OMB Will Guide Changes in Prison Industries The board of directors of Federal Prison Industries Inc. is waiting for guidance from the Bush administration before it moves to rein in some of the prison labor agency’s aggressive sales practices, board Chairman Kenneth Rocks told Set-Aside Alert. The Office of Management and Budget is reviewing FPI’s activities, which have drawn fire from some members of Congress and small business advocates. Angela Styles, administrator of federal procurement policy, told the House Small Business Committee in November that some of the agency’s practices are “unacceptable.” (SAA, 11/29/02) Rocks has said the board wants to limit FPI’s market share in product lines where the prison agency holds a virtual monopoly on sales to the government. In an interview, he said, “That is something we hope to resolve in the near future. We are looking for some direction from the administration.” By law, FPI can claim any civilian-agency contract it wants for the products and services it offers. Congress limited its mandatory source preference for Defense Department purchases, allowing businesses to win contracts if they offered lower prices than FPI. At its January meeting in Miami, Rocks said, the board voted to raise its micropurchase threshold to $2,500, from $250. That means an agency can buy any item worth up to $2,500 without offering the contract to FPI. The board has set a meeting with furniture manufacturers Feb. 19-20 at the federal prison in Coleman, FL. Office furniture is one of FPI’s largest product lines. “We’ll be looking at the issue of the content of inmate labor in furniture systems and the partnerships FPI has in furniture manufacturing,” he said. Critics have argued that those partnerships allow favored manufacturers to take advantage of FPI’s mandatory source preference by selling products through FPI that have little value added by prison labor. At a hearing of the House Small Business Committee Nov. 21, Rocks said he thought FPI should not be selling any product that does not involve “at least 50% of inmate labor.” A group of Congress members led by Rep. Pete Hoekstra (R-MI) has proposed ending FPI’s mandatory source preference in civilian agencies, as Congress did in 2001 for Defense Department purchases. But the Bush administration does not support that bill. In her November testimony, OMB’s Styles signaled that changes in FPI’s sales practices are not likely to go as far as some small business advocates want. She said the administration’s approach to FPI reform will be guided by two “equally important principles:” the need for competition in federal procurement and the need “to maintain adequate work opportunities at federal prisons to counter the potentially dangerous effects of inmate idleness and prepare prisoners for reintegration into society.” Rocks echoed that view in the interview Jan. 21. He said the board wants “to be more friendly to small business and still maintain the mission of FPI to keep inmates working. “It sounds simple,” he added. “But it’s not quite as simple.” He described the board’s job as a balancing act between those two goals. Congressional critics have questioned whether FPI has the legal authority to provide services to government agencies and private-sector customers, since the 1934 law creating the agency mentions only “products” and “commodities.” Styles said OMB is reviewing that issue along with other FPI practices. FPI’s sales to federal agencies totaled about $580 million in 2001.