One of the most important roles this committee plays
is to serve as a "watch dog" for the interest
of small businesses. Too often, even though small businesses
remain the driving force in the economy, they must do
so on a less than level playing field. In our work, we
see a whole host of examples where small businesses are
forced to compete without many of the advantages enjoyed
by their competitors. Time after time, whether it is health
care, pension or worker training, we have one set of rules
for small business and one set for corporate America.
This committee has well documented the unfair treatment
that small businesses have received in the federal marketplace
through such practices as contract bundling --- where
we have seen opportunity after opportunity stolen from
small businesses, all in the name of streamlining government.
Unfortunately, we all know the real story, which is the
fact that due to these practices, small businesses are
being streamlined right out of business without a single
penny of tax payer money saved.
Today, we look at another form of unfair competition
for small businesses, that coming from the federal prison
industry. The idea behind FPI is to use work as a means
of rehabilitation and to teach inmates a skill which can
be used to put them back on the right track. Every member
of the committee supports this --- if it was only that
simple. Unfortunately, somewhere along the way, this honorable
goal has gone awry. This laudable goal of giving individuals
a means for a second chance has turned into an industry
who's sole focus is not rehabilitation, but turning a
profit.
In just 5 years, the number of industries FPI's are involved
with has nearly doubled, making them the 40th largest
federal contractor, just ahead of Motorola. This level
of involvement might be justified, but when you realize
that while FPI has become a "Mega" contractor,
it benefits only 17 percent of the federal prison population
--- clearly something is wrong.
FPI have expanded their fiefdom through the use of preferential
contracting treatment, exemption from such labor laws
as OSHA and minimum wage standards to an endless line
of credit from the federal government. FPI has used these
benefits to expand its market share. When you look at
how the playing field has become so skewed in favor of
FPI, it is little wonder any small business can compete.
Compounding these advantages is that FPI are not even
held to basic standards of product quality or requirements
to meet deadlines. If any one of the small businesses
testifying today ran their business the way FPI does,
they would quickly find themselves out of business. This
is especially concerning because many of the products
that come from FPI are used by the troops in our military,
and agencies like FAA that ensure safe transportation.
These are areas that can not be taken lightly. We have
an obligation to ensure that the public is safe guarded.
Today, the committee will examine just how to put the
breaks on the runaway train that is Federal Prison Industries.
But one thing is clear, the FPI system is robbing small
businesses of opportunities with little or no benefits
to this nation's inmates, and that must change.
I do believe that we can have the principle of using
the federal marketplace as a tool in the rehabilitation
process of inmates, but it must be balanced and it must
be fair. The current practice is weighted too far in favor
of FPI with very little demonstrated benefit, while clearly
costing our nation's small businesses jobs and opportunities.
I hope that today's hearing will allow us to find solutions
to this problem that will benefit everyone.
