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Study recommends keeping preference for prison goods.

STUDY RECOMMENDS KEEPING PREFERENCE FOR PRISON GOODS

An eagerly awaited congressionally commissioned study of Federal Prison Industries has left an office furniture leader disappointed at its "business as usual" recommendations. Stephen Channer, executive director of the Business and Institutional Furniture Manufacturers Assn., vowed to continue the fight for FPI reform through Congressional action.

BIFMA and other trade groups have fought to regulate FPI and, in particular, to strip away FPI's preferential treatment when it comes to federal procurements. Under U.S. law, the federal government must purchase its goods from FPI if they are available. In the furniture industry, this mandatory preference has led to $160 million in sales, according to the report prepared by Deloitte & Touche.

The study has been sent to the House where it is currently being reviewed by at least five committees including the Judicial Committee, Small Business Committee and the Armed Services Committee.

Of the four recommendations in the thick two-volume study, the one most troubling to the furniture industry is that the mandatory preference for FPI products would be maintained. The report said, "Without the preference, FPI would have to increase its sales and marketing expenditures and might still not be successful in attracting the orders required to provide the needed inmate employment."

While maintaining the mandatory preference the proposal would forbid FPI from introducing new product lines to employ the growing federal prison population. Federal inmate population is expected to grow from 57,722 in 1990 to an estimated 106,289 in 1996. Inmates employed in all prison industries are expected to grow from 14,485 to 20,486 in that same time frame, according to the report.

Channer, a leader in the fight to curb FPI, said the report boils down to business as usual.

"One of the things the report was supposed to do was suggest new areas of activities for FPI," Channer said. "They (Deloitte & Touche) just said, |Stay with what you are doing.'

"We of course are not through. We will go back through the Congress to try for change. But, this (report) is certainly not helpful," Channer added.

Gerald Miller of Deloitte & Touche said that the report would help FPI to meet the Congressionally mandated goal of keeping prisoners working and occupied. "Individuals will look at it from their own perspective depending if they are from UNICOR (FPI), a trade association or a private business," said Miller. "On balance, I think what we recommended will help them (FPI) to meet their mission."

However, Channer said if keeping prisoners busy was the goal, then the study "missed the boat," when it comes to "pass through" and "kit" purchases. He said this involves little to no inmate labor. Channer said that FPI uses its mandatory source status to broker or "pass through" products from private business to the government. Kit sales are simply the purchase of components so that prisoners can assemble them for sale.

"This puts very few prisoners to work. It is simply a money exchange. It would seem to me that this is an issue that should have been explored," Channer said.

Joe Gerard, vice president of government affairs for the American Furniture Manufacturers Assn. said he heartily supports FPI not increasing its market share. He said the continuing mandatory preference FPI receives is "one of the points we would question. But, you can't look at one recommendation and fault the whole report."

The second recommendation would allow private sector businesses to vie for government orders as the prime contractor. Currently, only FPI can be the prime contractor on a project no matter how small a part they play in its manufacture. FPI then can subcontract work it cannot do to private businesses. Under this recommendation, any private business can be the prime contractor but would then be forced to subcontract work out to a FPI facility. A company would make the majority of the product and then ship it off to a prison where inmates would do a minimal task, repackage the product and then ship it off to the retailer, according to Channer.

"Is this a meaningful recommendation?" Channer said. "It is absolutely ridiculous. It is simply a way Deloitte & Touche has devised so that private business would have to share work with the prison system."

The study states that this recommendation would maximize the number of inmates working at labor intensive jobs such as packaging, while at the same time minimizing FPI's market share.

The third recommendation would be for prison industries to produce products currently made outside the country. According to the study this would affect the electronics, apparel and textile industries. The final recommendation would be to increase sales of services such as printing, binding, data entry and vehicle and equipment repair to the U.S. government. This increase in service jobs would offset the lack of job growth due to eliminating startup of any new product lines.
COPYRIGHT 1991 Vance Publishing Corp.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Trends & News
Author:Adams, Larry
Publication:Wood & Wood Products
Date:Oct 1, 1991
Words:816
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