	Introduction

The Federal Prison Industries, Inc. (FPI), is a government-owned corporation that employs offenders incarcerated in correctional facilities under the Department of Justice's (DOJ's) Federal Bureau of Prisons (BOP). The FPI manufactures products and provides services that are primarily sold to executive agencies in the federal government. The 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 six industries. The FPI is intended to be economically self-sustaining and does not receive funding through congressional appropriations. The FPI has been able to sustain itself even though it has been operating at a loss for the past several fiscal years because it is able to draw funds from a revolving account (the "Prison Industries Fund") into which money received from the sale of the products or by-products of the FPI, or for the services of federal prisoners working in FPI, is to be deposited. Data show that the number of FPI work assignments available to inmates has not kept pace with the growing federal inmate population. As shown in Figure 2 , even though the number of inmates employed by the FPI generally increased between FY1970 and FY2001, starting in FY1988 the proportion of the federal inmate population employed by the FPI began a steady decease. Even though the BOP contends that the real product the FPI produces is rehabilitated inmates, opponents note that the FPI produces goods and services that are sold to the federal government, in many cases with advantages not available to the private sector. The Mandatory Source Clause: Central to the Debate

The debate regarding the competing visions of the FPI revolves around its mandatory source clause, the requirement for federal agencies to purchase products from the FPI. Critics argue that the FPI has lower labor costs. For example, prisoner wages in FPI are far below the minimum wage in the private sector. Critics also contend that the FPI has other competitive advantages. While inmates receive far lower pay than workers in private industry, the FPI asserts this advantage is offset by the lower average productivity of inmates and the inefficiencies associated with operating a business in a correctional setting. The FPI also argues that its operations benefit private businesses. Rehabilitation and Management

Advocates of the FPI maintain it is a proven rehabilitative program that does not cost taxpayers anything to operate. In addition, the DOJ OIG reports that "FPI officials ... viewed [PIECP] as a less viable option for new business development than the repatriation authority ... under [PIECP], FPI would be required to pay inmates higher wages, thus increasing overhead costs." The legislation would authorize funding for vocational education programs. This proposal would resolve any tension surrounding the FPI's mandatory source clause and its effect on private vendors' ability to secure federal contracts. Also, as outlined previously, it has been argued that vocational educational programs are more effective at reducing recidivism than work assignments through correctional industries. However, the BOP asserts that vocational and apprenticeship programs are not a substitution for, but rather a complement to, FPI work assignments. Using Inmate Labor in the Open Market

Another option to provide more work opportunities for inmates might be to repeal federal laws that prohibit the sale of prisoner-made goods on the private market and allow businesses to compete for inmates' labor on the open market. When this is combined with the additional cost of operating a business in a correctional environment, minimum wage or prevailing wage requirements make inmate labor look less attractive, thereby limiting work opportunities for inmates. Policymakers could consider keeping prevailing wage requirements in place, but a subsidy might have to be offered in order to make inmate labor attractive to private businesses. Some policymakers might be concerned about what effect additional inmate labor force participation might have on private workers. In addition, since any economic benefits, such as lower prices for consumers or a larger workforce of lower-skilled laborers willing to work for lower wages, are likely to be small, and increased inmate labor force participation could lead to non-inmate workers losing jobs, it might be argued that the economic costs of allowing inmates to work in the private market exceed any potential economic benefits. Concerns about whether the mandatory source clause has prevented private businesses from competing for federal contracts have led Congress to include language in certain legislation that modified how federal agencies procured products under the FPI's mandatory source clause. Before approving the expansion of an existing product or the creation of a new product, the act required the FPI to
prepare a written analysis of the likely impact of the FPI's expansion on industry and free labor; announce in an appropriate publication the plans for expansion and invite comments on the plan; advise affected trade associations; provide the FPI's Board of Directors with the plans for expansion prior to the Board making a decision on the expansion; provide opportunity to affected trade associations or relevant business representatives to comment to the Board of Directors on the proposal; and publish final decisions made by the Board of Directors. 108-199 ) modified the FPI's mandatory source clause by prohibiting funds appropriated by Congress for FY2004 to be used by any federal executive agency for the purchase of products or services manufactured by the FPI unless the agency making the purchase determines, pursuant to government-wide procurement regulations, that the products or services are being provided at the best value. The National Defense Authorization Act for FY2008
The National Defense Authorization Act for Fiscal Year 2008 ( P.L. §1761(c) to allow the FPI to participate in the Prison Industry Enhancement Certification Program (PIECP).
The Federal Prison Industries, Inc. (FPI), is a government-owned corporation that employs offenders incarcerated in correctional facilities under the Federal Bureau of Prisons (BOP). The FPI manufactures products and provides services that are sold to executive agencies in the federal government. The 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.
The FPI is intended to be economically self-sustaining and it does not receive funding through congressional appropriations. In FY2015, the FPI generated $472 million in sales, which is greater than the FPI's sales in FY1993 ($405 million), but is below the FPI's peak sales of $885 million in FY2009. The FPI operated at an $18 million loss for FY2015, the seventh straight fiscal year in which the FPI's expenses exceeded revenues.
Data show that the number of FPI work assignments available to inmates has not kept pace with the growing federal inmate population. Starting in FY1988 the proportion of the federal inmate population employed by the FPI steadily deceased. In FY2015, approximately 7% of all federal inmates had an FPI work assignment.
The FPI manufactures products and provides services that are primarily sold to executive agencies in the federal government. In the past, federal departments and agencies were required to purchase products from the FPI. This requirement is sometimes referred to as the FPI's "mandatory source clause."
The debate about the FPI centers on the FPI's mandatory source clause. Some policymakers believe the mandatory source clause impedes private vendors' abilities to secure federal contracts. However, the FPI contends that the mandatory source clause is necessary to overcome some of the inefficiencies written into its authorizing legislation and problems associated with producing products in a prison environment, thereby allowing it to generate revenue and provide work opportunities for inmates.
Critics argue that the FPI's lower labor costs provide it with a competitive advantage over private sector employers. The FPI asserts that any lower labor costs are more than offset by the disadvantages associated with operating a business inside a prison.
Advocates of the FPI maintain it is a proven rehabilitative program that does not cost taxpayers anything to operate and it helps provide for the orderly operation of a prison by keeping inmates occupied. Critics contend that vocational education programs have been shown to be more effective at reducing recidivism and inmates who participate in them are not competing with private sector workers for federal contracts.
Congress has taken legislative action to lessen any adverse impact the FPI has had on small businesses. For example, in 2002, 2003, and 2004, Congress passed legislation that modified how the Department of Defense (DOD) and the Central Intelligence Agency (CIA) procured products offered by the FPI in its schedule of products. In 2004, Congress passed legislation prohibiting federal agencies from using appropriated funding for FY2004 to purchase products or services offered by the FPI unless the agency determined that the products or services are provided at the best value. This provision was extended permanently in FY2005. In the 110th Congress, the National Defense Authorization Act for Fiscal Year 2008 (P.L. 110-181) modified the way in which DOD procures products from the FPI. In addition, the Administration of President George W. Bush made several efforts to reduce the consequences the FPI's mandatory source clause might have on the ability of private businesses to compete for federal contracts.
Should Congress decide that it wants to try to reverse past trends and expand work opportunities for inmates, there are several options policymakers could consider. One option could be to expand a work-sharing initiative that the FPI has already started on a small scale. Congress could also consider replacing inmate work opportunities with vocational education programs. However, the BOP asserts that vocational and apprenticeship programs are not a substitution for, but rather a complement to, FPI work assignments. Congress might also consider allowing private businesses to compete for inmate labor on the open market. Congress has granted the FPI the authority to participate in the Prison Industry Enhancement Certification Program (PIECP), which allows inmate labor to be used to produce goods for sale on the open market if certain conditions are met, such as paying inmates the prevailing wage for similar work. However, the FPI has had problems taking advantage of this new authority because the FPI would be required to pay inmates higher wages, thus increasing overhead costs. Also, inmates tend to be lower-skilled than non-incarcerated workers, which means that the prevailing wage requirement, and the additional costs associated with operating a business in a correctional environment, makes inmate labor less attractive to private businesses. This problem could be resolved by removing the prevailing wage requirement and allowing the market to set the price for inmate labor, but this raises questions about what effect inmate labor might have on non-incarcerated workers and the potential for inmate laborers to be exploited.