Senate Hearing Considers Prison Industries Reform The Bush administration supports eliminating Federal Prison Industries’ mandatory source preference, with a big “if:” if adequate work opportunities for prisoners are maintained, said Harley Lappin, FPI’s chief executive and director of the Federal Bureau of Prisons. Lappin testified April 7 before the Senate Governmental Affairs Subcommittee on Financial Management, the Budget and International Security. The subcommittee is considering S. 346, legislation that would abolish the prison labor corporation’s mandatory source status. In his written testimony, Lappin said, “We support continued reform of FPI, including the elimination of FPI’s mandatory source provision and the reduction of its reliance on traditional products, especially furniture, textiles and electronics, as long as the [Bureau of Prisons] is able to maintain its ability to provide job skills training and work experience to a growing federal inmate population.” But he said the Bush administration is neutral on both the Senate bill and H.R. 1829, a similar bill that was passed by the House in November. (SAA, 11/14/03) The Senate bill, sponsored by Carl Levin (D-MI), Craig Thomas (R-WY) and others, is the tougher of the two. It would end FPI’s mandatory source preference six months after it is signed into law; the House bill would phase out the preference over five years. Both bills would allow FPI to be awarded a sole-source contract if the attorney general determines that the contract was essential to safety and effective administration of a particular prison. The bills also permit FPI to compete for federal contracts on an equal basis with businesses. The House bill prohibits FPI from bidding on small business set-aside contracts. FPI’s revenues totaled $679 million in 2002; Sen. Thomas said it was the 69th largest defense contractor in 2003. Both bills would prohibit FPI from offering services in interstate commerce. The corporation’s expansion into services, such as computer recycling and data entry, has raised new opposition among businesses. Congress earlier passed legislation requiring that, before a sole-source contract is awarded to FPI, contracting officers must conduct market research to determine whether FPI’s product is comparable in price, quality and time of delivery to a product offered by the private sector. FPI’s board voted last year to limit its market share to 20% in all product categories. The board also said FPI would waive its mandatory source status anytime a business offered a product at a lower price. Critics, such as Rep. Pete Hoekstra (R-MI), say that is meaningless because FPI reserves the right to match the price offered by businesses. At the Senate hearing, the usual voices lined up on the usual sides: business groups favoring the bill, unions representing prison guards against it. Guards fear a reduction in jobs for prisoners would lead to discipline problems. The Bush administration, while endorsing the goal of FPI reform, has repeatedly emphasized the benefits of the program in keeping prisoners occupied and providing job training. Lappin, the CEO, called FPI “the Bureau of Prisons’ most important correctional management program.” About 12% of federal prisoners work in FPI factories, at wages ranging from around 25 cents to $1.25 an hour.