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Federal Prison Industries
Nathan James
Analyst in Crime Policy
January 4, 2011
Congressional Research Service
7-5700
www.crs.gov
RL32380
CRS Report for Congress
P
repared for Members and Committees of Congress
c11173008

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Federal Prison Industries

Summary
UNICOR, the trade name for Federal Prison Industries, Inc. (FPI), is a government-owned
corporation that employs offenders incarcerated in correctional facilities under the Federal Bureau
of Prisons (BOP). UNICOR manufactures products and provides services that are sold to
executive agencies in the federal government. FPI was created to serve as a means for managing,
training, and rehabilitating inmates in the federal prison system through employment in one of its
industries.
By statute, UNICOR must be economically self-sustaining, thus it does not receive funding
through congressional appropriations. In FY2009, FPI generated $885.3 million in sales.
UNICOR uses the revenue it generates to purchase raw material and equipment; pay wages to
inmates and staff; and invest in expansion of its facilities. Of the revenues generated by FPI’s
products and services, approximately 80% go toward the purchase of raw material and
equipment; 17% go toward staff salaries; and 4% go toward inmate salaries.
Although there have been many studies on the recidivism rate and societal factors that may
contribute to it, there are only a handful of rigorous evaluations of the effect that participation in
correctional industries (i.e., FPI) has on recidivism. What research exists suggests that inmates
who participate in correctional industries are less likely to recidivate than inmates who do not
participate, but the results are not conclusive.
The previous Administration made several efforts to mitigate the competitive advantage UNICOR
has over the private sector. Going beyond the previous Administration’s efforts, Congress took
legislative action to lessen the adverse impact FPI has caused on small businesses. For example,
in 2002, 2003, and 2004, Congress passed legislation that modified FPI’s mandatory source
clause with respect to procurements made by the Department of Defense and the Central
Intelligence Agency (CIA). In 2004, Congress passed legislation limiting funds appropriated for
FY2004 to be used by federal agencies for the purchase of products or services manufactured by
FPI under certain circumstances. This provision was extended permanently in FY2005. In the
110th Congress, the National Defense Authorization Act for Fiscal Year 2008 (P.L. 110-181)
modified the way in which DOD procures products from FPI.
There are several issues Congress might consider as it continues its oversight of FPI, including
whether FPI should be involved in emerging technology markets as a way to provide inmates
with more job-ready skills for post-release employment and whether FPI should be allowed to
enter into partnerships with private businesses.

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Contents
Introduction ................................................................................................................................ 1
Background ................................................................................................................................ 1
Authority ........................................................................................................................ 2
Activities ........................................................................................................................ 2
Inmate Participation in FPI.............................................................................................. 3
Effect of Correctional Industries on Recidivism........................................................................... 4
Administrative Efforts to Reform FPI.......................................................................................... 5
Legislative History...................................................................................................................... 6
The Anti-Drug Abuse Act of 1988 ................................................................................... 6
The National Defense Authorization Act for FY2002....................................................... 7
The Bob Stump National Defense Authorization Act for FY2003 .................................... 7
The Consolidated Appropriations Act of 2004 ................................................................. 7
Consolidated Appropriations Act, 2005 ........................................................................... 7
Intelligence Authorization Act for FY2004 ...................................................................... 7
The National Defense Authorization Act for FY2008....................................................... 7
Policy Considerations ................................................................................................................. 8
Providing Inmates with Current Skills ................................................................................... 8
Public-Private Partnerships for FPI........................................................................................ 9

Figures
Figure 1. Federal Inmates Employed in FPI and Proportion of Total Inmate Population
Employed by FPI, 1970-2010................................................................................................... 4

Contacts
Author Contact Information ...................................................................................................... 10

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Federal Prison Industries

Introduction
UNICOR,1 the trade name for Federal Prison Industries, Inc. (FPI), is a government-owned
corporation that employs offenders incarcerated in correctional facilities under the Department of
Justice’s (DOJ’s) Federal Bureau of Prisons (BOP).2 UNICOR manufactures products and
provides services that are sold to executive agencies in the federal government. Although
UNICOR industries are located within various federal prisons, they operate independently from
the prison. FPI was created to serve as a means for managing, training and rehabilitating inmates
in the federal prison system through employment in one of its eight industries.
UNICOR’s enabling legislation3 and the Federal Acquisition Regulation (FAR)4 require federal
agencies to procure products offered by UNICOR, unless authorized by UNICOR to solicit bids
from the private sector.5 (See discussion below, under the “Legislative History” section.) Such
waivers can be granted by UNICOR to executive agencies if its price exceeds the current market
price for comparable products.6 Federal agencies, however, are not required to procure services
provided by UNICOR but are encouraged to do so pursuant to FAR.7 It is this “mandatory source
clause”8 that has drawn controversy over the years.
This report opens with a discussion of FPI’s background and a brief review of the research on
whether participating in correctional industries reduces recidivism. It then summarizes the
statutory history of FPI and other laws affecting the industry. The report concludes with an
examination of some policy considerations relating to FPI. This report does not address the
related debates on inmate labor, criminal rehabilitation, or competitive versus noncompetitive
federal government contracting.
Background
As the federal prison system was established in the first decade of the 20th century, factories were
constructed within prisons to manufacture products needed by the federal government and to
provide prisoners with job skills and keep them from being idle. Labor organizations, however,
had been making arguments against prison industries since the late 1800s due to the poor
conditions in which inmates were working and their perception that the industries were taking

1 UNICOR and the FPI are used interchangeably throughout this report.
2 This report does not cover industries in state prison, often referred to as the Private Sector/ Prison Industry
Enhancement Certification (PIE) program. The PIE program was authorized by Congress in 1979 in the Justice System
Improvement Act (P.L. 96-157).
3 See 18 USC §4121 et seq.
4 FAR was developed in accordance with the requirements of the Office of Federal Procurement Policy Act of 1974
(P.L. 93-400).
5 Under current law (18 USC §4124(a)) and regulations (48 C.F.R.), federal agencies must procure products from FPI,
unless granted a waiver by FPI (48 CFR 8.604), that are listed as being manufactured by UNICOR in the corporation’s
catalog or schedule of products.
6 See Bureau of Prisons Program Statement 8224.02, FPI Pricing Procedures.
7 FAR encourages federal agencies to treat UNICOR as a “preferential source” in the procurement of services. See 41
CFR §101-26, 107; 48 CFR §302-5, 8.002, 8.602, 8.603, 8.605(f), and 8.704.
8 Also referred to as “superpreference,” “sole source,” or “preferential status.”
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jobs away from law abiding citizens. The Depression of the 1930s and the resulting high levels of
unemployment crystalized the debate. UNICOR was established in 1934 under an executive order
issued by President Franklin Delano Roosevelt.9 The purpose of UNICOR was to consolidate the
operations of all federal prison industries in order to provide training opportunities for inmates
and “diversify the production of prison shops so that no individual industry would be
substantially affected.”10
Authority
FPI is administered by a six-person Board of Directors that is appointed by the President. Its
enabling act11 requires that representatives of industries, agriculture, labor, and retailers and
consumers serve as board members.12 The board’s decision-making regarding products to be
manufactured and areas of expansion are driven by a goal of employing the greatest possible
number of inmates.13
Activities
UNICOR has 98 factories in federal prisons representing seven different industrial operations.
UNICOR’s seven industrial operations are comprised of roughly 175 different types of products
and services.14 UNICOR’s industrial operations include the following:
• clothing and textiles;
• electronics;
• fleet management and vehicular components;
• industrial products;
• office furniture;
• recycling activities; and
• services (which includes data entry and encoding).15
UNICOR is economically self-sustaining and does not receive funding through congressional
appropriations. In FY2009, FPI generated $885.3 million in sales.16 UNICOR uses the revenue it

9 See Executive Order 6917.
10 Franklin Delano Roosevelt, The Public Papers and Addresses of Franklin D. Roosevelt, vol. 3 (New York: Random
House, 1938), p. 497. These principles are reflected in the current statutory authority for FPI, see 18 USC §4122(b).
11 See 18 USC §4121.
12 In addition to the five board members who must be from the aforementioned groups, the Attorney General and the
Secretary of Defense (or their designee) also serve as board members.
13 Under 18 USC §4122(b)(1), this goal is explicit, along with other goals to “diversify, so far as practicable, prison
industrial operations,” and to “so operate the prison shops that no single private industry shall be forced to bear an
undue burden of competition from the products of the prison workshops, and to reduce to a minimum competition with
private industry or free labor.”
14Federal Prison Industries, Inc., Annual Report 2009, http://www.unicor.gov/information/publications/pdfs/corporate/
catar2009_C.pdf.
15 Ibid.
16 Ibid.
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generates to purchase raw material and equipment; pay wages to inmates and staff; and invest in
expansion of its facilities. Of the revenues generated by FPI’s products and services,
approximately 80% go toward the purchase of raw material and equipment; 17% go toward staff
salaries; and 4% go toward inmate salaries.17 Inmates earn from $0.23 per hour up to a maximum
of $1.15 per hour, depending on their proficiency and educational level, among other things.
Under BOP’s Inmate Financial Responsibility Program, all inmates who have court ordered
financial obligations must use at least 50% of their FPI income to satisfy those debts; the rest may
be retained by the inmate.18
Inmate Participation in FPI
Under current law, all physically able inmates who are not a security risk are required to work.19
Those inmates who are not employed by FPI have other labor assignments in the prison. FPI
work assignments are usually considered more desirable because wages are higher and because
they allow inmates to learn a trade. However, this is not to discount the importance of regular
prison work assignments. Both regular and FPI work assignments can provide inmates with “soft
skills” (e.g., punctuality, learning the importance of doing a job correctly, following directions
from supervisors). Also, both types of work assignments can contribute to institutional order by
reducing inmate idleness. Nevertheless, regular prison work assignments provide for the
operation and maintenance of prison facilities, hence these work assignments will exist as long as
BOP operates prisons; the availability of FPI work assignments is more volatile.
Data suggest that the availability of FPI work assignments is decreasing. As shown in Figure 1,
in nearly every year between 1970 and 2001, the number of inmates employed by FPI increased.
Between 2001 and 2010, the number of inmates employed by FPI fluctuated between high of
approximately 23,200 inmates in 2007 and a low of approximately 15,900 in 2010. However,
even though the number of inmates that had an FPI work assignment has, in general, increased
since 1970, the proportion of the inmate population employed by FPI has generally decreased
since the late 1980s.

17 Ibid.
18 Ibid; John W. Roberts, Work, Education, and Public Safety: A Brief History of Federal Prison Industries, at
http://www.unicor.gov/about/organization/history/overview_of_fpi.cfm.
19 Title XXIX, §2905 of the Crime Control Act of 1990 (P.L. 101-647) required that all offenders in federal prisons
must work (the act permitted limitations to this rule on security and health-related grounds).
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Figure 1. Federal Inmates Employed in FPI and Proportion of Total Inmate
Population Employed by FPI, 1970-2010
25,000
35%
30%
g
s
20,000
in
er
rk
rk
25%
o
o
W
W
s
e
15,000
te
20%
a
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n
f I
f I
15%
o
10,000
o
er
tion
mb
10%
or
u
N

5,000
rop
P

5%
-
0%
70
75
80
85
90
95
00
05
10
19
19
19
19
19
19
20
20
20
Year
Inmate Workers
Proportion of Inmates Working

Source: CRS presentation of data provided by the U.S. Department of Justice, Bureau of Prisons.
Effect of Correctional Industries on Recidivism
Although there have been many studies on the recidivism rate and societal factors that may
contribute to it, there are only a handful of rigorous evaluations of the effect that participation in
correctional industries (i.e., FPI) has on recidivism. What research exists suggests that inmates
who participate in correctional industries are less likely to recidivate than inmates who do not
participate, but the results are not conclusive. This section of the report provides a brief overview
of two studies that synthesized the results of evaluations of correctional industries.
A 2006 analysis of two different studies of correctional industries programs evaluated the impact
of these programs on recidivism.20 The results of the analysis indicated inmates who worked in
correctional industries were less likely to recidivate than those who did not. However, the
researcher concluded that given the limited number of rigorous evaluations of correctional
industries programs, it was not possible to make any definitive conclusions about the ability of
these programs to reduce recidivism.
Another analysis conducted in 2000 that summarized the results of four evaluations of
correctional industries programs also found that inmates who participated in correctional
industries programs were less likely to recidivate.21 However, the researchers reported that they

20 Doris Layton MacKenzie, What Works in Corrections: Reducing the Criminal Activities of Offenders and
Delinquents
(New York: Cambridge University Press, 2006), p. 102.
21 David B. Wilson, Catherine A. Gallagher, and Doris L. MacKenzie, “A Meta-analysis of Correctional-based
Education, Vocation, and Work Programs for Adult Offenders,” Journal of Research in Crime and Delinquency, vol. 37
(continued...)
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could not rule out sampling error as a possible explanation for the positive effect. The researchers
also reported that many of the studies included in the analysis lacked stringent methodological
rigor, thereby preventing the researchers from concluding that the programs lead directly to
decreased re-offending.
Administrative Efforts to Reform FPI
Over the years, critics have asserted that FPI has an unfair advantage over private business, They
argue that FPI’s mandatory source clause produces a monopoly-like environment that usurps and
supplants the bidding process for federal contracts. FPI maintains that the mandatory source
clause is paramount to keeping prison industries in operation. Furthermore, FPI asserts that the
work opportunities it provides are necessary to manage and rehabilitate federal inmates. UNICOR
made several efforts, however, to lessen the impact of its industries on small businesses by
leveling the playing field with respect to its mandatory preference over the private sector. Efforts
have also been taken to reduce FPI’s reliance on its mandatory source preference.22
For example, in May 2003 UNICOR’s Board of Directors adopted a resolution that raises the
threshold for mandatory use of FPI from $25 to $2,500. By raising the threshold, FPI’s Board of
Directors in essence eliminated FPI’s mandatory source clause for purchases up to $2,500 and is
now allowing federal agencies to go directly to the private sector for any purchase under $2,500.
On a related matter, FPI’s Board of Directors adopted a resolution that now requires that FPI
approve requests for waivers in all cases where the private sector provides a lower cost. Prior to
the board’s decision regarding waivers, FPI, on average, granted 87% of waivers that were
requested.23 Its Board of Directors also directed FPI to waive its mandatory source status for
products where the FPI’s share of the federal market is in excess of 20%. Finally, the Board of
Directors requires prison-made products sold by FPI to have at least 20% of its value contributed
by inmate labor.
In addition to FPI’s Board of Director’s decisions, federal agencies have begun to evaluate FPI’s
contract performance. According to testimony at a Senate hearing on FPI, “while this [the
evaluation of FPI’s contract performance] did not change FPI’s mandatory preference status, it
was an important first step in helping FPI better monitor and improve its own performance ...
[which would assist] FPI as they move toward being more competitive in the federal
marketplace.”24

(...continued)
(2000), p. 356.
22 A previous effort to eliminate FPI’s mandatory source clause came during the Clinton Administration in 1993 when
Vice President Al Gore recommended that the mandatory source provision be eliminated and that UNICOR be exempt
from the FAR in order to better compete with the private sector in terms of delivery schedules and costs.
23 CRS analysis of FPI waiver data from FY1994 to the first six months in FY2004.
24 Testimony of Jack R. Williams, Jr., in U.S. Congress, Senate Committee on Governmental Affairs, Subcommittee on
Financial Management, the Budget, and International Security, Making Federal Prison Industries Subject to
Competitive Bidding
, hearing on S. 346, 108th Cong., 2nd sess., April 7, 2004 (Washington: GPO, 2004).
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Legislative History
While UNICOR was originally authorized in 1934 through P.L. 73-461 and Executive Order
6917, the current statutory authority for UNICOR was first codified in the 1948 revision of the
“Crimes and Criminal procedure” statutes.25 The only amendments to the statute were provisions
added in 1988, 1990, 1992, and 2002.26
The question of whether UNICOR is unfairly competing with private businesses, particularly
small businesses, in the federal market has been an issue of debate. In 1989, Congress considered
a proposal that would have provided the private sector with greater opportunity to compete for
DOD contracts. In 2002, Congress passed legislation that modified FPI’s mandatory source clause
with respect to the DOD,27 see discussion below.
The absence of legislative activity on this issue for over a half century (from 1934 to 1988) is
notable. However, over the past several decades, the erosion of the nation’s manufacturing sector
and the increase in the federal inmate population at the same time the federal government was
downsizing increased congressional interest in FPI.
Only those laws that made substantial changes to the operation of FPI will be discussed below.
The Anti-Drug Abuse Act of 1988
The Anti-Drug Abuse Act of 1988 (P.L. 100-690) required that UNICOR meet specific
requirements to ease the impact of its activities upon the private sector. Before approving the
expansion of an existing product or the creation of a new product, the act required UNICOR to
• prepare a written analysis of the likely impact of UNICOR’s expansion on
industry and free labor;
• announce in an appropriate publication the plans for expansion and invite
comments on the plan;
• advise affected trade associations;
• provide the UNICOR board of directors with the plans for expansion prior to the
board making a decision on the expansion;
• provide opportunity to affected trade associations or relevant business
representatives to comment to the Board of Directors on the proposal; and
• publish final decisions made by the Board of Directors.

25 P.L. 80-772, codified at 18 USC §4121 et seq.
26 The 1988 Anti-Drug Abuse Act (P.L. 100-690) authorized UNICOR to borrow from and invest in the U.S. Treasury
and added the “reasonable share” language regarding market capture. The 1990 Crime Control Act (P.L. 101-647)
required federal agencies to report information on the purchase of UNICOR products and services. The Small Business
Research and Development Enhancement Act of 1992 (P.L. 102-564) modified the reporting requirements so that
federal agencies provide separate reports of UNICOR purchases to the Federal Procurement Data System.
27 See 10 USC §2410n.
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The National Defense Authorization Act for FY2002
The National Defense Authorization Act for FY2002 (P.L. 107-107) required the Secretary of
Defense to use competitive procedures for the procurement of the product if it is determined that
the product is not comparable in price, quality and time of delivery to products available from the
private sector. In doing so, the act required the Secretary of Defense to conduct research and
market analysis with respect to the price, quality and time of delivery of FPI products prior to
purchasing the product from FPI to determine whether the products are comparable to products
from the private sector.
The Bob Stump National Defense Authorization Act for FY2003
Similar to P.L. 107-107, the Bob Stump National Defense Authorization Act for Fiscal Year 2003
(P.L. 107-314) also required the Secretary of Defense to use competitive procedures for the
procurement of the product if it is determined that the product is not comparable in price, quality
and time of delivery to products available from the private sector. With respect to the market
research determination, the act made such determinations final and not subject to review. The act
required that FPI perform its contractual obligations to the same extent as any other contractor for
the DOD. It prohibits a DOD contractor or potential contractor from using FPI as a subcontractor
and it also prohibits the Secretary of Defense from entering into a contract with FPI under which
an inmate worker would have access to sensitive information.
The Consolidated Appropriations Act of 2004
The Consolidated Appropriations Act of 2004 (P.L. 108-199) modified FPI’s mandatory source
clause during FY2004 by prohibiting funds appropriated by Congress for FY2004 to be used by
any federal executive agency for the purchase of products or services manufactured by FPI unless
the agency making the purchase determines that the products or services are being provided at the
best value, which are in line with government-wide procurement regulations.
Consolidated Appropriations Act, 2005
The Consolidated Appropriations Act, 2005 (P.L. 108-447) permanently extended the provision in
the Consolidated Appropriations Act of 2004 (P.L. 108-199) related to FPI’s mandatory source
clause. The provision prevents federal agencies from using appropriated funds for purchasing FPI
products or services unless the agency determines that the product or service provides the best
value for the agency.
Intelligence Authorization Act for FY2004
The Intelligence Authorization Act for FY2004 (P.L. 108-177) required the Director of the
Central Intelligence Agency to only make purchases from FPI if he determines that the product or
service best meets the agency’s needs.
The National Defense Authorization Act for FY2008
The National Defense Authorization Act for Fiscal Year 2008 (P.L. 110-181) amended current law
to require the Secretary of Defense to do market research to determine whether an FPI product is
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comparable to products available from the private sector that best meet the needs of Department
of Defense (DOD) in terms of price, quality, and time of delivery before purchasing a product that
FPI produces in which FPI does not have a significant market share. If the Secretary determines
that an FPI product is not comparable to private sector products in terms of price, quality, or time
of delivery, the Secretary must then use competitive procedures for the procurement of the
product, or make an individual purchase under a multiple award contract in accordance with the
competition requirements applicable to such a contract. In cases where FPI is determined to have
a significant market share, the Secretary of Defense can purchase a product from FPI only if the
Secretary uses competitive procedures for procuring the product, or makes an individual purchase
under a multiple award contract in accordance with the competition requirements applicable to
such a contract.
Policy Considerations
This section of the report provides an overview of some select issues Congress might consider as
it continues oversight of FPI. Among the issues Congress might consider is whether FPI should
be involved in emerging technology markets as a way to provide inmates with more job-ready
skills for post-release employment and whether FPI should be allowed to enter into partnerships
with private businesses.
Providing Inmates with Current Skills
Most of FPI’s current operations are based on a manufacturing, mass-production, low-skilled
labor economy of the 1930s. Inmates employed in FPI are working in “a labor-intensive manner”
where the emphasis is on employing as many inmates as possible with each inmate producing
little output.28 While inmates can learn critical skills such as good workplace habits,
accountability and the importance of being dependable, there is some concern about whether the
trade skills inmates learn while participating in FPI are marketable after they are released. As FPI
notes, the U.S. economy is changing and many jobs requiring minimal technical skills are being
moved overseas.29 According to FPI, it is exploring ways to develop more opportunities for
inmates to learn skills in emerging technologies such as the environmental and alternative energy
sectors.30 Congress could consider modifying recent changes to FPI’s mandatory source clause so
that federal agencies would be required to purchase emerging technology products and services
from FPI while continuing to require agencies to purchase other products only if the agency
determines that the product provides the best value. This option may promote FPI expansion into
markets that will provide some inmates with skills that are more in-tune with the economy.
However, there might be some concern that FPI would gain too large of a share of the federal
market, thereby pushing out private vendors.

28 Statement of BOP Director Kathleen Hawk Sawyer, in U.S. Congress, House Committee on the Judiciary, Federal
Prison Industries
, hearings, 106th Cong., 2nd sess., October 5, 2000.
29 U.S. Department of Justice, Bureau of Prisons, Federal Prison Industries, Federal Prison Industries, Inc. Annual
Report 2009
, p. 8, http://www.unicor.gov/information/publications/pdfs/corporate/catar2009.pdf.
30 Ibid.
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Public-Private Partnerships for FPI
As discussed above, most federal agencies are required to procure goods from FPI, if the agency
determines that the goods offered by FPI provide the best value. However, over the past decade,
out of concern that FPI has an unfair advantage over private businesses when it came to procuring
federal contracts, both the Administration and Congress have taken actions to limit the scope of
FPI’s mandatory source clause. According to FPI, the changes to the mandatory source clause are
affecting FPI’s ability to provide work opportunities to inmates. FPI reported that in FY2009 it
downsized factories at 19 facilities because of “prior legislative changes and procurement
directives, increased competitive pressures, and a soft economic climate.”31 According to BOP, in
FY2000 FPI operated 103 factories.32 The number of factories operated by FPI peaked in FY2007
at 110. In FY2009, FPI operated 98 factories. One issue Congress might consider is whether there
is a way to modify FPI’s mandatory source clause to allow it to provide work opportunities to
federal inmates while also minimizing FPI’s competition with private business.
Policymakers could consider permitting FPI to enter into public-private partnerships, such as
those entered into by state correctional institutions under the Prison Industry Enhancement
Certification Program (PIECP). Under PIECP, private businesses can use prison workers to make
products that can be sold on the open market,33 but the program has several conditions to protect
private employees from unfair competition from incarcerated individuals.34 Allowing FPI to enter
into partnerships with private businesses to produce goods for sale on the open market might

31 Ibid.
32 Data supplied by the U.S. Department of Justice, Bureau of Prisons.
33 Prisoner-made goods produced through PIECP-certified programs are not subject to the prohibitions set forth in the
Amherst-Sumners Act or the Walsh-Healey Act. The provisions of the Amherst-Sumners Act (18 U.S.C. §1761(a))
create exemptions to federal restrictions in the marketability of prison-made goods. Generally, it is illegal for an
individual to transport such goods in interstate commerce or from a foreign country. Exemptions are delineated for
certain individuals on parole, probation, or supervised release. In addition, the prohibition on interstate commerce of
prisoner-made goods does not apply to agricultural commodities or parts for the repair of farm machinery, nor to
commodities manufactured in a federal, District of Columbia (DC), or state institution for use by the federal
government, the District of Columbia, or any state or political subdivision of a state or not-for-profit organizations. The
act effectively prevents most jail and prison inmates in the United States from producing goods for sale in open
markets. Under the Walsh-Healey Act (41 U.S.C. §35), any contract made and entered into by any Executive
department, independent establishment, or other agency of instrumentality of the United States, District of Columbia,
or any corporation whose stock is owned by the United States for the manufacture or furnishing of materials, supplies,
articles, and equipment in any amount exceeding $10,000 is subject to certain stipulations under the act. One of these
stipulations is that the contractor cannot use convict labor to manufacture, produce, or furnish any of the materials,
supplies, articles, or equipment included in the contract.
34 A PIECP-certified program must have (1) legislative authority to pay wages at a rate not less than that paid for
similar work in the same locality’s private sector; (2) written assurances that the program will not result in the
displacement of previously employed workers; (3) authority to provide worker benefits, including workers’
compensation or its equivalent; (4) authority to involve the private sector in the production and sale of prisoner-made
goods; (5) written assurances that inmate participation is voluntary; (6) legislative or administrative authority to collect
and provide financial contributions of not less than 5% and not more than 20% of gross wages to crime victim
compensation/assistance programs and legislative or administrative authority for crime victim compensation/assistance
programs to accept such financial contributions; (7) written proof of consultation with organized labor and local private
industry before program startup; and (8) compliance with the National Environmental Policy Act and related federal
environmental review requirements. In addition to deductions for crime victim compensation, correctional departments
may take deductions for room and board, taxes (such as federal, state, FICA), and family support. Deductions cannot
exceed 80% of gross wages. The Bureau of Justice Assistance (BJA) is responsible for certifying that correctional
institutions are adhering to the program’s requirements. For more information, see U.S. Department of Justice, Office
of Justice Programs, Bureau of Justice Assistance, Prison Industry Enhancement Certification Program, Program
Brief, NCJ 193772, July, 2002, http://www.ncjrs.gov/pdffiles1/bja/193772.pdf.
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reduce some of the tension surrounding FPI’s mandatory source clause and access to federal
contracts for small businesses because FPI would not have to rely on sales to the federal
government to provide work opportunities for inmates. In addition to potentially expanding the
number of FPI work assignments available to inmates, allowing FPI to enter into a partnership
with private business might enable FPI to venture into markets that it could not by working solely
with the federal government. For example, FPI might become more involved in high-tech
manufacturing work. This could provide inmates with opportunities to learn skills that would be
more marketable after release. Partnerships with private companies may also provide inmates an
opportunity to connect with companies that might employ them after they are released. Also, BOP
could take deductions from higher inmate wages to help offset some of the costs of incarceration.
If Congress chooses to allow FPI to enter into partnerships with private businesses, it could also
consider requiring a certain percentage of inmate wages to be placed in an account that would
serve as “start-up” money for the inmate after being released.
Despite some of the potential benefits that could be realized by allowing FPI to partner with
private businesses, there might also be concerns about prison workers competing for jobs with
non-incarcerated individuals, especially as the country is rebounding from a recession and
unemployment remains comparatively high. In addition, one researcher found that there is a poor
track record when it comes to private businesses partnering with correctional agencies to employ
prisoners. The researcher reported that in 2002, there were 188 partnerships between state
correctional agencies and private businesses, employing approximately 3,700 inmates (less than
0.3% of the prison population).35 According to the author, few firms find it economically viable to
enter into partnerships with correctional agencies because there are higher costs associated with
operating a business in a prison environment and employers are required to pay inmates the
prevailing wage even though they tend to be lower-skilled than the rest of the workforce.36

Author Contact Information

Nathan James

Analyst in Crime Policy
njames@crs.loc.gov, 7-0264



35 Jeremy Travis, But They All Come Back: Facing the Challenges of Prisoner Reentry (Washington, DC: Urban
Institute Press, 2005), p. 156.
36 Ibid., pp. 156-157.
Congressional Research Service
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