Congressional Reform of UNICOR

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By Joseph Summerill

Published: 11/25/2002

In the past two years, Federal Prison Industries, Inc., better known by its trade name 'UNICOR,' has faced efforts within the United States Congress to limit the agency's status as a mandatory source for the Federal Government. While broad reform of UNICOR seems unlikely in these closing days of the 107th Congress, piece meal reform may still occur. Further, although UNICOR's counterparts at the State level have not yet faced similar efforts by their State legislatures, Federal reform of UNICOR may result in reform of prison factories at the State level.

Established in 1934, UNICOR is a wholly-owned corporation of the United States Government, whose mission is to employ and train inmates confined within the Federal Bureau of Prisons (BOP). UNICOR inmates do everything from manufacture office furniture to perform miscellaneous services, such as printing. At the State level, similar types of prison factory programs also exist. The philosophy behind both State prison factories and UNICOR is that correctional facilities are safer if inmates are kept constructively busy.

Currently, UNICOR has only one customer -- the Federal Government. In fact, until recently, Federal law designated UNICOR as a 'mandatory source' for all Federal agencies. At the State level, only New Mexico, North Carolina, Utah, South Dakota and Washington require their State agencies to purchase goods from their State prison factories. Despite having just one customer, UNICOR is required to minimize its impact on private businesses and labor. However, with sales exceeding $22 million in 2001, UNICOR has regularly been criticized by private industry for having a 'captive' work force, which is paid below minimum wage.

Private industry has not been the only critic of UNICOR, and recently, Congress has considered legislation eliminating certain advantages enjoyed by UNICOR. For example, in 2001, Congress passed the National Defense Authorization Act for Fiscal Year 2002, which reforms how the Department of Defense ('DOD') purchases UNICOR products. Although this new law is limited solely to DOD's purchases from UNICOR, efforts are underway in the National Defense Authorization Act for Fiscal Year 2003 to safeguard defense contractors from any requirement that they use UNICOR as a supplier or subcontractor.

Historically, if the DOD needed a particular product, it was required to purchase that product from UNICOR -- so long as UNICOR could provide the product in a timely manner and at a 'competitive price.' Under the old law, the determination as to whether UNICOR could provide a timely and competitively priced product to the DOD was made by UNICOR and not by DOD. Accordingly, UNICOR routinely determined that it could meet the military's needs in an affordable and timely manner. However, under the DOD's FY 2002 Authorization Act, before purchasing a product from UNICOR, the DOD is now authorized to first conduct market research to determine whether UNICOR's product is comparable in price, quality and time of delivery with those products offered in the private sector. If the DOD determines that a UNICOR product is not comparable with the private sector, the DOD is authorized to use competitive procedures for the procurement of that product.

Piggybacking on the success of the DOD FY 2002 Authorization Act, legislation entitled the 'Federal Prison Industries Competition in Contracting Act of 2002' was introduced by Representative Peter Hoekstra (R-MI) during the 107th Congress. To date, this legislation has approximately 137 cosponsors in the U.S. House of Representatives, and a companion bill has been introduced in the U.S. Senate by Senator Carl Levin (D-MI). This past April 2002, the House Judiciary Committee sent the Hoekstra bill to the full House of Representatives for consideration, and in July it was placed on the House of Representatives calendar for a vote.

If signed into law, this new law would eliminate UNICOR's mandatory source status within five years. The legislation would also require UNICOR to use competitive procedures when selling products to both civilian and defense agencies, and allow the contracting agency to determine if UNICOR's price is a 'fair market price.' The legislation would also require UNICOR to provide alternative opportunities for federal inmates to receive job training, as well as increasing vocational and remedial educational opportunities for federal inmates and to host workshops to assist federal inmates on learning new employment skills. Finally, the legislation requires UNICOR to adhere to federal occupational, health and safety standards concerning its industrial operations.

While the Hoekstra bill enjoys broad support in Congress, it is not without its critics. One of those critics is Representative Frank Wolf (R-VA), who during a recent hearing on the BOP, stated his opposition to the Hoekstra bill. According to Congressman Wolf, 'you can't put a person away [in prison] and not give them work.' Interestingly, Congressman Wolf -- along with Senator Strom Thurmond (R-SC) -- have introduced their own bill reforming UNICOR. The 'Federal Inmate Work Act of 2001' eliminates UNICOR's mandatory source status, but to offset the loss, allows UNICOR to sell products to State and local governmental agencies, as well as certain non-profit organizations. Further, the Wolf/Thurmond bill includes UNICOR in the Prison Industries Enhancement Program, which currently allows products produced by State and local inmate labor to be sold in the commercial market through specific programs approved by the Bureau of Justice Assistance.

Finally, Senators Craig Thomas (R-WY) and Carl Levin (D-MI) recently introduced an amendment to the Senate's Homeland Security Act, which would provide the new Secretary of Homeland Security with the same authority enjoyed by the Secretary of Defense. In other words, the Department of Homeland Security would not be required to purchase goods from UNICOR once it determined that UNICOR's products were not comparable in price, quality and time of delivery with those products offered in the private sector.

With both the House and Senate now in Washington this month for a 'lame-duck' session, there is still a possibility that legislation reforming UNICOR may occur before Congress adjourns for the year. While the House may still vote on the Hoekstra bill this session, the bill's counterpart in the Senate has seen very little movement and is unlikely to be passed this year. Accordingly, both the Hoekstra bill and its Senate counterpart will have to be reintroduced next January in the 108th Congress. There is a strong possibility, however, that an amendment to the Homeland Security Act, limiting the new agency's dependency on UNICOR, will be voted on this year, perhaps extending to a civilian agency the same authority enjoyed by DOD.

JOSEPH SUMMERILL, formerly an attorney with the U.S. Department of Justice, now practices at the law firm of Piliero, Mazza & Pargament, PLLC, specializing in corrections contracting. The views expressed herein are the views of the author and do not necessarily reflect those of the Department of Justice or any other government agency. Mr. Summerill can be reached at jsummerill@pmplawfirm.com.

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