Hoekstra Sees FPI Deal As Renewed Threat

June 5, 2002
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HOLLAND — At least one office furniture maker expects to report a sales increase this year: the federal government.

That growth will come in a year when the office furniture industry is experiencing layoffs because of the weakened U.S. economy, highlighting the need for change, U.S. Rep. Pete Hoekstra says.

Hoekstra used the situation last week to promote his latest effort to eliminate the monopoly the government’s Federal Prison Industries holds in supplying federal agencies with everything from office furniture and supplies to textiles and electronics.

“It will grow because it does not have to compete for the business,” Hoekstra said.

Hoekstra spoke against the backdrop of the new U.S. Social Security Administration office in Holland, which was forced to delay its opening by 30 days because of a month delay in receiving its office furniture from FPI, he said.

“I think there are folks in West Michigan who know something about office furniture who were not even provided with the opportunity to compete for this business,” he said. “We’re not saying they (FPI) can’t provide that furniture. We’re saying that if you want to provide that furniture, you’ve got prove to us and the people inside that building making the decision that you can provide it on time, with the right quality and the right price, and that you can provide a better deal.”

FPI employs more than 21,000 federal inmates to produce a myriad of products, including office furniture, that it markets under the Unicor brand name. Hoekstra wants to remove a provision known as mandatory-source status that requires federal agencies to buy first from Unicor, unless they receive a waiver from FPI.

Hoekstra has fought unsuccessfully for years to strip FPI of its mandatory-source status, building a unique coalition in Washington that includes, among others, Rep. Barney Frank, a liberal Democrat from Massachusetts, and the U.S. Chamber of Commerce and labor unions. They all consider mandatory-source status as giving FPI an unfair competitive advantage over the private sector.

Hoekstra’s latest legislative effort is pending in the Criminal Justice Subcommittee of the House Judiciary Committee. His biggest beef with FPI is a move into new markets that further puts it into direct competition with the private sector.

Among those facing that competition is Scott Vander Kooy, president of CompRenew, a Belmont firm that recycles computers and employs about 40 people. Vander Kooy sees FPI, with its cheap labor and low facility costs, as a threat to an emerging industry.

“If the present trend continues, our industry, as a private industry, will go away. Federal Prison Industries will own it,” Vander Kooy said. “We love to compete. Bring it on. But that’s not right competition, especially in a free-enterprise system.”

While FPI, an arm of the Federal Bureau of Prisons, no longer opposes elimination of mandatory-source status, the agency worries that Hoekstra’s legislation would undercut its work programs at a time when the inmate population is on the rise. The federal inmate population, driven by the nation’s get-tough approach to crime and mandatory minimum sentence standards, is forecast to increase from about 145,000 inmates in 2000 to more than 200,000 by 2006.

FPI wants to see elimination of mandatory-source status coupled with provisions that would provide it new marketing opportunities that would maintain the program’s viability.

“It would just undermine the program,” said Ruth Bracken, assistant to FPI Chief Executive Officer Steve Schwalb. “When you have that many inmates in the system and that many inmates coming into the system, you can’t jeopardize a program that works by taking that harsh of a position.”

Hoekstra, however, suggests that FPI can make up for the work lost under the elimination of mandatory-source status by targeting business ventures that import products into the U.S. that are made overseas. His bill is competing against a similar measure sponsored by Rep. Frank Wolf of Virginia that would also eliminate FPI’s mandatory-source status, while allowing the agency to get into new businesses that would compete against the private sector.

FPI is open to working out the differences between the two bills and hopes to find a “happy middle ground” that can finally resolve the issue, Bracken said.

“We’re open to dialog about the possibilities,” she said.

FPI sold $546.3 million in goods in 2000, including $118.9 million in office furniture. Executives within the $13 billion office furniture industry complain that they should have had the opportunity to bid on that business, especially at a time when the industry is sluggish and companies have laid off workers and slowed production.

“We would love to have the opportunity to keep our people employed and be able to compete for this kind of work on quality, delivery and pricing,” said Don Heeringa, chairman of Trendway Corp., a Holland Township furniture firm with nearly $100 million in annual sales. “The way the federal law is right now, which we would like to see changed, we don’t have the ability to compete on any of those factors that we normally compete on.”

Bracken dismissed the notion that FPI has anything to do with job cuts in the industry. The broader issue comes down to more than how much furniture FPI sells each year, she said.

A recent 16-year study showed that inmates working in FPI are 24 percent less likely to return to prison after their release.

“It’s not just about business and the impact on business. It’s a very complex public-policy issue of how we feel about crime and what we do and how we handle those confined in our system,” Bracken said. “There’s got to be some perspective on the market impact and the tradeoff of societal benefits and having inmates work.” 

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