Critics question Federal Prisons' business plans

Private contractors and lawmakers Wednesday criticized Federal Prison Industries' plan to begin competing for private-sector business. They also questioned the requirement that federal agencies buy certain products from the prisons.

Federal Prison Industries, also called Unicor, is a division of the Justice Department's Bureau of Prisons. Unicor employs 20,000 federal inmates, who produce $500 million a year in furniture, clothing, electronics and other products for federal agencies. Unicor also employs 1,600 civil servants. Under federal procurement rules, agencies must buy certain products from Unicor.

With a burgeoning prison population, Unicor is now planning for the first time to offer prison labor to private firms. In a pilot project, Unicor plans to put inmates in Fort Worth, Texas, to work on a data entry project for a used car information database.

Unicor is basing its plan to offer its services to the private sector on a Justice Department interpretation that Unicor's statute does not prohibit it from selling services to private firms. Unicor will primarily seek work that is now performed outside the United States, such as data entry, the agency says.

At a Wednesday hearing of the House Education and Workforce Subcommittee on Oversight and Investigations, subcommitee chairman Pete Hoekstra, R-Mich., blasted Unicor's plan.

"Private industry, using law-abiding workers, would be forced to compete for contracts with [Unicor] on a playing field tilted toward inmates," Hoekstra said. "To put it bluntly, if these proposals go through, Amercan workers may lose their jobs to felons." The U.S. Chamber of Commerce and other industry associations echoed Hoekstra's concerns.

Hoekstra has long been a critic of Unicor. In the 105th Congress, Hoekstra introduced a bill to limit Unicor's business. He said Wednesday he will introduce a similar bill this year.

In the Jan. 7 Federal Register, Unicor announced its commercial services plan as part of a complete explanation of the agency's standard operating procedures. Unicor is accepting comments on the procedures through May 10.

Bureau of Prisons spokesman Todd Craig said besides the commercial services plan, the rest of the announcement simply explains current procedures, not any new authorities.

"These are simply regulations that put into writing our practices," Craig said.

But contractors told Hoekstra on Wednesday that the announcement is actually an attempt on Unicor's part to try to clamp down on a larger share of federal business at the expense of private firms.

"The federal government is a captive customer," said Bryan Rossman, a spokesman for the Associated General Contractors of America. "This is in direct contrast to the recent improvements in federal procurement that give the contracting officer more discretion to buy the best quality product at the best price on a procurement. It is unfair to current suppliers who supply the government with quality goods and services to allow [Unicor] to eliminate their opportunity to compete."

One provision of the Jan. 7 Federal Register announcement that raised the ire of contractors is one that says Unicor will ask agencies to cancel any soliciations announced in the Commerce Business Daily that should be reserved for Unicor.

Craig said Unicor tries to work with, not punish, agencies when they don't give Unicor required business.

"This is not a draconian measure," Craig said.

The Jan. 7 announcement also notes that government contractors must obtain required products from Unicor when they're working under federal contracts.

Unicor "is attempting to become a mandatory subcontractor as well through this proposed rule," said Gary Engebretson, president of the Contract Services Association of America.

Unicor officials note that 76 percent of the organization's budget is spent on purchasing materials and services from the private sector. In addition, agencies can request waivers from the Unicor requirement. In 1998, Unicor received 14,205 waiver requests. The agency granted about 90 percent of those waivers.

"Unicor is, first and foremost, a correctional program," Unicor's 1998 annual report says. "It contributes directly to the orderly management of federal prisons by reducing inmate idleness and providing work skills training."

Federal contracting officers with questions about Unicor requirements can call the agency's customer service hotline at 800-827-3168.