IB
Union Calendar No. 349
107TH CONGRESS
2D SESSION
H. R. 1577
[Report No. 107–583]
To amend title 18, United States Code, to require Federal Prison Industries
to compete for its contracts minimizing its unfair competition with non-
inmate workers and the firms that employ them and increasing the
likelihood that Federal agencies get the best value for taxpayers dollars,
to require that Federal Prison Industries fully and timely perform its
Government contracts by empowering Federal contracting officers with
the contract administration tools generally available to assure full and
timely performance of other Government contracts, to enhance the oppor-
tunities for effective public participation in decisions to expand the activi-
ties of Federal Prison Industries, to provide to Federal agencies tem-
porary preferential contract award authority to ease the transition of
Federal Prison Industries to obtaining inmate work opportunities through
other than its mandatory source status, to provide additional work oppor-
tunities for Federal inmates by authorizing Federal Prison Industries
to provide inmate workers to nonprofit entities with protections against
commercial activities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 24, 2001
Mr. HOEKSTRA (for himself, Mr. FRANK, Mr. COLLINS, Mrs. MALONEY of
New York, Mr. SENSENBRENNER, Mr. COBLE, Mr. HILLEARY, Ms.
BALDWIN, Mr. JENKINS, Mr. KLECZKA, Mr. TOM DAVIS of Virginia, Mr.
RAHALL, Ms. HART, Mr. MCGOVERN, Mr. BLUNT, Mr. GORDON, Mr.
BURR of North Carolina, Mr. SMITH of Washington, Mr. LAHOOD, Mr.
NEY, Mr. HILLIARD, Mr. LOBIONDO, Mr. JONES of North Carolina, Mr.
ENGLISH, Mr. DOYLE, Mr. MCHUGH, Mr. EHLERS, Ms. CARSON of Indi-
ana, Mr. SESSIONS, Mr. CAMP, Mr. KUCINICH, Mr. ROYCE, Mr. SOUDER,
and Mr. TANNER) introduced the following bill; which was referred to the
Committee on the Judiciary
JULY 16, 2002
Additional sponsors: Mr. NORWOOD, Mr. DEAL of Georgia, Ms. SANCHEZ, Mr.
CHAMBLISS, Mr. BARTLETT of Maryland, Mr. TOOMEY, Ms. GRANGER,
Mr. GILLMOR, Mr. FERGUSON, Mr. CALLAHAN, Mr. MALONEY of Con-
necticut, Mr. HOSTETTLER, Mr. COYNE, Mrs. MYRICK, Mr. HEFLEY, Mr.
BRADY of Texas, Mr. SMITH of New Jersey, Mr. BORSKI, Mr. KNOLLEN-
BERG, Mr. ROGERS of Michigan, Mr. FILNER, Mr. UPTON, Mr. HILL,
Mr. BALDACCI, Mr. MCINTYRE, Mr. STUMP, Mr. FROST, Mr. KIRK, Mr.
MANZULLO, Mr. OLVER, Ms. MCKINNEY, Mr. DUNCAN, Mr. BARCIA, Mr.
ISTOOK, Mr. CLAY, Mr. LANTOS, Mr. GRUCCI, Mr. MCINNIS, Mr. ROE-
MER, Mr. SHADEGG, Mr. SCHAFFER, Mr. NADLER, Ms. WOOLSEY, Mr.
RANGEL, Mr. THORNBERRY, Mr. LATOURETTE, Mrs. NORTHUP, Mr.
LEACH, Mr. BURTON of Indiana, Mr. DEMINT, Mr. BALLENGER, Mrs.
EMERSON, Mr. CANTOR, Mr. PENCE, Mr. KERNS, Mr. BRYANT, Mr. TAY-
LOR of North Carolina, Mr. WAMP, Mrs. JONES of Ohio, Mr. PICKERING,
Ms. VELA´ZQUEZ, Mr. NETHERCUTT, Mr. FLETCHER, Mr. RYAN of Wis-
consin, Mr. CLEMENT, Mrs. CAPITO, Mrs. CUBIN, Mr. KINGSTON, Mr.
QUINN, Mr. PLATTS, Ms. PRYCE of Ohio, Mr. TIAHRT, Mr. MCKEON,
Mrs. WILSON of New Mexico, Mr. CRAMER, Mr. DOOLITTLE, Mr.
FORBES, Mr. TERRY, Mr. EDWARDS, Mr. BARR of Georgia, Mrs. DAVIS
of California, Mr. LATHAM, Ms. LEE, Mr. LANGEVIN, Ms. SCHAKOWSKY,
Mr. GANSKE, Mr. BONIOR, Mr. FLAKE, Mr. WELDON of Florida, Mr.
HAYES, Mr. BOEHLERT, Mr. GOODE, Mr. OXLEY, Mr. STENHOLM, Mr.
DINGELL, Mr. CONYERS, Mr. WATT of North Carolina, Ms. JACKSON-
LEE of Texas, Mr. GEKAS, Mr. ISAKSON, Mr. OSBORNE, Mr. BRADY of
Pennsylvania, Mr. UDALL of Colorado, and Mr. NUSSLE
Deleted sponsors: Mr. LUCAS of Oklahoma (added June 28, 2001; deleted
July 15, 2002) and Mr. SANDLIN (added September 13, 2001; deleted
May 22, 2002)
JULY 16, 2002
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on April 24, 2001]
A BILL
To amend title 18, United States Code, to require Federal
Prison Industries to compete for its contracts minimizing
its unfair competition with non-inmate workers and the
firms that employ them and increasing the likelihood
that Federal agencies get the best value for taxpayers
dollars, to require that Federal Prison Industries fully
and timely perform its Government contracts by empow-
ering Federal contracting officers with the contract ad-
ministration tools generally available to assure full and
timely performance of other Government contracts, to
enhance the opportunities for effective public participa-
tion in decisions to expand the activities of Federal Pris-
on Industries, to provide to Federal agencies temporary
preferential contract award authority to ease the transi-
tion of Federal Prison Industries to obtaining inmate
work opportunities through other than its mandatory
source status, to provide additional work opportunities
for Federal inmates by authorizing Federal Prison Indus-
tries to provide inmate workers to nonprofit entities with
protections against commercial activities, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Federal Prison Indus-
tries Competition in Contracting Act of 2002’’.
SEC. 2. GOVERNMENTWIDE PROCUREMENT POLICY RELAT-
ING TO PURCHASES FROM FEDERAL PRISON
INDUSTRIES.
Section 4124 of title 18, United States Code, is amend-
ed to read as follows:
‘‘§ 4124. Governmentwide procurement policy relating
to purchases from Federal Prison Indus-
tries
‘‘(a) IN GENERAL.—Purchases from Federal Prison
Industries, Incorporated, a wholly owned Government cor-
poration, 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 spe-
cific product or service that is authorized to be offered for
sale by Federal Prison Industries, in accordance with sec-
tion 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 au-
thorized 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 reason-
ably expect fair consideration to receive the contract
award on a competitive basis; and
‘‘(B) the contract award is necessary to main-
tain 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 pursu-
ant 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 fur-
nished will meet the requirements of the procurement
activity (including any applicable prequalification
requirements and all specified commercial or govern-
mental standards pertaining to quality, testing, safe-
ty, 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 pursu-
ant to paragraph (3) shall be—
‘‘(A) supported by specific findings by the war-
den 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 deter-
mination described in paragraph (3) within 30 days after
Federal Prison Industries has been informed of a con-
tracting opportunity by a procurement activity, the pro-
curement activity may proceed to conduct a procurement
for the product or service in accordance with the procedures
generally applicable to such procurements by the procure-
ment 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 au-
thority 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 re-
lating 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 INDUS-
TRIES.—Federal Prison Industries shall perform its con-
tractual obligations under a contract awarded by a Federal
department or agency to the same extent as any other con-
tractor.
‘‘(e) FINALITY
OF CONTRACTING OFFICER’S DECI-
SION.—(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 In-
dustries 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 sub-
section (b)(4). The decision of the head of a Federal depart-
ment 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 pur-
suant to subchapter IV of chapter 5 of title 5; or
‘‘(B) final resolution by the board of contract ap-
peals having jurisdiction over the procurement activi-
ty’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 de-
partment 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 Procure-
ment Policy Act (41 U.S.C. 403(11))).
‘‘(g) CATALOG OF PRODUCTS.—Federal Prison Indus-
tries 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.’’.
SEC. 3. PUBLIC PARTICIPATION REGARDING EXPANSION
PROPOSALS BY FEDERAL PRISON INDUS-
TRIES.
Section 4122(b) of title 18, United States Code, is
amended—
(1) by redesignating paragraph (6) as para-
graph (12); and
(2) by striking paragraphs (4) and (5) and in-
serting the following new paragraphs:
‘‘(4) A decision to authorize Federal Prison Industries
to offer a new specific product or specific service or to ex-
pand 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 Fed-
eral market by Federal Prison Industries on private sector
firms and their noninmate workers.
‘‘(B)(i) The analysis required by subparagraph (A)
shall be performed by an interagency team on a reimburs-
able basis or by a private contractor paid by Federal Prison
Industries.
‘‘(ii) If the analysis is to be performed by an inter-
agency 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 Pro-
curement Data Center.
‘‘(iii) If the analysis is to be performed by a private
contractor, the selection of the contractor and the adminis-
tration of the contract shall be conducted by one of the enti-
ties 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.
made product or to expand production of a currently au-
thorized product if the product is—
‘‘(I) produced in the private sector by an indus-
try 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 pro-
posal for inmates to provide a service in which an inmate
worker has access to—
‘‘(I) personal or financial information about in-
dividual private citizens, including information relat-
ing 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 com-
munications, water and electrical power distribution,
pipelines for the distribution of natural gas, bulk pe-
troleum 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, un-
less to be performed within a Federal correctional institu-
tion pursuant to the participation of an inmate in an ap-
prenticeship or other vocational education program teach-
ing the skills of the various building trades.
‘‘(II) For purposes of this clause, the term ‘construc-
tion’ 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, 2001, including the repair, alter-
ation, 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 au-
thorize the production and sale of a new product or
service, or expand the production of a currently au-
thorized 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 ap-
proval of the proposal, which notice shall offer to fur-
nish 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 af-
fected 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 prod-
uct 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 ex-
pansion proposal, the Chief Operating Officer of Federal
Prison Industries may provide the board of directors a re-
vised 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 re-
spect 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 para-
graphs (5) through (9) of this subsection, the board of direc-
tors may—
‘‘(A) authorize the donation of products produced
or services furnished by Federal industries and avail-
able for sale; or
‘‘(B) authorize the production of a new specific
product or the furnishing of a new specific service for
donation.’’.
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 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 Indus-
tries and make purchases on a noncompetitive basis in ac-
cordance 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 Indus-
tries if the contracting officer for the procurement activity
determines that—
(1) the product offered by Federal Prison Indus-
tries will meet the requirements of the procurement
activity (including commercial or governmental
standards or specifications pertaining to design, per-
formance, testing, safety, serviceability, and warran-
ties as may be imposed upon a private sector supplier
of the type being offered by Federal Prison Indus-
tries);
(2) timely performance of the contract by Fed-
eral 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 Fed-
eral 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 proce-
dures of the Federal Acquisition Regulation.
(d) PERFORMANCE OF CONTRACTUAL OBLIGATIONS.—
(1) IN
GENERAL.—Federal Prison Industries
shall perform the obligations of the contract nego-
tiated 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 satisfac-
tion, such dispute shall be resolved pursuant to sec-
tion 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 Govern-
ment made pursuant to subsection (b) and subsection
(c) of this section shall not exceed—
(A) 90 percent in fiscal year 2004;
(B) 85 percent in fiscal year 2005;
(C) 70 percent in fiscal year 2006;
(D) 55 percent in fiscal year 2007; and
(E) 40 percent in fiscal year 2008.
(2) SALES
WITHIN
VARIOUS
BUSINESS
SEC-
TORS.—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 sec-
tor.
(3) LIMITATIONS RELATING TO SPECIFIC PROD-
UCTS.—Use of the authorities provided by subsections
(b) and (c) shall not result in contract awards to Fed-
eral 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 di-
rected by the buying agency.
(f) DURATION OF AUTHORITY.—The preferential con-
tracting authorities authorized by subsection (b) may not
be used on or after October 1, 2008, and become effective
on the effective date of the final regulations issued pursuant
to section 17.
(g) DEFINITIONS.—For the purposes of this section—
(1) the term ‘‘base period’’ means the total sales
of Federal Prison Industries during the period Octo-
ber 1, 2000, and September 30, 2001 (Fiscal Year
2001);
(2) the term ‘‘business sectors’’ means the eight
product/service business groups identified in the 2001
Federal Prison Industries annual report as the Cloth-
ing and Textile Business Group, the Electronics Busi-
ness Group, the Fleet Management and Vehicular
Components Business Group, the Furniture Business
Group, the Graphics Business Group, the Industrial
Products Business Group, the Recycled Electronics
Products and Services Business Group, and the Serv-
ices Business Group; and
(3) the term ‘‘fair and reasonable price’’ shall be
given the same meaning as, and be determined pursu-
ant to, part 15.8 of the Federal Acquisition Regula-
tion (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 limitation imposed by such sub-
section for such fiscal year and the likely effects of the limi-
tation imposed by such subsection for the following fiscal
year.
(2) The Attorney General’s finding shall include a de-
termination whether such limitation has resulted or is like-
ly 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 ad-
ditional alternative inmate rehabilitative opportunities and
additional correctional staffing, as may be appropriate.
SEC. 5. AUTHORITY TO PERFORM AS A FEDERAL SUBCON-
TRACTOR.
(a) IN GENERAL.—Federal Prison Industries is au-
thorized 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 per-
formance 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 ap-
proval of subcontractors or suppliers by the contracting offi-
cer which may be imposed by the Federal Acquisition Regu-
lation 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 in-
mate workers in violation of section 1762(a) of title 18,
United States Code. A Federal contractor (or subcontractor
at any tier) using Federal Prison Industries as a subcon-
tractor or supplier in furnishing a commercial product pur-
suant 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 INDUSTRIES.—Except as author-
ized 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 sub-
contractors at any tier by means of—
(1) a contract solicitation provision requiring a
contractor to offer to make use of Federal Prison In-
dustries, 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 a new paragraph (11) as follows:
‘‘(11)(A) The Board of Directors of Federal Prison In-
dustries shall prescribe the rates of hourly wages to be paid
inmates performing work for or through Federal Prison In-
dustries. The Director of the Federal Bureau of Prisons
shall prescribe the rates of hourly wages for other work as-
signments within the various Federal correctional institu-
tions.
‘‘(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 vic-
tims of the inmate’s crimes (at a rate not less than
10 percent of gross wages);
‘‘(iv) allocations for support of the inmate’s fam-
ily 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 soci-
ety, 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.’’.
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 fur-
nished, 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, 2001, may continue to provide such commercial
services until—
(1) the expiration date specified in the contract
or other agreement with a commercial partner on Oc-
tober 1, 2001, or
(2) until September 30, 2004, if the prison work
program is directly furnishing the services to the com-
mercial market.
(c) APPROVAL REQUIRED
FOR LONG-TERM OPER-
ATION.—A prison work program operated with a correc-
tional institution operated by 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 in-
serting ‘‘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 In-
dustries facility; or
‘‘(B) any particular wage, compensation, or
benefit on demand, except as otherwise specifi-
cally 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 be-
half of any inmate against the United States or any
officer, employee, or contractor thereof.’’.
SEC. 10. PROVIDING ADDITIONAL OPPORTUNITIES FOR
POST INCARCERATION VOCATIONAL AND RE-
MEDIAL EDUCATIONAL OPPORTUNITIES FOR
INMATES.
(a) FEDERAL REENTRY CENTER DEMONSTRATION.—
(1) AUTHORITY AND ESTABLISHMENT OF DEM-
ONSTRATION PROJECT.—From funds made available
to carry out this section, the Attorney General, in
consultation with the Director of the Administrative
Office of the United States Courts, shall establish the
Federal Reentry Center Demonstration project. The
project shall involve appropriate prisoners from the
Federal prison population and shall utilize commu-
nity corrections facilities, home confinement, and a
coordinated response by Federal agencies to assist
participating prisoners in preparing for and adjust-
ing to reentry into the community.
(2) PROJECT
ELEMENTS.—The project author-
ized by paragraph (1) shall include the following core
elements:
(A) A Reentry Review Team for each pris-
oner, consisting of representative from the Bu-
reau of Prisons, the United States Probation
System, the United States Parole Commission,
and the relevant community corrections facility,
who shall initially meet with the prisoner to de-
velop a reentry plan tailored to the needs of the
prisoner.
(B) A system of graduated levels of super-
vision within the community corrections facility
to promote community safety, provide incentives
for prisoners to complete the reentry plan, in-
cluding victim restitution, and provide a reason-
able method for imposing sanctions for a pris-
oner’s violation of the conditions of participation
in the project.
(C) 
Substance 
abuse 
treatment 
and
aftercare, mental and medical health treatment
and aftercare, vocational and educational train-
ing, life skills instruction, conflict resolution
skills training, batterer intervention programs,
assistance obtaining suitable affordable housing,
and other programming to promote effective re-
integration into the community as needed.
(3) PROBATION
OFFICERS.—From funds made
available to carry out this section, the Director of the
Administrative Office of the United States Courts
shall assign one or more probation officers from each
participating judicial district to the Reentry Dem-
onstration project. Such officers shall be assigned to
and stationed at the community corrections facility
and shall serve on the Reentry Review Teams.
(4) PROJECT
DURATION.—The Reentry Center
Demonstration project shall begin not later than 6
months following the availability of funds to carry
out this subsection, and shall last 3 years.
(b) DEFINITIONS.—For the purposes of this section,
‘‘Appropriate prisoner’’ shall mean a person who is consid-
ered by prison authorities—
(1) to pose a medium to high risk of committing
a criminal act upon reentering the community, and
(2) to lack the skills and family support network
that facilitate successful reintegration into the com-
munity.
(c) AUTHORIZATION OF APPROPRIATIONS.—To carry
out this section, there are authorized to be appropriated,
to remain available until expended—
(1) to the Federal Bureau of Prisons—
(A) $1,375,000 for fiscal year 2003;
(B) $1,110,000 for fiscal year 2004;
(C) $1,130,000 for fiscal year 2005;
(D) $1,155,000 for fiscal year 2006; and
(E) $1,230,000 for fiscal year 2007;
(2) to the Federal Judiciary—
(A) $3,380,000 for fiscal year 2003;
(B) $3,540,000 for fiscal year 2004;
(C) $3,720,000 for fiscal year 2005;
(D) $3,910,000 for fiscal year 2006; and
(E) $4,100,000 for fiscal year 2007.
SEC. 11. PROVIDING ADDITIONAL TRAINING AND EDU-
CATIONAL OPPORTUNITIES FOR INMATES.
(a) AMENDMENT REGARDING THE DEPARTMENT OF
JUSTICE ASSETS FORFEITURE FUND.—Section 524(c)(1) of
title 28, United States Code, is amended—
(1) by redesignating the second appearance of
subparagraph (I) as subparagraph (J);
(2) by amending subparagraph (J) (as redesig-
nated by paragraph (1)) to read as follows:
‘‘(J) payments to the Bureau of Prisons exclu-
sively for the purpose of establishing the Federal En-
hanced In-Prison Vocational Assessment and Train-
ing Program in all Federal institutions, which shall
provide in-prison assessments of prisoners’ needs and
aptitudes, enhanced work skills developed, enhanced
release readiness programming, and other components
as appropriate to reduce inmate idleness and prepare
Federal prisoners for release and reentry into the
community;’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(K) payments to the Bureau of Prisons exclu-
sively for the purpose of establishing a nonprofit com-
ponent for inmate work in all Federal institutions, in
carrying out which Federal Prison Industries shall (i)
work actively to identify and donate to nonprofit or-
ganizations that provide goods and services to low in-
come individuals who can use Federal Prison Indus-
try products and have difficulty purchasing these
products on their own, and (ii) focus on organizations
that would not otherwise be available to purchase
such products.’’.
(b) PRIORITY ESTABLISHED.—During each fiscal year
after fiscal year 2002, the Attorney General shall, to carry
out the programs described in subparagraphs (J) and (K)
of section 524(c)(1) of title 28, United States Code (as added
by subsection (a)), allocate such funds as may be appro-
priate, but in no event less than $75,000,000, from the ex-
cess unobligated balance in the Department of Justice Assets
Forfeiture Fund. If the unobligated balance of the Fund is
less than such amount or such funds are otherwise unavail-
able from the Fund, such allocation shall be made from the
General Treasury.
SEC. 12. RESTRUCTURING THE BOARD OF DIRECTORS.
Section 4121 of title 18, United States Code, is amend-
ed to read as follows:
‘‘§ 4121. Federal Prison Industries; Board of Directors:
executive management
‘‘(a) Federal Prison Industries is a government cor-
poration of the District of Columbia organized to carry on
such industrial operations in Federal correctional institu-
tions 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 Presi-
dent shall assure that 3 members represent the business
community, 3 members represent organized labor, 1 member
shall have special expertise in inmate rehabilitation tech-
niques, 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 fur-
nishing services as well as firms producing products, espe-
cially from those industry categories from which Federal
Prison Industries derives substantial sales. The members of
the Board representing organized labor shall, to the max-
imum 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 com-
munity shall be appointed for a term of 3 years;
‘‘(B) 2 members representing labor shall be ap-
pointed 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 Fed-
eral inmate workers shall be appointed for a term of
3 years;
‘‘(F) 1 member representing the business commu-
nity shall be appointed for a term of 4 years;
‘‘(G) 1 member representing the business commu-
nity shall be appointed for a term of 4 years; and
‘‘(H) the members having special expertise in in-
mate 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 ap-
pointed 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 Oversight 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 advance
approval of the Chairperson of the Board, while otherwise
away from their homes or regular places of business for pur-
poses 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 en-
able the Board to perform its duties.
‘‘(B) Upon request of the Chairperson of the Board,
a Federal agency may detail a Federal Government em-
ployee 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 tem-
porary 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. 13. PRE-RELEASE EMPLOYMENT ASSISTANCE.
(a) IN GENERAL.—The Director of the Bureau of Pris-
ons shall, to the maximum extent practicable, afford to in-
mates opportunities to participate in programs and activi-
ties designed to help prepare such inmates to obtain em-
ployment upon release.
(b) PRE-RELEASE EMPLOYMENT PLACEMENT ASSIST-
ANCE.—Such pre-release employment placement assistance
required by subsection (a) shall include—
(1) training in the preparation of resumes and
job applications;
(2) training in interviewing skills;
(3) training and assistance in job search tech-
niques;
(4) conduct of job fairs; and
(5) such other methods deemed appropriate by
the Director of the Bureau of Prisons.
(c) PRIORITY PARTICIPATION.—Priority in program
participation shall be accorded to inmates who are partici-
pating in work opportunities afforded by Federal Prison
Industries and are within 12 months of release from incar-
ceration.
SEC. 14. PROVIDING ADDITIONAL MANAGEMENT FLEXI-
BILITY TO FEDERAL PRISON INDUSTRY OPER-
ATIONS.
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 para-
graphs:
‘‘(B) Federal Prison Industries may locate more than
one workshop at a Federal correctional facility.
‘‘(C) Federal Prison Industries may operate a work-
shop outside of a correctional facility if all of the inmates
working in such workshop are classified as minimum secu-
rity inmates.’’.
SEC. 15. FEDERAL PRISON INDUSTRIES REPORT TO CON-
GRESS.
Section 4127 of title 18, United States Code, is amend-
ed 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 sub-
mit an annual report to Congress on the conduct of the busi-
ness of the corporation during each fiscal year and the con-
dition of its funds during the fiscal year.
‘‘(b) CONTENTS OF REPORT.—In addition to the mat-
ters 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 serv-
ice;
‘‘(C) the corporation’s share of such total
Federal Government purchases by specific prod-
uct and type of service; and
‘‘(D) the number and disposition of disputes
submitted to the heads of the Federal depart-
ments 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 em-
ployed inmates by the term of their incarcer-
ation; and
‘‘(D) the various hourly wages paid to in-
mates employed with respect to the production of
the various specific products and types of serv-
ices authorized for production and sale to Fed-
eral 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 en-
abled such former inmate to earn a livelihood upon
release.
‘‘(c) PUBLIC AVAILABILITY.—Copies of an annual re-
port under subsection (a) shall be made available to the
public at a price not exceeding the cost of printing the re-
port.’’.
SEC. 16. DEFINITIONS.
Chapter 307 of title 18, United States Code, is amend-
ed 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 (includ-
ing ancillary finished components or assemblies) so as
to produce a significant change in form or utility,
without necessarily changing or altering the compo-
nent 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, prop-
erties, 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 pre-
ceding fiscal years, that does not exceed 20 per-
cent of the Federal market for the specific prod-
uct; and
‘‘(B) any specific service during the 3 pre-
ceding 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, 2001.’’.
SEC. 17. IMPLEMENTING REGULATIONS AND PROCEDURES.
(a) FEDERAL ACQUISITION REGULATION.—
(1) PROPOSED
REVISIONS.—Proposed revisions
to the Governmentwide Federal Acquisition Regula-
tion 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.
(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 publica-
tion.
(3) PUBLIC PARTICIPATION.—The proposed regu-
lations required by subsection (a) and the final regu-
lations required by subsection (b) shall afford an op-
portunity 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 de-
fining the terms specified in paragraph (2).
(2) TERMS TO BE DEFINED.—The Board of Di-
rectors 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
DEFINI-
TIONS.—
(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 mat-
ters described in subsection (b)(2) shall be pub-
lished not less than 180 days after the date of en-
actment 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 rule-
making pursuant to section 553 of title 5, United
States Code. Unless determined wholly impracti-
cable 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 effec-
tively solicit public comment on proposed regula-
tions, 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 proce-
dures, guidelines, and any other matter relating
to the governance and operation of Federal Pris-
on Industries based on deliberations and a re-
corded vote conducted during a meeting open to
the public, unless closed pursuant to section
552(b) of title 5, United States Code.
SEC. 18. RULE OF CONSTRUCTION.
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 regula-
tion in effect on the date of the enactment of this Act.
SEC. 19. EFFECTIVE DATE AND APPLICABILITY.
(a) EFFECTIVE DATE.—Except as provided in sub-
section (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 Pris-
on Industries needed by a Federal department or agency
after the effective date of the final regulations issued pursu-
ant to section 16(a)(2), or after September 30, 2003, which-
ever is earlier.
SEC. 20. 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:
‘‘4130. Construction of provisions.
‘‘4131. Definitions.’’.
SEC. 21. INDEPENDENT STUDY TO DETERMINE THE EF-
FECTS OF ELIMINATING THE FEDERAL PRIS-
ON INDUSTRIES MANDATORY SOURCE AU-
THORITY.
(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 Gen-
eral 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 ex-
ecutive branch, and the public are solicited.
(c) SUBMISSION.—Not later than January 31, 2003,
the Comptroller General shall submit the results of the study
to Congress, including any recommendations for legislation.
Union Calendar No. 349
107TH CONGRESS
2D SESSION
H. R. 1577
[Report No. 107–583]
A BILL
To amend title 18, United States Code, to require
Federal Prison Industries to compete for its con-
tracts minimizing its unfair competition with
non-inmate workers and the firms that employ
them and increasing the likelihood that Federal
agencies get the best value for taxpayers dollars,
to require that Federal Prison Industries fully
and timely perform its Government contracts by
empowering Federal contracting officers with the
contract administration tools generally available
to assure full and timely performance of other
Government contracts, to enhance the opportuni-
ties for effective public participation in decisions
to expand the activities of Federal Prison Indus-
tries, to provide to Federal agencies temporary
preferential contract award authority to ease the
transition of Federal Prison Industries to obtain-
ing inmate work opportunities through other
than its mandatory source status, to provide ad-
ditional work opportunities for Federal inmates
by authorizing Federal Prison Industries to pro-
vide inmate workers to nonprofit entities with
protections against commercial activities, and for
other purposes.
JULY 16, 2002
Reported with an amendment, committed to the Com-
mittee of the Whole House on the State of the Union,
and ordered to be printed