Hoekstra Win Should Pay Dividends

January 9, 2004
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HOLLAND — Late last year, Congessman Peter Hoekstra’s personal eight-year campaign to open federal procurement contracts to competitive bidding won a lopsided majority in the House.

Hoekstra’s winning bill was a huge victory for the private sector, requiring Federal Prison Industries to begin competing for its government contracts rather than mandating those contracts. For that, Hoekstra is one of the Business Journal’s Newsmaker of the Year Award finalists.

Congress also adopted a separate provision submitted by Hoekstra in the 2004 Appropriations Bill that buttresses the act.

Hoekstra’s issue was that FPI — a branch of the federal penal system that operates under the brand name Unicor — figuratively had been snatching business from private sector office furniture manufacturers, while denying private sector access to federal contracts worth hundreds of millions of dollars.

Hoekstra, R-Holland, said that FPI’s conduct not only contributed to unemployment in West Michigan’s furniture industry, but also frequently forced federal agencies to pay more than necessary for equipment.

FPI has manufactured office furniture for federal agencies since 1934 to provide meaningful employment for felons in the federal prison system. Its charter requires it not to compete with private industry, but the agency long ago ignored that proviso. In fact, it was becoming so blatant that a call for its reform came from the office of then-Vice President Al Gore during the Clinton administration.

Too, FPI conducted a virtual monopoly by virtue of paying slave-level wages, no benefits, no taxes of any kind and holding itself exempt from the costs of conforming to OSHA regulations.

Unicor’s federal mandatory source status enabled it to mandate when a given federal agency needed new furniture, what that furniture would be and what the agency would pay for it, even when the price often exceeded that of comparable private sector goods.

Over the life of his eight-year focus on the issue, Hoekstra enlisted a bipartisan coalition on both sides of the aisle in both houses of Congress.

Prominent among Democratic Party legislators contributing to November’s one-sided victory over FPI were John Conyers and Barney Frank in the House and, in the Senate, Debbie Stabenow and Carl Levin.

With Levin’s help, Congress actually passed a Hoekstra bill in 2001 to rein in FPI by terminating its virtual control of Department of Defense procurement.

Soon afterward, however, Hoekstra was stunned to learn that FPI’s staff — contrary to directives from its own board (also Hoekstra allies) — was flouting the new statute. Moreover, Pentagon procurement officers, facing a war-footing timetable, were knuckling under to FPI mandates to avoid getting embroiled in litigation with FPI’s Department of Justice lawyers.

Fortunately for Hoekstra’s purposes, FPI took several other actions since then that buttressed his case against the agency in Congress.

During a time when the hard-hit U.S. furniture industry was laying off workers, FPI openly obtained subcontract work from competing Canadian furniture-makers. Too, FPI supplied its Canadian subcontractors with specifications for an office chair that was a knock-off of Herman Miller’s Aeron chair.

In comments to the FPI board of directors, Hoekstra said he found it difficult to understand why an agency created to help the federal prison population was using U.S. tax revenues to help employment in the Canadian office furniture industry.

At the same time — with West Michigan auto suppliers also in trouble — FPI announced plans to expand into automotive component production. Unicor also bragged in its annual report that at a time of prolonged recession, its net sales for fiscal 2002 were up 16.3 percent to $678.7 million from the $583.5 million in FY2001.

But what really generated heat within the Hoekstra coalition was FPI’s conduct last spring. In March, the agency took a winning $6 million Steelcase bid on a Federal Aviation Administration contract, copied it and in effect awarded the contract to itself.

Aside from infuriating Steelcase, which had invested time and money in the bid, the move made enemies of legislators in other parts of the country where subsidiaries and suppliers of West Michigan office furniture manufacturers are located — and where layoffs also had occurred.

Hoekstra told the Business Journal he expects the FPI staff to continue resisting the new statutes. The agency’s staff, he notes, have civil service protection and are virtually immune to discipline or firing.

Hoekstra said, however, Congress will continue bolstering federal agencies’ ability to seek private sector bids — a process that he believes will protect private sector jobs from a predatory bureaucracy.           

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