Federal Prison Industries

Federal Prison Industries (FPI), a wholly owned government corporation run by the Bureau of Prisons, uses inmate labor to produce about 150 different products and services, including furniture, textiles, and electronic components. FPI then markets these items to federal agencies. This report provides information on whether FPI collects and maintains data that would enable it to make reliable, generalizable statements about the satisfaction of its federal agency customers with the quality, cost, and timely delivery of FPI products. GAO discusses (1) whether FPI has data, either from its management information systems or from other sources, to support overall conclusions about how federal customers who buy and use its products and services view their timeliness, price, and quality; and (2) whether agencies that are among the largest buyers of FPI products and services monitor FPI's performance the same way they do commercial vendors in terms of timeliness, price, and quality.

GAO noted that: (1) FPI has been the subject of substantial debate over the years, much of which has centered on the timeliness, price, and quality of its products; (2) missing from this debate have been convincing data that show whether federal customers who buy and use FPI products and services are satisfied with FPI's performance; (3) FPI has a variety of management information systems that allow it to track customer orders and react to complaints; (4) however, FPI does not have a systematic or structured process for collecting and analyzing customer satisfaction data so that conclusions can be drawn about customer satisfaction; (5) FPI's efforts to gauge customer satisfaction have been limited to relying on narrowly scoped surveys as well as other efforts; (6) without convincing data on customer satisfaction, FPI: (a) remains vulnerable to assertions by its critics that federal customers are dissatisfied and, in turn, should no longer be required to buy FPI products; and (b) may miss opportunities to improve its operations by having better data on how federal customers view its performance in the areas of timeliness, price, and quality; (7) furthermore, FPI's lack of a systematic approach for collecting these data appears inconsistent with contemporary management principles used by both public- and private-sector organizations; (8) regarding agencies' efforts to monitor FPI performance, major customer agencies that GAO contacted stated that they consider price when awarding contracts and monitor factors like quality and timeliness while administering contracts for all vendors, including FPI; (9) it should be recognized, however, that the contracting officer's leverage in resolving procurement problems is different for FPI than for private-sector vendors since the rules that typically govern contracts with private-sector vendors do not apply to FPI; (10) in this regard, on September 13, 1993, the Acting Attorney General issued a legal opinion that FPI, as a seller of goods to the federal government, is not covered by the Federal Acquisition Regulations (FAR), and must be treated under its authorizing legislation FAR Subpart 8.6; (11) furthermore, agencies cannot use past performance information to deny awarding a contract to FPI because, under the law, FPI is a mandatory source of supply; and (12) however, at FPI's discretion, agencies can use it to negotiate with FPI factors such as product quality or delivery time frames, or to seek a waiver from FPI so that they can buy from a commercial vendor that can better meet their quality or delivery requirements.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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