It is a sweet deal by anyone's definition: A little-known company gets its choice on any government contracts it wants without bidding. The government must ask this company for permission to buy from a competitor. The company pays no taxes and doesn't have to comply with the same worker safety standards imposed on its competitors. It can borrow from the U.S. Treasury at below prime rates and use government surplus equipment.
At its current rate of growth, and with the preferential treatment from Uncle Sam, this little venture may be a Fortune 500 company by 1992.
Small wonder its competitors are hopping mad.
The company is Unicor-Federal Prison Industries, a government corporation run by the Justice Department. Its sole excuse for getting preferential treatment over private contractors is that its work force is made up of federal prisoners.
On the surface, it looks good. The government subsidizes job training for prisoners who produce inexpensive goods. They learn a skill and they keep out of trouble. But in practice, Unicor seems more interested in cornering the government market than in rehabilitating prisoners.
It is questionable whether the program has helped inmates land jobs after prison. A recent survey of a furniture industry trade association found that few ex-cons got work in that industry after learning the trade while behind bars. Curiously, Unicor cannot come up with any statistics about the success of its alumni.
Many small companies that would like to sell the government the same goods are crying foul. Zephyr Broom Co. in Missouri used to sell brooms to the government. Now it doesn't bother to bid because Unicor has swept up the business.
If, for example, the Department of Veterans Affairs wants to buy pajamas for VA hospital patients, it must first ask Unicor to supply the goods. If a private company wants the contract, Unicor has the first right of refusal.
Congressional sources told our associate Melinda Maas that the problem with Unicor is accountability. It has none.
We obtained a letter from Unicor to Air Force procurement officials in Hawaii inviting them to visit prison factories in Minnesota and Kansas. The letter included an account number for the Air Force to bill Unicor for "expenses incurred for these visits."
Private companies are not allowed to court the bureaucracy in the same way. "We can't even buy them a doughnut, much less pay their air fare," said Sue Perry of the Business and Institutional Furniture Manufacturers Association.
Sen. Alan J. Dixon (D-Ill.) has drafted a bill to roll back Unicor's preferential status, but prison industry officials are saying that if they are forced to be competitive, no one will buy their products. There's a lesson in there somewhere.
The Army has complained about Unicor's quality and prices. In a letter to Rep. Robert W. Kastenmeier (D-Wis.), the Army brass said this about shoes bought from Unicor: "Most people cannot wear the shoes more than one or two hours a day due to aching feet and legs. . . . As to value, in some cases Unicor's prices are higher than comparable items on the open market or through competitive procedures."