Scope of Procurement Priority Accorded

to the Federal Prison Industries

under 18 U.S.C. § 4124

The procurement priority accorded to “products” o f the Federal Prison Industries under 18

U.S.C § 4124 does not include services.

November 8, 1989

M e m o r a n d u m O pin io n f o r th e G e n e r a l C o u n se l

G e n e r a l S er v ic e s A d m in istra tio n

This memorandum responds to your request for our opinion whether 

the procurement priority accorded to “products” of the Federal Prison 

Industries (“FPI”) under 18 U.S.C. § 4124 for sale to federal agencies 

includes services as well as commodities.1 The General Services 

Administration (“GSA”) maintains that “products” under section 4124 

refers solely to commodities and not to services.2 FPI contends that 

“products” includes services.3 For the reasons set forth below, we conclude that “products” does not include services under the statute.

This dispute over the meaning of section 4124 began in 1986, when 

the GSA proposed to amend the Federal Acquisition Regulations 

(“FAR”) to deny FPI priority consideration over commercial suppliers 

in the acquisition of services by federal agencies. 51 Fed. Reg. 21,496 (to 

be codified at 48 C.F.R. pt. 8) (proposed June 12, 1986). Currently, the 

FAR provide that FPI has a priority over commercial sources with 

respect to services as well as commodities. 48 C.F.R. § 8.603(a)(2). GSA 

proposed the change to make the regulations consistent with section 

4124, on which the regulations are based. FPI challenged this proposal, 

arguing that the word “products” in section 4124 must be understood to

1 Letter for Douglas W Kmiec, Assistant Attorney General, Office of Legal Counsel, from Robert C. 

MacKichan, Jr., General Counsel, General Services Administration (Jan 4, 1989) (“GSA Letter”), attaching GSA Position on Procurement of Services From Federal Prison Industries (“GSA Memorandum”).

2 GSA Letter at 1-2; GSA Memorandum at 1-5

3 Letter for William P. Barr, Assistant Attorney General, Office o f Legal Counsel, from J Michael 

Quinlan, Director, Federal Bureau of Prisons (June 19, 1989) (“FPI Letter”), enclosing Letter for GSA/FAR 

Secretariat, from Harry H. Flickinger, Acting Assistant Attorney General for Administration, Department 

of Justice (Oct. 16, 1986) (UJMD Letter”), Letter for General Counsel, GSA, from Eugene N Barkin, 

General Counsel, Bureau of Prisons (July 31, 1973)

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include services and that priority over commercial sources is therefore 

mandated.4

Section 4124 requires federal agencies and institutions to purchase 

“such products of the industries authorized by this chapter as meet their 

requirements and may be available.”5 Neither section 4124 nor related 

sections contains a definition of “products.” See 18 U.S.C. §§ 4121-4128. 

The natural meaning of the word suggests, however, that it means a commodity,6 rather than the provision of labor that constitutes the usual 

meaning of the word “service.”7 This interpretation of “products” in section 4124 is confirmed by section 4122(a), which provides that FPI was 

created to determine what operations shall be conducted in federal penal 

institutions “for the production of commodities.”8 18 U.S.C. § 4122(a); 

accord id. § 4122(b)(1) (FPI to operate prison workshops so no one private industry bears an undue burden of competition from the workshops’ 

“products”); id. § 4122(b)(2) (FPI to concentrate on providing to federal 

agencies “only those products” that maximize inmate employment); id. § 

4122(b)(3) (FPI to diversify its products); id. § 4122(b)(4) (FPI decision 

to introduce a new product or expand production of a product to be 

made by board of directors).

FPI argues that it is dangerous to impose today’s “plain meaning” on 

the words of a statute written half a century ago.9 Both the statute and the

4 FPI does not challenge the pnonty the FAR currently give to services provided by the blind or other 

severely handicapped under 41 U.S.C. § 48. See FPI Letter at 2 (“[W]e strongly urge that the proposed 

amendment to the FAR not be adopted and that the current version, establishing a priority for FPI for 

services between the blind and commercial sources, be continued.”) (emphasis added); JMD Letter at 6 

n.7 (“Continued priority for FPI in the provision of services would not effect [sic] the priority, over FPI, 

in the provision o f services that exists for the Workshop for the Blind and Other Severely Handicapped 

(BOSH)" The GSA is thus off point with its warning that “[a] determination by the Office o f Legal 

Counsel that 18 U.S.C. § 4124 does afford FPI priority status in Government contracting in the service 

area could have a severe impact on the mandatory source program for workshops for the blind and handicapped administered by the Committee for Purchase from the Blind and Other Severely Handicapped.” 

GSA Letter at 2.

5 Section 4124 provides in relevant part as follows

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

6 Webster’s Third New International Dictionary 1810 (1986) (“Webster’s”) defines “product” as “the 

result o f work or thought” (emphasis added). It defines “commodity” as “an economic good . . a product o f agriculture, mining, or sometimes manufacture as distinguished from servicesId . at 458 

(emphasis added)

We are not persuaded by FPI’s argument that the word “product” necessarily includes services simply 

because the term “Gross National Product” has been defined to include both goods and services. That 

phrase is a term o f art imported from a different context and, thus, cannot be dispositive of the issue

7 Webster’s defines “service” as “useful labor that does not produce a tangible commodity" Id. at 2075 

(emphasis added)

8 As originally enacted, this section referred to “articles and commodities” Act of May 27,1930, ch. 340, 

§ 3, 46 Stat. 391 (1930). The words “articles and” were deleted in 1948 during a recodification that was not 

intended to have any substantive effect. Legislative History o f Title 18, United States Code at 2649 (1948).

9 "One simply cannot apply today’s precise definitions o f terms, such as services, to the same words 

used fifty years earlier in a far looser context.” JMD Letter at 4.

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legislative history, however, lead us to conclude that the Congress that 

initially passed this statute in the 1930’s understood the distinction 

between “products” and “commodities,” on the one hand, and “services” 

on the other. The very chapter under consideration permits the Attorney 

General to make “the services of United States prisoners” available to 

federal agencies for use on public works projects, 18 U.S.C. § 4125(a), yet 

“services” is not mentioned in section 4124. Clearly, the Congress of that 

period was familiar with the word “services” and understood it to have a 

meaning distinct from “products.”10

FPI argues that since federal prisoners had in fact performed services 

since at least the early years of this century, “products” as used in the 

statute should be understood to include services. FPI points out that, at 

various times, federal prisoners have been engaged in laundry services, 

tire recapping, furniture refinishing, and typewriter repair.11 FPI argues 

that such services “must be presumed to have been sanctioned by that 

legislation” — and therefore that “products” must include “services” — 

“in the absence of a clear legislative mandate to the contrary.”12 We disagree. The issue before us is not whether federal prisoners may perform 

services; it is whether 18 U.S.C. § 4124 grants the FPI a procurement priority for such services. We think the plain meaning of that statute shows 

that services are not covered.

The legislative history of section 4124 confirms our conclusion. With one 

exception, the examples of prisoner activities discussed at the time of the 

statute’s enactment all involved the manufacture of commodities, and that 

example was omitted from the version finally enacted.13 Subsequent amend10 Our conclusion is reinforced by the language of the Robinson-Patman Price Discnmination Act 

passed in 1936. 15 U S.C § 13. This Act makes it unlawful for persons engaged in commerce “to discriminate in pnce between different purchasers of commodities of like grade and quality.” Id (emphasis 

added) Over the past half-century, courts have firmly established that the word “commodity” in this context refers to “aproduct as distinguished from a service ” Baum v. Investor's Diversified Servs , Inc., 409 

F.2d 872, 874 (7th Cir. 1969) (emphasis added), see also May Dep’t Store v. Graphic Process Co , 637 F.2d 

1211, 1214-16 (9th Cir 1980). We hesitate, therefore, to declare that Congress in the 1930’s failed to grasp 

the distinction between commodities and services.

11 JMD Letter at 1

12 Id at 2

13 Dunng the floor debate, reference was made to a job that would qualify as a service 72 Cong. Rec. 

2146 (1930). Fearing that the new and expanding prison industries would displace federal civilian workers, especially hundreds of employees who repaired mail bags, Representative LaGuardia offered the following amendment

Provided further, That no class of articles or commodities shall be produced for sale to or 

use of departments of independent establishments o f the Federal Government in United 

States penal or correctional institutions which at present are being produced by civilian 

employees at the navy yards, arsenals, mail bag repair shop, or other Government owned 

and operated industnal establishments, or such articles as these Government owned and 

operated establishments are equipped to produce 

72 Cong. Rec. at 2147 (emphasis added). He viewed this amendment as necessary because “[ijt [was] contemplated in the course of this prison reform to have the mail bag repair work conducted in jails.” Id

(statement o f Rep LaGuardia). The final version o f the statute, however, dropped the reference to mail

Continued)

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merits to the statute also fail to indicate any intent to include services 

among priority items. In fact, subsequent congressional action in the procurement preference area indicates that Congress understood FPI’s priority 

to apply only to goods and not services. In 1971, Congress amended the 

Javits-Wagner-O’Day Act of 1938, which created a procurement preference 

for commodities made by the blind that was subordinate to the existing priority for FPI products. 41 U.S.C. §§ 46-48c. One of the principal objectives 

of the 1971 amendment was to grant to the Committee on Purchase from 

the Blind and Other Severely Handicapped (“CPBOSH”) a preference for 

services in addition to its existing preference for commodities. See H.R. 

Rep. No. 228, 92d Cong., 1st Sess. 2 (1971), reprinted in 1971 U.S.C.C.A.N. 

1079. The fact that Congress believed this amendment necessary only 

underscores the distinction between “commodities” and “services.”

Furthermore, the 1971 Act expressly considered the relationship 

between the preference accorded to CPBOSH and the existing preference for FPI products. It provides a preference to “any commodity or service” on a list prepared by CPBOSH, subject to the availability of such 

“commodity or service." 41 U.S.C. § 48 (emphasis added). The section 

goes on, however, to note that it does not apply “to the procurement of 

any commodity which is available for procurement from [FPI], and 

which, under section 4124 ... is required to be procured from such 

industry.” Id. (emphasis added). The omission of any reference to services in this exception indicates that Congress did not believe that FPI 

was entitled under section 4124 to any preference for services.

We are not persuaded by FPI’s argument that the legislative history of 

a 1988 amendment to the FPI statute “shows congressional awareness 

and approval of FPI providing services.” See FPI Letter at 1. This history 

asserts that “[i]n addition to establishing UNICOR [another name for FPI] 

as a wholly owned Government corporation, the enabling legislation also 

provides that other Federal Government agencies are required to purchase from UNICOR those goods and services that UNICOR produces 

when they can do so at fair market prices.” H.R. Rep. No. 864, 100th 

Cong., 2d Sess. 3 (1988) (emphasis added). This offhand assertion is entitled to minimal weight because the procurement preference provisions 

were not under consideration at the time — the purpose of the amendments was to authorize FPI to borrow funds. It is hardly probative of congressional consideration of the procurement preference issue.14 In sum,

13 ( . continued)

bag repair. Act o f May 27,1930, ch. 340, § 346, 46 Stat 391 (1930). We cannot infer from this failed proposal that Congress intended “products" to include “services." Indeed, the elimination of this explicit reference 

to a service only strengthens our conclusion that Congress did not give FPI any priority over services.

14 That same report also lists FPI's operations, noting that it is engaged in “date [sic] and graphics 

including printing services to government agencies, signs, graphics products, and keyboard data entry 

systems.” Id. at 4. The undisputed fact that FPI carries out such activities, however, is not material to the 

issue o f whether it is entitled to a procurement priority for such activities.

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we find nothing in the legislative history of section 4124 or related 

statutes that suggests FPI’s interpretation of that section is correct.15

FPI asserts that failure to construe “products” to include services is 

contrary to the spirit of the statute and would undermine related provisions that require FPI to train inmates to perform skills they can use 

when they are released, 18 U.S.C. § 4123, and to diversify prison industrial operations, id. § 4122(b). Although interpreting section 4124 to reach 

services as well as products would no doubt enhance FPI’s ability to 

achieve the directives of sections 4122 and 4123, we find no indication in 

the statute or legislative history that Congress believed a priority for 

services was necessary to achieve that result.16 Where, as here, the statutory language is clear, FPI’s contrary interpretation of its own enabling 

legislation need not be controlling. See Chevron U.S.A., Inc. v. Natural

Resources Defense Council Inc., 467 U.S. 837, 842 (1984).

LYNDA GUILD SIMPSON 

Deputy Assistant Attorney General

Office of Legal Counsel

15 FPI also relies upon an Executive Order issued by President Roosevelt in 1934 setting up FPI This 

Order provided:

The heads o f the several executive departments, independent establishments and Government owned and Government controlled corporations shall cooperate with the corporation in 

carrying out its duties and shall purchase, at not to exceed current market prices, the products or services o f said industries, to the extent required or permitted by law.

Exec Order No 6917, § 9 (1934) (emphasis added). This Order pointedly avoids imposing any requirement above and beyond the terms of the statute; that is the point of the phrase “to the extent required or 

permitted by law ” Thus, since section 4124 provides only a preference for “products,” the Order cannot 

be said to extend further. In fact, the Order’s reference to “products or services” only confirms the inappropriateness o f reading the statute’s word “products” to include services

16 We also disagree with FPI’s assertion that our interpretation is contrary to the spirit of the statute’s 

general goals o f training prisoners and preventing them from sitting idle. See JMD Letter at 5. We are not 

persuaded that our interpretation prevents the FPI from fulfilling those goals These and other policy 

arguments can be presented to Congress with a request to amend section 4124.

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