James Sensenbrenner, November 7, 2003

In an important step to protect Wisconsin jobs and businesses, on November 6, 2003, the House of Representatives passed HR 1829, the Federal Prison Industries Competition in Contracting Act of 2003, a bipartisan solution to reform prison industries.

Authorized in the 1930’s, Federal Prison Industries (FPI) was established to provide job training opportunities to federal inmates by producing goods and services for federal agencies. FPI is a large government owned corporation whose impact on private industry is significant -- in fiscal year 2002, it sold over $210 million in office furniture, representing a 17.2% share of the office furniture market.

By law, FPI products and services have to be purchased by federal agencies. This requirement, which provides FPI with a mandatory market for its goods, is referred to as "superpreference" or "mandatory source". Moreover, in order for a federal agency to obtain products from the private sector, it has to obtain a waiver -- which is issued by FPI; and even then, only if FPI cannot make the needed product or provide the required service.

Although FPI may have been started with good intentions, it has been surrounded by controversy since its inception. True, FPI products are not available for sale in interstate commerce or to non-federal entities, but that is more than made up for by its guaranteed market for its products, a government facility to produce them in, and the legal ability to pay its workers less than minimum wage to manufacture them. In addition, FPI, not the buying agency, enjoys the benefit of determining whether its products and delivery schedules meet the needs of the buying agency. Furthermore, FPI, rather than the buying agency, determines the reasonableness of its offered price.

This is not the way the federal government should do business. As a Member of Congress, I believe it is my duty to protect American businesses and workers from unfair competition by the government, as well as to protect the pocketbooks of taxpayers by ensuring that the government is not misusing taxpayer dollars.

I have been working to correct the situation with FPI and level the playing field for private industry since I first came to Congress. Two businesses in my district were shut down as a direct result of unfair competition from FPI. Other businesses sought my help when FPI threatened to come in and begin manufacturing small engines. Over the years I have received scores of letters complaining about FPI and asking Congress to eliminate mandatory source in favor of a more competitive market for federal agency business.

Consequently, as Chairman of the House Judiciary Committee, I was pleased to pass this bill out of my committee in July in preparation for its consideration on the House floor earlier this month. HR 1829 will alter the way FPI does business by requiring that it compete for its business opportunities. This bill would gradually phase out FPI’s exclusive right to sell goods to federal agencies. It would require that FPI sales to its federal agency customers be made through contracts won on a competitive basis. Moreover, in order to ensure that inmates are not idle, there are provisions in the legislation to provide funds for inmate rehabilitation and training.

These common sense approaches to reforming prison industries will allow FPI to continue operations, but will not allow it to continue to have an unfair advantage over small businesses. After all these years, it is time to create a more balanced playing field for businesses and private industry when it comes to government procurement. Reforming this program and eliminating mandatory source will help to create jobs for law abiding, tax paying citizens -- and that’s good news for Wisconsinites.

James Sensenbrenner is a Republican Member of Congress representing the Fifth Congressional District of Wisconsin. He chairs of the House Judiciary Committee.