I
105TH CONGRESS
2D SESSION
H. R. 4100
To amend title 18, United States Code, with respect to the employment
of Federal prisoners, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 19, 1998
Mr. MCCOLLUM introduced the following bill; which was referred to the
Committee on the Judiciary
A BILL
To amend title 18, United States Code, with respect to
the employment of Federal prisoners, 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 ‘‘Free Market Prison
Industries Reform Act of 1998’’.
SEC. 2. GENERAL PROVISIONS RELATING TO STRUCTURE
AND FUNCTION OF FEDERAL PRISON INDUS-
TRIES.
Title 18, United States Code, is amended by striking
sections 4121 through 4122 and inserting the following:
‘‘§ 4121. Definitions
‘‘In this section—
‘‘(1) the term ‘industry’ means an endeavor
that utilizes incarcerated persons to produce one or
more goods or provide one or more services, or both;
‘‘(2) the term ‘product’ includes services;
‘‘(3) the term ‘prisoner contributions’ means an
amount which shall be used for—
‘‘(A) payment of fines and restitution owed by
the prisoner pursuant to court order;
‘‘(B) reasonable charges for room and board, as
determined under rules made by the Attorney Gen-
eral;
‘‘(C) allocations for support of the inmate’s
family pursuant to statute, court order, or agree-
ment by the inmate; and
‘‘(D) contributions, of not less than 5 percent
but not more than 20 percent of the fee paid on ac-
count of the inmate, to any fund established by law
to compensate the victims of crime;
‘‘(4) the term ‘assembled good’ means a good
which is the result of the assembly of fabricated
goods, as such terms are defined in 19 CFR 10.11
et seq.; and
‘‘(5) the term ‘foreign-made good’ means a
good that the Director of Bureau of Labor Statistics
‘‘§ 4130. Limited Sales Projects
‘‘(a) Any industry not operated as a Private Sector
Project or a Prison Industry Enhancement Project shall
be operated as a Limited Sales Project.
‘‘(b) An industry operated as a Limited Sales Project
shall—
‘‘(A) sell its products only to—
‘‘(i) the Federal Government;
‘‘(ii) State and local governmental en-
tities; or
‘‘(iii) outside the United States;
‘‘(B) be operated directly by Federal Pris-
on Industries; and
‘‘(C) be located in a facility provided by
the Bureau of Prisons.
SEC. 4. NEW INDUSTRIES.
(a) IN GENERAL.—Chapter 307 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 4131. Private Sector Projects
‘‘(a) Except as provided in subsection (g), each indus-
try located at a facility activated by the Attorney General
on or after the date which is one year after the date of
the enactment of the Prison Industries Reform Act of
1998 shall be operated as a Private Sector Project. Each
industry located at a facility that was activated before that
date may be operated as a Private Sector Project.
‘‘(b) An industry operated as a Private Sector Project
shall—
‘‘(1) sell its products generally on the open
market;
‘‘(2) be operated by a private person under a
contract with Federal Prison Industries for the use
of prison labor; and
‘‘(3) be located in a facility operated by the Bu-
reau of Prisons or a private person under a contract
with the Attorney General, or elsewhere as may be
determined by the Attorney General.
‘‘(c) Except as otherwise provided in this section,
Federal Prison Industries shall enter into a contract with
a private person to operate the Private Sector Project on
terms beneficial to the mission of Federal Prison Indus-
tries. The contract shall include a provision for payment
of a fee for the use of the services of the inmates working
in that Project.
‘‘(d) Before entering into a contract with a private
person under subsection (c), Federal Prison Industries
shall prepare and make public a notice soliciting private
persons to submit bids for the contract. Federal Prison
Industries shall submit that notice to the committees on
the judiciary of the House of Representatives and the Sen-
ate on or before the date such notice is made public.
‘‘(e) When reviewing bids submitted by a private per-
son to operate and manage a Private Sector Project, Fed-
eral Prison Industries shall give preferences to private per-
sons who propose to use the Private Sector Project for
operations that otherwise would be located in a foreign
place, unless Federal Prison Industries determines that
other bids are of greater benefit to the mission of Federal
Prison Industries.
‘‘(f) The Attorney General may determine the portion
of any compensation paid by the private person pursuant
to a contract under subsection (c) that will be distributed
as wages to inmates who work in the industry. The re-
mainder of such compensation shall be retained by Federal
Prison Industries and distributed as prisoner contribu-
tions in accordance with section 4133.
‘‘(g) If Federal Prison Industries is unable to enter
into a contract with a private person with respect to a
Private Sector Project within 18 months after the latter
of the date on which notice is given pursuant to subsection
(d) or on which the Attorney General activates the facility
at which the industry is to be located, Federal Prison In-
dustries may operate that industry as a Prison Industry
Enhancement Project.
‘‘§ 4132. Prison Industry Enhancement Projects
‘‘(a) Each industry that is in operation on the day
which is one year after the date of the enactment of the
Prison Industries Reform Act of 1998 and located at a
facility activated before such day may be operated as a
Prison Industry Enhancement Project. Any industry de-
scribed in section 4131(g) and which Federal Prison In-
dustries determines will not be operated as a Private Sec-
tor Project shall be operated as a Prison Industry En-
hancement Project.
‘‘(b) An industry operated as a Prison Industry En-
hancement Project’ shall—
‘‘(1) sell its products generally on the open
market;
‘‘(2) be operated by Federal Prison Industries;
and
‘‘(3) be located in a facility operated by the Bu-
reau of Prisons or a private person under a contract
with the Attorney General.
‘‘(c) The Attorney General may determine the portion
of the net revenues of the Prison Enhancement Project
to be distributed as wages to inmates who work in the
industry. The remainder of such revenue shall be retained
by Federal Prison Industries and distributed as prisoner
contributions in accordance with section 4133.
‘‘(d) Not later than 2 years after the date of the en-
actment of the Prison Industries Reform Act of 1998,
Federal Prison Industries shall operate not less than 5
industries existing on such date as Private Sector Projects
or Prison Industry Enhancement Projects. Not later than
3 years after such date, Federal Prison Industries shall
operate not less than 20 such industries as Private Sector
Projects or Prison Industry Enhancement Projects.’’.
(b) ELIMINATION OF OLD PROVISION RESPECTING
NEW INDUSTRIES.—Title 18, United States Code, is
amended by striking section 4123.
SEC. 5. CONFORMING AMENDMENTS.
(a) MANDATORY SOURCE REQUIREMENT.—Section
4124 of title 18, United States Code, is amended—
(1) in subsection (a)—
(A) by striking ‘‘The’’ and inserting ‘‘Ex-
cept as otherwise provided by law, the’’;
(B) by inserting ‘‘(in each of the executive,
legislative, 
and 
judicial 
branches)’’ 
after
‘‘United States’’; and
(C) by striking ‘‘the industries’’ and insert-
ing ‘‘Limited Sales Projects’’;
(2) in subsection (d), by striking ‘‘products and
services’’ and inserting ‘‘products of Limited Sales
Projects’’; and
(3) by adding at the end the following:
‘‘(e)(1) Subsection (a) does not require the purchase
by Federal entities of any assembled goods.
‘‘(2) Subsection (a) does not require the purchase by
Federal entities of any foreign-made goods. ’’.
(b) PRISON INDUSTRIES FUND.—Section 4126(c) of
title 18, United States Code, is amended—
(1) by inserting ‘‘(in an amount not greater
than that provided in chapter 81 of title 5)’’ after
‘‘operations, and compensation’’;
(2) by striking the period at the end of para-
graph (4) and inserting a semicolon;
(3) by striking the matter in subsection (c) that
follows paragraph (4) and inserting the following:
‘‘(5) in paying, under rules and regulations pro-
mulgated by the Attorney General, prisoner con-
tributions.’’.
SEC. 6 CLERICAL AMENDMENTS.
The table of sections for chapter 307 of title 18,
United States Code, is amended—
(1) so that the item relating to section 4121
reads as follows:
‘‘4121. Definitions.’’.
(2) by striking the item relating to section
4123; and
(3) by inserting after the item relating to sec-
tion 4129 the following new items:
‘‘4130. Limited Sales Projects.
‘‘4131. Private Sector Projects.
‘‘4132. Prison Industry Enhancement Projects.’’.
SEC. 7. MODIFICATION OF PROHIBITION ON SALES OF
PRISONER-MADE PRODUCTS.
Section 1761 of title 18, United States Code, is
amended by striking subsections (b) through (d) and in-
serting the following:
‘‘(b)(1) This section does not apply to good, wares,
or merchandise manufactured or produced, or services
provided, by inmates at an industry—
‘‘(A) provided by Federal Prison Industries; or
‘‘(B) provided by a State, unless—
‘‘(i) the industry is operated by a person
other than the State; and
‘‘(ii) after September 30, 2008, the State
does not have in effect any requirement that
the departments and agencies of the State pur-
chase a portion of their requirements for prod-
ucts produced by any industry provided by that
State.
‘‘(2) As used in this subsection, the term ‘State’
means a State of the United States and any common-
wealth, territory, or possession of the United States.’’.
SEC. 8. STUDY OF FOREIGN-MADE GOODS.
The Director of the Bureau of Labor Statistics shall
make a initial determination of those goods (described by
Standard Industrial Product Code published by the Office
of Management and Budget) of which 95 percent or more
of the amount sold in the United States are fabricated
in a foreign place. The Director shall report that deter-
mination to Congress, not later than 180 days after the
date of the enactment of the Prison Industries Reform Act
of 1998.
SEC. 9. RESTRUCTURING.
(a) PLAN.—The Attorney General shall, not later
than one year after the date of the enactment of this Act,
develop and submit to Congress a plan, together with any
recommendations for any necessary implementing legisla-
tion, for restructuring Federal Prison Industries. The plan
shall provide—
(1) for the reduction in the use of Limited
Sales Projects measured as a percentage of the total
sales of Federal Prison Industries (or any successor)
by 40 percent before the end of the 5-year period be-
ginning on the date of the enactment of this Act;
(2) except as provided in subsection (b)—
(A) for the phase out of the use of Limited
Sales Projects by September 30, 2008; and
(B) for the phase out of the use of Prison
Industry Enhancement Projects by September
30, 2013;
(3) the creation of a non-governmental entity to
succeed to the rights and obligations of Federal
Prison Industries;
(b) ALTERNATE PROVISIONS OF PLAN.—
(1) GENERALLY.—The plan may provide that if
the number of inmates employed in industries pro-
vided by Federal Prison Industries 3 years after the
submission date is less than the number of inmates
so employed on the submission date, then—
(A) the 40 percent reduction described in
subsection (a)(1) is not required and Limited
Sales Projects may also be used to provide in-
dustries after September 30, 2008, but to no
greater extent (measured as a percentage of the
total sales of Federal Prison Industries (or any
successor)) than used on the submission date;
and
(B) Prison Industry Enhancement Projects
may also be used to provide industries after
September 30, 2013.
(2) DEFINITION.—as used in this subsection,
the term ‘‘submission date’’ is the date the plan is
submitted to Congress under subsection (a).
(c) IMPLEMENTATION OF PLAN.—To the extent the
plan may be implemented without the enactment of legis-
lation, the plan shall go into effect 180 days after the date
of its submission to Congress, unless Congress shall by
law otherwise provide.
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