Independent Report on Prison Industry

Enhancement Certification Program (P.I.E.C.P.)

with Documented Violations

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© Bob Sloan

Prison Industries Consultant

May 20th, 2009

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OUTLINE

Introduction:

I.Purpose of the Federal PIECP Program

A. Federal Law Establishing PIECP

1. Title 18 U.S.C. 1761(c))

2.Justice System Improvement Act of 1979, Pub. L. No. 96-157, 93 Stat. 1215

B. Federal Laws/Acts Affected by PIECP Law

1. Ashurst-Sumners Act (18 U.S.C. 1761(a))

2. Walsh-Healey Act (41 U.S.C. 35)

B. Corresponding State Law(s) to Title 18 U.S.C. 1761(c))

1.§ 946.523 Prison industry enhancement (PIE) programs. (Florida example cited).

II.Oversight and Regulation

A. Federal Agencies With Oversight/Regulatory Obligations

1. U.S. Department of Justice (DOJ)

2. Office of Justice Programs (OJP)

3.Bureau of Justice Assistance (BJA)

B. Private Corporation Performing Oversight of PIECP under Federal Grant

1. National Correctional Industries Association (NCIA)

III.Mandatory Criteria for Participation in PIECP Program

A. Nine (9) Mandatory Requirements for Participation in the Program

1. 1-5

2. 6-9

B. Prison Industries Certified through the PIECP Program

1. 37 State Prison Industries

2. 1 County Jail Industry

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IV.Program Violations by:

1.Prison Industries

2.NCIA

3.BJA

4.OJP

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Citations of Authority

Laws Cited

Title 18 U.S.C. 1761(c)) Prison Industries Enhancement Certification Program (PIECP)

Ashurst-Sumners Act (18 U.S.C. 1761(a))

Walsh-Healey Act (41 U.S.C. 35)

§ 946.523 Prison industry enhancement (PIE) programs. (Florida)

§ 440.15 (9) (Florida)

§ 946.518 f.s. (Florida)

Texas PIECP Senate Bill - SB 1169, 2009

Justice System Improvement Act of 1979, Pub. L. No. 96-157, 93 Stat. 1215

Justice Assistance Act of 1984, Pub. L. 98-473 Sec. 609k(a)(1), 98 Stat. 2077, 2102

The Crime Control Act of 1990, Public Law 101-647 Sec. 2906, 104 Stat. 4789,4914

Reports

Florida Inspector General’s Audit Report, #2004-4 February 28, 2005

Media Articles

“Your Valentine -Made in Prison”, by Beth Schwartzapfel, Feb. 9, 2009 The Nation

“Critics: Prison labor hurts free-world jobs / Program allows companies to employ inmates, operate for less with subsidies” Houston Chronicle article, July 7, 2008

“Labor leaders fuming over Texas prison plan” Houston Chronicle article, Sept. 14, 2006

“Prison job program blamed for death” By LYDA LONGA. Staff Writer News-Journal Online, March 21, 2009.

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“Senate committee passes bill that would 'eliminate sweetheart deals' for companies using prison labor” http://www.lufkindailynews.com/hp/content/news/stories/2009/04/23/bill_passes.html

Links

http://www.nationalcia.org/wp-content/uploads/2008/10/pie-overview-final2.pdfhttp://www.nationalcia.org/wp-content/uploads/2008/09/pie-final-guideline.pdfhttp://www.nationalcia.org/) http://www.nationalcia.org/wp-content/uploads/2008/09/assessment-guide-2006-

version.dochttp://www.senate.state.tx.us/avarchive/http://olcrpublic.leg.state.fl.us/#P

Additional references.

“PIECP 2008 Report“, by Robert Sloan

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PURPOSE OF REVIEW

In today’s economic situation every job lost in the private sector brings financial stress to

individuals, their families, their creditors and results in the ever-increasing state

unemployment rates now seen in the U.S. More and more individuals are applying for

unemployment compensation and other publicly funded programs across this country due

to loss of employment.

The downturn in financial markets and investment accounts is the largest contributor to

job losses and the disappearance of personal retirement assets. In addition to the “typical”

causes mentioned above, there is another contributor to the loss of private sector jobs, lost

manufacturing and reduced free market sales. This contributor is the federal Prison

Industries Enhancement Certification Program (PIECP). This Program was enacted to

allow state and federal prison industries to train criminal offenders in the techniques and

technologies of today’s manufacturing of a myriad assortment of products and goods.

Upon release from incarceration these inmates would stand a better chance of gainful

employment and thereby avoid returning to prison. Training was the goal and sales of the

manufactured goods were secondary. In an effort to create more products and keep the

prisoners busy, the industries wanted to sell their products in order to continue funding

training programs.

Legislators envisioned an overall reduction in recidivism through this program. In order

for PIECP to work, they created what they perceived as a “level playing field” by writing

the law in such a manner as to make mandatory, several criteria that prison industries had

to meet prior to applying for participation - and had to continue to meet on an annual

basis to continue operating under the program’s “certification”. This was done in an effort

of not providing an unfair advantage to the prison industries over their private sector

competitors. They reasoned if prison industries were to be competitive - and not favored

over private sector companies – leases, wages, benefits, material costs and other typical

operating expenses should be equitable between Private manufacturers and prison

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industries with regard to suppliers and manufacturers and operating costs.

Unfortunately Congress overlooked the very real possibility that allowing partnerships

between prison industries and private enterprise would result in the private industry

partners foregoing the mission statement of “training” in favor of “profits”. This is the

goal of most private businesses and corporations in the U.S. and has not changed just

because they’ve moved their operations from “private sector” facilities into “prison

facilities.”

To encourage these “partners” to utilize inmate labor for their production, prison

industries have offered many manufacturers fully operational manufacturing spaces,

warehouses and other buildings as a lease for as little as $1.00 per year. In addition, the

inmate work force shows up every day, receives no annual vacation, medical or other

benefits and are receiving hourly wages of less than 1/3 of that currently paid to private

sector employees of the manufacturing “partner”. These ploys have attracted corporations

such as Wal-Mart, Victoria’s Secret United Airlines, Starbucks, Shelby Classic Cars,

Nintendo, Microsoft, Eddie Bauer1 and others to close - or reduce - their operations in the

private sector and move them inside the prison fences where they enjoy huge profits for

the manufacture and sales of the same products they were making outside prison fences.

The federal agencies with oversight of the program are supposed to be there to prevent an

abuse of the program, ensure compliance with program requirements, investigate

allegations of non-compliance and to also ensure that no private sector jobs are lost due

to state(s) prison industry operations.

Oversight of the PIECP program is virtually non-existent, as will be shown in the

following review. The failure by the DOJ, OJP and the BJA to oversee this program has

allowed the PIECP program to operate to an unfair advantage - to the private sector

employees, competitors and to the prison workers.

It is hoped that after reading this review and the attached documentation, this

Administration will look in earnest at the operation(s), lack of oversight, lack of

1 See “Your Valentine -Made in Prison”, by Beth Schwartzapfel, Feb. 9, 2009 The Nation, in Appendix8

government regulations and take the necessary steps to bring the federal agencies and the

PIECP participants into full compliance with the laws and guidelines of the PIECP

program. In doing this many private sector jobs will be saved.

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Introduction

An important federally run program that is often times overlooked and usually

misunderstood is the Prison Industries Enhancement Certification Program (PIECP)

that has been in operation since 1979. Thirty-seven plus state prison industries, and a few

county jail industries exist under the umbrella of this program. PIECP exists to allow

prison industries to train incarcerated offenders in contemporary manufacturing

techniques and technology that will allow them to become employable upon release from

prison. This was the goal when the program laws were enacted.

To facilitate this training program a relaxation of federal laws/acts concerning the

interstate sale and transportation of prisoner made goods were made a part of the initial

program and remain in place today. To encourage private sector businesses and

companies to become involved in such training, the laws were written such that prison

industries could partner with private sector manufacturers or service companies to utilize

inmate labor to make their products or provide their services. Once manufactured,

products could then be shipped across state lines, sold to private or corporate consumers

within the various states where the products were made and sold to the U.S. Government

in amounts exceeding $10,000 per order.

A secondary purpose of the program is to reduce “idleness” within prisons by involving

inmates in vocational training under the program and providing those released offenders

with the training necessary to be better qualified for employment in the private sector

once released.

The Department of Justice (DOJ) through the Office of Justice Programs (OJP) runs the

PIECP program. The Bureau of Justice Assistance (BJA) who is also charged with

oversight of the operations, investigations and initial review and annual compliance

reviews, regulates the program. This is the way the program is to be run, the reason for its

existence and the purpose of the laws that enacted it.

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Mandatory Federal PIECP Requirements

There are nine (9) “Mandatory Criteria” that must be met prior to a prison industry being

opened and operated. These Standards are provided2 at: http://www.nationalcia.org/wp-

content/uploads/2008/10/pie-overview-final2.pdf and are listed below:

“Mandatory Criteria for Program Participation

Eligible jurisdictions that apply to participate in the PIE Certification Program must meet all nine of the following criteria:

1. Legislative authority to involve the private sector in the production and sale of prison-made goods, and administrative authority to ensure that mandatory program criteria will be met through internal policies and procedures.

2. Legislative authority to pay wages at a rate not less than that paid for similar work in the same locality’s private sector.

3. Written assurances that the PIE Certification Program will not result in the displacement of workers employed before program implementation.

4. Authority to provide worker benefits, including workers’ compensation or its equivalent.

5. Legislative or administrative authority to take deductions not to exceed 80 percent of gross wages for room and board; taxes (federal, state, local); allocations for support of family pursuant to state statute, court order, or agreement by offender; and contributions of not more than 20 percent, but not less than 5 percent of gross wages to any fund established by law to compensate the victims of crime.

6. Written assurances that inmate participation is voluntary.

7. Written proof of consultation with related organized labor before PIE Certification Program startup.

8. Written proof of consultation with related local private industry before PIE Certification Program startup.

9. Compliance with the National Environmental Policy Act and related federal environmental review requirements.” (Emphases added)

2 PIECP Guidelines cannot be found on the BJA, OJP or DOJ sites. The only place these full guidelines are available are upon the NCIA site.

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PIECP ACT

The P.I.E.C.P. program came about due to legislation by Congress in 1979. The Program,

codified at 18 U.S.C. 1761(c), was first authorized by the Justice System Improvement

Act of 1979, Pub. L. No. 96-157, 93 Stat. 1215. PIECP was expanded from 7 to 20 pilot

projects under the Justice Assistance Act of 1984, Pub. L. 98-473 Sec. 609k(a)(1), 98

Stat. 2077, 2102. In 1990, The Crime Control Act of 1990, Public Law 101-647 Sec.

2906, 104 Stat. 4789,4914, raised to 50 the number of PIECP projects that may be

excepted by the Bureau of Justice Assistance (BJA) from certain Federal restrictions on

the marketability of prisoner-made goods. BJA first issued a Final Guideline to

implement this program on March 29, 1985, 50 FR 12661-64. After providing an

opportunity for public comment on the revised Guideline on July 7, 1998 (63 FR 36710-

19) final Guidelines were issued on April 7, 1999. These guidelines can be viewed at:

http://www.nationalcia.org/wp-content/uploads/2008/09/pie-final-guideline.pdf .

The Intent of Congress when initiating this program was to exempt prison industries from

the Federal restrictions on the marketability of prisoner-made goods, including relaxation

of the Ashurst-Sumners Act, (18 U.S.C. 1761(a)) and the Walsh-Healey Act, (41

U.S.C. 35).

Prior to the PIECP legislation, prison industries were prohibited from sales to the general

public, corporations or other non-state non-governmental agencies or departments (sales

to federal agencies were limited to orders not exceeding $10,000). Since PIECP laws

were enacted prison industries were allowed to produce products and offer them for sale

to private businesses, corporations and consumers and to ship these products utilizing

interstate transportation of prison made goods - under authority of 18 U.S.C. 1761(c) -

the PIECP program.

States wishing to participate in the PIECP program have enacted legislation to mirror the

PIECP Guidelines and 18 U.S.C. 1761(c). State legislation is to include the same nine (9)

mandatory requirements as set forth in the federal PIECP Final Guidelines3.

3 Florida statute(s) provided as a comparison to the federal PIECP Guidelines 12

In 1999 Florida enacted § 946.523 Prison industry enhancement (PIE) programs. This

law reads:

“(1) The corporation may operate or contract with the private sector for substantial involvement in a prison industry enhancement (PIE) program that includes, but is not limited to, contracts for the operation of a direct private sector business within a prison and the hiring of inmates. Any contract authorizedAny contract authorized by this subsection must be in compliance with federal law governing inmate workby this subsection must be in compliance with federal law governing inmate work programsprograms and must not result in the significant displacement of employed workers in the community. The purposes and objectives of this program are to:

(a) Increase the benefits to the general public by reimbursing the state for a portion of the costs of incarceration.

(b) Provide purposeful work for inmates.

(c) Increase job skills.

(d) Provide additional opportunities for rehabilitating inmates who are otherwise ineligible to work outside the prisons, such as maximum security inmates.

(e) Develop and establish new models for prison-based businesses that create jobs approximating conditions of private sector employment.

(f) Draw upon the economic base of operations for deposit into the Crimes Compensation Trust Fund.

(g) Substantially involve the private sector and its capital, management skills, and expertise in the design, development, and operation of businesses.

(h) Provide the financial basis for an inmate to contribute to the support of his or her family.

(i) Provide for the payment of state and federal taxes on an inmate's wages, which are paid at the rate of the prevailing or minimum wage rateor minimum wage rate.

(j) Provide savings for the inmate to have available for his or her use upon the inmate's eventual release from prison.

(2) Notwithstanding any other law to the contrary, including s. 440.15(9), private sector employers shall provide workers' compensation coverage to inmates who participate in prison industry enhancement (PIE) programs under subsection (1). However, inmates are not entitled to unemployment compensationHowever, inmates are not entitled to unemployment compensation.” (Emphasis added).

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As can be seen from the foregoing federal and Florida PIECP statutes, the Florida legislation differs on three (3) important issues.

1.Florida allows that the inmate workers will be paid “at the rate of the prevailing or minimum wage rate” where the PIECP requirement specifically requires: Legislative authority to pay wages at a rate not less than “that paid for similar work in the same locality’s private sector ” with no provision for “minimum wage rate”.

2.The federal guideline requires the prison industry have the “Authority to provide worker benefits, including workers’ compensation or its equivalent.” The Florida statute includes a restriction of, “However, inmates are not entitled to unemployment compensation.”

3.The foregoing differences between the federal and state PIECP laws cause Florida’s legislation to violate Section (1) of § 946.523 , in that (1) requires “Any contractAny contract authorized by this subsection must be in compliance with federal law governingauthorized by this subsection must be in compliance with federal law governing inmate work programs.” inmate work programs.” and §946.523 (1)(I) and Section (2) on their face are non-compliant with 18 U.S.C. 1761(c) - the federal PIECP laws.

The Florida prison industry, Prison Rehabilitative Industries and Diversified Enterprises (PRIDE) utilizes the state’s “minimum wage” clause to set the typical wage rate for the inmate workers in their industries at the Florida minimum wage scale of $6.40 per hour. This allows the corporation to increase profits by reducing payroll overhead substantially4 while maintaining product pricing at the regular retail price compared to competitor’s products.

4 Experienced Computer Controlled Machine Tool Operators, Metal and Plastic in Jacksonville, Florida are paid $15.58 per hour - the prevailing wage. At PRIDE’s UCI Metal Plant in Raiford, Florida an experienced Computer Controlled Machine Tool Operator is paid $6.40 per hour (source: Florida Occupational Employment and Wages, 2006). This results in a savings of $9.18 per hour per inmate operator to PRIDE.

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Lack of Actual Oversight and Regulations

The BJA sought and received a federal grant for a private corporate organization to take

over actual oversight, reviews, investigation and control of the PIECP program.

Oversight was turned over to the National Correctional Industries Association (NCIA), a

private association.

The NCIA describes itself at http://www.nationalcia.org/) as:

“The National Correctional Industries Association (NCIA) is an international nonprofit

professional association whose members represent all 50 state correctional industry

agencies, Federal Prison Industries, foreign correctional industry agencies and

city/county jail industry programs. Private sector companies that work in

partnership with correctional industries both as suppliers/vendors and as partners

in apprenticeship and work programs are also members”.

A reading of the actual Congressional legislation that enacted the PIECP program reveals

that Congress did not intend for participants in this program to “oversee themselves” and

“operate the PIECP program” without actual governmental oversight or regulation.

As can be seen, the PIECP program is authorized by U.S. Laws, through the DOJ, and

operates in such a manner it allows state and federal prison industries to partner with

private sector manufacturers and to be federally regulated. It was neither their intent nor

purpose for operations and oversight to be provided by a private association with a

membership composed of the employees, administrators, vendors and suppliers employed

by the very businesses, industries and manufacturers they are to oversee. This “oversight”

rises above a perception of impropriety and can best be described as a genuine conflict of

interest.5

A group of individuals, businesses, corporations, vendors and suppliers who “partner”

together in an enterprise for profit purposes - to the detriment of all other competitors -

5 In 1999 Pamela Jo Davis was the CEO of PRIDE of Florida. At the same time she was a Director of the NCIA and later served as the NCIA Treasurer. In 2006 Brian Connett was the PIECP Coordinator for PRIDE of Florida and also a Director serving on the NCIA Board. Each Prison Industry contacted by this author admitted that at least one – or more – of their staff serve upon the NCIA Board or are members in important positions within the NCIA.

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form nothing less than a monopolistic entity. The procedures of this group, under the

guise of “training inmates” to reduce recidivism further exacerbates their actions and

taints whatever additional profits they earn. When they provide the only actual oversight

of their operations, a monopoly is insufficient as a description.

As a demonstration of how profitable the PIECP program is to the prison industries, you

have only to look to the Florida example. Florida received its PIECP Certification in

1995. The Florida Department of Corrections (FDOC) was the entity awarded this

certificate. PRIDE lobbied the legislature to turn over the certificate to them - as they

operated all the state prison industries. This request was granted. PRIDE’s CEO,

President and several Board Members immediately formed 8-10 spin-off corporations:

Industries Training Corporation - non-profit; Labor Line Services Corporation -

non-profit; Labor Line Inc, for-profit; Florida Citrus Producers, Inc. - for-profit;

Global Outsourcing, Inc. - for-profit; Global Reman, Inc, for-profit; Northern

Outfitters, Inc6. - for-profit; Florida Citrus Partner, LLC, and; Diversified Supply

Management, Inc. - for-profit7.

PRIDE’s President, CEO, and Board members all had interests in the foregoing spin-offs.

They had administrative positions, were upon the Boards of the spin-offs or held

positions of President, CEO, Vice-President, CFO or Treasurer of these corporations.

They met at PRIDE Board Meetings and passed motions to “loan” their spin-offs more

than $19 million dollars of PRIDE’s money, with no re-payment schedule(s), interest or

collateral. The money received by the spin-offs paid secondary salaries to all of them -

allowing them to “double dip” from PRIDE coffers.

In 2004 a Florida Inspector General’s Audit was ordered by then Governor, Jeb Bush. The

Audit disclosed that the formation of Industries Training Corporation (ITC) was for the

sole purpose of taking full advantage of the PIECP program8 and the other corporations

were formed to facilitate a larger range of products and profits.

6 This was a Utah business and had no impact upon “training” of Florida inmates.7 Source: Florida Inspector General’s Audit Report, #2-2004 February 28, 2005 pg. 12 (full report in appendix).8 Florida Inspector General’s Audit Report, #2004-4, pg. 13

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At the time ITC and the other spin-offs were formed by PRIDE, its CEO, Pamela Jo

Davis, was also serving as the Treasurer of the NCIA and had served as Chairman prior to

that. She was in effect, the head of her prison industry while serving as Chairman of the

association charged with overseeing her individual industries.

The Audit further found the actions of creating and forming the spin-offs violated the

Florida Law governing the prison industry. It also determined that the money “loaned” to

the spin-offs was not likely to be recovered by PRIDE. Davis was forced to resign, as was

the President and most of the members of the PRIDE Board of Directors. PRIDE was

forced to sever all ties to the spin-offs and did so in 2005.

Again, it is argued that with the proper oversight and federal regulations in place, this

type of greed, corruption and manipulations involving the PIECP program would not

have happened.

In 2008 the lack of adherence to the PIECP guideline requirements and oversight failures

contributed to the closure of a Texas business, Lufkin Corporation and the unemployment

of 150+ private sector employees9. A prison based PIECP industry, Direct Trailer and

Equipment Company was operating at a Texas prison facility locally, paying inmates 1/3

the wage Lufkin had to pay and leasing prison manufacturing facilities for $1.00 a year.

This allowed Direct Trailer to undersell Lufkin by several thousand dollars per unit. An

investigation revealed that the Texas’ Private Sector Prison Industries Oversight Authority

did not follow the mandatory PIECP guidelines before allowing Direct Trailer to begin

operations. They failed to fully research and review the existing labor needs of the

surrounding locality as required by the guidelines. They failed to communicate with

Lufkin and other manufacturers, advising of the implementation of the PIECP operation.

This resulted in a loss of sales to Lufkin and another trailer manufacturer, Bright Coop.

The end result is that Lufkin is out of business, Bright Coop’s sales are down and the

contract between Texas prison industries and Direct Trailer has been severed. The Lufkin

employees and their families bore the brunt of the injury, having to seek other jobs in an

9 Houston Chronicle article, July 7, 2008 “Critics: Prison labor hurts free-world jobs / Program allows companies to employ inmates, operate for less with subsidies”

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area with high unemployment10.

10On April 21, 2009 the Texas Senate Criminal Justice Committee passed SB 1169 to reform the Texas’ PIECP Program. This bill would move oversight to the Tex. Dept of Criminal Justice and is designed to stop job losses in Texas to prison inmates in the PIECP program. See story at: http://www.lufkindailynews.com/hp/content/news/stories/2009/04/23/bill_passes.html

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Description of Violations to the PIECP Guidelines

The following represents actual operating procedures in use by various prison industries

across the U.S.

1. Absent the PIECP program, most prison industries are prohibited by state and

federal laws from selling prison made goods to consumers, private businesses (for

resell) or any entity other than state or federal government agencies inside or

outside the state where the prison industry operates. They are allowed to sell to

some non-profit entities – such as Universities within the various states. Once the

PIECP Certificate is obtained, prison industries utilize the program to partner with

private manufacturers to expand prison product sales to private and commercial

markets within the state of manufacture. They then sell prison made products to

those private sector market customers. In Florida, state law specifically prohibited

sales to private businesses, brokers or general non-governmental consumers until

1999. When § 946.523 was enacted that year, PRIDE immediately formed spin-off

partner corporations and partnered with other private sector businesses to

manufacture and sell prison made goods upon the open markets of Florida (where

such activities previously violated both state and federal laws). § 946.523 wording

does not relax corresponding state laws that prohibit the sale of prisoner made

goods to the general public, private sector manufacturers or retailers doing

business in Florida. PRIDE however, advances the argument that by participating

in the federal PIECP program, they are allowed to manufacture and sell their

products to anyone within Florida without abiding by the PIECP mandatory

requirements. PRIDE has used the PIECP Certification to get around the

prohibitions, now claiming when their prison made products are not being shipped

across state lines they are not required to meet any of the PIECP requirements –

paying prevailing wages to the inmate workers, tax on the sales, workers

compensation, etc. They refuse to recognize and acknowledge that the sales are

illegal and improper unless done through the PIECP program and abiding by the

guideline‘s mandatory requirements.

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2. There are no federal PIECP “exemptions” under federal laws allowing state prison

industries to manufacture and sell prison made goods within the state of

manufacture, if otherwise specifically prohibited by state and federal laws, absent

the PIECP Certification. A careful reading of Florida’s § 946.523 reveals that this

statute does not allow for the sale of prison made goods to Florida consumers.

Florida Statute § 946.518 reads:

-“Sale of goods made by prisoners; when prohibited, when

permitted. --Goods, wares, or merchandise manufactured or mined

in whole or in part by prisoners (except prisoners on parole or

probation) may not be sold or offered for sale in this state by any

person or by any federal authority or state or political subdivision

thereof; however, this section and ls. 946.21 do not forbid the sale,

exchange, or disposition of such goods within the limitations set

forth in 1s.”

This f.s.§ 946.518 specifically prohibits such sales on the open markets. The use

of the PIECP program to circumvent the controlling state law is violative of both

the PIECP intended legislation and Florida Statute §946.518.

3. The PIECP Program allows prison industries to “partner” with private sector

manufacturers to utilize inmate labor in the manufacture of the products or

services made by/for the private sector “partner”. Again, this partnership is only

allowed by participation in the federal PIECP program. Without the program such

alliances are prohibited as are the sale of their products to consumers within the

state of manufacture.

4. Prior to beginning a new industry under the PIECP guidelines, a prison industry is

required to meet with private sector manufacturers and labor organizations. This

is required in order to ensure the prison industry will not adversely affect private

sector competitors in the industry or cause the loss of private sector jobs.

Currently this requirement is being virtually ignored. This is witnessed by the

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closure of Lufkin Trailer industry as stated above and supported by the attached

articles.

5. In the Lufkin situation, the Texas PIECP oversight board completely failed to

ascertain the employment situation in the community before the industry opened –

as required by the PIECP mandatory guidelines. They also failed to contact union

or other labor leaders as well as Lufkin Trailer Industries – their main competitor.

This kind of “failure to abide by the PIECP Requirements” happens in other states

such as Florida.

6. Prison Industry PIECP “Partnerships” are taking place across the United States.

More and more private sector manufacturers are closing their private sector

operations, laying off employees and moving entire operations into prisons. There

they have the benefit of virtually no annual lease obligations, no employee benefit

packages, no paid vacations, medical paid by the Departments of Corrections and

a work force that has to show up for work every shift – or face disciplinary

punishment.

7. PIECP requires prison industries to pay inmate workers “the prevailing wage”

paid in the community/locality for their work based upon job description. Instead,

most of the prison industries contacted, state they pay the inmate workers the

federal minimum wage (or as in Florida, the higher state minimum wage of $6.40

per hour). Every job station pays the same regardless of whether it is a skilled or

unskilled job and without regard to the experience and length of time an inmate

has worked at his/her position.

8. Prison industries often times manufacture various parts of a single product at

more than one facility, i.e. chair frames at one plant, cushions at another, inserts at

a third and corrugated boxes for shipping at a fourth. The dozens of inmates who

manufacture the individual parts are paid the standard prison wage of between

$.25 and $.55 per hour. Once the parts are shipped to a fifth plant where inmate

workers assemble them. The assembly inmates receive PIECP wages. This

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procedure allows the prison industry to maintain a high profitability while further

reducing overhead and it all allows the prison industry to achieve a leg up on their

private sector competitors.

9. Prison industries often list their industry as the “customer” on an order – in house.

Inmates manufacture products at the prison wage. Once the products are

completed, they are placed into inventory. If a PIECP order for that product comes

in, the prison industry draws that order from inventory and thus defeats the PIECP

wage and other requirements altogether.

10. Inmate workers are “trained” in the manufacture of industry products – whether

the products will be sold to institutional or PIECP markets. This training period is

considered by the prison industries to be non-PIECP and the inmates are paid the

standard prison wage, even though the products are earmarked for the private

sector. Inmates must complete their training without benefit of the PIECP wages

and other benefits11.

11. Prison Industries in Florida opened a Food Processing facility in 2001-02. They

partnered with a private sector food processing company out of Atlanta, Georgia.

The processing included grinding, mixing and the addition of spices, fillers and

flavoring ingredients that turned the raw meats into hamburger, chicken and pork

patties. PRIDE labeled this industry a service industry. They informed NCIA and

other federal PIECP officials that they were merely grinding the bulk meat,

freezing it and returning it to the PIECP partner – ATL Industries – in Georgia.

The finished goods were a composite of the raw meat products with additional

fillers, spices and flavorings that created new products. Then these products were

actually shipped from the PRIDE facility all over the United States, yet they

continued to claim the products were sent back to ATL. Eventually, PRIDE’s

partnership with ATL disintegrated due to discrepancies in their bookkeeping.

11 The BJA previously determined that inmates being trained must be paid the same prevailing wage as other trained workers. They state if the prison industry wishes to avoid paying full wages while an inmate is in training, they must have a training facility separate from the manufacturing facility and utilize that procedure on products that do not enter into PIECP markets.

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ATL sued PRIDE and PRIDE kept ATL’s equipment, recipes, customer lists,

labels and ingredients. PRIDE continued processing meat products and shipping

them to ATL’s customers all over the country, while battling ATL in court12.

12. While the stated mission of the PIECP program is to provide training to

incarcerated individuals and assisting an ex-offender in securing employment

upon release, their actions within the industrial setting have been altered. Prison

industries now train lifers and other long terms sentenced inmates on equipment

and methodology and keep them at that job for years on end. This increases

production and thus profits for the industry. This practice, however, denies real

training to other short-term offenders who will be released and won’t have the

beneficial training to assist them in their transition back into the community. The

continued use of lifers – and other inmates with long sentences – in an industrial

training program defeats the primary purpose of the program itself and places

supervisory personnel in a dangerous situation by putting dangerous tools into the

hands of the most dangerous inmates at the facility13. However this procedure does

allow the prison industry to maximize their production schedules and sustain high

profit margins.

13. The NCIA enables the improper behavior and procedures by not fully enforcing

the PIECP Guideline’s nine (9) mandatory requirements. This association paid to

perform actual oversight through a government grant, instead interprets the laws

to the benefit of their member prison industries. Clearly, PIECP requires prison

industries to pay prevailing wages to the inmates manufacturing or providing

services under the program’s authority. However, since there is a clause within the

12 In 2005 ATL found PRIDE food products at the facility were contaminated by rat feces and urine in the fillers, ingredients and packing materials. This information was provided to the USDA and ATL asked for a voluntary recall of products sold under their label. The USDA denied this request. PRIDE practiced this kind of “takeover” of a private sector partner on two (2) other occasions in their Citrus division and at a Torque Converter facility.

13 In 2008 a prison guard (Donna Fitzgerald) at the Tomoka CI prison industry facility was brutally stabbed and killed by a PRIDE inmate worker serving two life sentences. It was later determined that the inmate should not have been placed into the industrial training program with his record and sentence, see: “Prison job program blamed for death”, By LYDA LONGA, News-Journal Online, 3/21/09

23

guidelines that allows a prison industry to pay “minimum wages” where the local

prevailing wage is the minimum wage, or where the state OES agency is unable to

factually determine the wage rate for a particular job description, the NCIA

chooses to utilize this clause as a loophole to set most job description wage rates

to the lower federal minimum wage. This procedure further disadvantages private

sector competitors, when added to the already incredible $1.00 annual lease of

prison facilities. The NCIA ignores the actual wording of the PIECP guidelines

that limit’s the use of the minimum wage clause to certain instances and requires

justification for setting inmate wages at the lower minimum wage.

14. PIECP guidelines require a “pre-certification” compliance from all participants

that they abide by the nine (9) mandatory requirements before the PIECP

Certificate is issued. In addition, the BJA is to re-assess each industry on an

annual basis. This re-assessment is required to ensure wages that increase in the

private sector are increased a like amount in the prison industries. This review is

to also ensure that the prison industry continues to abide by the requirements of

checking with local employers to determine if the prison industry is adversely

affecting local private sector manufacturers. Prior to 2006 re-assessments were

conducted “on site” of each individual prison industry as required by PIECP

legislation. The NCIA however, in 2006 changed their protocols to allow for

“Desk Assessments” of existing prison industries14. Under this type of assessment

the NCIA “assessor” reviews documents already filed with the NCIA and

determines compliance without actually visiting the individual prison industries.

The NCIA assessor is told they need not double check the previously provided

information during their assessment. In addition, only 1/3 of all prison industries

will be reassessed through on-site or desk assessment. The remaining 2/3 are not

subjected to any assessment at all. This protocol or procedure allows prison

industries to sometimes not be reviewed for compliance for as much as 4-6 years.

This new procedure reduces an already lax oversight by the NCIA.

14 Another change from the PIECP guidelines is that assessments are now done on a 24 month cycle, rather than annually - See: http://www.nationalcia.org/wp-content/uploads/2008/09/assessment-guide-2006-version.doc

24

15. NCIA Assessors are members of the association and employees or administrators

of prison industry operations, or their vendors or suppliers who have an obvious

interest in the PIECP program as it relates to their individual industry or business.

This creates a genuine conflict of interest situation whereby it is in the assessor’s

best interests to not be critical of wage or other considerations of a sister industry

being assessed by them, where wage and other issues mirror those of the

assessor’s own prison industry. An assessment forcing compliance with PIECP

guidelines at one industry would force compliance with the remaining prison

industries. This assessment procedure is fraught with the appearance of

improprieties and should be reviewed closely by the DOJ and U.S. Department of

Labor (DOL).

16. All allegations and complaints made to the DOJ are summarily forwarded to the

BJA for investigation. The BJA forwards these complaints to the NCIA for review

and investigation. These investigations typically result in no response from the

NCIA to the complainant. Secondary inquiries result in the same response. In

2003, 2004, 2005, 2006 and 2007 complaints from this author and others were

made to the BJA, NCIA and the DOJ about the PIECP operations in Florida. The

NCIA was queried with four important questions:

1.Does the industry wide payment of state or federal minimum wages to inmate

workers in Florida (PRIDE Industries) satisfy the prevailing wage requirement

of the PIECP Guidelines?

2.When otherwise prohibited by state law(s) from selling prisoner made goods to

the public, private sector manufacturers or retailers, does PIECP participation

and partnership with a private sector business override state law and allow

sales of prisoner made goods to otherwise restricted customers and consumers

within the state of manufacture?

3.Is there any provision within the PIECP guidelines or law that exempts PIECP

participating industries or their private sector partners from the mandatory

25

guideline requirements (wages, benefits, etc.) when prison made products are

being manufactured and sold strictly within the state of manufacture?

4.Are PIECP participating industries required to pay prevailing wages to inmate

workers who manufacture sub-assembly parts or products that are later

assembled at another PIECP industry for PIECP orders? And do products

drawn from inventory to fill PIECP orders require the payment of prevailing

wages to the inmates who manufactured them, applied retroactively?

(On June 16, 2009 we again queried the DOJ with the above four questions.

On July 1, 2009 we finally received an email response from Mr. Julius

Dupree, Policy Advisor of the BJA. In his response Mr. Dupree advised that

the payment of minimum wages to inmate workers in the PIE program in

place of the prevailing wage was in fact violative of 18 USC 1761(c)(2)).

17. PRIDE “adjusts” actual inmate hours worked on PIECP projects by reducing the

hours worked by all inmates on the project to fit into the Labor portion of contract

bids which result in contract acceptance. Once the bid is accepted, the work is

performed and regardless of the number of hours worked by the inmates, the

actual hours are adjusted until wages for the project match the projected labor of

the bid.

18. At some industries, the management projects labor for projects (orders) and once

the order is placed, they divide the labor portion paid by the customer equally

among all inmates working in the industry. This practice further dilutes the hourly

wage below prevailing wage requirements and in some cases, even below

minimum wage rates15.

19. Prison Industries utilize “brokers” with state corporations or business addresses in

the state of manufacture to broker PIECP orders and projects that are shipped

across state lines or internationally16. In 2004 PRIDE manufactured hundreds of

15 This was being done in 2004-05 at the PRIDE UCI Dental Industry, even though the practice had been disallowed by the BJA.16 In 2004 PRIDE’s Vehicle Tag Industry secured a contract to manufacture thousands of vehicle

26

thousands of “yard signage” (for sale and real-estate signs) for Century Graphics

out of Orlando, Florida. The Metal Industry at UCI correctly identified these

products as PIE products, and began paying the inmate workers the minimum

wage for their work. Shortly after the product run began, PRIDE revised the

contract to show it was a non-PIECP order, and stopped paying PIE wages to the

inmates, but continued producing the signs by the thousands. Once this author

began complaining to the BJA about the work being done and inmates not being

paid, PRIDE responded that 10% of all the signs made were being shipped out of

Florida, and inmates would receive PIE wages on 10% of those orders designated

as being shipped from Florida by the customer. Neither PRIDE nor Century

Graphics ever produced documentation supporting their contention that only 10%

or the products were being shipped out of Florida.

20. Inmates who work as janitors, maintenance, Quality Control and other critical

jobs within the prison industries are not paid PIECP wages on product runs in the

plants. Industry managers claim that these positions have no bearing on

production and are not “notable tasks” as defined by the BJA. This procedure is

improper as Quality Control to insure products meet specifications, maintenance

to keep the machinery operating and janitorial staff clean all areas and make it

possible for operators to continue to produce products.

21. In PRIDE’s industries in Florida, possession of the PIECP Guidelines by inmate

staff is forbidden and possession of any PIECP materials from the outside results

in termination and disciplinary action by the DOC at PRIDE’s urging. Inmates are

not allowed to have handbooks or the Guidelines for the program under which

they are working. Complaints about this to PRIDE’s President, the NCIA and BJA

have resulted in no change to this practice17

tags (license plates) for the country of Malta. Once manufactured they were shipped by PRIDE to a Florida address of a broker. The broker then shipped the order overseas to Malta. For their work the inmates were paid between $.25 -.50 per hour and each got a McDonalds meal for their efforts. When this author queried PRIDE about the order and shipment, PRIDE representatives stated the order was “sold” to a state corporation, and was thus exempt from PIECP wages and other requirements.17 In 2006 the author spoke with the PRIDE Board about this practice and PRIDE President, Jack Edgemon assured that the guidelines would be posted in each industry. In 2007 when confronted

27

22. PRIDE partnered with ATL Industries in Atlanta in 2002 to process meat into

edible products (Union Foods). PRIDE deliberately took steps to not certify this

as a PIECP industry with the NCIA or BJA until 2007. For five (5) plus years

PRIDE operated this facility without paying any PIECP wages to the inmate

workers at all, even though the products made were shipped nationwide18.

23. PIECP industries in Florida and other states use antiquated machinery and

technology in manufacturing their products. The use of outdated technology and

equipment in a national inmate vocational/occupational training program defeats

the mission goal of “training inmates to be better able to be employable upon

release.” Private sector manufacturers have little incentive to hire ex-offenders to

fill open industrial positions that require contemporary experience in operation of

digital or electronic machinery or equipment where the applicant has been fully

trained - but on equipment and with technology that is no longer in use.

24. Lobbying. Though most of us see no need for Prison Industry Programs with a

Mission Goal of “Training of inmates” to pay huge sums of money for lobbyists,

PRIDE does just that. Currently they have several well placed Lobby firms with

powerful lobbyists on their payroll and on their Board of Directors: Ron LaFace,

Lobbyist with Capital City Consulting LLC (Also a PRIDE Board Member),

Spearman Management (Guy Spearman and Allison Hebert), Brewton and

Plante, PA (Wilbur Brewton and Kelly Plante) and Toni Smith Large at the Firm

of Greenberg Traurig, PA. In 2007 PRIDE paid $208,000 to $266,000 to their

lobbyists. In 2008 they paid $279,000 to $359,000 to lobbyists. For 2007 and

2008 the total lobby fees paid by PRIDE were $487,000 to $545,00019. Records

by the author that such posting had not been done, Mr. Edgemon stated that he had instructed all industries to have the PIECP guidelines available in the industry managers office. Any inmate who wished to read the guidelines had only to request access to it (this is insufficient, as inmates who show an interest in the program guidelines are terminated, and this procedure allows PRIDE to identify “trouble makers” and get rid of them easily.)18 After ATL terminated their contract with PRIDE in 2004, two PRIDE employees formed 2 spin-off for-profit corporations (Century Meats and Circle A Brands) to take over ATL’s position. One of these PRIDE employees was Devon Westbrook, the Union Foods Industry Manager and son-in-law of President Edgemon. These corporations continue to operate as of this writing.19 Source: Florida ” Lobbying Firm Compensation Reports by Principal”, http://olcrpublic.leg.state.fl.us/#P

28

going back to pre-2007 are not readily available20.

25. In Florida PRIDE is required to provide inmate training statistics to the

Legislature and FDOC to insure that the training requirements set by the state are

being met. PRIDE issues hundreds of “Certificates Of Completion) to their

inmate workers annually. However, the Certificates are issued without the

required actual training of the inmates. Other inmates working as clerks present

inmate workers handouts on various topics and they are told to read and study

the handouts in preparation for hands on review by the supervisor. Instead of a

test or review, the supervisor has the certificates issued in the inmate’s name and

hands them out. There are no hands on testing of the procedures; no written

testing or other inspection to insure the inmate even read the handouts. Thus, the

training certification program depended upon by the FDOC and Legislature is

defeated by the prison industry.

26. From 1999 through 2005 PRIDE and their spin-offs “partnered” with several

private sector businesses. Of those partnerships, five (5) resulted in takeovers by

PRIDE or their spin-offs. The methods used included, eviction of private sector

partner personnel from “prison” property by PRIDE, seizure of all equipment,

products, proprietary recipes, formula or technology, materials and customer lists

owned by the partners. PRIDE issued false invoices, claiming the partners owed

them money for operation and other expenses. While PRIDE or their spin-offs

continued to operate the production lines absent their partners, taking all profits

for themselves, their General Counsel, resident agent and Lobbyist, Wilbur

Brewton filed civil suits in Florida Courts to tie up the former partners and their

money. The companies who were partners and permanently put out of business

by these PIE partnerships were Custom Converter Sales, Inc., Fresh Nectars,

Inc., Value Line Converters, Inc., Man-Trans, LLC and ATL Industries, Inc.

Under the 501(C)(3) Non-Profit Corporation Exemption provisions of the IRS,

20 In addition to being a lobbyist for PRIDE, Brewton is also an attorney representing PRIDE and serves as their Resident Agent (He was also Resident Agent for most of the spin-off corporations that were found to be illegal by the 2004 Fl. Insp. Gen’s Audit.

29

substantial lobbying is prohibited and lobbying for laws or amendments that benefit the

501(C)(3) corporation are specifically mentioned and prohibited.

As can be seen from this single issue, there is much money to be made by partnering with

the Prison Industries under the PIECP program. PRIDE would not be spending nearly a

quarter of a million dollars a year lobbying Florida Legislators and the Executive branch

of government, if it were not a corporation driven by profit rather than “inmate training“

and job placement.

CONCLUSION

Programs that train inmates in occupational skills in efforts to attack prison recidivism are

applaudable, and should be encouraged to flourish. Today our incarcerated individuals

top 2 million with recidivism rates surpassing 40%. Any program that will reduce

recidivism will ultimately assist in reducing the static prison populations21.

However, in approaching the recidivism issue through a training approach, the mission

goals must be directed toward such a reduction - and not accompanied or superceded by a

goal of increased production and profits. Over the past decade and a half prison industries

have been profit driven, with little or no actual thought toward rehabilitation or actual

training. Once large corporations realized the potential in profits by using the prison

industries and their attractive benefits, they jumped on the prison train wholeheartedly.

They have realized huge income from participation in the PIECP program and hope to

continue to do so.

Clearly participants within the program are exploiting the PIECP program - prison

industries, business partners, vendors, suppliers and others associated with prison

industry operations. As seen by the Lufkin situation, prison industry operations continue

to contribute to job losses in the private sector markets. PIECP “Partners” continue to

enjoy sweetheart deals that include no rent for facilities, medical paid by the Departments

21 Sloan is the author of the “Release to Home” re-entry program now being considered by the federal Bureau of Prisons. This program was submitted to the FDOC in Florida in 2006 and has been partially implemented under another name (Building Trades Program) by Florida and the DOC.

30

of Correction, pay no benefits to the inmate workers - no vacations, medical insurance,

unemployment compensation - and pittance pay in hourly wages.

Since each DOC with a participating prison industry is entitled to deduct between 40 and

80 percent of the inmate worker’s gross pay for room and board, the amounts actually

paid to the DOC’s are far less than they should be. In this time of every state and their

prisons experiencing financial strain to meet budgetary needs, they need the full room

and board income they are entitled to. For every dollar saved by not paying prevailing

wages to the inmate workers and put into coffers as profit by the prison industries, the

state loses $.40 to $.80. The accumulated $.40 to $.80 savings per dollar, per hour, per

inmate to the prison industry and their partners, results in millions of dollars in additional

profits per annum being lost to each DOC. Unfortunately, in every state with a

participating PIECP prison industry, the taxpayers have to make up that $.40 to $.80 per

hour per inmate by subsidizing DOC budgets with tax dollars. In essence, the prison

industries participating in the PIECP program are stealing from the taxpayers and

showing that money as “profit” on their books by being allowed to underpay inmate

workers. This “theft” scenario does not take into count the tens of thousands of products

being manufactured and sold within the states of the participating industries, and not

claimed as PIECP products or sales. On these items - at least in Florida - inmates workers

are paid as little as $.25 per hour instead of prevailing wages of as much as $35.00 per

hour.

As can be seen by the above procedures and manipulations many millions of dollars are

diverted from state DOC’s and wind up as profits in prison industry bank accounts. This

is why so many huge manufacturers such as Microsoft, Nintendo, Victoria’s Secret and

other have switched from private sector operations to the prison industries. Investors have

watched the transition with glee, choosing to move funds into stocks of these companies,

which are traded/bought/sold through the Dow, Nasdaq and S&P markets. As stated

previously, there’s money to be made in the prison industries of today - especially when it

is operated with little or no federal regulation.

Big business has gotten their hands into the prison industry PIECP program in order to

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get a step up on competitors and increase profits exponentially due to lower overhead

costs of labor and facility leasing. We’ve recently observed what happens when huge

corporations follow this path - in the financial markets, at least - and how their actions

can impact states, communities and individual citizens

Oversight, as stated earlier is virtually non-existent and what oversight there is, is simply

an authority from the DOJ and BJA to allow “self-regulation” by the industry and their

employees and vendors. A lack of oversight by other federal agencies resulted in the

meltdown of AIG, Leahman Brothers, Freddie Mac, Fannie Mae, Enron and other

companies thought “too large to fail.” Allowing the prison industries under the PIECP

program to continue to prey upon private sector employees and competitors in the

manner explained herein, is simply not acceptable - especially in these economic times

with unemployment at record levels.

What happened to our economy due to a laxness by the U.S. Securities and Exchange

Commission (SEC) over the past five or so years, has been happening in plain sight with

the same laxness being shown by the DOJ, OJP and BJA. Complaints to the Government

Accounting Office (GAO) of how the BJA and DOJ are failing to oversee the PIECP

program resulted in a GAO determination that the subject of the agencies failing to

properly operate or oversee the program was outside their jurisdictional boundaries.

Queries sent to Senators and Representatives about this issue resulted in standard scripted

responses. Under this new Administration one can only hope that such non-responses will

be a thing of the past.

Legislative intentions and goals that created PIECP have been thrown to the back seat.

During our depression years of the early ‘30’s manufacturers cried foul when prisoner

made goods were put onto the market, competing for their customer’s dollars. The

Congress enacted the Ashurst-Sumners Act and Walsh-Healey Act in response. These

federal laws kept prison made goods off the private sector markets and protected the

interests of private sector companies. Today the same situation exists as it did back in

1935; prisons made goods are reducing consumer sales by private sector companies. The

difference between these two calamities is that today not only is the private sector losing

32

business, they’re losing employee jobs to prison industries, and the loss to some private

sector businesses is a profitable gain to other private sector companies who are partnered

with the prison industries.

The federal PIECP program is allowing certain private sector companies to enjoy a

considerable advantage over their competitors. Taxpayer dollars through a federal grant

are being used to allow program participants to oversee themselves through the NCIA.

Local and state tax dollars are funding and subsidizing DOC’s and their prison industries

with ever increasing budgetary needs. Prison industries generally tout a claim that their

industry programs are “self-sustaining” and are not funded by taxpayer money. This is

just not accurate. As explained above, taxpayers are paying due to the tactics and

procedures utilized to under pay wages and therefore under fund room and board money

to the DOCs.

It is hoped that this review and the supporting documentation will cause the appropriate

agencies in authority to finally take a long hard look at the entire PIECP program,

program participants and program partners. Once they do, they will see the immediate

need to make necessary changes to introduce un-biased oversight and regulations to the

program and participating industries. Only by doing this will the job loss in the private

sector ease and the level playing field envisioned by Congress begin to actually exist.

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HOUSTON CHRONICLE ARCHIVES

Paper: Houston Chronicle

Date: Mon 07/07/2008

Section: B

Page: 1 MetFront

Edition: 3 STAR R.O.

Critics: Prison labor hurts free-world jobs / Program allows companies to employ

inmates, operate for less with subsidies

By LISA SANDBERG, AUSTIN BUREAU

STAFF

AUSTIN - The East Texas town of Lufkin was home to one of the biggest manufacturers of

tractor-trailer beds in the state until sluggish sales forced the firm, Lufkin Industries, to close

its factory earlier this year, displacing 150 workers.

For everyone but the affected employees, the story might have ended as little more than a

cautionary tale of what happens when an established business gets squeezed by a smaller,

nearby competitor, in this case, Direct Trailer and Equipment Co., which sells an almost an

identical product for as much as $2,000 less.

Instead, plenty of people have taken notice of this East Texas labor imbroglio, and some are

crying foul.

As it turns out, Direct Trailer produces its tractor beds with cheap prison labor and subsidies

from the state of Texas. The company rents space inside the Michael Unit, a 2,900-bed

facility in Tennessee Colony, for $1 a year. The state foots the tab on work force health care,

too.

The arrangement is part of a federal program that allows select companies to provide paid

work experience to select prisoners, as long as the prison operation doesn't eliminate similar

free-world jobs nearby. The Prison Industry Enhancement, or PIE, initiative has been

operating in Texas since 1993 and includes nearly 400 inmates working in five prison plants

across the state.

Companies applying to operate inside the prisons must have outside-prison operations and

must pay wages commensurate with those paid for similar work in the same locality's private

sector. (Welders make at least $8 an hour in the area where Direct Trailer operates its prison

plant.)

Inmates keep about 20 percent of their wages, with the rest going to their dependents,

victims, the courts and the state.

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Paul Perez, general counsel for Lufkin Industries, said his company paid workers upward of

$15 an hour and couldn't compete in an already competitive market against a newcomer who

could produce a less expensive product.

"It exacerbated an already difficult situation," Perez said.

Direct Trailer's president, John Nelson, could not be reached for comment.

One state lawmaker, Sen. Robert Nichols, R-Jacksonville, is calling not just for Direct Trailer's

state contract to be severed, but he's also questioning the validity of every one of PIE's five

prison programs.

Nichols accuses PIE's board, known as the Private Sector Prison Industries Oversight

Authority, of approving the contract with Direct Trailer without having the necessary

employment data required by the federal government and the board.

He said that when he investigated Direct Trailer's 2005 certification, he discovered that the

board compared only overall employment in the area against national employment data

without looking at local employment data for "specific skills, crafts or trades," as was also

required.

Nichols also said that when he contacted the Texas Workforce Commission, he received a

letter last month that said the agency "does not have unemployment data for specific skills,

crafts, trades or occupations." The letter was signed by a manager Jesse Lewis, director of

external relations.

Nichols said that can mean only one thing: "None of (the programs) are meeting the

guidelines."

Kathy Flanagan, presiding officer of the oversight board, acknowledged the board made

decisions looking at "only part of the information," but she deflected blame elsewhere. "It's

not our responsibility to ask the Texas Workforce Commission how they get their

information."

She said in light of the current controversy, the board was now reviewing its policy and

procedures.

Such comments are unlikely to satisfy labor officials, who complain that even when the rules

are followed, the prison program need only demonstrate no harm to local jobs.

"We think the law needs to be clear: Using prison labor should not result in job losses

anywhere, and certainly not in the state of Texas," said Rick Levy, legal director of the Texas

AFL-CIO.

Nichols said he will urge the oversight board to amend its rules so that contracts are signed

only with companies that can show no jobs anywhere in the state will be affected by a prison

operation.

35

"If you can train a prisoner (in) a trade, I think that's very good. But not if one law-abiding

Texan has to lose his job," Nichols said.

Robert Carter, PIE's program administrator, is hoping that the fracas won't lead to the demise

of a program that's provided job training and pay to hundreds of inmates, the vast majority

of who will one day be released.

He said studies indicate that those who participate in PIE get jobs quicker upon release, earn

higher pay and stay in them longer than non-participants.

Perez said his company has been able to rehire most of the 150 laid-off workers from the trailer

plant and put them to work manufacturing oil field equipment.

But there are new rumblings from the owner of another East Texas trailer manufacturing

firm. Charles Bright, who owns Bright Coop, said his sales are down, and he's wondering if

it's because Direct Trailer is selling its product cheaper.

"I'm not opposed to the program, as long as I can rent one of those buildings for $1 a year," Bright said.

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Sept. 14, 2006, 1:54PM

Labor leaders fuming over Texas prison plan

The state may expand program that hires convicts at cut-rate wagesBy LISA SANDBERGCopyright 2006 Houston Chronicle Austin Bureau

LOCKHART — Penny Rayfield's 35 assembly workers get neither vacation nor sick pay. Their salaries are barely above minimum wage. But they show up on time and don't hunt for work elsewhere.They seem happy to have a job, even one that pays about $4 less per hour than what assembly workers make, on average, elsewhere in Texas.

Rayfield's company, Onshore Resources, has a sweetheart deal.

It pays Texas exactly $1 a year for the sprawling building where it makes electronic circuit boards.

It has no need to foot health insurance for the employees because the state provides their medical care.

The for-profit business is tucked inside a private prison in this rural community 30 miles south of Austin.

It's one of a handful of operations in which an estimated 500 state inmates in three prisons make products such as windows and air-conditioning parts for the private sector.

The program, in both public and private detention facilities, is part of the federal Prison Industry Enhancement (PIE) initiative.

It has long rankled labor leaders, who've complained quietly that it could slowly but surely displace better-paid workers outside prison.

That opposition is getting noisier as the state appears ready to add two new PIE operations to the four it now has.

One would use prison inmates at the Boyd Unit in Teague in Central Texas to assemble muscle cars from kits. The second would have inmates at the Telford Unit in northeast Texas manufacture uniforms for U.S. postal workers, most of whom are unionized.

Quick approval expected

Today, a committee that oversees PIE is expected to consider both expansions. Jeff LaBroski, a labor representative with the PIE program, said he expected both to sail through. Federal officials must approve it, and the Texas Department of Criminal Justice governing board then gets the final say. Douglas Hasty, the president/CEO of Unique Performance, the car company seeking PIE approval, contributed $1,000 in April to Texans for Rick Perry, the governor's re-election campaign, state records reveal. Hasty did not immediately return calls for

37

comment Wednesday.The Texas AFL-CIO is warning that "a new era of disregard for free-world workers may be about to unfold."Ron Spurlock, community action representative with the United Auto Workers, which represents 5,000 members in Texas, was likewise unequivocal."We're exporting jobs from all over the country and now we're going to take the jobs that are left here and turn them over to prison labor at half, or less, the wages you'd expect to pay someone on the open market," Spurlock charged.

A divisive issue

The issue pits those anguished by the erosion of middle-class jobs, many of which have gone overseas, against those trying to rehabilitate inmates and enhance prison security. "This is not meant to displace workers in the free world, it is meant to reduce recidivism," said Randa Taylor, spokeswoman for the Geo Group, which operates the minimum-security Lockhart Unit, site of the largest PIE operations in the state.The PIE certification program, enacted by Congress in 1979, allows states to give prisoners private sector work experience and a few employers some nice breaks. Today, 5,800 inmates participate in about 40 jurisdictions around the country. Though the program touches a fraction of the overall prison population, the numbers have grown through the years, said Sahra Nadiir, project coordinator for the National Correctional Industries Association.Offenders like it because they make money, although they keep only about 20 percent of it. The states pocket as much as 80 percent, for room and board. Texas collects between 30 percent and 60 percent, depending on how much gets divvied up among the courts, crime victims and offenders' dependents, spouses or disabled parents.Businesses applying to operate inside prison must have an outside-prison operation. They can't reduce the number of their free-world jobs while expanding their prison jobs and the wages they pay must be commensurate with those paid for "similar work in the same locality's private sector."Labor leaders say it is nonsense to consider wages only in a localized area. "We think the consequences are national," said Ed Sills, spokesman for the Texas AFL-CIO.

'Best work force'

Pete Arciniega has supervised workers at big-name manufacturing plants but prefers the obscure operation at the Lockhart Unit, where he oversees 250 prisoners. His employees had to apply and give a clear reason for wanting to join Chatleff Controls, a Buda-based company that manufactures air-conditioning and heating parts. If they're hired, they will earn between $6 and $8 an hour before deductions."They do a hell of a job. They're the best work force I've ever had," Arciniega said as workers around him labored under fluorescent lights amid the hum of heavy machinery.Across the state, similar work fetches an average of $12.85 an hour, according to the Texas Workforce Commission. Arciniega said such comparisons are unfair because free-world employees tend to work for years, giving them the seniority to earn more money.Rayfield said her 35 assembly workers just down the hall from Arciniega's shop make about $6 an hour, which is, according to state data, about $4.11 less than assembly workers statewide make."They don't have vacations; they don't call in sick," she acknowledged, but she said

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the program's rehabilitation goals are the underlying reason for hiring inmates and putting up with the red tape.lsandberg@express-news.net

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The NationYour Valentine, Made in Prison

By Beth SchwartzapfelFebruary 12, 2009

With Valentine's Day approaching, perhaps you're planning a trip to Victoria's Secret. If you're a conscientious shopper, chances are you want to know about the origins of the clothes you buy: whether they're sweatshop free or fairly traded or made in the USA. One label you won't find attached to your lingerie, however, is "Made in the USA: By Prisoners."

This Valentine's Day you might want to steer clear of Victoria's Secret, unless you like your lingerie made by prisoners.

In addition to the South Carolina inmates who were hired by a subcontractor in the 1990s to stitch Victoria's Secret lingerie, prisoners in the past two decades have packaged or assembled everything from Starbucks coffee beans to Shelby Cobra sports cars, Nintendo Game Boys, Microsoft mouses and Eddie Bauer clothing. Inmates manning phone banks have taken airline reservations and even made calls on behalf of political candidates. Still, it's notoriously difficult to find out what, exactly, prisoners are making and for whom. Most of the time, inmates are hired by subcontractors who have been hired by larger corporations, which are skittish about being associated with prison labor. Paul Wright, an expert on prison labor with sources inside many prisons, has broken many labor stories in his newspaper, Prison Legal News. It hasn't been easy. "As a general rule, you'll have an easier time finding out who Kim Jong Il's latest mistress is than finding out who these guys are working for," he says. (Starbucks, Nintendo, Eddie Bauer and Victoria's Secret did not return requests for comment; Microsoft declined to comment.)

Advocates of prison labor programs describe the arrangement as win-win: inmates keep busy and stay out of trouble, and employers get low-cost labor with little or no overhead. But critics, from labor unions to prisoner rights advocates, raise a host of concerns about exploitation and unfair business competition.

In 1979 Congress created the Prison Industry Enhancement Certification Program (PIE), which provides private-sector companies with incentives to set up shops in prisons using inmates as employees. States offer free or reduced rent and utilities in exchange for the decreased productivity that comes with bringing materials and supplies in and out of a secured facility and hiring employees who must stop working throughout the day to be counted and who are sometimes unavailable because of facility-wide lockdowns.

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Prisoners are often grateful for the work; when the system is working, they can learn marketable job skills and save money. "It provided a sense of independence," says Kelly DePetris, who worked for eight years in California state prisons at Joint Venture Electronics, doing everything from assembly to administrative jobs to materials control.

"You don't have to ask people for things," she says. "I have a son, so it was nice to send home money to help with little things--school clothes, things like that." As a Joint Venture employee, DePetris made about $1.74 per hour after deductions, compared with the thirty cents she estimates she might have made working in the prison laundry. When she was released last May after serving fourteen years, she had saved $16,000, with which she bought a used car, clothes and health insurance. "It's really come in handy," she says. Relatively speaking, PIE accounts for a tiny fraction of the number of inmates in US prisons and jails. Some 5,300 of the 2.3 million inmates nationwide work for private-sector companies. "It's a small piece, but it's a significant piece" of the overall prison labor system, says Alex Friedmann, who served ten years in a Tennessee prison in the 1990s and worked making Taco Bell T-shirts in a PIE silk-screening shop. PIE rules stipulate that work must be voluntary, that workers be paid a wage comparable to what free-world employees doing similar work are paid and that the program not compete unfairly with companies on the outside. But labor unions and companies on the outside have argued that this is impossible: there is no way for a company that pays no rent to compete fairly. Talon Industries was a Washington State-based water-jet company whose competitor, MicroJet, had a PIE shop inside a state prison. Rick Trelstad, a partner at Talon, contended that his company shut down in 1999 at least in part because MicroJet consistently underbid him for work. (He and an association of his colleagues successfully sued the Washington State Department of Corrections to shut down the local PIE program, but voters reinstituted it last year.) Lufkin Industries, a Texas-based maker of tractor-trailer beds, claims it was run out of business because its competitor, Direct Trailer & Equipment Company, paid only one dollar per year for factory space in the local prison and so was able to offer much lower prices for the same product. David Lewis, vice president and general manager of Joint Venture Electronics and Kelly DePetris's former boss, acknowledges that the setup has been great for his business. "They get no holiday pay. They get no vacation pay. There's no medical, dental: all that's paid for by the state," he says. What's more, if the company has to downsize, as it did recently, laid-off prison workers have few other places to look for work. When business picks up again, employees who on the outside would have found other jobs are still in prison, just waiting to be rehired. The waiting list for work at Joint Venture is up to 200 people long. Advocates for prisoners' rights take issue with what they see as an inherently exploitative situation. Courts have consistently found that prisoners are not protected by the Fair

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Labor Standards Act. So they may not unionize. They can't agitate for better wages or working conditions, because any threats to walk off the job would ring hollow--where would they go? What's more, by law, as much as 80 percent of PIE employees' paychecks is deducted for room and board, taxes, family support, victims' compensation or charity. The National Correctional Industries Association, the nonprofit organization that certifies PIE programs, found that participants kept only about 20 percent of their wages in the past two quarters. Friedmann, for instance, worked for two years in the late 1990s in the silk-screening shop. He estimates that after deductions for fines, fees and other charges, he left prison with $30. "So while businesses get rent-free space, prisoners are paying for their 'room and board,'" says Prison Legal News's Paul Wright, who himself served seventeen years in a Washington prison. "Prisoners pay their boss's rent." So this Valentine's Day, if your shopper's conscience leads you to check labels, don't bother looking for "Made in Prison." Of all the hundreds of goods and services produced by prisoners with taxpayer subsidies, only one is labeled as such: a line of jeans and denim work shirts made at the Eastern Oregon Correctional Institution. It's called Prison Blues.

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Prison job program blamed for death

By LYDA LONGA Staff WriterMarch 21, 2009 - News-Journal Online

DAYTONA BEACH -- A final and blistering review of the overall operations at Tomoka Correctional Institution leading up to the murder of a veteran female corrections officer takes aim not only at the prison's command staff and other employees, but also at the corporation that provides jobs for the prisoners inside the facility. Corrections Officer Donna Fitzgerald, 50, of Port Orange was stabbed to death the night of June 25, 2008, as she worked an overtime shift at the prison. Prosecutors and investigators with the Florida Department of Law Enforcement say 40-year-old inmate Enoch Hall, who worked as a welder with PRIDE Enterprises -- the company that provides jobs for inmates inside 20 of the state's prisons -- stabbed Fitzgerald to death 25 times with a knife he had made from sheet metal. Fitzgerald's killing sparked three investigations, including this review by the Critical Incident Response Team, a panel made up of several prison officials from around the state. In its 73-page report released this week, the panel leveled sharp criticism at prison staff responsible for placing inmates in jobs, known as the Inmate Classification Team. Panel members also did not spare harsh words for PRIDE officials assigned to Tomoka Correctional.

One finding in the report says assignment to PRIDE jobs at Tomoka -- regardless of whether the inmate had "serious disciplinary incidents" -- "was inappropriately influenced by PRIDE and their production priorities." Hall was at Tomoka serving two life sentences for rape and kidnapping. His assignment to PRIDE did not conflict with a state statute that allows prison inmates to work for the entity regardless of their crimes. But Hall, disciplined four different times while at Tomoka, lost his privilege to work in repairing heavy vehicles. He was reinstated, however, because PRIDE needed a welder and Hall was considered one of the few welders among the prison population, a recent report shows.

PRIDE spokesman Foster Harbin said Friday that all inmates are assigned to PRIDE jobs by prison staff, not by PRIDE officials.

Therein lies part of the problem, according to the review. A manual used by prison staff required Classification Team staff to do a "thorough

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assessment" of any inmate with a history of violence if a job assignment was going to mean an inmate would be supervised by a female corrections officer.

No inmates were ever in that situation while working PRIDE jobs during regular working hours at the prison, the review shows. However, starting in April 2008, an after-hours project took two months to complete. During those after-hours work periods, there were 11 occasions when only one female officer was supervising a cadre of inmates. The night Fitzgerald died she was supervising Hall and at least 12 other inmates with violent records by herself.

The panel's review found that PRIDE staff was "routinely not present" during the after-hours projects without the knowledge of Tomoka's command staff. Since Fitzgerald's death and following the three investigations, the entire five-member command staff from Tomoka has been replaced, Corrections spokeswoman Gretl Plessinger said. That includes the supervisor who oversaw the Inmate Classification Team. But that's not the only supervisor who has been shown the door at Tomoka Correctional. Corrections Secretary Walter McNeil in February wrote a letter to PRIDE President Jack Edgemon about Tomoka PRIDE manager Bruce Hall. In the short but terse missive, McNeil lit into Hall, saying security was not "the paramount concern" for the former manager.

McNeil asked for a "suitable replacement" for Hall. But Friday, Harbin said there would be no replacement and that Hall has been reassigned as a sales manager for PRIDE. lyda.longa@news-jrnl.com

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“Senate committee passes bill that would 'eliminate sweetheart deals' for companies using prison labor” ,Lufkin Daily News, Sen. Robert Nichols' officeWednesday, April 22, 2009

The Senate Criminal Justice Committee on Tuesday passed a bill by state Sen. Robert Nichols (R-Jacksonville) to prevent Texans from losing jobs to prison labor.

Representatives from Bright Coop Inc., The Piney Woods Economic Partnership and the Lufkin Economic Development Corporation testified in support of the bill.

"It's a shame when a hard-working Texan loses their job to a weak economy, but it's simply wrong when they to lose their job to state-subsidized prison labor," said Nichols.SB 1169 reforms the Texas' Prison Industry Enhancement Certification Program (PIE program). The current program allows private industry to partner with prisons and employ inmates. While private companies supposedly pay a prevailing wage, they benefit from the use of cheap facilities, a reduced tax burden, and not paying for employee benefits. There are currently five active PIE programs across the state.

"When it comes to the prison industry program, the current playing field is simply not level," said Nichols. "It's already resulted in job loss in East Texas."

One company that contracted for prison labor in Texas was Direct Trailer. The company paid only $1 a year to lease 70,000 square feet of factory space from the prison. Direct Trailer even advertised they could sell their products for less because of a special relationship with the state utilizing inmate labor.

Direct Trailer employed offenders in the Michael Unit at Tennessee Colony to assemble trailers for 18-wheeler trucks. Lufkin Industries, Inc., located about 85 miles from Tennessee Colony, could not compete with Direct Trailer who sold its product for thousands of dollars less. Last January, Lufkin Industries closed its trailer manufacturing division, resulting in a loss of 150 jobs.

Senate Bill 1169 and House Bill 1914 by Rep. Jim McReynolds (D-Lufkin) would help stop job loss and unfair competition by:

* eliminating sweetheart deals and requiring businesses using prison labor to pay a fair market value for use of facilities* moving oversight of the program from the Prison Industry Oversight Authority to the Texas Department of Criminal Justice (TDCJ) board* preventing TDCJ from approving contracts resulting in job loss anywhere in Texas

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* allowing employers to submit a sworn statement that their business would be hurt and jobs could be lost by approval of a specific prison industry contract* requiring job and product descriptions be specific so employers can recognize a prison industry contract that would unfairly threaten their business* creating notification for area businesses and posting information about programs online* notifying the state senator and state representative in whose districts the project would be located

"By increasing accountability and transparency we can make sure the Prison Industry Enhancement program serves its purpose, to train inmates and not to take jobs from Texas workers," said Nichols.

Groups which support the bill include the AFL-CIO, Texas Association of Business, Texas Association of Manufacturers and the American Association of State, County and Municipal Employees.

Video of the hearing is available at http://www.senate.state.tx.us/avarchive/.To watch, click on April 21 next to Criminal Justice. Nichols' bill is the first heard.

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Prison job program under review

By STEVE BOUSQUET, Times Staff Writer In print: Wednesday, July 9, 2008

TALLAHASSEE — Florida officials are reviewing eligibility for a St. Petersburg-based prison labor program after a participant killed a correctional officer at a Daytona Beach prison.

Officer Donna Fitzgerald was stabbed to death June 25 at Tomoka Correctional Institution after she was attacked by an inmate who fashioned a knife made from sheet metal. Enoch Hall, 39, serving two life sentences for the rape and kidnapping of a 66-year-old Pensacola woman, faces a first-degree murder charge and has been moved to Florida State Prison in Starke.

Despite a rap sheet showing a history of violence toward women, Hall passed a security clearance to work in a heavy-equipment shop for PRIDE, the nonprofit that has provided jobs for inmates for nearly three decades.

"We're reviewing all of our policies and procedures," said state corrections spokesman Gretl Plessinger. She said the state and PRIDE work jointly to determine an inmate's eligibility for a prison job.

PRIDE, created by business executive Jack Eckerd, aims to teach skills to inmates that will help them readjust to society, such as reporting for work on time, following directions and learning a trade.

By law, 40 percent of inmates selected for PRIDE must be serving sentences longer than 10 years as a way to fulfill another of PRIDE's duties: reducing inmate idleness. Of the 2,500 inmates working for PRIDE, less than 10 percent are serving life sentences, PRIDE spokesman Foster Harbin said.

Harbin said his firm would support whatever changes the state will recommend, including whether a "lifer" with a violent past should be in a work program available to only a tiny fraction of the prison population.

Robert Sloan, a former Florida inmate and critic of PRIDE, said in a letter to the St. Petersburg Times: "There is absolutely no place in the prison industrial training programs for inmates with life or long sentences. … Most lifers will never receive a release and should therefore not be considered for such a program”.

Harbin said the death of Fitzgerald, who was attacked when she found Hall hiding in a work shed about 7:30 p.m., was the first violent incident involving a PRIDE participant in the program's 27-year history.

The agency said that to be eligible for PRIDE work, an inmate cannot have been cited in

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a disciplinary report for six months.

Steve Bousquet can be reached at bousquet@sptimes.com or (850) 224-7263.

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