FAR (8.602) Gone: A Proposal to Maintain the Benefits of Prison- Work Programs Despite the Restructuring of Federal Prison

Industries’ Mandatory- Source Status

Michael C. Groh*

*Michael Christopher Groh is a J.D. candidate at The George Washington University Law School and a member of the Public

Contract Law Journal.

Table of Contents

I. Introduction...............................................2

II. Historical Background of Federal Prison Industries........7

A. The Call for a Work Program in Federal Prisons.......7

B. The Creation of Federal Prison Industries and the Years of Expansion........................................10

C. The Debate over FPI’s Mandatory Source Status, Its Restructuring, and Recent Developments..............14

1. FPI’s Original Mandatory Source Provision.......14

2. Increased Congressional Attention and Reforms Prior to the Restructuring of the Mandatory Source Provision.......................................15

3. The Restructuring of FPI’s Mandatory Source Status..........................................18

III. Analyzing the Arguments For and Against Maintaining and Expanding Federal Prison Industries......................20

IV. Recommendations: FPI Should Either Retain Substantial Preferential Treatment in Federal Procurement or Otherwise Be Permitted to Sell on the Open Market..................28

V. Conclusion................................................33

2

I. Introduction

With some good fortune, expertise in a particular industry

can mean the difference between unemployment and a steady job.

Texan Lee Gibbs, who possesses specialized skills in electronic

component boards, knows this better than most.* He never even

bothered to apply for his $30,000†- per- year job that he began

in 1998; – his skill set rendered him so marketable that

employers came straight to him.‡ This was just as well, however,

because interviewing for jobs was never really an option for

Gibbs; – he was busy completing a seven-year drug sentence in

state prison at the time.§ While serving his sentence, Gibbs

participated in a prison work program run by a U.S. Technologies,

a firm based in Georgia.** Equipped with the training he

received in electronics and the $8,000†† he managed to save from

his prison earnings, Gibbs was able to buy a vehicle and clothes

for work, as well as secure and apartment,‡‡ and thus he was able

* See Dan Sewell, License plates? Forget about it: Prison Labor: Some states are working with businesses to have prisoners do high-tech jobs, THE REGISTER GUARD NATIONAL, Aug. 30, 1998 at 5A.† Adjusted for inflation, $42.401.04. CPI Inflation Calculator, BUREAU OF LABOR STATISTICS, http://www.bls.gov/data/inflation_calculator.htm; (enter $30,000 for “$,” for “in” select 1998, and for “Has the same buying power as: in” select 2012).‡ See Sewell, supra note 11.§ Id.** Id.†† Adjusted for inflation, $11,306.94. CPI Inflation Calculator, supra note. 22 (enter $8,000 for “$,” for “in” select 1998, and for “Has the same buying power as: in” select 2012).‡‡ Sewell, supra note 11.

3

to evade the “age-old” recidivism trap which many ex-prisoners

face upon returning to their old neighborhoods.§§

While Although Lee Gibbs gained his exemplary (albeit

somewhat atypical) experience through a program run in

partnership with a state prison, many inmates in the federal

prison system have access to similar resources through Federal

Prison Industries (referred to as FPI or by its trade name UNICOR

(its trade name)).*** FPI is a wholly-owned government

§§ See JEREMY TRAVIS ET AL., URBAN INSTITUTE JUSTICE POLICY CENTER, FROM PRISON TO HOME: THE DIMENSIONS AND CONSEQUENCES OF PRISONER REENTRY 17 (2001) (“More prisoners are returning home, having spent longer terms behind bars, less prepared for life on the outside, with less assistance in their reintegration. Often they will have difficulties reconnecting with jobs, housing, and perhaps their families when they return, and will remain best by substance abuse and health problems.”); see also NATIONAL CRIME PREVENTION COUNCIL, Probation, Parole, and Reentry in Faith Community and Criminal Justice Collaboration: A Collection of Effective Programs 46, 47 (2005). (“Many ex-offenders leave prison with no job prospects and no money, support system, or adequate housing. They are at risk of reoffending when they return to their neighborhoods.”); Warren E. Burger, Prison Industries: Turning Warehouses into Factories with Fences, 45 PUB. ADMIN. REV. iew 754, 755 (Nov. 1985) (“A person imprisoned for two, three, five years, or more and then released- – still unable to read, write, spell, perform arithmetic, or offer any marketable skill- – will quite possibly return to a life of crime. The recidivism often commences within weeks of release. Who will hire unskilled illiterates with criminal records? The best programs in the world will not cure all of this dismal problem, a problem with which the human race has grappled almost since the beginning of organized society. But we can improve our prison systems, and the improvements will cost less in the long run than the failure to make them.”).*** See discussion infra notes 10-1210-12.

4

corporation that employs federal inmates to produce goods and

services solely for the Federal Ggovernment.†††

Historically, FPI enjoyed status as a mandatory source for

certain categories of supplies for all federal agencies under

Federal Acquisition Regulation (FAR) 8.602(a).‡‡‡ Although the

mandatory- source status applied only to supplies and services

listed on FPI’s “Schedule of Products,” Congress the FAR Council

strongly encouraged federal agencies to purchase from FPI

supplies and services not so listed.§§§ Congress The FAR Council

also encouraged agencies to approach FPI with suggestions that it

consider the feasibility of adding products needed by the agency

and normally produced by correctional institutions, yet not

already listed in its Schedule.****

††† See FAR 8.601(a)-(b). FPI is prohibited from providing its products or services to state or foreign governments, and from selling on the open market. See Coal. for Gov’t Procurement, 365 F.3d 435, at 443-44 (6th Cir.); Hawes-Cooper Act, 49 U.S.C. § 60, 45 Stat. 1084 (1929)‡‡‡ See, e.g., FAR 8.602(a) (2000). (“8.602 Policy. (a)“ Agencies shall purchase required supplies of the classes listed in the Schedule of Products made in Federal Penal and Correctional Institutions . . . at prices not to exceed current market prices, using the procedures in this subpart.” §§§ Id.FAR 8.602(b) (“(b) . . . [A]gencies are encouraged to use the facilities of FPI to the maximum extent practicable in purchasing (1) supplies that are not listed in the Schedule, but that are of a type manufactured in Federal penal and correctional institutions, and (2) services that are listed in the Schedule.”)**** See Id.FAR 8.602(c) (“(c) If a supply is not listed in the Schedule is of a type normally produced by Federal penal and correctional institutions, agencies are encouraged to suggest that FPI consider the feasibility of adding the item to its Schedule.”).

5

Yet wWithin the past decade, mounting pressure from private

industry has resulted in the severe diminution of FPI’s

mandatory- procurement- sourcing status,.†††† thus

threateningThis threatens the continued viability of the

corporation and the work programs it provides.‡‡‡‡ Despite this

change that effectively forces, effectively forcing FPI to

compete for its federal contracts, FPI is still forbidden to sell

its products or services to any purchaser other than the fFederal

gGovernment,.§§§§ and Nevertheless, it is still chargedtasked with

employing as many eligible federal inmates as possible.*****

†††† See Consolidated Appropriations Act, Pub. L. No. 108-447, § 637, 118 Stat. 2809, 3281 (2004) (“None of the funds made available under this or any other Act for fiscal year 2005 and each fiscal year thereafter shall be expended for the purchase of a product or service offered by Federal Prison Industries, Inc., unless the agency making such purchase determines that such offered product or service provides the best value to the buying agency pursuant to governmentwide procurement regulations, issued pursuant to section 25(c)(1) of the Office of Federal Procurement Act (41 U.S.C. 421(c)(1)) that impose procedures, standards, and limitations of section 2410n of title 10, United States Code.”).‡‡‡‡ See U.S. DEP’T OF JUSTICE, BOP FEDERAL PRISON INDUSTRIES, FY 2012 Congressional Budget Submission (hereinafter “FPI Report for FY 2012”), available at: http://www.justice.gov/jmd/2012justification/pdf/fy12-bop-fpi-justification.pdf (“FPI sales have been negatively impacted by the passage of Sections 811 and 819 of the National Defense Authorization Acts of 2002 and 2003, and Section 637 of the FY 2004 and FY 2005 Omnibus Appropriations Bills, which changed the nature of FPI’s mandatory source status, as well as several administrative initiatives by the FPI program’s Board of Directors. More recently, Section 827 of the National Defense Authorization Act of 2008 further eroded FPI’s procurement preference.”).§§§§ Coal. for Gov’t Procurement, 365 F.3d at 443-44; Hawes-Cooper Act, 49 U.S.C. § 60, 45 Stat. 1084 (1929).***** FPI’s organic statute, 18 U.S.C. § 4121 (2006), includes a mandatory work requirement for all prisoners, stating that it is

6

While aAny endeavor to expand prison work- programs will

engender opposition from multiple sectors,.††††† Thus ,

particularly Dduring a time in which many law-abiding citizens

find themselves hard-pressed to obtain employment, the public

safety concerns which attend the severe prison overpopulation

crisis demand a pragmatic approach.‡‡‡‡‡ As this Note

demonstrates, beyond its rehabilitative role in of reducing the

recidivism rate among federal prisoners, FPI contributes an

invaluable resource to prison management.§§§§§ by reducing It

reduces idleness within the prison population while providing a

reliable stream of domestically-produced products and services to

the Ffederal Ggovernment in a way that minimizes impact on

the policy of the Federal Government that all federal inmates “shall work.”††††† Prison labor has historically faced criticism from humanitarian groups, but labor unions and private businesses have been its fiercest opponents. See Stephen P. Garvey, Freeing Prisoners’ Labor, 50 STAN. L. REV 339, 370-71 (19987) (“Predictably, labor and business interests— – especially small businesses— – regularly lobby Congress to limit FPI’s operations, or at least slow its growth.”).‡‡‡‡‡ See Lauren M. Cutler, Note, Arizona’s Drug Sentencing Statute: Is Rehabilitation A Better Approach to the “War on Drugs?”, 35 NEW ENG. J. ON CRIM. & CIV. CONFINEMENT, 401-02 (“Prison overcrowding is one of the most significant factors in explaining the current crisis in corrections. . . With an increase of over 600% [of people incarcerated in state and federal prison from 1974 to 2001], it is easy to believe that this country is facing a phenomenal prison overpopulation problem.”)§§§§§ See FAR 8.601(b)-(c) (“FPI provides training and employment to for prisoners confined in Federal penal and correctional institutions through the sale of its supplies and services to Government agencies . . . (c) FPI diversifies its supplies and services to minimize adverse impact on private industry.”).

7

private industry.****** Therefore, despite some concerns about its

effects on small businesses and inmate treatment, FPI should

retain a substantial degree of preferential treatment in

procurement or otherwise be permitted incrementally to expand its

production onto the open market. To address humanitarian

concerns and placate private industry, each expansion should be

checked by an additional level of protection for small businesses

and inmate srehabilitation.

This nNote first summarizes the history of history of FPI,

’s evolution— frombeginning with a relatively uncontroversialthe

Bureau of Prisons (BOP) entity through to and then tracking its

controversial expansion in the 1980s and 1990s. It then proceeds

to analyzes the recent changes to its FPI’s mandatory- source

status and weighs its the perceived benefits to agency

procurement and private industry against the costs to FPI. The

next section then addresses the critical arguments for and

against expanding FPI generally, arriving and arrives at the

conclusion that FPI is a worthwhile enterprise which that should

be protected from failure. Finally, the Nnote concludes by

laying out possible alternatives to the status quo, including the

restructuring of FPI’s sourcing provision and a proposed

****** See FAR 8.601(b)-(c) (“FPI provides training and employment to prisoners confined in Federal penal and correctional institutions through the sale of its supplies and services to Government agencies . . . (c) FPI diversifies its supplies and services to minimize adverse impact on private industry.”)id.

8

framework for expanding FPI into additional markets (so as to

increase prisoner employment) while increasing labor safeguards

and training.

II. Historical Background of Federal Prison Industries

A. The Call for a Work Program in Federal Prisons

For some—, no doubt encouraged by visuals provided by

Hollywood—, the topic of prison labor conjures images of men

wearing black-and-white-striped scrubs while laboring on a chain

gang under the watchful eyes of armed guards and attack

hounds.†††††† While Although that form of prison labor has is

largely been relegated to in the past,‡‡‡‡‡‡ work in the U.S.

prison system has a long history, and was once a “central element

in the life of the penitentiaryto the internal life of the early

penitentiary.”§§§§§§ Often the goal of such work was primarily the

promotion of traditional penal goals such as the reduction of

idle hands, the instillation of discipline, and the promotion of

prison self-sufficiency, less aboutrather than the completion of

useful projects but rather about the promotion of traditional

†††††† See, e.g., COOL HAND LUKE (Warner Bros. 1967); O BROTHER, WHERE ART THOU? (Touchstone Pictures, 2000). The same applies to literature. See, e.g.,e.g. ROBERT E. BURNS, I AM A FUGITIVE FROM A GEORGIA CHAI N GANG! (1932); Fyodor Dostoyevsky, House of the Dead (1862).‡‡‡‡‡‡ Garvey, supra note 1618, at 34039 (“[Labor] has virtually vanished from today’s prisonlabor has all but disappeared from today’s prison.”).§§§§§§ Id. at 342 (“The history of the prison is in large measure a history of prison labor.”).

9

penal goals: the reduction of idle hands, instilling the

instillation of discipline, and the promotion of prison self-

sufficiency.*******

Perhaps unsurprisingly then, with inmate labor so ingrained

in the fabric of prison life, the traditional reservations about

establishing industry in prison (meaning the actual production of

marketable goods) centered not on humanitarian concerns, but

rather on the risk that super-competitive inmate-produced goods

would compete with those made by freemen.††††††† Through the 19th

and early 20th centuries, Tthe hostility that such competition

engendered through the 19th and early 20th centuries (from

private enterprises, trade associations, and labor unions)

resulted in state and federal bans on the open market or ******* See iId. at 345-476; . See also Coal.ition for Gov’t. Procurement v. Fed. Prison Indus., 365 F.3d 4354, 443 (6th Cir. 2004).††††††† This early attitude is captured well by the words of former Justice George Sutherland, one of the “Four Horsemen,” who were champions of liberty of contract and enemies of President Franklin Roosevelt’s progressive New Deal legislation. Even Justice Sutherland felt the need to uphold the Hawes-Cooper Convict Labor Act of 1929 (which allowed states to prohibit the sales of prison-made goods produced out-of-state) in Whitfield v. Ohio, 297 U.S. 421, 439532, 535 (1936). Writing for the majority, Justice Sutherland wrote that (“the The view of the State of Ohio [which had exercised its power under the Hawes-Cooper Act] that the sale of convict-made goods in competition with the products of free labor is an evil, finds ample support in fact,” and that that such legislation “proceeds upon the view that free labor, properly compensated, cannot compete successfully with the enforced and unpaid or underpaid convict labor of the prison.”). See (PBS Biographis of the Robes, Alexander George Sutherland, available at: http://www.pbs.org/wnet/supremecourt/capitalism/robes_sutherland.html).

10

interstate trade ofin inmate-produced goods.‡‡‡‡‡‡‡ Yet despite

“the apparent hostility exhibited by the [F]federal [G]government

to the states’ use of inmate labor,” when it came to the federal

penitentiary system, “Congress promoted inmate-labor programs,”

by authorizing the construction of two prison factories between

in 1918 and 1924.§§§§§§§ In keeping with the prevailing trend of

restricting prison-made goods from the open market, these

factories— – the first in Atlanta, Georgia for the manufacturing

of cotton fabrics for the War and Navy Departments, the second in

Leavenworth, Kansas for the manufacture of shoes, brooms, and

brushes— – produced their goods solely for consumption by federal

agencies.********

Encouraged by these results, Congress soon expanded the use

of inmate work programs to all federal prisons and required ,

requiring the Attorney General to “provide employment for all

physically fit inmates in the United State penal and correctional ‡‡‡‡‡‡‡ See Coal.ition for Gov.’t Procurement, 365 F.3d at 443-44; see also the Hawes-Cooper Act, 49 U.S.C. § 60, 45 Stat. 1084 (1929),; Ashurst-Sumners Act, 18 U.S.C. §§ 1761-62 (2006) (making it unlawful to knowingly transport in interstate or foreign commerce goods made by convict labor, regardless of state law). Legislation at the federal level proved essential to the fight against prison-made goods, for while although opponents of prison labor at the state level succeeded in obtaining bans on the intrastate sale of prison goods, the Dormant Commerce Clause prevented states from discriminating against such goods produced in other states. Garvey, supra note 1718, at 366.§§§§§§§ Coal.ition for Gov’t. Procurement, 365 F.3d at 444.******** Id.; John W. Roberts, Work, Education, and Public Safety: A Brief History of Federal Prison Industries, in FACTORIES WITH FENCES: THE HISTORY OF FEDERAL PRISON INDUSTRIES 10, 14 (1996), available at: http://www.prisonpolicy.org/scans/jus-24a.pdf.

11

institutions.”†††††††† This expansion came largely as a response to

a special report issued in 1929 by the Special Committee on

Federal Penal and Reformatory Institutions of the House of

Representatives decrying the deplorable conditions inside federal

prisons caused by overpopulation.‡‡‡‡‡‡‡‡ In addition to the

substantial limitation that the products and services thus

furnished be limited to consumption by federal agencies, Congress

directed the Attorney General only to establish those industries

“as [would] give the inmates a maximum opportunity to acquire a

knowledge and skill in trades and occupations which w[ould]

provide them with a means of earning a livelihood upon

release,.”§§§§§§§§ Congress also directed the Attorney General as

well as to do so in a diversified manner which so that it would

“reduce to a minimum competition with private industry or free

labor.”*********

B. The Creation of Federal Prison Industries and the Years of Expansion

On June 23, 1934, and as a logical progression from the Act

of 1930, Congress authorized the creation of Federal Prison

Industries, Inc., as a financially self-supporting entity located †††††††† Act of May 27, 1930, ch. 340 § 1, 46 Stat. 391, 391 (hereinafter “Act of 1930”).‡‡‡‡‡‡‡‡ See Roberts, supra note 2729, at 14. §§§§§§§§ Act of 1930, supra note 2830, at 391-92 (UNICOR’s current mission statement because it largely mirrors the interests and concerns, detailed in the preceding couple of sentences, underlying the Act of 1930). FAR 8.601(a); 18 U.S.C. § 4121.********* Act of 1930, supra note 3028, at 391-92.Id.

12

within the Bureau of Prisons (BOP) and headed by a six-member

board of presidentially-appointed directors.††††††††† FPI came into

being on December 11, 1934, with President Roosevelt’s

implementation of Executive Order No. 6917, and it began

operations in the January of 1935.‡‡‡‡‡‡‡‡‡

Initially, FPI received an initial capital investment of

only $4 million, which was represented by the transfer of assets

to the corporation of the Atlanta and Leavenworth

factories.§§§§§§§§§ As a result of a remarkable program of

expansion and diversification, FPI grew from these three two

initial locations to twenty-five separate shops and factories

producing more than seventy categories of products by the eve of

World War II.********** As a direct result of strong war time ††††††††† Even today, FPI’s mission statement reflects these goals: “It is the mission of Federal Prison Industries, Inc. (FPI) to employ and provide job skills training to the greatest practicable number of inmates confined within the Federal Bureau of Prisons; contribute to the safety and security of our Nation’s Federal correctional facilities by keeping inmates constructively occupied; produce market-priced quality goods for sale to the Federal Governmentand services; operate in a self-sustaining manner; and minimize FPI’s impact on private business and labor.” Mission Statement, UNICOR Available at http://www.unicor.gov/about/overview/ (last visited Oct. 6, 2012). ‡‡‡‡‡‡‡‡‡ NATHAN JAMES, CONG. RESEARCH SERV., RL 32380, FEDERAL PRISON INDUSTRIES 2 (2007); see also Roberts, supra note 2729, at 18.§§§§§§§§§ Roberts, supra note 2729, at 18.********** Id. This vast array of items included canvas products (“mechanic’s aprons, basket inserts, coal bags, feed bags, laundry bags, mail bags, drop cloths, map cases, [automobile] and truckseat covers, tarpaulins, knapsacks, and tents of all sizes”), metal furniture (“filing cabinets, bed frames, stationery cabinets, library carts, waste receptacles, chairs, desks, lockers, and shelving”), fibreer furniture (“wicker

13

demand, FPI’s sales “jumped from a little over $7 million in 1941

to nearly $18.8 million in 1943,” resulting in a total wartime

production of over more than $75 million in goods which that went

“directly to the war effort”††††††††††— – a contribution which that

earned the praises of President Roosevelt himself.‡‡‡‡‡‡‡‡‡‡

Along with this wartime boom in productivity, and in order

to meet special military needs, FPI implemented new vocational

training courses and expanded its production to include products

especially for military use.§§§§§§§§§§ While Although military

demand during the Korean War temporarily flooded FPI with orders

and mitigated the sharp decline in sales which followingthat

chairs, settees, library tables, and writing desks”), wooden furniture (“bureaus, tables, chiffoniers, stools, office screens, hat racks, chairs, and desk trays”), foundry items (“name plates, tablets, land survey monuments, aluminum stamp handles; , and iron boiler grates, grutter gates, manhole covers, ballasts, flanges, door holders, and bushings”), clothing (“chambray work shirts, woolen suits and uniforms, dungarees, undergarments, hospital gowns, riding breeches, overalls, and leather jackets”), cotton textiles, metal food trays and document cases, mattresses, footwear (“military shoes, men’s and women’s dress shoes and Oxfords, canvas Oxfords, children’s shoes, leather arch supports, and baseball cleats”), rubberized and woodblock mats, work gloves and mittens, and “a multitude of brooms and brushes (shaving brushes, tooth brushes, paint brushes, dust brushes, scrubbing brushes, typewriter brushes, hearth brooms, parlor brooms, and warehouse brooms).” Id.†††††††††† Id. at 23.‡‡‡‡‡‡‡‡‡‡ Roosevelt Praises Prisoners’ War Aid: Achievement Must Be Followed by Post-War Penal Reforms He Writes Association, N.Y. TIMES, Nov. 23, 1943 (“The Federal prison system has already worked out an admirable industrial program before we entered the war.” * * * “The curbing of delinquency is one of our great public issues, and our post-war program must reckon with it. The wartime gains in this respect must be consolidated and perpetuated.”).§§§§§§§§§§ Roberts, supra note 2729, at 23-234.

14

followed the end of WWII, by 1954 the number of federal inmates

employed by FPI had fallen back to the pre-war (1940) level of

18%eighteen percent.*********** This post-war economic downturn

affected prison industries at the state level as well, and with

the resulting idleness of the prison population being blamed for

a “rash of disturbances” during the 1950s.†††††††††††

As a result, FPI undertook a major expansion program during

the late 1950s and 1960s, increasing and increased its

educational offerings while expanding its electronics operations

and furniture factories.‡‡‡‡‡‡‡‡‡‡‡ In 1974, FPI sought to stabilize

its sales volumes by establishing regional marketing positions

and reorganizing the company into seven industry

divisions,§§§§§§§§§§§ with each group responsible for “handl[ing] *********** Id. at 25. ††††††††††† Id. But sSee also John Pallas & Robert Barber, From Riot to Revolution, in THE POLITICS OF PUNISHMENT: A CRITICAL ANALYSIS OF PRISONS IN AMERICA 238, 238-239 (Erik Olin Wright ed. 1973) (“More than 50 major riots occurred in American prisons between 1950 and 1953; until the disturbances of the 1970s, the early fifties were characterized as the worst period ever for American prison administration. These riots and strikes were largely spontaneous uprisings against intolerable living conditions.”).‡‡‡‡‡‡‡‡‡‡‡ This $5 million (self-financed) expansion program included renovation of FPI factories, vocational training buildings, and warehouses, and “led to improved production and enhanced vocational training, characteristic of FPI during the 1960s.helped make possible the higher production and enhanced vocational training that would characterize FPI during the 1960s.” Roberts, supra note 2729, at 26.§§§§§§§§§§§ These were:(1) Automated Data Processing, (2) Electronics, (3) Graphics, (4) Metals, (5) Shoe and Brush, (6) Textiles, and (7) Woods and Plastics. Id. Today, the groups (now eight in total) are: (1) Clothing and Textiles, (2) Electronics, (3) Fleet Management and Vehicular Components, (4) Graphics, (5) Industrial Products, (6) Office Furniture, (7) Recycling, and (8) Services.

15

resource management, production, and sales,” in its specific

field.************

While Although the modernization and revamping of FPI

factories in the late 1970s and 1980s helped keep the corporation

competitive and inmates employed through the development of new

product lines (including “stainless steel products,

thermoplastics, printed circuits, modular furniture, ergonomic

chairs, Kevlar. . . products. . ., and optics”), FPI faced new

challenges during the 1980s.†††††††††††† As the population of inmates

within the BOP began surging in the 1980s,‡‡‡‡‡‡‡‡‡‡‡‡ (in large

measure as a result of the increased prosecution of drug-related

crimes, the elimination of federal parole and good time credit,

and stricter sentencing guidelines under the Comprehensive Crime

Control Act of 1984,§§§§§§§§§§§§), FPI— – still faced with its

Id. at 28.************ Id.†††††††††††† Id. at 29-30.‡‡‡‡‡‡‡‡‡‡‡‡ The size of this increase is hard to overstate: from 1930 to 1979, the federal prison population ranged between 17,000 and 24,000; this climbed to 50,000 in 1987, and jumped to nearly 95,000 by 1994. Id.; see also Cutler, supra note 1819, at 401-02.§§§§§§§§§§§§ See Roberts, supra note 2927, at 30; see also Burger, supra n.ote 8, at 754-55 (“During the past 10 years [1974-1984], America’s prison population has more than doubled from approximately 220,000 in 1974 to more than 460,000 last year. In part this reflects increases in crime and probably in part, longer sentences. It probably also means that a greater proportion of crimes are detected and result in punishment.”); UNITED STATES SENTENCING COMMISSION, FIFTEEN YEARS OF GUIDELINES SENTENCING: AM ASSESSMENT OF HOW WELL THE FEDERAL CRIMINAL JUSTICE SYSTEM IS ACHIEVING THE GOALS OF SENTENCING REFO RM 5 (Nov. 2004).

16

statutory responsibility to employ as many inmates as possible— –

was forced to further expand its operations.*************

Acknowledging Some members of Congress acknowledged the

difficulties FPI faced in this task – and that FPI’s attempts at

expansion were leading some to question its compliance with the

requirement that “no single private industry shall be forced to

bear an undue burden of competition from the products of the

prison workshops[.]”††††††††††††† – Tthe U.S. House of

Representatives considered H.R. 4994, referred to as the Federal

Prison Industries Reform Act of 1988, which would have permitted

FPI to borrow funds directly from the Ggovernment.‡‡‡‡‡‡‡‡‡‡‡‡‡ While

Although ultimately unsuccessful, the Prison Industries Reform

Act of 1988 presaged the increased level of Congressional

attention that FPI would enjoy as its mandatory source status

encountered increasing levels of opposition.§§§§§§§§§§§§§

C. The Debate over FPI’s Mandatory- Source Status, Its Restructuring, and Recent Developments

1. FPI’s Original Mandatory Source Provision

From its inception until 2001, FPI’s organic statute

required that: “[t]he several Federal departments and agencies ************* James (2007), supra note 3235, at 4-5-6.††††††††††††† 18 U.S.C. § 4122(b)(1).‡‡‡‡‡‡‡‡‡‡‡‡‡ Although the bill died in committee, its substance was carried over to the 1988 Anti-Drug Abuse Act (Pub. L. 100-690). James, supra note, 3235 at 9.§§§§§§§§§§§§§ See H.R. 4021 (100th): Federal Prison Industries Reform Act of 1988 available at: http://www.govtrack.us/congress/bills/100/hr4021.Id.

17

and all other gGovernment 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.”************** This mandatory

source requirement, outlined in Federal Acquisition Regulation

(FAR) subpart 8.6, essentially required that all federal agencies

purchasing any item listed in FPI’s Schedule of Products purchase

said product from FPI unless FPI did not meet the agency’s

delivery schedule or quality requirements, or otherwise exceeded

current market prices.††††††††††††††

In order to exercise this exception and to buy from another

source, the agency first needed first to obtain a waiver from

FPI, with FPI having ultimate control over the

determination.‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Despite this level of control, between

1994 and 2004, FPI granted on average around 87%about 87 percent

of the waivers that were requested.§§§§§§§§§§§§§§ This trend

continued into 2005, when FPI granted an “unprecedented” ninety-

nine-point-seven points go 99.7% of allwith no waiver requests

received.***************

************** 18 U.S.C. § 4124 (2000).†††††††††††††† FAR 8.602 (201100).‡‡‡‡‡‡‡‡‡‡‡‡‡‡ FAR 8.604(c) (2011).§§§§§§§§§§§§§§ James (2007), supra note 3532, at 9.*************** UnicorUNICOR, FACTORIES WITH FENCES: 75 YEARS OF CHANGING LIVES 29 (2009).

18

2. Increased Congressional Attention and Reforms Prior to the Restructuring of the Mandatory Source Provision

Yet whileAlthough FPI was largely uncontroversial during its

first half-century of operation,††††††††††††††† a number of

developments during the 1980s – including the erosion of the

national manufacturing sector, a substantial increase in the

federal inmate population during a time of government downsizing,

and the need for more effective techniques to manage a prisoner

population constituted increasingly by offenders convicted of

violent crimes – resulted in increased Congressional

attention.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ FPI’s attempts to acquire a greater

percentage of government procurement contracts in this hostile

climate resulted in a severe backlash from private industry,

which ultimately resulted inled to a significant reshaping review

of FPI’s mandatory source status.§§§§§§§§§§§§§§§

Prior to the virtual end of mandatory sourcing, however,

Congress did attempt a stop-gap measure with the Anti-Drug Abuse

Act of 1988 (P.L. 100-690), which required FPI to meet certain

requirements prior to creating a new product or expanding an

existing one, in order to address the concerns of private

industry. These included the requirements that FPI:

††††††††††††††† See JAMES, supra note 32 at 10.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Id Roberts supra note 29, at 29-32..§§§§§§§§§§§§§§§ See UnicorUNICOR, FACTORIES WITH FENCES, supra note 5454, at 25-26.

19

“prepare a written analysis of the likely impact of [FPI’s] expansion on industry and free labor;

announce in an appropriate publication the plans for expansion and invite comments on the plan;

advise affected trade associations; provide the [FPI] board of directors with the

plans for expansion prior to the board making a decision on the expansion;

provide opportunity to affected trade associations or relevant business representatives to comment to the Board of Directors on the proposal; and

publish final decisions made by the Board of Directors.”****************

The debate surrounding proposed FPI reform during the late

1990s, however, illustrates the failure of the Anti-Drug Abuse

Act to placate the private sector, along with the diversity of

opinion as to the best way forward. One piece of legislation,

introduced by Representative Bill McCollum (Rep. Fla.L), one of

FPI’s chief supporters in Congress, acknowledged the controversy

surrounding the anticompetitive mandatory- source requirement by

proposing the eliminationproposed eleminitating the of

preferential treatment altogether.†††††††††††††††† Apparently,

Rrecognizing the serious blow to the program that the elimination

of preferential treatment might entail, Congressman McCollum

proposed to allow FPI to open its goods and services to the open

market for the first time.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Additionally, he **************** See James (2007), supra note 3532, at 10.†††††††††††††††† Prison Industries Reform Act (PIRA) of 1999, (H.R. 2558), 106th Cong. §1 (1999).‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ See iId. At the time, it was FPI’s position that the mandatory source status was “necessary to offset several

20

recommended that private companies be allowed to contract with

FPI to utilize inmate laborers to manufacture products— – subject

to certain important qualifications (e.g. minimum wage guarantees

and agreement of private companies not to lay off free laborers

in favor of prisoners).§§§§§§§§§§§§§§§§ Finally, seeking to encourage

the development of prisoner work programs at the state level, the

Prison Industries Reform Act of 1999 would have eliminated, under

certain circumstances, the ban on the interstate transportation

of goods produced in state prison. Finally, seeking to encourage

the development of prisoner work programs at the state level, the

Prison Industries Reform Act of 1999 would have eliminated the

ban on the interstate transportation of goods produced in state

prison.*****************

The bill ultimately failed to gain traction, however, with

opponents favoring other another proposal†††††††††††††††††s which that

would have eliminated preferential treatment while forcing FPI

to compete for contracts, due to concerns about undercutting

competitive disadvantages, such as its labor-intensive production environment, untrained/uneducated labor pool, security costs and production delays associated with prison operations, and . . . its restriction to a single customer.” UNICOR UNICOR , FACTORIES WITH FENCES, supra note 5754, at 26.§§§§§§§§§§§§§§§§ PIRA of 1999 supra note 59, supra note 59.***************** Id. at § 5 (exempting from the ban such goods either if inmates are paid the federal minimum wage or else the particular goods are only produced overseas)Id. This provision would have repealed the Ashurst-Sumners Act, 18 U.S.C. §§ 1761-62, supra note 25.††††††††††††††††† Federal Prison Industries Competition in Contracting Act. H.R. 2558, 106th Congress (1999).

21

private enterprise, higher-priced government contracts, and the

long-term undesirability of prison industries for prisons and

prisoners.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ While Although these proposals met the same

fate, their recommendations set the tone for the debate on FPI

reform during the following congressional session.§§§§§§§§§§§§§§§§§

3. The Restructuring of FPI’s Mandatory Source Status

The first major change to FPI’s sourcing preference came

oin December 28, 2001, with the passage of the National Defense

Authorization Act for Fiscal YearFY 2002 (P.L. 107-

107).****************** which This Act required the Secretary of

Defense to conduct market research respecting the “price,

quality, and time of delivery” of FPI products, and to use

competitive procurement procedures for obtaining any product not

comparable in those areas to products offered by the private

sector.†††††††††††††††††† This change essentially took the “waiver” ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ See generally Prison Industries Reform Act of 1999 and Federal Prison Industries Competition in Contracting Act of 1999: Hearing Before the Subcomm. on Crime of the Committee on the Judiciary, 106th Congress (1999)).§§§§§§§§§§§§§§§§§ The 106th Congress introduced two bills which saw FPI as a problem and sought to eliminate its mandatory source. See Prison Industries Reform Act of 1999 and Federal Prison Industries Competition in Contracting Act of 1999: Hearing Before the Subcomm. on Crime of the Committee on the Judiciary, 106th Congress (1999) The 107th Congress actually succeeded in chipping away at it with the National Defense Authorization Act for Fiscal Year 2002 (passed Dec. 2001). See infra note 69. ****************** National Defense Authorization Act for Fiscal Year 2002, Pub. L. No. 107-107, 115 Stat. 1012 (Dec. 28, (2001) (codified as amended in scattered sections of 10 U.S.C.).†††††††††††††††††† National Defense Authorization Act for Fiscal Year 2002, Pub. L. 107-107 (Dec. 28, 2001).Id.

22

determination out of FPI’s hands, and was subsequently expanded

by the Bob Stump National Defense Authorization Act for FY 2003

(P.L. 107-314), which rendered that determination final and not

subject to review.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ The Act also prohibited requiring

Department of Defense (DOD) contractors from hiringto hire FPI as

a subcontractor, and placed a ban on FPI contracts in which

inmates would have access to sensitive information.§§§§§§§§§§§§§§§§§§

Soon after, the Intelligence Authorization Act for FY 2004

extended this exemption to the Central Intelligence

Agency.*******************

The most substantial change yet to FPI’s sourcing status

came with the Consolidated Appropriations Act of 2004, which

eliminated FPI’s mandatory source clause, prohibiting and

prohibited the usage by any federal agency of appropriation funds

for the purchase of FPI products or services except upon the

agency’s determination that the products offered are the “best

value.”††††††††††††††††††† These changes had led to a substantial

decrease in FPI’s productivity and sales revenue, forcing the

‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ See Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub. L. No. 107-314, 116 Stat. 2458 (Dec. 2, (2002) (codified at 10 U.S.C.).§§§§§§§§§§§§§§§§§§ Id.******************* Intelligence Authorization Act for Fiscal Year 2004, Pub. L. 108-177 (Dec. 13, 2003).††††††††††††††††††† Consolidated Appropriations Act, Pub. L. No. 108-447, § 637, 118 Stat. 2809, 3281 (2004)Consolidated Appropriations Act of 2004, supra note 14.

23

corporation to close some of its facilities and thus reducing

FPI’s capacity to employ inmates.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

Thus one of BOP’s “most important re-entry programs . . . is

dwindling rather than expanding.”§§§§§§§§§§§§§§§§§§§ While Although FPI

has implemented a program to adapt to its new environment, the

negative impact that these changes have wrought since 2005 raises

the question of whether additional steps should be taken to

sustain FPI and, if so, what they might look like.

III. Analyzing the Arguments For and Against Maintaining and Expanding Federal Prison Industries

Needless to say, FPI (and its counterparts at the state

level) is not without controversy. While Although it is

undeniable that the alteration of the mandatory sourcing

requirement has made it more difficult for the corporation to

‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ See FPI Report for FYY 2012, supra note 1515; s. See also Federal Bureau of Prisons Oversight: Hearing Before the Subcomm. on Crime, Terrorism, and Homeland Security of the Committee on the Judiciary, 111th Congress, 1-2 (2009) (statement of Rep. Robert C. Scott, Chairman, Sub. Comm. on Crime, Terrorism, and Homeland Security) (“[O]ver the last 8 years, the number of inmates participating in the FPI program has declined significantly. As recently as last year, an amendment to the National Defense Authorization Act eliminated the mandatory source requirement for purchases of FPI products by the Department of Defense. ¶ On July 15, the Bureau of Prisons announced that it has begun closing FPI factories at 14 prisons and scaling back operations in four others. According to BOP, the FPI has lost $20 million this year, and BOP officials expect that 1,700 inmates will lose their jobs as a direct result of the factory closings.”).§§§§§§§§§§§§§§§§§§§ Federal Bureau of Prisons Oversight: Hearing Before the Subcomm. (2009), supra note 7268, at 13 (statement of Harley G. Lappin, Director, Federal Bureau of Prisons, Dep’t of Justice).

24

fulfill its statutory objectives, it is worth addressing the

concerns of both supporters and critics of the program to see

whether the program is worth saving, and, if so, what the remedy

should look like.

Perhaps tThe most persistent criticism leveled at FPI is

that, armed with cheap labor and its mandatory sourcing

requirement, FPI is anticompetitive and undercuts

labor******************** and the private sector, especially small

businesses.†††††††††††††††††††† For instance, with the expansion of its

productive capacity during the 1990s, FPI became the recipient of

strong criticism from the apparel industry, which balked at the

fact that FPI’s apparel sales of $134 million in 1998 (about 25 ******************** See Steve Schwalb, Federal Prison Industries: The Myths, Successes, and Challenges of One of America’s Most Successful Government Programs, in FACTORIES WITH FENCES: THE HISTORY OF FEDERAL PRISON INDUSTRIES 5-6 (1996), available at http://www.prisonpolicy.org/scans/jus-24a.pdf. It is interesting to relate, considering the level of criticism prison labor received from the ranks of organized labor, a perspective from one of the progenitors of the movement— – American Federation of Labor (AFL) leader Samuel Gompers, who wrote “[c]ertainly no thoughtful, humane person, and most assuredly no trade unionist, wants the inmates of our prisons to remain idle.” Garvey, supra note 1817, at 369 (quoting SAMUEL GOMPERS, LABOR AND THE COMMON WELFARE 110 (1919)).†††††††††††††††††††† See, e.g., John R. McDonald, Note, Federal Prison Industry Reform: The Demise of Prison Factories? 35 PUB. CONT. L. J. 675, 682, 684-86 (2006). McDonald advocates the complete elimination of FPI’s preferential status as a means of protecting the private sector and ensuring “the best value to American taxpayers,” although he seems to consider only procurement costs in his valuation of the FPI program. Id. at 691. McDonald would then, somewhat incongruously, replace any lost FPI-run training programs with a whole new slate of prisoner rehabilitation programs, paid for, presumably, by the aforementioned taxpayers. Id.

25

percent of its total sales) rendered FPI the single largest

supplier of apparel to the Department of Defense.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

This particular criticism (of market capture) was not limited to

the apparel industry but also came increasingly from the

furniture industry, andas the impact on those industries seemed

to undercut the premise that FPI was to remain so diversified

that no one particular industry would feel the burden of its

operations.§§§§§§§§§§§§§§§§§§§§

Yet whileAlthough FPI’s concentration in any one particular

industry might result in that industry carrying an unfair burden

of the costs of maintaining the program, the FPI Board of

Directors has taken seriously its mandate to minimize the effect

on private industry.********************* This is generally true despite

isolated instances in which FPI was slow to respond to the

concerns of affected businesses For instance, the Board voted

against a proposal for expanding the production of military

gloves, as because an increased share of the government contracts

for flight crew gloves and dress gloves would likely begin to ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Bureau of Prisons Oversight: The Importance of Federal Prison Industries: Hearing Before the Subcomm. on Criminal Justice Oversight of the Senate Committee of the Judiciary, 106th Cong. 25-26 (1999) (statement of Ann F. Hoffman, legislative director for the Union of Needletrades, Industrial and Textile Employees).§§§§§§§§§§§§§§§§§§§§ See James (2007), supra note 3532, at 1, 8.********************* Bureau of Prisons Oversight, supra note 7276, at 8 (Statement of Kathleen Hawk Sawyer, Director of Federal Bureau of Prisons and Chief Executive Officer of Federal Prison Industries) 8 (“No other program has so greatly diversified its production so as to maximize minimize impact on any particular industry[.]”).

26

force its private industry competitors out of

business.†††††††††††††††††††††

Perhaps more importantly for dispelling the notion that FPI

is harmful to small businesses than the diligent manner in which

FPI approaches its statutory requirement to minimize the impact

on any particular industry, however, is the fact that FPI

purchases employs small businesses for about 40 forty percent of

its sourcing from small businesses.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Additionally,

‘more than one mayor’ has stated that FPI has a positive impact

on the surrounding community, resulting mainly from a

‘combination of direct FPI expenditures in the local economy,’

and an attendant improvement in community safety and property

values. Moreover, FPI has a positive impact on local communities,

with FPI purchasing local products and services and using local

utilities, which resultsresulting in a large percentage of

federal procurement money being directed to small businesses and

local communities.§§§§§§§§§§§§§§§§§§§§§ Thus FPI helps to direct a ††††††††††††††††††††† Id. at 12-13 (Statement of Joseph M. Aragon, Chairman of Federal Prison Industries’ Board of Directors); see also David Gonzalez, An Iron Fist for Makers of Velvet Gloves, N.Y. TIMES, April 12, 1997.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ See UNICOR, Fact or Fiction, available at http://www.unicor.gov/about/faqs/fact_fiction/ (last visited Oct. 25, 2012). See also NATHAN JAMES, CONG. RESEARCH SERV., RL 32380, FEDERAL PRISON INDUSTRIES 310 (2009) (noting that about seventy-five percent75% of FPI’s revenues areis spent purchasing raw material and equipment from the private sector). §§§§§§§§§§§§§§§§§§§§§ See Steve Schwalb, Federal Prison Industries: The Myths, Successes, and Challenges of One of America’s Most Successful Government Programs, in FACTORIES WITH FENCES: THE HISTORY OF FEDERAL PRISON INDUSTRIES 5, 8 (1996), available

27

substantial percentage of federal procurement money to the

private sector, including small businesses and, to some, degree,

local communities.**********************

And whileAlthough FPI has the historic advantage of having

to pay its workers only minimal wages, the competitive

disadvantages which that FPI faces due to “the lower average

productivity of inmates and the security inefficiencies

associated with employing inmates” more than offset this nominal

advantage.†††††††††††††††††††††† FPI faces certain specific statutory

constraints which operate tothat diminish its perceived

“competitive advantage,” including:

“Employ as many inmates as reasonably possible.

athttp://www.prisonpolicy.org/scans/jus-24a.pdf.Bureau of Prisons Oversight, supra note 7672 (Statement of Steve Schwalb, Assistant Director, Federal Bureau of Prisons, and Chief Operating Officer, Federal Prison Industries) 44. Partly as a result of this engagement with small businesses, a congressionally-mandated independent market study determined that FPI’s overall impact on the private sector was “negligible.” UNI CORUNICOR, FACTORIES WITH FEN CES , supra note 5457, at 26.********************** See id. See also Bureau of Prisons Oversight, supra note 79, (Statement of Steve Schwalb, Assistant Director, Federal Bureau of Prisons, and Chief Operating Officer, Federal Prison Industries) at 44; Unicor, supra note 83. Partly as a result of this engagement with small businesses, a congressionally-mandated independent market study determined that FPI’s overall impact on the private sector was “negligible.” UNICOR, FACTORIES WITH FENCES , supra note 57, at 26.†††††††††††††††††††††† Steve Schwalb, Federal Prison Industries: The Myths, Successes, and Challenges of One of America’s Most Successful Government Programs, in FACTORIES WITH FENCES: THE HISTORY OF FEDERAL PRISON INDUSTRIES 5-6 (1996), ), available at: http://www.prisonpolicy.org/scans/jus-24a.pdf. supra note 77, at 5-6.

28

Concentrate on manufacturing products that are labor intensive.

Provide the maximum opportunity for inmates to acquire marketable skills for use upon release.

Diversify production as much as possible to minimize competition with private industry and labor, and reduce the burden on any one industry.

Avoid taking more than a reasonable share of the Federal market for any specific product.

Sell products only to the Federal Government, meeting the quality and delivery requirements of the Federal customers, and not exceeding current market prices.

Comply with Federal procurement regulations. Operate in an economically self-sustaining

manner.”‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

Another of the criticisms often leveled at FPI is the charge

that, although the corporation is self-funded, the program has

hidden costs. For instance, FPI does not have to reimburse the

Bureau of Prisons (BOP) for water or electricity

usage.§§§§§§§§§§§§§§§§§§§§§§ Similarly, although supporters of FPI often

point outemphasize that a percentage of prisoner wages and FPI’s

profits are used to defray the BOP’s operation costs, critics

find that this defrayment is inadequate.*********************** In the

same way, prior to the restructuring of the mandatory source

requirement, critics alleged that FPI’s Board of Directors took

‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Id. at 6.§§§§§§§§§§§§§§§§§§§§§§ Lawrence W. Reed, The Federal Prison Industries Empire, 52 IDEAS ON LIBERTY, no. 9, Sept. 2002, at 15, 15 (2002).*********************** Steve Schwalb, Federal Prison Industries: The Myths, Successes, and Challenges of One of America’s Most Successful Government Programs, in FACTORIES WITH FENCES: THE HISTORY OF FEDERAL PRISON INDUSTRIES 5, 8(1996), available athttp://www.prisonpolicy.org/scans/jus-24a.pdf.Id.

29

advantage of FPI’s preferential status by making it unreasonably

difficult to obtain a waiver, thus forcing agencies to pay above-

market prices for negligent deliveries of lesser quality

goods.†††††††††††††††††††††††

Although the BOP does undoubtedly subsidize FPI by providing

some operational overhead, by keeping a substantial percentage of

inmates productively employed, FPI alleviates some of the

tangible and intangible costs of housing inmates.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

For instance, whereas in 1994 each federal inmate generated

$4,177, inmates employed by FPI generated $24,687 per year,

exceeding which exceeded the average cost of the prisoner’s

confinement ($21,352) by $3,335.§§§§§§§§§§§§§§§§§§§§§§§ Additionally, a

standard fifty percent of prisoner wages are dedicated to pay

court-appointed obligations and costs, contribute to the

Vvictim’s Ccompensation fFund, and otherwise to defray the costs

of incarceration.************************ And whileAlthough FPI’s Board of ††††††††††††††††††††††† See id. at 7. See also Bureau of Prisons Oversight, supra note 79 (Statement of Steve Schwalb, Assistant Director, Federal Bureau of Prisons, and Chief Operating Officer, Federal Prison Industries) 44; Unicor, supra note 80. Partly as a result of this engagement with small businesses, a congressionally-mandated independent market study determined that FPI’s overall impact on the private sector was “negligible.” UNICOR, FACTORIES WITH FENCES , supra note 57, at 26.Id.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Supporters of FPI “contend that it is more costly to run a prison where the inmates are idle, which could lead to disruptive behavior.” James (2009), supra note 8076, at 9.§§§§§§§§§§§§§§§§§§§§§§§ PRISON LABOUR: SALVATION OR SLAVERY? 283 (Dirk van Zyl Smit & Frieder Dunkel eds., 1999) (herein after “Prison Labour”).************************ See BUREAU OF PRISONS, Work Programs, available at http://www.bop.gov/inmate_programs/work_prgms.jsp (last visited Oct. 25, 2012); see also 18 U.S.C. § 1761(c)(1)(A)-(D).

30

Directors did refuse to grant a number of cost waivers, the

overwhelming majority of such requests were

honored.††††††††††††††††††††††††

Although tThe core of the debate over FPI (at least as far

as the recent debates in Congress) is centered around the core of

the effect of mandatory sourcing on private industry and

government procurement expenses but , much of the verbal

ammunition on both sides derives from the impact that FPI has on

inmates and prison management.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Besides attacking

the fairness of funneling jobs away from law-abiding citizens to

provide work for convicted criminals, FPI critics ’s detractors

point out somewhat incongruouslymay suggest that FPI’s low- wage

range (anywhere between $0.23 and $1.15 per hour)§§§§§§§§§§§§§§§§§§§§§§§§

sets a bad example for the international community, especially

becausesince the United States has expressly outlawed prohibited

the importation of goods made with forced labor, including

foreign goods produced by convicts.*************************

More progressive detractors question not just the morality

of forcing inmates to work (all eligible inmates are required to

work— – either in prison industries or institutional jobs) in †††††††††††††††††††††††† See supra notes 53-5456-57.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ See James (2007), supra note 35.§§§§§§§§§§§§§§§§§§§§§§§§ BUREAU OF PRISONS supra note 92. ************************* See Section 307 of the Tariff Act of 1930, 19 U.S.C. § 1307 (prohibiting the importation from any country of products made with forced labor); see also 18 U.S.C. § 1761 (criminalizing the knowing importation of goods made by convict or prison labor); BOP Work Programs.

31

return for nominal wages, but also question the whole penological

attitude of rehabilitation based on labor and

discipline.††††††††††††††††††††††††† Such detractors highlight the labor-

intensive nature of most of the work FPI provides, arguing that

since because much of the labor is necessarily

unskilled,‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ inmates do not leave prison having

added to their array of marketable skills.§§§§§§§§§§§§§§§§§§§§§§§§§

Overarching the anti-prison labor enterprise movement is the

notion that the real solution to the problems associated with

prison overcrowding************************** is simply reducing the number

of individuals sent to prison in the first place.††††††††††††††††††††††††††

††††††††††††††††††††††††† See PRISON LABOUR, supra note 8488, at vii.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Due to its statutory requirement of employing as many eligible inmates as possible, FPI operates under something of a disincentive towards making its productive processes more efficient, with labor-intensive work being favored over capital-intensive efficiency. See Schwalb, supra note 7882, at 5-6.§§§§§§§§§§§§§§§§§§§§§§§§§ James (2007), supra note 35,32 at 14.************************** Kerry L. Pyle, Note, Prison Employment: A Long-Term Solution to the Overcrowding Crisis, 77 B.U. L. REV. 151, 154-57 (1997). Considering that the overpopulation crisis during the 1980s and 1990s—which forced FPI to expand its production, thus engendering the backlash from labor and private industry, which ultimately led to the elimination of mandatory sourcing – resulted in large measure from increasing incarceration rates for drug-related offenses due to a reinvigorated war on drugs, reduced enforcement of the federal drug laws, or even decriminalization, might have the same effect. See id. at 152, 153.†††††††††††††††††††††††††† Heather Ann Thompson, The Prison Industrial Complex: A Growth Industry in a Shrinking Economy, 21(3) NEW LABOR FORUM 39, 44-45 (Fall 2012).Kerry L. Pyle, Note, Prison Employment: A Long-Term Solution to the Overcrowding Crisis, 77 B.U. L. REV. 151, 151 (1997). Considering that the overpopulation crisis during the 1980s and 1990s— –

32

Yet the opponents of FPI seem willing to sacrifice the good

for the perfect. Managers of prisons view the ability to keep

inmates productively employed as critical to their ability to

reduce the dangers associated with idleness in prisons, and thus

to keep the prison population under control and

safe.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ The most obvious source for thus employing

prisoners— – jobs providing services to the inmate’s

institutioninstitutional services – —however, is highly

inadequate.§§§§§§§§§§§§§§§§§§§§§§§§§§ Indeed, while although the “vast

majority of prisoners who have jobs work in institutional

maintenance,” there are simply “far more prisoners than

jobs.”*************************** Such institutional jobs are also “neither

challenging nor interesting, and they usually last only a few

hours a day.”†††††††††††††††††††††††††††

Moreover, despite the fact that much of FPI’s operations

require only relatively unskilled labor, FPI “provides inmates,

many of whom have little training and have never held down a

which forced FPI to expand its production, thus engendering the backlash from labor and private industry, which ultimately led to the elimination of mandatory sourcing – resulted in large measure from increasing incarceration rates for drug-related offenses due to a reinvigorated Wwar on Ddrugs, reduced enforcement of the federal drug laws, or even decriminalization, might have the same effect. See id. at 152, 153. Cutler, supra note 18 at 398.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Kerry L. Pyle, Prison Employment: A Long-Term Solution to the Overcrowding Crisis, 77 B.U. L. REV. 151 (1997) PRISON LABOUR , supra note 84, at 171.See id. at 171.§§§§§§§§§§§§§§§§§§§§§§§§§§ Prison Labour, supra note 84,Id. at 283.*************************** Id. at 171.††††††††††††††††††††††††††† Id.

33

steady job, with the opportunity to learn responsibility, gain

experience, and earn a sense of achievement.”such labor better

sets up for post-release work.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ According to

Reginald A. Wilkinson, President and CEO of Ohio College Access

Network, “Many inmates have never held a job for any length of

time, nor have they learned to take instruction or feel the

satisfaction of a job well done.”§§§§§§§§§§§§§§§§§§§§§§§§§§§ Mr. Wilkinson

has also said that “federal and state prison industries imbue

inmates with a work ethic and a sense of self-

responsibility.”**************************** This work experience has

indeed had a positive effect on rehabilitation;: a study

conducted by FPI during the 1990s revealed a 24%twenty-four

percent reduction in recidivism by inmates employed by FPI – as

opposed to those working only institutional jobs or no jobs at

all – over the 12-year span covered by the

survey.†††††††††††††††††††††††††††† That success is due in part to the fact ‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Bureau of Prisons Oversight (2009 hearing), supra note 7368. Further illustrating FPI’s commitment to reducing recidivism, its vocational training programs operate in conjunction with the Bureau of Prisons’ Inmate Replacement Program (IPP), which “provides inmates instruction in resume writing, job search, and interview skills in a ‘mock job fair’ environment in preparation for successful transition back to their communities.” UNI CORUNI COR , FACTORIES WITH FENC ES, supra note 57,54 at 27. Corporate recruiters who participate in the program receive various incentives for hiring rehabilitated ex-inmates. Id.§§§§§§§§§§§§§§§§§§§§§§§§§§§ Bureau of Prisons Oversight (2009 hearing), supra note 73Id.**************************** Id.†††††††††††††††††††††††††††† Prison Labour, supra note 84 at 284.UNICOR, FACTORIES WITH FENCES , supra note 57, at 32.

34

that inmates who participate in FPI’s work programs are “14% more

likely to find and maintain a job” than inmates who do

not.”‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

IV. Recommendations: FPI Should Either Retain Substantial Preferential Treatment in Federal Procurement or Otherwise Be Permitted to Sell on the Open Market

Even leaving aside the question of whether the elimination

of FPI’s mandatory- source status was ultimately advisable, the

existence of formidable arguments for its maintenance recommends

an evaluation of the manner by which Congress chose to alter it.

Rather than merely rendering optional the purchase of products or

services from FPI, Congress chose to forbid such purchases unless

the agency “making such [a] purchase determines that such offered

product or service provides the best value to the buying agency

pursuant to [Ggovernment-wide] procurement

regulations.”§§§§§§§§§§§§§§§§§§§§§§§§§§§§

Although this requirement is undoubtedly in line with the

general cost-saving requirements imposed by procurement law

generally,***************************** it may be worth considering the

advisability of a middle ground between forcing government

agencies to purchase products and services from FPI absent a

‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ UNICOR , supra note 54 Id.at 34.§§§§§§§§§§§§§§§§§§§§§§§§§§§§ Consolidated Appropriations Act, Pub. L. No. 108-447, § 637, 118 Stat. 2809, 3281 (2004).Consolidated Appropriations Act of 2004, supra note 14.***************************** See FAR Part 10 (requiring agencies to conduct market research and to consider a variety of factors in determining the value to the agency).

35

showing that the prices do not “exceed current market

prices,”††††††††††††††††††††††††††††† and forbidding such purchases absent a

showing of best- market value.

As a preliminary matter, even with the market research

requirements in place, Congress the FAR Council need not have

eliminated the language in FAR 8.602(b) and (c), which encouraged

agencies to purchase supplies not listed in the Schedule of

Products, utilize FPI services, and to work closely with FPI to

develop additional supplies “normally produced by Federal penal

and correctional institutions.”‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ These

provisions, while although merely aspirational, envisioned a

close working relationship whereby FPI could gain a better

understanding of how to serve the needs of the various federal

agencies while fulfilling its statutory mandate.§§§§§§§§§§§§§§§§§§§§§§§§§§§§§

If reducing procurement costs was the primary motivation behind

the change, then such communications, helpful to a now-troubled

FPI, should not be discouraged.

††††††††††††††††††††††††††††† 18 U.S.C. § 4124(a). states: (“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.”). Before the reforms of the last decade, FAR part 8.6 placed the responsibility for determining whether FPI prices met “current market prices” with FPI, requiring the buying agency to obtain a waiver if it wished to purchase from another source.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Compare FAR 8.602 (2000) with FAR 8.602 (2011006).§§§§§§§§§§§§§§§§§§§§§§§§§§§§§ See id.

36

One way to incentivize the purchasing of materials and

services from FPI without reinstituting the mandatory source

requirement would be to exempt federal agencies from the market

research requirement. Since Because conducting market research

can be costly and time-consuming, one possible alternative is to

require FPI to conduct such research itself. Thus, perhaps

through the means of appropriated funds, FPI would research the

comparability of its products with those available in the private

sector, and publish the results to potential purchaser agencies.

Operating under the (albeit disputable) assumption that federal

agencies will seek to obtain the best value for

money******************************, the agencies should then be free to

purchase FPI goods or services. It may well be that even if the

agency goes against its interest and chooses FPI over a better

deal in the private sector, it will still save money by cutting

out the expense and difficulty involved in conducting its own

market research.

Another more extreme way of helping FPI to maintain its

competiveness in the face of decreasing government demand, while

encouraging the diversification of its schedule of products, is

****************************** See e.g. OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, MEMORANDUM FOR THE CHIEF ACQUISITION OFFICERS SENIOR PROCUREMENT EXECUTIVIES CHIEF INFORMAITON OFFICERS, “MYTH-BUSTIN 2”: ADDRESSING MISCONCEPTIONS AND FURTHER IMPROVING COMMUNICATION DURING THE ACQUISITION PROCESS” 9, 11 (2012)(outlining ways to ensure the Government gets best value from its contracts).

37

to reassess the ban on FPI participating in the open

market.†††††††††††††††††††††††††††††† Indeed, in light of the economic

difficulties facing FPI at this time due to the elimination of

preferential treatment, along with the problems resulting from

prison overpopulation, Senator John Ensign (R-Nev.V) recently re-

introduced S. 180, the Prison Opportunity, Work, and Education

Requirement Act (the POWER Act),‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ a bill which

that arguably goes even further than Congressman McCollum’s

aforementioned proposal.§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§ Chief among the Act’s

provisions are a requirement that eligible federal prison inmates

work not less than 50 hours per week and engage in job training

and skills preparation courses.******************************* To accomplish

this goal, the proposed legislation would eliminate the ban on

the interstate traffic in goods produced by convict labor and

repeal the prohibition on FPI contracting with private companies †††††††††††††††††††††††††††††† See FAR 8.601(b)., supra note 10.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ S. 180, 112th Cong. § 1 (2011).§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§ Chief among the Act’s provisions are a requirement that eligible federal prison inmates work not less than 50 hours per week, and engage in job training and skills preparation courses. To accomplish this goal, the proposed legislation would eliminate the ban on the interstate traffic in goods produced by convict labor and repeal the prohibition on FPI contracting with private companies, while directing the Attorney General to establish a Foreign Labor Substitute Panel to review proposals by private U.S. companies to manufacture goods currently only produced abroad. FPI laborers thus working for private companies would be paid wages comparable to those provided to non-inmate workers within the given industry, of which a substantial portion would be used for costs of incarceration, victim restitution, other inmate expenses, FPI expenditures, and other federal and state prisoner programs. Id.******************************* Id.

38

while directing the Attorney General to establish a Foreign Labor

Substitute Panel to review proposals by private U.S. companies to

manufacture goods currently only produced

abroad.†††††††††††††††††††††††††††††††

Of all Senator Ensign’s proposals, the creation of a Foreign

Labor Substitute Panel with the power to review applications by

private companies to utilize FPI laborers for the manufacture of

goods currently produced only abroad seems particularly

promising.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Not only would such a program

result in the repatriation of work to the United States and

increase inmate employment without hurting private industry, it

would may also ensure fair compensation, working conditions, and

new training opportunities for inmates while providing needed

labor to enterprising new companies.§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§

Should FPI be allowed to sells its goods and services on the

open market, additional measures ought to be adopted to ensure

that FPI’s Board of Directors complies with the requirement that

FPI claim no more than a “reasonable share” in any particular

market.******************************** This would allow FPI to expand into ††††††††††††††††††††††††††††††† Id.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ FPI has itself cited “repatriating work currently performed outside the U.S.” as a “potential growth opportunity” for the corporation which would “infuse the UNICOR program with new inmate jobs without undue negative impact on the American worker.” UNICOR UNICOR , supra note 5457, at 30.§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§ See id.******************************** Id. Of course, this “reasonable share” restriction is considerably less important (and less likely to be implicated) when applied against the entire free- market demand

39

currently untouched industries and thus further diversify its

product catalog. Moreover, any partnership between FPI and a

private company for the utilization of inmate labor would

implicate the paying of minimum wages comparable to those offered

to non-inmate workers in the industry, and this would thus

offsetting much of the competitive advantages often associated

with inmate labor.†††††††††††††††††††††††††††††††† Although it is far from

certain, the same wage requirements might well apply where prison

for a particular service or commodity than when applied against the far more limited federal market. Nevertheless, increased Congressional oversight— – perhaps by requiring FPI to submit projected market share reports— – could ensure that FPI’s impact on private industry remain “negligible,” UNICOR , supra note 54 at 26.Id. at 26 (explaining impact is currently negliblenegligible).

†††††††††††††††††††††††††††††††† On this point both Congressman McCollum and Senator Ensign’s proposals were in agreement. See supra notes 6259 and 119104. A look at the Percy Amendment to the Sumners-Ashurtst Act, Pub. L. No. 96-157 § 2, 93 Stat. 1215 (1979) (known as the Prison Industry Enhancement Act), provides some guidance as to the likely contours of such requirements. In order to sell their goods in interstate commerce, the Act required private companies utilizing prison labor to meet three requirements: (1) paying prisoner-employees’ wages, subject to certain deductions, set “at a rate which is not less than that paid for work of a similar nature in the locality in which the work was performed;” (2) ensuring that prisoner-employees have the right to participate in certain state and Ffederal Ggovernment benefits, such as workmen’s compensation, and (3) securing from prisoner-workers voluntary participation subject to advanced agreement authorizing the various deductions from their wages. THOMAS , Library of Congress, Bill Summary & Status: 108th Congress (2003-2004): H.R. 1829, available at: thomas.loc.gov /cgi-bin/bdquery /z?d108:HR01829:@@@L&summ2=m&, last visited 10/27/12.

40

goods are sold on the open market, even in the absence of such a

public-private partnership.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡

V. Conclusion

Despite concerns about its effect on private industry,

government procurement expenses, and inmate welfare, Federal

Prison Industries is a worthwhile program that offers substantial

benefits to governmental agencies, prison management, local

communities, and the prisoners themselves. In light of the

problems facing increasingly overcrowded federal prisons, it

would be unwise to allow the FPI reforms of the past decade to

persist in undermining Congress’ avowed objective of providing

work to all eligible inmates.§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§ Therefore FPI

‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Shifting prison industries to the open market would set “new forces . . . in motion,” requiring FPI to consider a number of additional factors in determining inmate wages. BARBARA J. AUERBACH, ET AL., U.S. DEP’T OF JUSTICE, NAT’L INSTITUTE OF JUSTICE , WORK IN AMERICAN PRISONS: THE PRIVATE SECTOR GETS INVOLVED at 14 (May 1988). For instance, while although federal inmates generally do not qualify as “employees” under the Fair Labor Standards Act (FLSA), see, e.g., Henthorn v. Dep’t of the Navy, 29 F.3d 682, 687 (D.C. Cir. 1994) (“[A] federal prisoner seeking to state a claim under the FLSA must allege that his work was performed without legal compulsion and that his compensation was set and paid by a source other than the Bureau of Prisons itself.”), and therefore need not be paid the minimum wage, it is unclear whether this might not change if FPI begins to compete on the open market. U.S. DEP’T OF JUSTICE at 14.Auerbach et al., at 15. Indeed, even without this shift, a proposal that would have guaranteed FPI workers the minimum wage under the FSLA received considerable support in the 108thth Congress. H.R. 1829, 108th Cong. § 6 (1st Sess. 2003) (died in Senate Committee on the Judiciary after receiving overwhelming support [350-65] in the House of Representatives).§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§§ See 18 U.S.C. § 4121 (2006).

41

should either retain some form of preferential treatment or

otherwise be permitted to compete on the open market, subject to

certain key constraints and qualifications. Therefore FPI should

either retain preferential treatment (to the extent that FPI

should be required to conduct congressionally-funded market

research on the items and services in its Product Schedule, with

the decision to purchase resting with the agencies after review

of the market research) or be permitted to compete on the open

market, subject to certain key constraints and qualifications.

42