NFIB worked hard to ensure that small businesses are able to compete with the Federal Prison Industries. NFIB supported government-wide reform, making FPI less predatory to small-business government contractors and a more responsible supplier to federal agencies. NFIB will continue to monitor the regulatory process to ensure the regulations are implemented according to congressional intent.
The problem with FPI:
- Small businesses have long faced unfair competition from the Federal Prison Industries, also known as UNICOR. FPI is a government-owned corporation, which employs federal inmates in numerous prison factories nationwide.
- FPI operates a centrally managed chain of over 100 prison factories and ranks 36th among the top 100 contractors with the federal government. Over 250 broad classes of products and services are produced by federal prisoners, totaling nearly $600 million in sales to the federal government in FY 2002.
- Many small businesses have had to close their doors because they could not compete with the inherent competitive advantages of FPI.
- NFIB members supported legislation that ended FPI's mandatory source status with federal agencies, which had required the government to purchase certain products from FPI. This exclusive arrangement forced federal agencies to purchase items from FPI even if a small-business owner could provide the service or product cheaper, faster and of better quality.
- Some of the ongoing competitive advantages that FPI maintains:
- FPI is not required to have the lowest bid to win a contract
- FPI is exempt from federal mandates
- FPI is allowed to pay a sub-minimum wage to its workers ($1.23 per hour or less)
- FPI facilities are built as part of a prison and have access to production equipment from other government agencies, at no cost
- FPI has direct access to the Treasury with authority to borrow up to $20 million, at rates far below what would be available to even the largest commercial enterprise
- Small businesses do not want to prohibit prison industries from entering the market; they just want a level playing field for competition.
