In July, the Government Accountability Office (GAO) released a report to Congressional committees, Federal Prison Industries, Actions Needed to Evaluate Program Effectiveness, GAO-20-205 (the GAO Report). The GAO Report is an important contribution in assessing the impact of Federal Prison Industries (FPI) on the federal marketplace and effectiveness in meeting its core mission of reducing recidivism.

The GAO Report’s findings around the Bureau of Prisons assessment of FPI’s performance in reducing recidivism should give pause. GAO found that the Bureau of Prisons had not assessed FPI’s effectiveness in reducing recidivism for over two decades. The findings will likely inform ongoing policy challenges that seek to balance inmate employment opportunities with potential harm to the private sector of FPI business operations.

By way of background, in 1934 the Federal Prison Industries (FPI) was created as a wholly owned government corporation to manage, train, and rehabilitate inmates through employment.  FPI’s goal is reduce recidivism among inmates employed through the development of marketable job skills, while minimizing harm to the private sector. The entity sells products and services to federal agencies and employed 16,000 inmates in 2019. FPI has seven business lines: agribusiness, clothing and textiles, electronics, fleet, office furniture, recycling, and services. Total FPI sales to federal agencies were $531 million in 2019.

FPI as a Mandatory Source. 

Pursuant to law and regulation, federal agencies generally are required to purchase FPI products that meet their needs and are comparable to those available in the private sector.  Federal Acquisition Regulation (FAR) 8.6 implements the statutory preference for FPI products and requires that agencies determine whether an FPI product is comparable to supplies available from the private sector in terms of price, quality, and time of delivery.  If an FPI product is comparable, the agency must purchase it from FPI or request a waiver.  If it is not comparable, the agency may procure the product using competitive procedures under the FAR (e.g., via Federal Supply Schedules, IDIQs, or open market).  In addition, if FAR competitive procedures are used, the agency must consider an offer submitted by FPI.

FPI may grant general or individual waivers from the mandatory source requirement.  In addition, the Department of Defense (DoD) is required to publish a list of product categories for which FPI’s share of the DoD market was greater than five percent, based on the most recent fiscal year data.  Where FPI’s DoD market share for a product exceeds five percent, the mandatory source requirement does not apply and DoD can only buy the product if DoD uses competitive procedures for the procurement of the product or makes a purchase under a multiple award contract in accordance with the competition requirements for orders under the contract.  This DoD framework ensures that commercial firms can compete fairly when FPI has a significant market share and is intended to help address potential harm to the private sector from FPI operations.

The First Step Act of 2018 and the GAO Report   

Under statute, FPI’s market has been limited to federal agencies and departments.  The First Step Act of 2018 (the Act) expanded FPI’s authority to sell products, adding public entities, (e.g. states) for use in correctional institutions, public entities for disaster relief/emergency response, the District of Columbia, and certain tax-exempt/nonprofit organizations. The Act also required GAO to conduct a review of various aspects of FPI operations, resulting in the July GAO Report.

The GAO Report addresses four areas: 1) the scope of FPI’s new markets; 2) a comparison of operating requirements between FPI and the private sector; 3) customer satisfaction with FPI; 4) and the extent to which the Bureau of Prisons (BOP) has evaluated FPI effectiveness in reducing recidivism. The findings of the first review found that data on the size of the new markets was very limited. GAO noted that FPI and the private sector share some operating requirements, but also face different requirements and business practices.  GAO also found that customers generally were satisfied with FPI, and, finally, among other things, that the BOP had not assessed FPI’s effectiveness in reducing recidivism for over two decades.

FPI’s Effectiveness in Reducing Recidivism – Where is the Data?

There is no data. As GAO noted in its report, for over two decades, BOP has not reviewed FPI’s impact on recidivism. In fact, according to GAO, in January of this year, the BOP cited a 1992 study as the basis for the Department of Justice’s designation of FPI as an Evidence-Based Recidivism Reduction Program under the First Step Act of 2018. The BOP’s reliance on twenty-eight-year-old studies in assessing the effectiveness of the program raises significant questions regarding the balance between the goal of employing inmates and the harm to the private sector from FPI preference programs.

Indeed, fundamentally, it is not clear how the government can achieve/assess the proper balance between FPI as a mandatory source versus harm to the private sector when there is no current data on the effectiveness of the program. This data and analysis are important to the vitality of the commercial office furniture industry, which employs over 350,000 people here in the United States. As with many industries, the commercial office furniture industry faces significant pandemic-induced challenges. Now more than ever, understanding the value of FPI’s ability to address recidivism is critical, as policy makers need to focus on addressing the appropriate balance between that organization and the private sector entities that may be struggling to keep people employed in the US. Consider, for example, DoD’s five percent market threshold for determining whether FPI maintains it mandatory source status. Eliminating this threshold without an analysis on the impact of FPI operations on recidivism would further tip the balance away from the private sector’s hundreds of thousands of employees, employees who, like many, could be facing hardships as a result of the pandemic.

Finally, GAO further noted in its current report that its 2015 report observed that BOP and FPI did not have a plan in place to prioritize the evaluation of, and set a goal for, reducing recidivism. At that time, BOP agreed, and in 2017 BOP announced a five-stage program evaluation plan to be completed in fiscal year 2018.  As of April 2020, BOP “had made little progress and had not established a new completion date.”  Given the current state of play, increased focus should be given to ensuring that FPI’s preferred procurement status is not harming the private sector.

The lack of data and goals around reducing recidivism suggests that the program may be out of balance.  The Coalition stands ready to help by working with all stakeholders for a program that appropriately balances FPI operations and opportunities for the private sector.