Omnibus Bill Bans “Mandatory Sourcing” by Federal Prison Industries in Laundry Services

ALEXANDRIA, VA – The textile rental services industry this week applauded a provision in the omnibus spending bill signed by President George W. Bush that permanently eliminated the Federal Prison Industries’ (FPI/UNICOR) “mandatory source” privileges in providing laundry services to the U.S. government. The elimination of FPI’s mandatory source status provides significant protection to the industry as TRSA continues its efforts to limit the federal prisons’ ability to compete for services—including laundry services—in the private sector.

“The Textile Rental Services Association (TRSA) applauds Congress for including language in the FY ’05 omnibus spending bill that restricts FPI from having carte blanche access to all federal laundry contracts,” said TRSA President and CEO Roger Cocivera. “TRSA has worked hard to shield our members from unfair government competition.”

President Bush signed the $338 billion omnibus spending bill for federal agencies on Wednesday. The measure contains a provision that bans FPI from automatically being awarded all government laundry contracts, as well as other contracts, in a “sole sourcing” arrangement.

“This bill is a significant victory for service companies, which can now compete for contracts that in the past were automatically awarded to FPI,” Cocivera said.

FPI is a federally owned corporation consisting of more than 100 prison factories. It ranks 32 nd among the top 100 contractors with the federal government. More than 300 products and services are produced by federal prisoners. These accounted for nearly $680 million in sales to the federal government in 2002, according to the National Federation of Independent Business.

While TRSA applauds this opening up of federal contracting, there remains an unlevel playing field for textile rental companies because FPI pays sub-minimum wages to prisoners, and does not have to pay for employee healthcare or other benefits. FPI also doesn’t have to comply with federal mandates such as OSHA, or pay taxes.

FPI officials in the past have said they planned to make laundry services their primary focus in the future. “Sole source status for FPI could have locked out textile rental companies seeking to compete in this sector,” Cocivera said.

Of additional concern to the textile rental industry is FPI’s assertion that it possesses the unlimited authority to sell services in the commercial market. FPI based its position on a questionable 1998 Department of Justice determination that inmate-furnished services provided by FPI are not explicitly prohibited by the 1934 statutory prohibition on the sale of the results on inmate-labor in interstate commerce. The statute specifically includes a prohibition on the sale of

inmate-produced goods/products, but makes no specific mention of services. As such, FPI has aggressively marketed services in the commercial market since 1998, reversing 64 years of practice.

Mandatory Sourcing

“TRSA will continue to work to limit FPI’s efforts to market services to the commercial market in unfair competition with private companies,” Cocivera said.

The Textile Rental Services Association of America (TRSA) is a national trade association representing over 1,100 company locations across the nation. Since 1913, TRSA members have provided textile maintenance and rental services to commercial, industrial and institutional accounts—over 90 percent of TRSA member companies are small businesses. TRSA members serve hygienically clean textile and dust control items to millions of customers in commerce, industry, and other professions, from automobile service to manufacturing, restaurants and hospitals. The textile rental industry generates yearly sales of roughly $11 billion. U.S. linen supply and industrial laundering companies employ more than 110,000 people.