LEGISLATIVE ACTION ALERT

HEARING SCHEDULED

on Prison Industries Legislation

August 5, 1999

McCollum's Subcommittee an Crime

House Committee on the Judiciary

Rep. Bill McCollum, Chairman of the Subcommittee on Crime, has scheduled a hearing on H.R. 2558, his "Prison Industries Reform Act of 1999", H.R. 2558 actually grants broad new authority for prison industry programs - State and local as well as FPI - to sell inmate labor and their products and services in the commercial market devoid of any real relief from FPI's mandatory source
preference or any effective protections for law-abiding workers and
the firms that employ them. Testimony will also be received on the Hoekstra-Frank-Collins-Maloney "Federal PRISON INDUSTRIES COMPETITION IN CONTRACTING ACT or 1999" H.R. 2551.

The hearing is scheduled for Thursday, August 5th, beginning at 9:30 am, in Room 2141 Rayburn House Office Building,, FPI will be represented by Kathleen Hawke Sawyer, Director of the Federal Bureau of Prisons (and FPI's Chief Executive Officer) and Steve Schwalb, FPI's Chief Operating Officer. They will be followed by a panel of private sector witnesses, now being determined.

Action Item - No. 1

Write directly to the Members of the Subcommittee on Crime and let them know how you feet about Rep. McCollum's prison industries expansion bill, H.R. 2558, and your support for the HoekstraFrank-Collins-Maloney bill, H.R. 2551. A list of the Members of the Subcommittee on Crime Is attached.

Action Item - No. 2

Associations supporting the Hoekstra-Frank-Collina-Maloney bill should telephone and request to testify. If your association is not given the opportunity to testify, you should prepare a statement for the record. In addition to Chairman McCollum, your statement should be distributed before the hearing to each
member of the Subcommittee on Crime so they know where your association stands on the two bills

Subcommittee on Crime
Committee on the Judiciary
U.S. House of Representatives

Bill McCollum (FL-8th), Chairman

* Original cosponsor of H.R. 2551,the Hoekstra-Frank-Collins-Maloney

# Original cosponsor of H.R. 2558, Flop. McCollum's

"Prison Industries Reform Act of 1999"

Mialing Addresses:
The Honorable [Name]
U.S. House of Representatives Chairman
Washington, DC 20515

The Honorable Bill McCollum
Subcommittee on Crime
Committee on the Judiciary
U.S. House of Representatives
Washington, DC 20615-6223
(202) 225-3928
FAX: (202) 225-3737

Broad New Authority for Prison Industries - Federal, State, and Local to Sell Inmate Labor and their Products and Services Commercially, With Only Illusory Protections for Law-abiding Workers and Business

28 Jul 1999

H.R. 2558, the Prison Industries Reform Act of 1999,

Introduced July 20, 1999 by Rep. Bill McCollum (FL-8th)

Chairman of Subcommittee on Crime, House Committee on the Judiciaty

H.R. 2558 expands Federal Prison Industries (FPI), upon enactment, by -

• extending FPI's mandatory-source status to all forms of "services', by defining "product" to include services;
• authorizing commercial sales of FPI products and services, withhout limitation;
• permitting FPI to provide inmate-workers under contract to private firms operating at an FPI workshop, devoid of any effective and enforcemble protections against the displacement of non-inmate workers or any requirement to pay prevailing (or even the Federal minimum wage), putting other businesses and their workers at a competitive disadvantage in the commercial. market;
• repealing the requirement that FPI cannot commence production of a new product(or significautly expand the production of a currently approved product) without obtaining prior approval from the FPI Board of Directors, after the Board has obtained and considered public comments on the proposed expansion's potential adverse impacts on private firms and their workers.

H.R. 2559 does" not -

• "eliminate" FPIs mandatory source status;
• reduce, on annual basis, FPI sales to Federal agencies made using FPI's mandatory source status; or
• even amend the statutory provision of upon which FPI's mandatory source status is based.

H.R.2558 only requires the submission of a plan, to

• waive further use of FPI's still statutorily-authorized mandatory source status within seven years after the date of enactment;
• reduce FPI's use of its mandatory source status on an annual basis (in amounts FPI deems appropriate), and
• designate products and services, for which FPI will waive voluntarily its still statutorily-authorized mandatory source status.

H.R.2558 specifically forecloses any judicial enforcement by adversely affected non-inmate workers or the firms that employ them, including FPI's failure to submit the "plan".

H.R.2558 recognizes FPI's asserted status as a "preferred source" under which FPI claims authority to be awarded negotiated sole-source contracts by Federal agencies, again, foreclosing even an opportunity for private flrms to bid, by authorizing Federal agencies to make purchases "directly" from FPI "by such method they deem appropriate".

H.R.2558 does not "cap" at current levels FPI sales made using its mandatory source status.

• The bill only prohibits FPI from producing a "new product" or to "significantly expand the rate of production" of a current product, unless the product (or service.) has been designated in FPI's plan as a product to be sold to Fedeial agencies without exercising FPI's mandatory source status.
• This protection is illusory, since under FPI's policies and pratice -

1. a product is not a "new product" if FPI has offered any individual item included within the broad classes of individual items encompassed within a Standard Industrial Classifilication (SIC), within the past five years; and
2. an increase of up to 15% within one year is not a expansion in production.

H.R. 2558 does not require inmate-workers making products (or performing services) for sale in the commercial market to be paid the Federal minimum wage, if the product (or service) is designated a "foreign-made product" by a new "Independent Review Panel", since -

• the bill is devoid of any realistic standard for determing whether a specific product (or service) "would otherwise be produced by foreign workers outside the United States", the statutory definition of "foreign-made product";
• the accompanying explanatory section-by-section analysis suggests that a private, firm using inmate labor would merely have to assert that the work planned for the inmates, would otherwise be performed by foreign workers;
• the Attorney General would be free to designate to the Panel "such other persons as the Attorney General deems appropriate", in addition to the statutorily-specified representatives from the Department of Commerce, the Department of Labor, the International Trade Commission, the Small Business Administration, "the business community" and organized labor", essentially being able to pack the Panel with those focused on expanding inmate work opportunities rather than protecting non-inmate workers and the firms that employ them;
• specifically authorizes the Panel to operate in secret by providing an exemption to the Federal Advisory Committee Act, which otherwise assures that such advisory groups operate in public; and
• precluding any public challenge of any determination made by the Panel.

H.R. 2558 does not provide effective and enforceable protections against displacement or non-inmate workers, since the bill -

• only directs FPI to include the specified non-displacment language in its contracts to furnish inmate workers to private firms;
• precludes any challenge by a displaced non-inmate worker; and
• grants to the Attorney General essentially unfettered waiver authority.

H.R.2558 even grants the Attorney General the power to nullify the entire legislation on the third and fifth anniversary of the date of enactment, if FPI is employing less than 25% of the work-eligible inmates, requiring a sustained increase in FPI-employed inmates (FPI employed approximatley 18% of the work-eligible inmates in 1998 and hasn't employed 25% in any year since 1989), before FPI has to relinquish use of its mandatory source status.

H.R.2558 fundamentally changes FPI's statutory direction, by -

• making paramount FPI's mission to provide employment for "the greatest number of inmates";
• establishing a requirement that FPI's sales be adequate to make FPI financially selfsupporting;
• repealing the requirement that "no single private industry shall be forced to bear an undue burden of [FPI] competition";
• amending the current statutory direction "to reduce to a minimum competition with private industry or free labor", to emphasize that any adverse impacts on private firms and their non-inmatc workers need only be, "consistent with [FPI's] mission" of providing employment for the maximum number of inmates; and
• reconstituting FPI's Board of Directors, increasing its membership from 6 to 12. appointed by the Attorney General (four of whom would be appointed upon the recommendation of the House and Senate leadership), potentially eliminating representation of private sector groups likely to be adversely impacted by FPI activities (e.g., representatives of labor,small business, and FPI's Federal agency customers).

H.R.2558 would exempt FPI from the Government-wide statutory and regulatory requirements relating to Federal agency purchasing, permitting FPI to make purchases in any manner it deemed appropriate, including sole-source purchases without limitation, for -

• materials, components', and even finished products in support of its inmate-work programs, as well as
• purchases of construction services and equipment for the establishment of new prison industry workshops or the modernization of the 100 existing workshops.

H.R. 2558 does nothing to protect FPI's Federal agency "customers" or tax-payer dollars, since FPI, rather than the buying agency, has the power to determine -

• whether FPI's product (or the timeliness of FPI's delivery) meets the mission needs of the buying agency;
• the price to be paid (FPI IS FREE TO CHARGE ANY PRICE THAT DOES NOT EXCEED THE HIGHEST PRICE OFFERED THE GOVERNWNT, EVEN IF NO PURCHASE HAS ACTUALLY BEEN MADE AT THAT PRICE); and
• the adequacy of FPI's own performance.

H.R.2558 even undercuts FPI's objective of inmate rehabilitation by repealing the existing provision calling for FPI work opportunities to provide the "maximum opportunity to acquire a knowledge and skill in trades and occupations which will provide them with a means of earning a livelihood upon release."

H.R.2558 expands State and local prison industries program by permitting them to sell in the commercial market without limitation, if "the State adopts a plan to elminate any State mandatory source status within 7 years. This new exception to the long-standing prohibition on the commerical sale of the results of inmate labor is exempted from even the limited protections for law-abiding workers applicable to commercial sales of the results of inmate labor under the existing Prison Industries Enhancement (PIE) Program, including -

• prohibiting displacement of non-inmate workers;
• paying an imnate-worker wages "at a rate which is not less than that paid for work of a similar nature in the locality";
• prohibiting the impainent of "existing contracts for services"
• requiring application to and certification by the Department of Justice's Bureau of Justice Assistance (BJA) before initiating a PIE operation; and
• reporting to, and monitoring by, BJA of each individual PIE operation.

H.R. 2558 includes a number of positive provisions relating to the allocation of inmate wages, including contributions to a "gate fand", payable upon release, to help facilitate a successful return to society.