Federal Prison Industries Contract Leads to Freeworld Job Losses

Federal Prison Industries Contract Leads to Freeworld Job Losses

The loss of a $45 million contract to produce military clothing has caused Tennessee-based Tennier Industries to lay off around 100 workers. The contract was awarded to Federal Prison Industries (FPI), also known as UNICOR, which will use prisoner slave labor to manufacture the clothing that otherwise would have been made by free world employees. [See: PLN, May 2012, p.1].

Tennier is located in a depressed area of Tennessee; its main line of business is military clothing manufacturing. The federal prisoners who will perform the work under the FPI contract will be paid from $.23 to $1.15 per hour. “Our government screams, howls, and yells how the rest of the world is using prisoners or slave labor to manufacture items, and here we take the items right out of the mouths of people who need it,” stated Tennier CEO Steven W. Eisen.

Some federal lawmakers see a problem with FPI. “If China did this – having their prisoners work at subpar wages in prisons – we would be screaming bloody murder,” said U.S. Representative Bill Huizenga, the lead sponsor of legislation to overhaul FPI. “This is a threat not to just established industries; it’s a threat to emerging industries.” Huizenga was part of a bipartisan coalition of lawmakers behind a bill introduced in Congress in December 2011, the Prison Industries Competition in Contracting Act (H. R. 3634), designed to change the way FPI operates.

Under current policy, FPI has the preferential status that requires federal agencies to purchase prisoner-made goods if FPI offers them with comparable price, quality, and time of delivery to that of private sector businesses (with certain exceptions). While FPI does not always quote the lowest price, it is often able to underbid private companies.

H.R. 3634 sought to limit FPI’s sales to the federal government by removing the agency’s preferential status, allowing private companies to provide more products to the government, and toughening price requirements on prisoner-made goods to make them more competitive. The bill would have increased prisoner wages to $2.50 per hour and imposed federal work-safety standards on FPI.

“As the system is currently set up, if UNICOR wants a contract from the federal government, it gets it,” Rep. Huizenga stated. “More often than not, UNICOR is given a contract, not because other companies do not produce the product or service requested, but because UNICOR receives preferential treatment when it provides services to other branches and agencies of the federal government.

This process takes jobs away from hardworking men and women that are currently employed, has a negative impact on economic growth, and does not guarantee the highest quality product or best use of taxpayer dollars.” U.S. Senator Mitch McConnell introduced another bill, the Federal Prisons Accountability Act of 2012 (S. 2169), that would require the director of the Bureau of Prisons (BOP) to be appointed by the president with the consent of the Senate.

The bill noted that the BOP’s director “serves as the chief operating officer for [FPI] … that directly competes against the private sector, including small businesses, for Government contracts.” Senator McConnell filed the bill after he was contacted by several Kentucky companies, including Campbellsville Apparel and Ashland Sales and Service, that were at risk of losing contracts to FPI.

“Our company believes that FPI should be more accountable to the public by never taking a job that is currently done by an American taxpaying citizen,” stated Campbellsville Apparel president Chris Reynolds. “My employees just cannot believe the fact that a prisoner who should be paying a debt to society is being promoted through the federal government to a job from an American taxpaying citizen.” The bills introduced by Rep. Huizenga and Senator McConnell both died in committee in 2012; they have not yet been reintroduced in the current session of Congress.

Meanwhile, FPI is moving into the production of solar panels and other energy technologies to help the government meet mandates for using renewable energy sources. Up to 400 federal prisoners are assembling solar panels at FPI plants in Otisville, New York, and Sheridan, Oregon. [See: PLN, Jan. 2011, p.46]. FPI said its purpose is to “provide inmates with job skills in a new and growing market,” according to spokeswoman Julie Rozier.

FPI industry programs have “been important to the Federal Bureau of Prisons for a long time,” added George Keiser, a former official at the National Institute of Corrections. “It’s one of the areas where they can demonstrate a high correlation between people who work in prison industries and who eventually, as they return to their communities, have a higher-than-average success rate at not being rearrested, not being convicted, and not returning to prison.”

The BOP reports that prisoners employed in FPI programs are 24 percent less likely to return to prison and have a 14 percent greater chance to find work upon release. FPI does have a financial cost, though, as it lost $1.8 million in 2011 – an improvement from the $56.3 million the agency lost the year before, largely due to a recall of defective military helmets. [See: PLN, Jan. 2011, p.20].

Tennier Industries filed a bid protest with the U.S. Government Accountability Office (GAO) over its loss of the $45 million military clothing contract to FPI. The company noted that the contract was issued as a Historically Underutilized Business Zone (HUBZone) set-aside, which, according to government regulations, is intended “to provide Federal contracting assistance for qualified small business concerns located in historically underutilized business zones, in an effort to increase employment opportunities, investment, and economic development in those areas.”

However, Tennier’s complaint was denied on June 29, 2012, even though FPI is not a HUBZone business and despite the company’s argument that allowing FPI to compete for the contract defeated the purpose of the HUBZone program. The GAO determined that federal statutes and regulations “specifically allow[ed] FPI to participate in the procurement” and that because FPI was not a HUBZone small business it did not have to comply with the rules applicable to such businesses.

Sources: New York Times, https://smallgovcon.com, www.louisville.com, www.acquisition.gov, www.gao.gov

(First published by Prison Legal News and used here by permission)