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Tuesday, February 1, 2011

Federal Prison Industries

Nathan James
Analyst in Crime Policy

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 110
th 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.

Date of Report: January 4, 2011
Number of Pages: 13
Order Number: RL32380
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