Putting prisoners before working families?

Time to end the monopolistic policies of Correctional Industries

At first blush, a program that strives to reduce the cost of incarceration and provide inmates with marketable skills for re-entry into society sounds like a win-win situation. For this reason, it is hard to fault those legislators who backed the creation of Correctional Industries (CI). However, especially in light of growing state unemployment, lawmakers need to seriously reconsider the wisdom of taking needed jobs away from law-abiding citizens and giving them to criminals through mandatory contract awards. CI is, in essence, a state-sanctioned monopoly.

The problem with CI isn’t its purpose but its current practice. As a result of RCW 43.19.534, state agencies are forced to abide by a "mandatory buy" contract with CI for purchases of goods such as office furniture, even though private sector businesses may be able to provide products more quickly and at a lower cost.

RCW 43.19.534 reads:

State agencies, the legislature, and departments shall purchase for their use all goods and services required by the legislature, agencies, or departments that are produced or provided in whole or in part from Class II inmate work programs operated by the department of corrections through state contract . . .

Regarding state contract #14393 (which concerns the purchase of furniture for all state agencies and is awarded to CI) CI has concluded that it is exempt from "best buy" provisions, which are guidelines enabling private sector businesses to compete for public contracts if they have a lower bid.

This perceived exemption from free market competition is clearly illustrated in a March 17, 2000, letter that CI sent to the Division of Children and Family Services in DSHS. DSHS was looking to purchase 52 metal storage cabinets and had found a more competitive price than CI offered but was subsequently informed:

Contract #14393 is . . . for the purchase of office, dormitory and miscellaneous furniture. This is a mandatory use contract for those products as mandatory use (of which storage cabinets are) for all state agencies and institutions . . . Unless an authorized exemption has been granted, any agency or department who purchases from another source may be in direct violation of state law. In the event that state law has been violated, CI reserves the right to insist upon the strict performance of this contract and pursue any other remedies available by law. RCW 43.19.190 (which allows for a best buy provision) is superseded by the statute 43.19.534 which is the foundation of this contract. Therefore please understand that the Best Buy Provisions do not apply to contract #14393.

In other words, CI has a monopoly on all state furniture purchases. As is the case with most monopolies, the consumer suffers from out-of-control pricing and poor service. In the case of state purchasing, the consumer ultimately is the taxpayer.

The clear results of these anti-competitive policies are illustrated by another DSHS experience. Even though DSHS found a private business that could provide metal bookshelves for $94 each and deliver them within seven days, the agency was forced to buy the bookshelves from CI for $218 each and still had not received them after thirteen weeks. On November 6, 1998, DSHS issued a complaint to Howard Yarborough, a Program Administrator for CI. The complaint read:

. . . Why does it take thirteen weeks for two metal bookcases? Is this enabling state agencies to operate efficiently? It seems the monopoly CI has is responsible for the slowness and lack of customer service, and it should not have to be accepted. Any other contract would have been terminated. An employee we spoke to at CI stated that they know state agencies have to order through them so CI is not really concerned with the length of time it takes. They stated they use 3 months as their standard. CI still exceeded it in this instance for only two metal bookcases.

If we had been allowed to patronize a local business it would have saved over $250 in the cost of the product, not to mention staff time trying to track down the order. A comparable metal bookcase from a local merchant was quoted at $125 with a 25% discount to state agencies . . . CI is charging $218 per bookcase plus tax, and has still not delivered after thirteen weeks! A change in state policy appears to be warranted.

Job losses have also occurred and continue to occur in the private sector as companies are forced to lay off workers as a direct result of the monopolistic policies of CI. By not allowing competitive bidding for services and products, the state is putting criminals above working families. No one is calling for the abolishment of CI or its humanitarian goals. However, revoking or revising RCW 43.19.534 to ensure competitive bidding is strongly advocated. All parties win when open bidding is allowed. Agencies will save money and CI will be able to pursue its objectives without becoming a pariah of working family jobs.

The federal government has already addressed this same problem in the Federal Prison Industries and revised 18 U.S.C. §4122(b)(2) to read, "Federal Prison Industries shall conduct its operations so as to produce products on an economic basis, but shall avoid capturing more than a reasonable share of the market among Federal departments, agencies, and institutions for any specific product."

Washington’s legislature has also mandated that CI’s board of directors ensure that its programs "minimize the impact on in-state jobs and businesses" (RCW 72.09.070(2)(f)). Nevertheless, CI has not reported its impact on the business community, despite the fact that private jobs continue to be lost to prison labor. Nor has CI sought to minimize its impact. Instead, CI’s current market plan seeks to expand its sales further to displace even more private sector jobs. At the same time, CI is moving steadily into other industries of Washington business.

Now is the time to put our private businesses on equal footing and eliminate CI’s ability to operate a monopoly in Washington. CI should play by the same rules as the private sector and stop providing jobs for criminals at the expense of working families.

Contact: Jason Mercier, Deputy Communications Director, (360) 956-3482 or jmercier@effwa.org

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org