Small business owners attack federal prison firm

Legislators and entrepreneurs testifying before the House Committee on Small Business Wednesday accused Federal Prison Industries of pilfering money from the pockets of small business owners. Federal Prison Industries (FPI), also known as Unicor, is a division of the Justice Department's Bureau of Prisons that employs more than 20,000 federal inmates. In 1999, it produced furniture, clothing, electronics and other products valued at $566.2 million. FPI sells several hundred products and services to federal agencies. By law, federal procurement managers must buy certain products that are made by FPI-employed inmates. "I am particularly concerned that FPI, unlike private sector competitors, does not actually have to compete for sales," testified Rep. Carolyn Maloney, D-N.Y. "In short, FPI has the corner on the federal market." Several small business owners told legislators that FPI has an unfair monopoly over federal contracts. "Many small businesses are not permitted to compete fairly in the government marketplace, even if they can produce lower pricing, on-time delivery and better quality," said Bobbie Gentile, president and owner of Dayton, Ohio-based Q-Mark Inc., a manufacturers' representative. Bob DeGroft, owner of Source One Office Furnishings in Albuquerque, N.M., told legislators that he had no problem with open and fair competition, but that he takes issue with the mandate governing Federal Prisons Industry. "FPI is not competing with anyone, but instead is guaranteed by statute all the government business it wants," DeGroft testified. According to Rep. Nydia Velazquez, D-NY, the initial goal for FPI--to rehabilitate prisoners and teach them a skill--has been twisted into a for-profit venture. "When you realize that while FPI has become a 'mega' contractor, that benefits only 17 percent of the federal prison population, clearly something is wrong," Velazquez said. In April, Rep. Peter Hoekstra, R-Mich., introduced the Federal Prisons Industries Competition in Contracting Act of 2001 (H.R. 1577), a bill that proposes to remove the requirement that agencies buy FPI products whenever they are available. The bill would allow FPI to compete against private-sector companies for work and would phase out its status as a mandatory source for products over the next five years. "Businesses of all sizes continue to be denied the opportunity to even bid on government contracts funded with their own taxpayer dollars," Hoekstra said. "Federal managers must obtain FPI's permission before they can make purchases that will get the best value for the taxpayer dollars entrusted to their care." Hoekstra introduced similar legislation in the 106th Congress, but was criticized because it did not offer any alternatives to FPI for prisoners seeking job training. In the new legislation, Hoekstra included provisions that would provide expanded vocational job training programs for federal inmates.