Posted December 6, 2006
By Wayne Woolley, Newhouse News Service
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Thousands of federal prison inmates have been working overtime the past three years, filling Pentagon contracts for everything from radio components to body armor.
The inmates work for Federal Prison Industries, a nonprofit Justice Department subsidiary that does business as UNICOR and sold more than $750 million worth of goods to the federal government last year.
Sales to the Army alone put UNICOR on the service's list of top 50 suppliers last year, ahead of well-known corporate names like Dell Computer and Booz Allen Hamilton.
With this growth has come criticism. Some lawmakers and members of private industry want to strip UNICOR of what they call preferential treatment. They say it's impossible to compete for government work against inmates making $1.15 an hour. They hope legislation now working its way through Congress will open more government work to competition.
The program's advocates call the legislation a threat to hundreds of small, private electronics manufacturers that provide UNICOR with raw materials. Some take it a step further, saying anything that diminishes UNICOR's status as a Pentagon supplier threatens the nation's defense because the agency's large, captive work force allows it to fill crucial orders faster and more efficiently than any private company could.
"They are meeting a defense demand that can be met by no one else," said Andy Linder, owner of Power Connector Inc., a small defense contractor in New York.
UNICOR, created 71 years ago as a way to give federal inmates marketable job skills and to produce low-cost goods for the federal government, began supplying the Pentagon on a broad scale in the 1980s. The company employs about 19,000 inmates -- slightly less than 20 percent of the federal prison population -- in 106 prison factories around the country.
One of the biggest customers is the Army's Communication and Electronics Command at Fort Monmouth, N.J. James Bowden, the civilian who oversees the Army's single-channel ground and airborne radio system, said the work done by the federal inmates -- manufacturing wires and other connector cables for the radios as well as brackets to mount the radios in vehicles -- has been critical to the war effort.
Since the war in Afghanistan began in 2001, Fort Monmouth has shipped more than 200,000 radios to combat zones, most with at least some components manufactured by federal inmates working in 11 prison electronics factories around the country. (Inmates are prohibited from handling any sensitive or classified material. Several private companies manufacture the actual radios.)
"Their work is excellent, and they've been able to do everything we've ever asked them to do," Bowden said. "And lately, we've asked them to do a lot. The demand right now is very high."
Demand has been so strong for several defense products that Federal Prison Industries has had to invoke "national exigency" provisions that normally prevent it from providing more than 20 percent of goods in each category of product the federal government buys each year. Todd Baldau, a spokesman for Federal Prison Industries, said the rules were waived during the 1991 Persian Gulf War.
Under current law, UNICOR enjoys a contracting preference known as "mandatory source," which obligates government agencies to try to buy certain goods from the prisons before allowing private companies to bid on the work.
Michael Mansh, president of Ashland Sales and Service, a small clothing manufacturer in suburban Philadelphia that supplies uniforms to the Pentagon, says the practice hurts his company. He said he has been unable to bid on certain lines of military uniforms because Federal Prison Industries has already spoken for them.
"It's tough when you don't even get a chance to bid for the work," Mansh said. "To say FPI doesn't take work from private industry, that's just flat-out wrong."
Legislation sponsored by U.S. Rep. Peter Hoekstra, Democrat of Michigan, that would strip the prisons of the preferences and force UNICOR to bid for government work like all other companies passed the House 362-57 in September.
Similar legislation has failed repeatedly over the past decade to pass in the Senate, but opponents of the measure think this could be the year it becomes law.