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Lobbying campaign against federal prison firm heats up

Business lobbyists and federal managers are joining forces to attack the system that gives a federal prison labor firm advantages in contracting with agencies.

Call the Long Island City, N.Y., office of Glamour Glove, and you can hear machines whirring in the background. Yes, New York's only remaining glove factory is still in business, says the receptionist, straining to be heard over the constant noise. For owner William Le Bouvier and the other folks at Glamour Glove, the din of machinery is a heartening sound; a few years ago, their jobs were on the verge of elimination. It wasn't Third World competition, rising rents, or lack of skilled workers that was threatening Glamour Glove. The company was facing extinction because of prison labor in the United States. You see, Federal Prison Industries, a quasi-government corporation that employs federal inmates around the country, makes gloves--as well as missile containers, office furniture, and other products--that federal agencies buy. Military contracts are the bread and butter of the domestic glove-making industry, but Glamour Glove couldn't compete against the cheaply produced gloves of FPI. In fact, a 1934 law barred Le Bouvier's company from competing for the Pentagon's business. That law says federal procurement managers must hire FPI if they need a product that is made by FPI-employed inmates. For Glamour Glove, the story had a happy outcome. Private glove manufacturers and the Union of Needletrades, Industrial and Textile Employees (UNITE) spearheaded a three-month lobbying and legal campaign that resulted in action on Capitol Hill. Ultimately, members of Congress urged FPI to compromise, and it agreed to cut its annual glove sales from $10.5 million to $7.4 million, and to cap production at 1.6 million pairs annually. Under the compromise, FPI today will not take more than 20 percent of the production of any new military glove. That means more business for Glamour Glove and other private companies. Companies in other industries haven't fared as well, and other lobbying campaigns continue. A wide-ranging coalition of business and labor groups that opposes FPI's preferential status argues that thousands of jobs and scores of businesses have disappeared because of competition from federal inmates. "There are far too many American workers losing their jobs to convicts," says Jay Power, a legislative representative for the AFL-CIO. Two all-business coalitions--the Coalition for Government Procurement and the Competition in Contracting Act Coalition--are also pushing for legislation to end FPI's preferential status and to force FPI to compete with the private sector on a level playing field. So far, senior officials at the Justice Department (which oversees FPI) and some members of Congress have blocked changes. They argue that FPI makes prisons safer and gives inmates job skills that they will need when they return to society. FPI is a government-owned corporation--akin to Amtrak and the U.S. Postal Service--that is run by the Justice Department's Federal Bureau of Prisons. The President appoints FPI's board of directors, and the seats are split between private- and public-sector representatives. The chief operating officer is Steven Schwalb, an assistant director at the bureau who has had a long career in prison management. "We are facing a 40 [percent] to 50 percent increase in the federal inmate population in the next seven years," Schwalb says. "Congress has authorized the construction of 28 new prisons. This isn't rocket science--we need some method of creating new inmate jobs." With 100 factories employing more than 21,000 inmates, FPI booked $546.3 million in net sales last year. The Bureau of Prisons uses FPI's gross profits (about $34 million last year) to build factories and expand into new products and services. And FPI is looking to grow because 12,000 additional federal inmates are expected to go to work for the corporation between now and 2007. But this year, the numerous anti-FPI forces--which include UNITE, the AFL-CIO, the American Apparel and Footwear Association, the American Furniture Manufacturers Association, the Electronic Industries Alliance, the National Association of Manufacturers, the National Federation of Independent Business, the U.S. Chamber of Commerce, and hundreds of other union and business groups--think they can further constrain FPI. These FPI opponents are banking on the new leadership at the House Judiciary Committee, which has jurisdiction over FPI. Former Rep. Bill McCollum, R-Fla., repeatedly blocked reforms while chairman of the Crime Subcommittee; McCollum had strong support from then-Judiciary Committee Chairman Henry J. Hyde, R-Ill. But McCollum is gone from Congress, and Hyde is no longer chairman of the Judiciary Committee. The new committee chairman is Rep. F. James Sensenbrenner Jr., R-Wis., who is a co-sponsor of an FPI-reform bill introduced by Rep. Pete Hoekstra, R-Pa. The new Crime Subcommittee chairman is Rep. Lamar S. Smith, R-Texas, who co-sponsored the Hoekstra bill in 1999 but has not signed on this year. Hoekstra's bill would phase out FPI's procurement preference over five years, while allowing additional funding for vocational training for prisoners, as well as a special exemption for wardens who fear that the loss of FPI work programs would hinder prison safety. Hoekstra, when he was chairman of the House Education and the Workforce's Oversight and Investigations Subcommittee, held five hearings on FPI over the past three years and lined up bipartisan support for his bill. Co-sponsors include Rep. Carolyn B. Maloney, D-N.Y., whose district is home to Glamour Glove; liberal Rep. Barney Frank, D-Mass.; and conservative Rep. Mac Collins, R-Ga. "I don't think the public realizes the extent of [FPI's] programs. We're not talking about license plates here," complains Brad Miller, the manager of communications and government affairs at the Business and Institutional Furniture Manufacturers Association, a Michigan-based group that represents office furniture companies that have battled FPI in federal court. BIFMA's members include Steelcase Inc., Herman Miller Inc., Haworth Inc., and Hon Industries Inc. Citing dramatic increases in FPI's furniture sales, Miller traveled to Washington last month to lobby Noushin Jahanian, an aide to Democratic Sen. Debbie Stabenow of Michigan. Three office furniture companies have filed a federal lawsuit in Michigan, alleging that FPI has entered scores of new business lines without the prior permission of its board and without allowing industry to comment. Arguments in the suit are slated for July. Stephen M. Ryan, a partner with Manatt, Phelps & Phillips, is directing the lawsuit for the furniture companies. The Quarters Furniture Manufacturers Association, whose members make furniture for military barracks, won a case against FPI three years ago. A federal court put a cap on FPI's sale of dormitory furniture, and FPI agreed to surrender its preferential procurement status in the quarters furniture market for five years. Unions say they support the broad effort against FPI because they've seen FPI inmates, who earn a maximum wage of $1.25 an hour, displace union workers. Ann Hoffman, legislative director for UNITE, argues that 300 union jobs were put at risk in 1997 when FPI decided to expand its glove production. Meanwhile, the Federal Managers Association, which represents more than 200,000 managers and supervisors, has joined the reform coalition, but for far different reasons. Federal procurement officials charge that FPI's selection is limited, its products are of inferior quality, and its prices are too high. "With everyone wanting to give taxpayers the best bang for their buck, this is one area that needs to be addressed," says Reed Watts, FMA's government affairs representative. "You can't tie the hands of federal managers." Another anti-FPI lobbying group, the Competition in Contracting Act Coalition, is operating out of the U.S. chamber. Joe Thiessen, the coalition's executive director and a former policy chief for the "Blue Dog" Coalition of conservative Democrats on Capitol Hill, says his group started plotting its lobbying strategy after last November's election. "We knew the earth had shifted a bit, and we were trying to get everyone ginned up," says Thiessen. He adds that the effort is "receiving a disproportionate amount of resources" at the chamber "for an issue that is not top-drawer," such as trade or tax policy. Thiessen's group works closely with the Coalition for Government Procurement, which boasts 350 corporate members. Larry Allen, the coalition's executive director, complains that FPI started out as a tiny program in the 1930s but has expanded with the booming prison population and has become too large. FPI is up against an array of foes, but as a government body, it is barred from lobbying in the strictest sense. Instead, FPI officials seek to "educate" lawmakers about their programs and about why the Hoekstra bill would cripple FPI. For example, FPI sponsored two trips to federal prisons last month. Schwalb, FPI's chief operating officer, arranged to fly Crime Subcommittee Chairman Smith, the panel's ranking member, Bobby Scott, D-Va., and Rep. Frank R. Wolf, R-Va., to Pennsylvania, where the trio toured several federal prisons and observed FPI work sites. Wolf is the sponsor of a separate reform bill that Schwalb supports. It would end FPI's preferential procurement status, but it would allow FPI to subcontract its workers to private-sector companies. Scott, who once oversaw prison work programs as a Virginia state assemblyman, is a longtime supporter of FPI. If the Hoekstra bill passes, Schwalb says, FPI will lose jobs and will have no way to replace them. The corporate interests "are only asking for this bill for one reason-the very real probability that they are going to increase their sales at our expense." Nonetheless, Schwalb is willing to face competition if FPI wins the right to subcontract its inmates to private-sector companies. FPI would limit its subcontracting to areas where the U.S. manufacturing industry is nearly nonexistent, such as the making of plastic toys or television sets. Currently, U.S. manufacturers use foreign laborers in overseas plants for those jobs, but Schwalb believes they would hire low-wage inmates, given the opportunity. The inmates would be paid a wage equal to that paid for similar work in each respective locality--a concession to labor unions. But FPI would have the discretion to withhold up to 80 percent of that wage. Smith apparently was convinced by Schwalb's arguments. He has declined to sign onto the Hoekstra bill this year, and an aide says that Smith and Sensenbrenner, who has already promised to mark up the Hoekstra bill, appear to be headed for a confrontation on the issue. On the Senate side, Carl Levin, D-Mich., is planning to introduce an amendment to the Defense authorization bill that would allow private companies to compete with FPI for Defense Department contracts. When Levin offered a similar amendment in 1999, it was defeated 49-51. Schwalb paints the confrontation in black-and-white terms. "The question is whether Congress has the motivation to be supportive of an important public policy program, or whether it's going to allow a power grab that addresses the self-interest of textile and furniture manufacturers." From Schwalb's perspective, he fears the answer may be the latter.