Hoekstra FPI Bill Takes Giant Step

April 26, 2002
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WASHINGTON, D.C. — After years of pushing, U.S. Rep. Peter Hoekstra (R-Holland) has scored the biggest victory yet in his effort to open all government contracts to the private sector.

The House Judiciary Committee last week voted unanimously to approve and send to the full House a bill to phase out over five years the mandatory-source status provision that grants Federal Prison Industries a virtual monopoly over government contracts.

The vote marks the first time that FPI reform has ever passed at the committee level as stand-alone legislation. Measures attached to appropriations bills as amendments in the past, in both the House and Senate, have passed committee, but were ultimately voted down and removed.

“This vote moves us one step closer to achieving fairness in government contracting,” Hoekstra said.

Backers of the Federal Prison Industries Competition in Contracting Act anticipate it will clear the full House and head to the Senate, where Sen. Carl Levin, D-Michigan, is awaiting to take up the cause.

“When we get to the House floor, we will do well,” Hoekstra said. “I’m confident we can move this out of the House.

Hoekstra has sought for years to end mandatory-source status for Federal Prison Industries, an arm of the U.S. Justice Department’s Federal Bureau of Prisons that employs more than 22,500 inmates to produce some 80 products, including textiles, electronic components and office furniture, that are sold to the federal government under the “Unicor” brand name.

In recent years, Federal Prison Industries has worked to branch into new product and service areas that bring it further into direct competition with the private sector. That expansion has only strengthened the interest in reforming FPI, Hoekstra said.

“Members of Congress are very concerned when a federal program or federal policies reduce private-sector employment, and Federal Prison Industries does that,” he said.

The battle against FPI intensified this year with the recession and a change in the chairmanship of the Judiciary Committee.

In West Michigan, executives from office furniture manufacturers who have been hard hit by the recession have complained loudly about mandatory-source status, which they see as unfairly blocking them from bidding on federal contracts. Office furniture is the agency’s largest business category, accounting for nearly 30 percent, or $174.9 million, of the $583.5 million in revenues Federal Prison Industries recorded last year, according to its 2001 annual report.

Under mandatory-source status, federal agencies are required to buy prison-made products unless they are granted a waiver from Federal Prison Industries to purchase from the private sector. The agency granted a majority of the 23,892 waiver requests it received last year, representing potential sales of $237.3 million.

Proponents of removing mandatory-source status scored their first big victory late last year when Congress passed a measure in the 2002 Department of Defense budget bill that allows the Pentagon to buy from the seller that provides the best value, whether it’s the private sector or FPI. The measure was important because about 60 percent of Federal Prison Industries’ business is with the Department of Defense.

At about the same time, proponents received word that President Bush supported their effort to reform the agency.

Opponents of FPI reform efforts have feared they would inhibit the agency’s ability to provide inmates needed job-training skills.

To address those concerns, Hoekstra’s bill expands remedial education, vocation and apprenticeship programs within federal prisons and allows inmates to do work for nonprofit organizations such as Habitat for Humanity. FPI also is authorized to produce products or provide services to address public needs that are not met by the private sector.

The bill also establishes guidelines for the agency’s directors to follow when they consider expanding product lines and requires independent assessment of their impact on the private sector and federal agencies.           

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