BCFC Testifies Before Congress On the Need to Reform Federal Prison Industries Contracting
Prison Industries Contracting Reforms Needed to Level Playing Field for the Private Sector, Including Small Business
Washington, D.C. June 28, 2012 - Congress should enhance private sector job creation, including in small business, by reforming Federal Prisons Industries (FPI), the Business Coalition for Fair Competition (BCFC) said today in testimony before a hearing of the Subcommittee on Contacting and Workforce of the House Small Business Committee.
BCFC President John Palatiello called FPI "a formidable competitor even for a large private sector enterprise, much less a small business." He said, "Evidence indicates that FPI will continue its expansionist behavior, by exploiting its mandatory source status and increasingly encroaching on private sector industries, forcing businesses to halt production lines, lay off employees and even close their doors for good."
Ensuring a level playing field for the private sector in the federal procurement process by ending FPI's unfair advantage is a major priority for BCFC. BCFC endorses the policy that the government should not perform the production of goods and services for itself or others if acceptable privately owned and operated firms found in the Yellow Pages of the phone book are or can be made available for such purposes - otherwise called the "Yellow Pages" test. BCFC believes private firms should be allowed to compete for government contracts fairly by eliminating FPI's mandatory source requirement that government agencies purchase products from the prisons.
Palatiello concluded, "While we are sympathetic to FPI's goal to employ federal inmates to reduce recidivism by providing vocational and remedial opportunities while incarcerated, it should not be done at the expense of law-abiding, taxpaying businesses. The original purpose of FPI was to reduce idleness in the prisons. Today, FPI is contributing to idleness in the private sector, especially small business, by taking jobs away and contributing to our unemployment. We appreciate the Subcommittee's examination of FPI's impact on small business and urge prompt consideration of H.R. 3634 by Congress."
The hearing examined potential legislative solutions, including H.R. 3634, the Federal Prison Industries Competition in Contracting Act. Currently cosponsored by 20 bipartisan members of the U.S. House and supported by numerous business organizations, H.R. 3634 provides greater competition in federal contracting by permitting private sector firms, including small business, more opportunities by reducing the unfair advantages of Federal Prison Industries. Organizations supporting H.R. 3634 are: American Apparel and Footwear Association (AAFA); American Congress on Surveying and Mapping (ACSM); American Traffic Safety Services Association (ATSSA); Business and Institutional Furniture Manufacturer's Association (BIFMA); Business Coalition for Fair Competition (BCFC); Council on Federal Procurement of Architectural and Engineering Services (COFPAES); Herman Miller, Inc.; Management Association for Private Photogrammetric Surveyors (MAPPS); National Association of Manufacturers (NAM); National Federation for Independent Business (NFIB); National Society of Professional Surveyors (NSPS); Specialty Graphic Imaging Association (SGIA); Steelcase Inc.; Textile Rental Services Association of America (TRSA); and U.S. Chamber of Commerce.
Since 1934, the Federal prisons have operated industrial facilities to keep idle inmates occupied and provide training in occupations designed to provide prisoners marketable skills that will make them productive, responsible citizens when their incarceration is complete. Historically, FPI (trade name:UNICOR) has focused on a limited number of product areas, particularly those in which the goods produced in the prison can be consumed in the prison, such as furniture and paper products. In recent years, they have expanded dramatically, shifting to a wide array of products, and recently, to the services sector. Almost every year, FPI expands to produce even more goods and services. FPI's sales growth, all through non-competitive contracts, has been formidable. It has revenues that have ranged from $745 million to more than $885 million annually in recent years. Annual sales have grown by over $100 million in the past decade alone. When compared to all other Federal contractors, FPI ranks as the # 36 entity, when measured by gross sales to Federal agencies.
The Business Coalition for Fair Competition (BCFC) is a national coalition of businesses, associations, taxpayer organizations and think tanks that are committed to reducing all forms of unfair government created, sponsored and provided competition with the private sector. BCFC believes the free enterprise system is the most productive and efficient provider of goods and services and strongly supports the Federal government utilizing the private sector for commercially available products and services to the maximum extent possible.