The U.S. Bureau of Prisons has launched a program to give inventors federal support in taking their ideas from concept to marketplace, while broadening the product line for prison industries that put inmates to work and teach them valuable job skills.
The new Innovation and Technology Program is a part of Unicor, the trade name of Federal Prison Industries Inc., which is operated by the U.S. Bureau of Prisons.
Behind the walls of 47 federal penal facilities across America, the little-known government corporation, directed from its civilian headquarters in northwest D.C., operates 75 manufacturing plants employing about 9,000 of the prison system's 32,000 inmates. Working for wages ranging from 44 cents to $1.10 an hour, convicts turn out products such as signs for the George Washington Parkway and the U.S. Capitol Mall, electronic circuit boards for Air Force guided missiles, woolen blankets for the military and canvas bags for the Postal Service. Unicor employes built the bookcases for the White House legal library, make loft-bed systems for Air Force Academy dormitories and produce a line of executive office furniture for the heads of federal agencies.
And while the Reagan administration and Congress skirmish over how to mop up red ink from the huge federal budget deficit, Unicor is economically self-sufficient and independent of congressional appropriations, said Gerald M. Farkas, 48, an assistant commissioner of the Bureau of Prisons who serves as Unicor's chief operating officer.
The corporation was established by Congress in 1934 with $4 million in seed money, according to Farkas. Since then, he said in a recent interview, Unicor has received "not one penny from Congress," paying its way entirely with profits earned on its line of 140 diversified products.
Unicor, which has its headquarters at 320 First St. NW, employs about 80 civil service workers here. Based on preliminary data, Unicor had gross sales of $210.8 million in fiscal 1984, up about 23 percent from $161 million in 1983, according to Controller Richard W. Baird. Net earnings after expenses for 1984 totaled about $18 million, up about 163 percent from roughly $7 million in 1983, Baird said. He said Unicor projects fiscal 1985 sales will rise to about $260 million.FF arkas attributes the healthy increase in profits and reveF nue to Unicor's 18-month-old corporate marketing division, which has tapped new markets within the federal government. Unicor is prohibited by law from selling to the private sector.
"Inmate population has been going up dramatically in the last few years, and -- to meet our needs to employ more inmates -- we've got to get more work in," Farkas said.
"The biggest problem that's facing prisons today is idleness, and idleness breeds management problems, particularly when prisons are overcrowded. One of the best ways we know to reduce idleness is to employ inmates, so that's where prison industries play a significant role." As part of its drive to expand, Unicor contracted with Booz-Allen & Hamilton Inc. for a research study to determine the corporation's marketing needs and to set up the marketing division, Farkas said.
"In the year and a half that we the marketing division have been here, sales have gone up 30 percent," said Lawrence E. Brown, 36, one of Unicor's three marketing analysts. Part of the division's mission, Brown said, is to find new products whose manufacture is labor-intensive and that are in high demand from government agencies. From that need sprang Brown's brainchild, the Innovation and Technology Program, formed in February 1984, which has just started searching for new products.
"We're looking for things that are not the same old cut-and-sew operation," Brown said. "We're looking for things that have some degree of difficulty, where you can teach inmates some skills useful on the outside."
By law, government agencies are required to purchase products they need from Unicor if the prison corporation makes them. However, Unicor doesn't try to prevent the agencies from purchasing the goods from the private sector if they choose to do so.
" . . . The position we have taken over the years is that we want to be competitive," Farkas said. "There have been instances in the past where we haven't been competitive perhaps in price or quality , and the bidding agency has chosen to go" to the private sector.
Unicor works with the Energy Department's Energy-Related Invention Program and the Commerce Department's Office of Small Business Technology, which are conduits for inventors hoping to get government aid for their projects. "Commerce and Energy have in place a screening process for just what we're looking for," Brown explained. "Anything that seems to have potential in terms of the government market will be referred to us."
According to Theodore Lettes, director of the Office of Small Business Technology, "The hardest thing for an inventor is to get from square one, to bring an invention from laboratory to production. And that's one of the things that Unicor is providing -- development support for turning that invention into a product."
Lettes sees Unicor and the Commerce and Energy programs as government-sponsored "business incubators" for new technology.
"That's one of the ideas that is moving very rapidly around the country, and there are a number of states that have set up investment organizations to aid inventors that are either state-run or state-sponsored," Lettes noted. He said Unicor and the Energy and Commerce department programs "are trying to bring together interested parties who can help in improving the competitiveness of American industry overall and particularly the small business community."
According to Lettes and Brown, acceptance of an invention by Unicor offers an inventor not only royalties on sales to the government that create immediate cash flow but also product credibility and a foundation on which to build a private-sector company.
If Unicor likes an idea, Brown said, the corporation will conduct a marketing study to pinpoint agencies that might use the product and determine the scope of demand for it.
"One of the things behind the Innovation and Technology Program was that we could get into new manufacturing processes on the ground floor, before commercialization, so that we have little or no competition" from the private sector for an item, Brown said. "Look at NASA the National Aeronautics and Space Administration , the Department of Energy and the Department of Defense: They are getting into things that are beyond anybody's imagination. We can be subcontractors on those things." BB ecause Unicor is self-funding, the bottom line is important, B Farkas said. But the primary goal is to employ inmates, and Farkas admits to some management practices that would make a chief executive in private industry blanch. "We operate on a contradiction," he said. "We take the position that Federal Prison Industries should employ as many inmates as possible. I would be dishonest if I didn't say we featherbed."
For example, Farkas said, Unicor may employ 130 inmates in a plant designed to be run by 100 workers. "So, the more inmates you have on the job, the less productivity you have. But some productive work for inmates is better than no work at reducing idleness."
The use of convicted criminals to manufacture sensitive items such as missile wiring harnesses for the Defense Department raises questions about product quality and possible plant sabotage.
"We've had some sabotage over the years," Farkas conceded, "but it has been very minimal. One of the things that inmates say they like about prison industries is they like the pay, and the work makes their time go faster. So they cherish the opportunity." Brown and Farkas also countered that "quality is really Unicor's number one priority," and they noted that inmates must apply for Unicor jobs and go through employment interviews.
"We've got a strict quality control program," Brown said. "We follow guidelines for GSA General Services Administration quality control. We do all our Defense Department work to military specifications. There are DOD quality assurance program inspectors who make periodic visits, and -- if it's a large enough contract -- inspectors may be stationed at the plant." Inspections are conducted along every step of production, from raw materials to the finished product, whether the product is rubber-soled safety shoes or wiring for an Air Force surface-to-air missile, Farkas added.
Business executives often complain that Unicor, with its low-cost prison labor, undercuts private industry on some products. "But, by law, we do not compete in the private markets," Farkas said. "Secondly, when you consider the entire population of this country, and the number of inmates in prison, it is a very infinitesimal amount that you're going to say may take away employment from people in the community."
Unicor parallels private industry as closely as possible so that inmates, many of whom never held a job outside prison, can learn fundamental work habits such as coming to work every day on time. Farkas noted that every able-bodied inmate in the federal prison system is required to work and that Unicor jobs are prized.
There are other constraints unique to the prison setting that interrupt the work flow at Unicor plants, Farkas said. "You have periodic inmate counts throughout the day, call-outs for education and for medical attention. We try for a 7 1/2-hour day, but you don't have those kinds of constraints in private industry."
But unlike private industry, Farkas pointed out, Unicor has no investors or stockholders to dilute profits. All earnings are reinvested in new plant and equipment and used to support other programs such as vocational training and education and to pay inmates in non-Unicor jobs such as prison maintenance and food preparation.
"In the last couple of years, with our profits, we have initiated a $50 million expansion program to both expand existing factories and to build new factories," Farkas said. "In addition, we have had some new prison institutions coming on line and, as a matter of policy, we build factories there."
Unicor has a six-member board of directors appointed by the president and representing industry, labor, agriculture, retailers and consumers, the secretary of defense and the U.S. attorney general. The corporation has four product divisions: textiles and leather products, data/graphics, electronics, and metals, wood and plastics.
Unicor also has its own industrial design group, headed by Alphonse M. Marra, who left Philco-Ford eight years ago to set up the department.
Marra relishes the job. "No other federal agency has this kind of department," he said, noting that he and his staff of designers and artists can brainstorm ideas for products ranging from quartz wall clocks to orthopedic chairs for federal secretaries and watch their work move from concept to factory.
Marra notes that in scope, nothing in private industry rivals Unicor, "except maybe General Electric. Most companies manufacture one or two products, maybe. We're putting out 140 products at 75 factories. There's nothing else like it."