Congress ends prison firm’s preference in Defense contracting

The Defense Department can buy furniture, textiles, and other equipment from private sector firms instead of Federal Prison Industries under legislation passed by Congress last week. In a major victory for private companies eager to tap the federal market, the Defense authorization bill stripped Federal Prison Industries (FPI), also called Unicor, of its mandatory source status with the Pentagon. FPI is still the default provider of certain products to all federal agencies besides Defense. It is unclear how much Defense work FPI will lose as a result of the legislation. Under the bill, Defense contracting officers still must determine if FPI offers the "best available" product in terms of quality, price and timeliness. If an FPI product is deemed the best available, Defense would be required to buy it from the agency. If FPI's product is not the best, the agency would have to compete with private firms in order to win a contract with the Pentagon. FPI employs more than 21,000 federal inmates and accounted for more than $546 million in sales in 2000, making it the 40th largest federal contractor. About 60 percent of its contracts are with the Pentagon. Sens. Carl Levin, D-Mich., and Craig Thomas, R-Wyo., championed the FPI provision, which passed by a 72-24 vote in the Senate version of the bill. On Wednesday, Levin praised the final version of the Defense bill for ending FPI's sole source relationship with the Pentagon. "The cushy provision that FPI had meant that private businesses could not bid on items that DoD procured," he said at a Capitol Hill press conference. But without the mandatory source requirement, FPI needs authority to sell products to non-federal customers if it is going to find work for the increasing number of federal inmates, said Steve Schwab, FPI's chief operating officer. Schwab suggested that FPI be allowed to sell products to non-profit companies, a proposal endorsed by Rep. Barney Frank, D-Mass.