Today, the Subcommittee on Oversight and Investigations will receive testimony on the impact of prison industry programs on workers and the businesses that employ them. Given the growing number of inmates in the Federal and State prison systems, our review must include the extent to which these programs actually helped former inmates successfully return to society.

Prison work serves several useful purposes. It helps combat idleness and thus help maintain order. It imparts fundamental work habits, often where such skills are totally lacking. When coupled with vocational training, prison work programs can give an inmate the job skills that will help the person find employment that pays a living wage. Done right, the experience can foster self-esteem.

Studies show that inmate work opportunities, when combined with basic remedial and vocational education, result in reduced rates of recidivism. The most comprehensive study was done by the Federal Bureau of Prisons. Its Post-Release Employment Program or PREP study is often cited as justification for the endless expansions of Federal Prison Industries. As we shall hear today that is not quite accurate, as is typical of so many statements made by FPI's senior management.

At this point, I would like to highlight an important distinction about inmate work opportunities. Most inmate work opportunities are not in prison industry programs. Rather, the work opportunities for most inmates come from jobs relating to the operation and maintenance of correctional facilities. They run laundries, cook, and clean. They help make electrical and plumbing repairs.

Within Federal correctional institutions only between 15 and 20 percent of the inmates capable of working are employed by FPI. The remainder work in these other jobs.

Yet, these prison industry programs have a significant impact in terms of sales and business opportunities from which private sector firms and their law-abiding employees are excluded. In 1997, it was estimated that the combined sales of prison industry programs totaled $1.2 billion. The lion's share of these sales were by Federal Prison Industries. In 1997, its sales were over half a billion dollars, $512.8 million. With sales like this it ranks 37th among the top-100 Federal contractors, just behind Texas Instruments.

By Federal law, prison made-products cannot be sold in interstate commerce, with certain exceptions for approved state projects under the Prison Industries Enhancement or PIE Program. Rather, FPI and its counterparts in the states confine their sales to government agencies. They cite this as justification for their preferential status in the government procurement process.

For FPI, these preferences are truly extraordinary and unfair to business as well as their agency customers. Most state programs reflect the same type of preferences.

Remember, FPI does not have to compete for its contracts! It is a mandatory source. Federal agencies must buy products offered by FPI. An agency must obtain FPI's permission, a "waiver", to be able to purchase competitively from private sector firms. If the agency cannot convince FPI to exercise its unilateral discretion to grant such a waiver, it cannot purchase from a commercial source a product that better meet the agency's mission needs, can be delivered when needed, and costs less.

In practical terms, FPI has the authority to determine whether its product and delivery meet the Federal agency's needs. Under an obscure 1931 decision, FPI can even specify the price the agency will pay for the FPI product, as long as that price does not exceed the highest price offered to the Government for a comparable product.

Even after obtaining its contracts sole-source, FPI's preferences don't end. FPI, rather than the buying agency, determines the adequacy of FPI's own contract performance. Let me say that again. FPI, not its agency customer, determines the acceptability of FPI's performance! No private sector vendor is accorded such treatment. They perform on-time to the Government's specifications or pay the consequence.

To the business community, FPI is an egregious example of unfair government competition. To their workers, it is lost work opportunities for them. It was tolerated when FPI's sales were $29 million in 1960 or even when they were $117 million in 1980. Having exceeded a half a billion last year the business community is demanding relief.

The Hoekstra-Frank-Collins-Maloney bill, H.R. 2758, provides that relief. Our "Federal Prison Industries Competition in Contracting Act" is supported by the business community and by organized labor. In essence, it requires FPI to compete for its contracts and to be held accountable for performing those contracts completely and on-time to the buying agency's satisfaction. We include exceptions permitting FPI to take contracts sole-source if needed to avoid prison disturbances, protecting prison guards and inmates.

While business and labor are seeking relief from FPI, the correctional community, managers of Federal and state prison industry programs, are calling for expansions of existing programs. They are also seeking authority to sell in the private commercial market. They want to sell services as well as products. They are looking for private firms to set-up operations in prisons. Legislation has been introduced to permit such expansions by FPI and its state counterparts, without any effective restraints to protect business not using inmate labor or those firms' workers. Even the PIE Program's protections, which many feel are ineffective, are eliminated. No longer would a firm using inmate labor have to agree not to displace non-inmate workers or have to pay even the minimum wage. It is no surprise to me that these proposals have drawn the opposition of the AFL-CIO and the business community.

That is where we are today. And that is why today's testimony is so important.