, and in 

fact we lead the world in the number of citizens who are incarcerated. 

41 

The increasing number of recidivists that are preying on our 

communities all across the nation point to the fact that we need 

much more of an emphasis, much more support, and much more 

approaches like that embodied in this initiative in our penal institutions. I think this Congress can indeed lead the way in demonstrating support for that. 

So with that, I urge your support, and I will be happy to entertain any questions you might have. 

[The prepared statement of Mr. Morial follows:] 

42 

PREPARED STATEMENT OF MARC H. MORIAL


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Mr. SCOTT. Thank you, and I thank all of our witnesses for your 

testimony. 

We have been joined by the gentleman from Georgia, Mr. Johnson. 

We will now begin questions, and I will recognize myself for 5 

minutes. 

Mr. Lappin, can you tell us how important it is to have incentive 

programs in prison and how that helps the administration of the 

prisons? Is FPI one of those incentives that is helpful? 

Mr. LAPPIN. Two primary objectives: We want to run safe prisons 

and we want to send people home from prison. The majority of the 

folks in prisons are going to go home. This past year, we released 

about 62,000 inmates—50,000 to the United States—and we certainly want to try to send as many of those offenders home with 

the skills and abilities they need to be more successful in the community. 

So without a doubt, incentive programs, opportunities for inmates to improve their skills and abilities during a period of incarceration, are critically important, not only in the effort to reduce 

recidivism, but in the effort to run safer prisons. 

As you heard, we have had some challenges here in the last few 

years in the financial area, which has resulted in a little lower 

staffing than we would prefer to have. The only way to compensate 

for that, or one way to compensate for that, is to keep inmates productively occupied. Federal Prison Industries is one of the largest 

programs we have at keeping inmates productively occupied, one, 

and two, show the results that you have discussed of reducing recidivism upon release. 

I know a lot of folks want to focus on how many inmates participate. What I tend to focus on is on how many do not participate. 

That is what concerns me, given the fact that here we have these 

folks incarcerated for a period of years sometimes, pretty much 

total control of their life, and we are unable sometimes to get them 

into a program that improves work skills. 

It comes down to a number of issues, but three primary ones: literacy/education, vocational training, and work skills. Many, many 

of the offenders that come into our custody lack one if not all three, 

along with a few other skills that they need. Certainly, the education programs we provide, the vocational programs we provide, 

and certainly the work program we provide like Prison Industries, 

have a positive impact on their successfully returning to the community, as well as we see those offenders being less disruptive during that period of incarceration. 

Mr. SCOTT. Does it in fact reduce recidivism? 

Mr. LAPPIN. Yes, it does. 

Mr. SCOTT. Does it reduce recidivism enough? The program pays 

for itself, is that right? 

Mr. LAPPIN. There is no cost to the taxpayer in providing this 

program. In fact, in many ways it creates more business in many 

communities. Let me be real clear, though, without a doubt we 

want to have as little impact as we possibly can on citizens’ businesses in this country. If there is anything that we can do to limit 

that, we are certainly open and receptive to that. 

48 

On the other hand, we want to be able to provide a work opportunity, a productive noteworthy work opportunity for offenders during this period of incarceration. I believe, with some of the authorities that have been discussed over the years, that we could strike 

that balance. It may not be perfect at the beginning. It may take 

some tweaking along the way, given the utilization that mandatory 

source has had for the FPI for years 

So I am hesitant to say that the immediate result is to eliminate 

mandatory source and move into these authorities. However, I 

think there could be some phase-out of that in a manner that limits the impact of not only requiring mandatory source, but limits 

the impact on citizens’ businesses in this country, as well as affords 

us the opportunity to ramp-up to increase our utilization of these 

other authorities until they compensate for what mandatory source 

has provided in the past. 

Mr. SCOTT. Well, mandatory source gives you the ability to maintain a constant flow of work. If you were to have to bid for all of 

your contracts, you might win some and lose some. How would you 

accommodate the ups and downs of the needed level of employment? 

Mr. LAPPIN. Let me ask Paul, because I think Mr. Laird will 

mention the fact that when you look at our entire product-to-service lines, you will find that much of what we do is not under mandatory source. We have learned a lot over the last few years about 

how to be competitive, how to measure the ups and downs and still 

afford opportunities for work. So I will turn it over to Mr. Laird. 

Mr. LAIRD. Thank you, Mr. Chairman. 

That is true. Our sales in fiscal year 2007 were generated from 

50 percent non-mandatory sources. That is an indication that we 

are continuing to venture out into these areas which lessen our dependency on mandatory source and further get us out into arenas 

where we are competing for the work that we are receiving. 

Mr. SCOTT. Well, if you had ups and downs, how would you accommodate those in terms of laying people off and bringing them 

back? If you changed the nature of the product in one institution, 

what complications arise when you cannot control the flow of work? 

Mr. LAIRD. That is a very good question. As the director mentioned, our main goal is to employ as many inmates as possible. In 

situations where we have work that has tapered off, we have been 

creative in hiring inmates to work part-time, so at least we had 

their presence in a factory, so one inmate may work in the morning 

and another inmate may work in the afternoon. So we haven’t really reduced the number of inmates that were working. We simply 

adjusted the hours. Now, that is not ideal, but nonetheless it gives 

us a presence in the inmate population in the exposure to the work 

programs that we are offering in those facilities. 

Mr. LAPPIN. I think Mr. Laird would agree with the fact that we 

are very diverse and have I don’t know how many different products and service areas. There are fluctuations that occur all the 

time. We are able to compensate sometimes in those areas that are 

very active, at those locations that may not be active, depending on 

their similarity to a certain product or service. So some of that can 

occur without huge expense. Wouldn’t you agree, Paul? 

Mr. LAIRD. Right. 

49 

Mr. LAPPIN. And still offer us the opportunity to provide productive work opportunities for those inmates, even though there may 

be some fluctuations, some peaks and valleys across a large variety 

of product lines and services. 

Mr. SCOTT. But just very quickly, and my time has expired, but 

if you switch product lines, you would have to get new equipment 

and things of that nature. If you lose a bid in one product, how 

quickly can you transition to another product? 

Mr. LAIRD. It would depend on the type of product line that we 

are placing into a factory. A perfect example would be our emphasis on recycling. Recycling does not involve a lot of overhead. It 

does not involve a lot of equipment. We can set up a factory relatively quickly, as opposed to, for instance, a vehicular componentstype factory which requires a lot of significant equipment to be installed. 

In recycling, in some services businesses where we do sorting 

and real hands-on work that does not require a lot of machinery, 

those factories can be updated relatively quickly. 

Mr. SCOTT. Thank you. 

Mr. Gohmert? 

Mr. GOHMERT. Thank you, Mr. Chairman. 

It is a difficult issue and requires a lot of balance. Mr. Chairman, 

I also wanted to submit that a witness who was invited was unable 

to attend—Frederick Puente, president of Blind Industries and 

Services of Maryland. He was not able to be here, but asked if we 

could enter his letter-statement into the record. 

Mr. SCOTT. Without objection. 

[The information referred to follows:] 

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Mr. GOHMERT. I thank you. 

Mr. Lappin, you mentioned, as I understood it, 60,000 prisoners 

are released, and 50,000 are released to the United States. Where 

to the other 10,000 go? 

Mr. LAPPIN. Deported. 

Mr. GOHMERT. Okay. 

Mr. LAPPIN. So of our 200,000 inmates, about 26 percent are nonU.S. citizens, about 50,000 inmates. So of that 62,000, 12,000 to 

14,000 are non-U.S. citizens. They are deported. The other 50,000 

or 51,000 or 52,000, depending on the fluctuations from year to 

year, are released into the United States as U.S. citizens. 

Mr. GOHMERT. Okay. So about 17 percent of the people you release, or one-sixth, are deported? 

Mr. LAPPIN. Are deported. 

Mr. GOHMERT. Okay. You mentioned you want to best minimize 

the effect on jobs in the private sector. How do you suggest that 

best be done? 

Mr. LAPPIN. There have been a number of other authorities discussed. Some involve greater utilization of products and services 

that are performed offshore. There are other authorities, and Paul, 

if you wouldn’t mind mentioning them in more detail to best inform 

the Committee. 

Mr. LAIRD. Sure. As you mentioned, director, probably the single 

most important authority that we feel would be beneficial to Federal Prison Industries would be for us to have the ability to 

produce items that are currently being manufactured offshore. The 

impact we feel on the private sector, on American workers, would 

be minimized. In fact, we feel it would actually be beneficial to the 

local communities in which these factories are located because we 

would rely on the raw materials, the services that would need to 

be provided, as well as the equipment that would need to be purchased for us to engage ourselves in those types of manufacturing 

activities. 

Mr. GOHMERT. Is there any prevention from doing that now? 

Mr. LAIRD. Yes, sir. 

Mr. GOHMERT. What is preventing them from doing those jobs 

now that are mainly done offshore? 

Mr. LAIRD. Our manufacturing components that we are engaged 

in right now are only available to be sold to the Federal sector, to 

the Federal Government. This new authority that would be beneficial to us would allow us to sell outside of the Federal sector. 

Mr. GOHMERT. Okay. That is really nice, and I think a lot of us 

would love to have a policy. I love that. That is nice. 

Mr. LAPPIN. That is why I brought him along, to provide cover. 

[Laughter.] 

Mr. GOHMERT. I need a Paul to follow me around. 

Mr. LAPPIN. I have lots of Pauls in the Bureau of Prisons. 

[Laughter.] 

Mr. GOHMERT. I am sorry, Paul. You had something else? 

Mr. LAIRD. Yes, Congressman Gohmert. Another beneficial authority for us would be to allow us to participate in the Prison Industry Enhancement Program, or the PIE program, which is currently available to State correctional industries. It essentially allows outside private industry to come in and partner-up, pay inVerDate Aug 31 2005 13:44 Jan 08, 2009 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6601 H:\WORK\CRIME\050608\42213.000 HJUD1 PsN: 42213
52 

mates prevailing wages, and actually do the work inside the prison 

fences. 

Mr. GOHMERT. Okay, thank you. 

Mr. Morial, if you a get a sense of my heart, I understand everything you are saying. I think I really appreciated what you were 

saying about you weren’t just rehabilitating, if I understood you. 

Some folks have never been habilitated in the first place, and our 

prisons really have to habilitate. Is that the point you were making 

with that comment? 

Mr. MORIAL. Yes. It is very interesting. In the primary program 

where we work with both high school dropouts and people who 

were formerly incarcerated, we find that they come to us as young 

adults—23 years or 24 year old—one, they are reading on a fourthor fifth-grade level; two, they have never been in any sort of regular W-2 employment. So for the first time when they come to us, 

we have to not only help them get basic reading skills, basic comprehension skills to get a GED, but we also have to give them what 

are called life skills and those sorts of things. 

So there is no question that the prison system is not just called 

on to rehabilitate, but to habilitate people so that when they are 

released, they are less likely to be recidivists because they have a 

chance of being gainfully employed. 

Mr. GOHMERT. It seems like one of the problems in prisons has 

been over the years like the old days of, well, they will make license plates. There is not a lot of call for license plate makers once 

they get out of prison. So we do need to have them learn trades, 

educated as you say. 

And I think being more familiar with the Texas prisons as I have 

been, that is one of the areas that Texas has fallen down, from the 

old days when everybody went out and did farm work and it was 

completely self-sustaining for their own food, to the days after this 

Justice order and they couldn’t go out and work like that. We never 

really have gotten back to where we avoid fights, avoid problems 

by having adequate training or education of the inmates. This is 

the balance we are looking for. 

Mr. Morial, you surely have people that you know that have also 

lost their jobs because there was competition from FPI. 

Mr. MORIAL. Let me say, and let me address this in this way. I 

think it is important to look at the loss of jobs as not scapegoating 

FPI. There are larger global trade and foreign competition issues 

at play in a lot of the businesses where they provide services. But 

then secondly, the effect because of the market share of FPI is so 

small. Has it cost a job-loss here or there? I don’t think anyone can 

argue that it hasn’t, but the benefits, the up-side is significant. 

I would suggest to you that there are not a lot of initiatives out 

there that habilitate and give prisoners skills that don’t require direct appropriations. We are spending on average on the low side 

probably $20,000 or $25,000 a year to incarcerate and house people. So this kind of investment is offset. 

Mr. GOHMERT. That may be low, too. 

Mr. MORIAL. Yes. 

Mr. GOHMERT. I agree with everything you say. It is just a matter of balance. 

53 

Mr. MORIAL. It is a matter of balance, but I think it is easy to 

say it is FPI, but the more important thing is one just need go into 

any store and look at where things are manufactured. 

Mr. GOHMERT. Sure. No, you are exactly right. A bunch of us 

went to China and were talking to the CEOs over there, why did 

you move from the U.S.? I expected the answer to be low labor 

costs, but no, quality control in the U.S. is a lot better and labor 

is cheaper here, but it is because they cut a deal—we have no corporate tax for 5 years and it will never go above 17 percent; we are 

paying 35 percent back in the U.S.; we can pay for our plant in 5 

years. 

So there are a lot of other factors for people losing their jobs, I 

agree. But if you happen to be one of those who lost your job, then 

it is hard not to have resentment to FPI, despite all the good this 

program is doing. 

Mr. MORIAL. I think keep in mind, and for any worker or person 

who may lose their job in an industry, they would tend to want to 

assign blame. But the role of the Congress is to balance in a very, 

very difficult environment where we have too many people in jail, 

and too many repeat offenders. It is costing us money. It is costing 

lives and families. This initiative, if this could be done in some 

States—— 

Mr. GOHMERT. That is why we are having the hearing, to try to 

strike that balance. That is why we are asking the questions we 

are of those of you who deal with these issues. That is what we 

want to do. I appreciate your participation here today. 

Mr. MORIAL. Thank you, sir. 

Mr. SCOTT. Thank you. 

We want to acknowledge the presence of the gentleman from 

North Carolina, Mr. Coble, who will have questions in just a 

minute. 

The gentlelady from Ohio? 

Ms. SUTTON. Thank you, Mr. Chairman. 

Thank you all for your testimony—— 

I just want to address Mr. Gohmert’s observation about our tax 

laws and that that is a contributor to the decisions to relocate, just 

not to get side-tracked very much here, but I would just like to 

point to the Bloomberg article back on December 14, shortly after 

we passed a trade deal with Peru. It quotes the president of Peru. 

The paragraph reads that mining, agriculture, fishing and manufacturing firms should now flock to this nation of 29 million people, 

which has a per capita income of less than $3,000 a year. Garcia 

said, ‘‘ ‘Come and open your factories in my country, so we can sell 

your own products back to the U.S.,’ Garcia told business executives today.’’ I would be happy to enter this into the record. 

Mr. SCOTT. Without objection. 

[The information referred to follows:] 

54 


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Ms. SUTTON. I do think it is an interesting discussion that we are 

having. Mr. Laird, I begin with you on this because I am not sure 

I completely understood what you were saying when you were talking about the competition with perhaps offsshore jobs. Are we suggesting now that the way that we might compete with offsshoring 

of jobs would be through the FPI program? That that would be the 

adjustment that we would be making? That that is the best we 

could do? 

Mr. LAIRD. I think it is a great opportunity for us to partner-up 

with American companies and offer ourselves as a labor source to 

keep these types of manufacturing jobs from going overseas and 

keeping them in the United States. It is not a cure-all for the burgeoning inmate population that is automatically going to raise us 

up to our goal of 25 percent, but it is one of those ideas that I think 

warrants consideration to help us meet our goals of employing 25 

percent of the inmate population. 

Ms. SUTTON. I would just say, just so you understand where I am 

coming from, I intend to be a supporter of the FPI program. I understand its value and I share the concern about how these things 

get wrapped up together, and we have problems in many directions 

that need to be dealt with and, as you point out, not scapegoated. 

Mr. Gage, in your testimony, you talk about these issues also. 

You addressed the opponents’ argument that FPI is not the cause 

of U.S. private companies’ sales losses and non-inmate workers’ job 

losses in the areas of office furniture and textiles and apparel industries, that they are being lost due to foreign competition. 

Do you see the potential, then, that perhaps if we eliminate the 

mandatory source requirement for FPI that those jobs would go to 

Mexico or offsshore? 

Mr. GAGE. Well, I really don’t know, but I do think—and I am 

also a vice president with the AFL-CIO, and I have been talking 

with some of the unions who have brought up a lot of opposition 

to FPI—Unite Here, for instance, in the apparel-making industry. 

I think the compromise that this whole issue needs, that Mr. 

Lappin has been suggesting, just repatriating our work. That is 

work that is out of the barn and gone. It is something that could 

have no impact on jobs in America and still revitalize FPI. 

So I think this whole issue really, when you look at the minimal 

impact on jobs and even some of the unions have seen that FPI is 

good for American workers—the Teamsters, for instance, delivering 

supplies, et cetera, for FPI. So there is a real balance there. 

But I think my members would like to not cost anybody a job, 

but have certainly these inmates working and working hard at productive jobs. I think there is enough work that has gone overseas 

not to come back that we could really resolve this problem. 

Ms. SUTTON. Okay. 

Mr. Morial, you stated, and I think correctly, that the Federal 

prison system is broken and that the Federal Prison Industries program is one of the nation’s only large-scale efforts at rehabilitation 

that is working at this moment in our prison system. A study that 

you cited in your testimony indicates that working in FPI is more 

important to minority inmates who are at a greater risk of recidivism, if I am not mistaken. And we heard a little bit about this discussion a few moments ago with Representative Gohmert. 

57 

The concerns that FPI takes jobs away that might otherwise be 

filled by non-inmate minorities is on balance still one that has you 

here testifying in favor of obviously maintaining the program. 

Mr. MORIAL. I don’t think any suggestion that this program 

takes jobs should be dismissed lightly, but it ought to also be put 

in the context of the fact that, one, FPI represents a very, very 

small share of overall Federal procurement. There is a lot of business that the Federal Government is doing that is available to private sector firms. 

Number two, with a number of products that they produce, you 

cannot escape the effect of foreign competition, globalization, and 

trade; and then, three, we have to confront the fact that the penal 

system, the prison system, the systems of incarceration in the 

United States are broke and busted because of the great numbers 

of people who are in jail and the recidivism rate which is 

shockingly high at both the Federal and State levels. 

So anything that we can do, particularly if it doesn’t require direct appropriation of money, to help people gain skills, gain education, is on balance I just think something that we need to support. I think we need to confront the fact that the benefits far outweigh any costs—not to dismiss the suggestion of jobs, but also 

those that suggest that it has cost jobs need to be able to demonstrate that, not just suggest it. 

Ms. SUTTON. I will close, but I thank you because I really do 

think it is important. This discussion is not the discussion about 

instead of reforming our trade policies, which is another issue for 

another day. Thank you. 

Mr. SCOTT. Thank you. 

The gentleman from California? 

Mr. LUNGREN. Thank you very much, Mr. Chairman, and thank 

you for having this hearing. I am sorry we didn’t have hearings 

and the Senate didn’t have hearings on this before they passed 

their amendment last year with virtually no discussion whatsoever 

in Committees that have never studied this issue whatsoever. 

I don’t apologize for having a tough stance on crime, and don’t 

apologize for the fact that we have the increase in prisoners, both 

at the State and the Federal level. At the same time, we have an 

obligation to deal with those people. I am sorry, but I keep hearing 

these excuses. 

Mr. Lappin and Mr. Laird, I am surprised that you so easily 

seem to suggest that legislation that has gone into effect, that gets 

rid of the mandatory purchasing program is not going to affect you 

very well, and that you can easily do this if we just reach out to 

get all those jobs that we are losing overseas. 

Frankly, it sounds like a bunch of rhetoric to me. Tell me how 

you are going to do it? We are now in a situation where in 1998, 

FPI employed 20,200 inmates. We now have a larger inmate population and we employ less. And you have had effort after effort in 

this Congress under both Democrats and Republicans in the Senate 

and the House to try and stop your program. 

Frankly, I am disappointed because when you stand here and tell 

us that it is an easy thing to handle, all you do is give sustenance 

to those people who want to destroy this very program. So how is 

it so easy for you to sit there and say, well, all we have to do is 

58 

reach out and get these jobs that we lose overseas and we can do 

it? 

Mr. LAPPIN. First of all, let me back up and apologize if my message was that it is easy to do. I don’t think it will be easy to do. 

Mr. LUNGREN. Well, it sure sounds like it from what I heard 

from both of you. 

Mr. LAPPIN. Okay. Let me back up again, then. I don’t think we 

can afford to lose mandatory source until, one, there is authority 

to explore these other areas, and in taking advantage of these new 

areas, have time to ramp those areas up to compensate for that 

which we lose as mandatory source is eliminated, if in fact it is 

eliminated. 

So it won’t be easy. It is going to take time. We don’t invest a 

whole lot of time and effort in advertising and marketing. We 

would have to shift because in the past our advertising and marketing had primarily been driven by the mandatory source, which 

we ultimately would lose if they move in that direction. 

So again, let me be clear. We advocate for mandatory source, the 

continuance of mandatory source, unless mandatory source is going 

to be replaced with authorities such as the ones we have mentioned. 

Mr. LUNGREN. Okay, well, that is the answer I wanted. That 

sounds more factual, because if we lose mandatory source as we 

have begun to lose mandatory source, you lose members of that 

population that are working, thereby making it safer for the inmate population and for the prison employees, and giving them the 

opportunity to have a job when they get out. Honest to God, if we 

don’t start taking this seriously, I don’t know what we are going 

to do. 

Mr. Morial, are you aware of any studies that show actual loss 

of jobs as a result of FPI? I asked Mr. Miller, who was testifying 

before us at the last hearing, representing the furniture industry, 

could he give me any real data to show how the FPI program is 

harming the industry, and he could not give it. To this day, I have 

not seen it. Are you aware—? 

Mr. MORIAL. I am not aware of any data. 

Mr. LUNGREN. See, we keep hearing this, that jobs are lost. The 

furniture industry in the United States, according to a Member of 

Congress who testified before us, is enormous compared with what 

FPI is doing. The furniture industry is somewhere in the neighborhood of a $12 billion to $14 billion industry. Office furniture and 

FPI was $250 million. Does that sound like we are really taking 

a huge chunk out of private industry, Mr. Morial? 

Mr. MORIAL. I noticed the same figures. I mean, obviously if you 

get the facts out here, the effect is not significant. I am not aware 

of any jobs, any studies, and any data that demonstrates job loss. 

Mr. LUNGREN. Here is the concern I have. When we have had an 

economy that has been moving along very well for 50-some months, 

and we have had the lowest unemployment over a sustained period 

of time we have ever had. We have had more people working than 

we ever had. In that environment, we have legislation coming here 

to cut FPI. And now as we are going down in an economy that is 

not as strong for some period of time—and I hope we are going to 

59 

recover shortly—it is much easier for people to attack FPI and use 

it as the reason why we are losing jobs. 

As someone committed to putting people away who commit 

crimes, I am also committed to treating them humanely. If we don’t 

do something to rehabilitate and habilitate these folks, it is on us. 

Mr. MORIAL. And I would continue to make this point. No matter 

where you stand on criminal justice issues, it is in no one’s interest 

to see people repeat offend. 

Mr. LUNGREN. Absolutely. 

Mr. MORIAL. One of the reasons why they repeat offend is because they come out in many cases no better educated, with no 

more skills, and no better ability to navigate and function in society than they had when they went before. So we see it, the National Urban League, helping people gain education and skills as 

being essential to eliminating recidivism in this country. That is 

where we are, and that is a public safety issue. It is a criminal justice issue. It is a human compassion issue. You can put any label 

on it. I say it just makes good common sense. 

Mr. LUNGREN. Mr. Gage, since you represent the employees who 

work in the prisons, can you tell us, representing them, that this 

program does in any real way assist in reducing tension in the institutions, assist in any way making it a safer environment for 

prisoners and for your employees? 

Mr. GAGE. Oh, yes. There is no question about it. Talking to any 

of our officers, they think this program is a real carrot for the inmate. It produces better behavior. You can’t just get one of these 

jobs. You really have to have a good record. To qualify for the program, and then to get the job and to stay out of trouble to keep 

the job. Our officers are, to a man and woman, committed to this 

program. 

Mr. LUNGREN. Mr. Chairman, thank you for the indulgence of 

the time. All I would say is if we didn’t have this program, we 

would be falling all over ourselves to create it. We would be talking 

about the promise of such a program, and we would be asking 

these people in front of us, how can you be sure that it is going 

to do these things? 

Maybe we ought to start a small pilot project to see if it helps 

inmates, if it brings down recidivism, if it actually improves the environment, if it protects the prisoners, if it protects those who are 

employed here. And maybe if it really worked, we could get a representative of the unions of the employees to come and testify, Mr. 

Chairman. But of course, it doesn’t exist, so we will have to wait 

until they actually create the program. 

Thank you very much, Mr. Chairman. 

Mr. SCOTT. What you didn’t add is have the program pay for 

itself. [Laughter.] 

Mr. LUNGREN. Mr. Chairman, I am a Republican. That goes 

without saying. [Laughter.] 

Mr. SCOTT. The gentleman from North Carolina? 

Mr. COBLE. Thank you, Mr. Chairman. 

Mr. Chairman, I apologize for my belated arrival. I was on the 

floor with an intellectual property bill. 

60 

Mr. SCOTT. We can excuse Mr. Morial, who indicated that he 

would have to leave just before 3 o’clock. So thank you very much 

for your testimony. 

Mr. COBLE. As I said, Mr. Chairman, I was on the floor with an 

intellectual property bill and my absence does not indicate my lack 

of interest in this proposal. I have worked with the Chairman, as 

he knows, regarding repeat offenders. I think that is a very serious 

problem that we need to address, and I think FPI does a good job 

of that. 

Mr. Director, as you know, when I was elected, my bread and 

butter issues in my district, Mr. Chairman, were tobacco, furniture 

and textiles. All three are now beleaguered. I have always tried to 

keep a sharp lookout to the end that FPI’s success would not be 

to the detriment of my furniture and textile folks back home. I am 

by no means opposed to rehabilitation. I think it is necessary. But 

that is where I am coming from, as you know, Harley. We have 

talked about this several times before. 

Mr. Director, has the number of Federal inmates participating in 

FPI increased in recent years? 

Mr. LAPPIN. The percentage has actually decreased. Probably 15 

or 20 years ago, we employed 40 percent of the eligible inmates in 

Prison Industries. Today, we are employing about 18 percent. So 

we have added 150,000 inmates and we are employing actually percentage-wise far fewer than we did before. 

Mr. COBLE. To what do you attribute that decrease? 

Mr. LAPPIN. Pardon? 

Mr. COBLE. To what do you attribute the decrease? 

Mr. LAPPIN. Well, there are a couple of things I think ongoing. 

One, there has been a lot of debate over the legislation and what 

limitations there are. There have been obviously some legislative 

initiatives that have limited our ability to grow in some of those 

areas, as well as decisions made by the board to try to help strike 

this balance of providing opportunities for inmates, as well as being 

mindful of the impact these programs have on furniture and textiles and electronics in particular. 

So again, I go back to the door opening for many other opportunities. I will go back to your comments, to your questions about what 

the options are. Let’s take call centers as an example. It wasn’t 

that long ago that call centers were not performed at all in this 

country. A few years ago, customers came to us—I should say providers, companies—came to us and said, listen, we would like to 

utilize your workforce in lieu of using the workforce on the other 

side of the world to provide call center work. 

We took advantage of that opportunity. Now, there are seven or 

eight or nine call centers. They are not textile factories. They are 

not furniture factories. They are call centers. The more opportunity 

that we can take advantage of that, the more potential there is for 

us to reduce the impact in some of these product areas that exist 

on a larger scale in this country. 

I think whether it is recycling or call centers or other opportunities we are taking advantage of, I think those are ways to limit or 

reduce the impact on those businesses that continue to operate in 

this country. 

61 

Mr. COBLE. How many BOP facilities offer FPI programs, approximately? 

Mr. LAPPIN. Yes, about 110. We are committed to having a factory in every secure general population facility. So we exclude jails, 

which are short-term facilities. We exclude medical centers, which 

typically are short-term and many of the inmates are not able to 

work. We emphasize the need for these factories, especially in medium-and high-security institutions, which is a bit inconsistent 

with what you see sometimes in the States because this is risky 

business. It is risky business giving inmates tools and access to 

things that can assist some who misbehave in injuring others and 

escaping. 

On the other hand, these are the inmates that need it the most, 

those that are in our mediums and highs. Typically, they are the 

more violent, the less educated, lack more of the skills we have discussed today. So we try to focus the enhancement of those skills 

as much, if not more so, in those facilities than others, given the 

fact that those inmates tend to be the ones that need it the most. 

So certainly all of our mediums and highs, and as many of the lowsecurity institutions as we can. With less opportunity in camps, because a lot of those offenders are more highly educated, more 

skilled, white-collar offenders oftentimes, tend not to need the 

types of skills that they are acquiring in Prison Industries. 

Mr. COBLE. I got you. 

Mr. Director, section 827 lowered the threshold from 20 percent 

to 5 percent, but that is exclusively applicable to DOD, is it not? 

Mr. LAPPIN. Yes, it is. 

Mr. COBLE. So in other words, mandatory source is still available 

to FPI beyond the confines of DOD. 

Mr. LAPPIN. Yes. Now realize, though, that over half of our sales 

are Department of Defense. 

Mr. COBLE. I realize that is your largest customer, then. 

Mr. LAPPIN. A huge portion of our business is generated by the 

Department of Defense. So this limits mandatory source to only the 

5 percent. Again, our concern obviously is that opens the door for 

the 15 percent no longer protected by mandatory source for it to 

go elsewhere, without the ability to grow other areas to compensate 

for the loss of jobs potentially in those areas that we are selling to 

DOD. 

Mr. COBLE. Mr. Chairman, again I want to reiterate the fact that 

I am pro-FPI, but I think we will agree that mandatory source, 

however, Mr. Director, does give you a leg up, does it not? 

Mr. LAPPIN. It depends on how you approach it. I can argue it 

either way. Without a doubt, visibly to the public, it appears as 

though we have a preference. On the other hand, managed properly, we try to limit that preference. Again, we rely very little on 

advertising and marketing, I think $2 million to $3 million a year 

for an $800 million organization—a drop in the bucket. So we have 

relied on that traditionally. 

So again, it will not be easy to do away with that. If it is decided 

we do away with it, it will certainly require us to change our operational business model. It should be done gradually as we learn 

more about how to take advantage of the non-mandatory services 

62 

and products. But then again, some certainly see it as, and I can 

understand why, an advantage. 

We are not opposed to competition as long as it is a level playing 

field. We need to have the opportunity and the authorities to do so. 

Again, I want to reiterate in regard to Mr. Lungren here that it 

needs to be done gradually, with thought, and assessment to ensure that we are making that transition in a manner that allows 

us to continue to provide the number and types of jobs we need to 

provide in our institutions. 

Mr. COBLE. Mr. Chairman, I see that infamous red light, so I will 

yield back. 

Mr. SCOTT. Thank you. 

I want to ask Mr. Gage just one other question. You indicated 

that we should be going after different kinds of work. 

Mr. GAGE. Yes. 

Mr. SCOTT. Could you give us some examples? 

Mr. GAGE. Some are talking about furniture, but they say that 

casters—you know, the casters on furniture, there is not one made 

in this country. So there are niche products that I think we could 

convert. I think that would probably be an easy conversion on the 

casters. 

But Mr. Chairman, if I may, just one point. The appropriation for 

BOP is not quite where it should be. There could be a—— 

Mr. SCOTT. Let me just say that I think in the next few days we 

are going to try to deal with that. 

Mr. GAGE. You are going to try to deal with it. I just want to 

make this perfect storm argument that when we decrease correctional officers, and it is already a very drastic situation, but this 

budget as it is would cause a further significant decrease, and you 

add to it lessening FPI, I think you really have a formula for violence. 

Mr. SCOTT. I appreciate your comments. As I indicated, we recognize that the budget as it is for the Bureau of Prisons is in a crisis 

situation and we are going to try to deal with that in a matter of 

days. 

Are there other questions? If not, I want to thank our witnesses. 

We will keep the record open in case there are other questions 

which may be sent to you in writing. We would ask for you to respond to them as soon as possible so the answers can be made part 

of the record. 

We will keep the record open for 2 weeks for other additional materials. 

The gentleman from Texas? 

Mr. GOHMERT. In light of the submission regarding the Peruvian 

invitation to come work there, I note that according to Nation’s Encyclopedia, the basic corporate tax for Peru is 27 percent, and that 

the average in the area is normally about 5 percent to 10 percent. 

So there are a number of reasons that draw people in that direction, but apparently we share the same concerns about the program on both sides and the need for balance here. 

Thank you. 

Mr. SCOTT. Thank you. 

63 

We will now adjourn. Without objection, the Subcommittee hearing will be adjourned, and we will convene a markup of several 

bills at this time. 

[Whereupon, at 3:07 p.m., the Subcommittee was adjourned.] 

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