UNICOR: Government and Private Contracts

By Christopher Zoukis (www.christopherzoukis.com)

Federal Prison Industries, known as UNICOR to most, is the for-hire prison labor arm of the Federal Bureau of Prisons. Inside the prisons UNICOR is known as the best employment that one can hope to obtain. This is because they pay the best wages; $0.23 to $1.15 an hour plus $0.20 an hour for premium consideration when it is warranted; basically slave wages. Yet, slave wages paid for hours and hours of work in prison makes you a big spender. This just goes to show what the rest of the prison population gets paid; $5.25 a month at a minimum. Outside the prisons, UNICOR is known as the private industry's darling. After all, where inside the United States can you find a factory staffed by persons who are willing to work for less than a quarter an hour? Seems illegal, doesn't it?

UNICOR was first started with the hope of providing viable employment skills to the incarcerated population. They started with two main ideas: One, an occupied prisoner is easier to manage than one that is idle. Two, that they could provide manufacturing services to government cheaply under the guise of providing employment skills to their workers. One of the chief tenets here was that UNICOR would not interfere with the private industry.

Enter reality. UNICOR now manufactures goods and provides services for the federal prison system and various governmental bodies, but they also manufacture goods and provide services in direct competition with private industry. This means that American jobs are being given to prisoners in order to cut costs and to increase profits. They also compete directly for contracts with private industry and at times completely block out private industry by being awarded contracts for a certain product; military helmets for example (see below). But if this wasn't enough, UNICOR has stepped in front of private industry by being awarded non-competitive contracts where private industry can't even bid on the contracts because UNICOR has already taken them. This is only a policy and jobs issue. It gets worse.

A side issue not seen by many has to do with subcontracting. What would you say if you found out that a privately owned company, in direct competition to your company, was utilizing prison slave labor to undercut your prices? Well, it's true. Companies such as Sears, Dick's Sporting Goods, ArmorSource, Target, Macy's, JC Penny, Spire Corp, and other national retailers have inked contracts either with UNICOR or through a company that signs contracts with UNICOR to obtain labor at rates far below minimum wage. The way it works is a private company will contact UNICOR and inquire about hiring them to either manufacture a complete product for them, such as military helmets or solar cells, or will inquire as to hiring UNICOR for remedial manual labor or services that they need done, such as sorting hangars. The important aspect to note here is that these companies are paying UNICOR a fraction of what it would cost them to hire American businesses, which are ready and willing to do the work.

At issue is that by utilizing prison slave labor private companies can sell their products and services for less than their competitors can because they have the use of thousands of prisoners who are willing to work for $0.23 an hour. The other issue is that the government can utilize prison slave labor to manufacture a product for less than a private company could afford to do so. This can and does completely alienate entire industries. But let’s not forget about the worst, the combination. This is where the government hires a private company which then hires UNICOR to manufacture the product or provide the services for them. This way the company actually doesn't do anything; they have prisoners do all of the work. It's as if companies are being rewarded for cutting American jobs by hiring a company, UNICOR, to produce their products using prisoners for wages not sustainable by any privately owned company.

The other issue at hand is UNICOR's manufacturing quality. This issue came to light a few years ago. UNICOR had obtained multiple contracts to manufacture ballistic helmets for the U.S. military. In 2007 and 2008 UNICOR was awarded non-competitive Army contracts for said helmets. These contracts were awarded pursuant to a provision in federal procurement regulations. The 2008 ballistics helmet contract shut out private industry completely by contracting 100% of the U.S. Marine Corps' helmet needs to UNICOR. Any thinking person would have realized that in a time of such economic crisis, such as this, the U.S. government should have hired private industry for such projects so the American people were working, not going for the cheap, and ineffective, choice of UNICOR prison slave labor. As Representative Chris Carney said, "At a time when our economy is rebounding, there are other private firms eager and able to take on this important work, which will lead to the creation of crucial jobs in the United States."

But the issue doesn't end there. The U.S. Department of Justice began investigating military contracts issued to ArmorSource; a private company who subcontracted their ballistic helmet manufacturing to UNICOR. The issue at hand was that on May 14, 2010 44,000 helmets, that were a part of a 600,000 helmet contract for the U.S. Army and 100,000 lightweight helmet contract for the U.S. Marine Corps, were recalled. The reason for the recall was that the helmets had failed ballistics testing. In response to this 44,000 helmet recall Representative Carney's office said that the products produced by UNICOR from the 2007 and 2008 contracts failed to pass first article testing, testing to see if the product met expectations and that after an 18-month delay, UNICOR had not delivered a single acceptable helmet. What made the matter worse was that no one knew where all of these 44,000 helmets were. As Brigadier General Pete Fuller said, "They could be on some soldiers' head in either Iraq or Afghanistan. They could also be anywhere else in the world."

Furthermore, Representative Carney stated that UNICOR had not met standards or deadlines, and that "we can't wait any longer to protect our troops." He also stated that "Our military men and women deserve only the best equipment and it has become clear that FPI [UNICOR] cannot meet the standards required in manufacturing helmets."

As Prison Legal News reported, because of these disheartening, and potentially corrupt, revelations "Rep. Carney has added an amendment to the National Defense Authorization Bill that would force UNICOR to submit to competitive bidding." Because of the 44,000 helmet recall and pressure from lawmakers, UNICOR suspended helmet production. They also waived the right of first refusal on U.S. government contracts. Maybe with UNICOR's preferential treatment being restricted private industry can grow like it was meant to and now that the playing field for government contracts has been leveled, everyday Americans will receive jobs, not prisoners who are paid slave wages.

The issue here is three-fold: American jobs are being given to prisoners who will work at sweat-shop wages, defective products are being distributed to our troops in the Middle East, and private industry is being stunted by these potentially corrupt UNICOR contracts. The only solution is to a) increase prisoner wages to minimum-wage therefore removing the incentive to use prison labor and to adequately pay the prisoners for their labor, b) remove preferential UNICOR treatment from U.S. government policy, c) stop UNICOR from taking jobs away from American businesses by making UNICOR bid on U.S. government contracts the same as private industry does, and d) restrict UNICOR from subcontracting for private business; UNICOR was created to work only for the government, keep it that way. Only by making these much needed changes will government contract bidding and private industry be complimentary, not corrupt.

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Sources: Prison Legal News, CNN, Fox News, Education Behind Bars, http://dailyitem.com, U.S. Representative Chris Carney press release, www.greentechmedia.com, www.masshightech.com