Joint Subcommittee to Study Prison Industries
September 22, 1999, Richmond
The focus of the second meeting of the joint subcommittee was on a follow-up presentation by Virginia Correctional Enterprises (VCE) and receiving public comment regarding the required purchase of goods and services manufactured or provided by prisoners in the Commonwealth and the effect of prison industries on private businesses.
Virginia Correctional EnterprisesThe director of VCE began the meeting by reviewing responses submitted by VCE to several inquiries made by the joint subcommittee from the first meeting. He stressed the importance of the work programs in developing a work ethic among inmates and teaching processes such as the operation of heavy machinery. General reference was made to studies supporting the finding that inmates involved in prison enterprise work programs are less likely to re-offend upon release and are more likely to acquire and maintain traditional employment than those not involved in such programs. The director acknowledged, however, that the recidivism rate for inmates involved in VCE programs versus those not involved was unknown because the Department of Corrections (DOC) does not track inmates upon release. While VCE employs between 1,200 and 1,400 inmates, there is an exceptionally high turnover rate—as high as 100 percent in the past. It was also noted that VCE receives approximately $15 million from state agencies for the purchase of furniture and related items, which accounts for 25 percent of the overall total of $75 million spent by state agencies.
The director also responded to concerns raised during the subcommittee's first meeting regarding the process used by VCE in reviewing requests from agencies for waivers from the mandatory source requirement. VCE has such authority if it does not offer the desired product, if it has nothing compatible with the agency's requirements, or if it cannot meet the delivery requirements. Agencies are required to submit a standard DOC form containing a brief explanation of why the waiver is needed. According to VCE, most waivers are received by facsimile and are acted upon within 24 hours to one week. VCE indicated it has granted a total of 2,616 waivers valued at over $7,473,800.
A member of VCE's Advisory Board and the Board of Corrections appeared before the joint subcommittee in support of the efforts of VCE in improving operations and in favor of keeping in place the mandatory source requirement. He also cited three areas that would prevent VCE from having a "level playing field" if it was required to compete with private industry: marketing, manufacturing and labor force. Competition with private industry would result in more resources being needed to fund the additional marketing necessary to adequately promote VCE products. In addition, VCE would be required to participate in other aspects of product marketing, such as business lunches and other forms of client maintenance that are not accepted state government practices. These forms of product marketing, available to private businesses, would have to be made available to VCE. Further, VCE's mandate to include the maximum number of employees in work programs works against the normal tendency of private industry to decrease costs and increase profitability through the use of automation and other advanced technologies that rely on fewer skilled workers. Finally, it was noted that the VCE's labor force is largely unskilled and subject to extremely high turnover rates, resulting in a workforce that is in a near-constant training mode.
VCE Advisory BoardThe joint subcommittee received comment from four individuals; three others, including two state agency representatives, submitted written comments. A member of the VCE Advisory Board and owner of a commercial interior design firm raised concerns about the effectiveness of the advisory board. The 11-member advisory board was created by legislation enacted in 1994 to assist in evaluating the services and operations of VCE. The board has responsibility to (i) review new products and services manufactured or produced by VCE; (ii) review the pricing structure of products and services manufactured or produced by VCE; (iii) evaluate the level and quality of products and customer services offered by VCE and make recommendations on such quality and services; (iv) advise the director of the Department of General Services on business trends, product development, contract opportunities, and other related matters; and (v) review proposed joint venture agreements and make recommendations to the director of the DOC.
The board member maintained that the advisory board is controlled by the VCE and provided with little or no information regarding its activities. It was also noted that all members of the advisory board had not been appointed as of the date of the meeting and that it had been meeting for some time without a full membership. Discussion ensued among members of the joint subcommittee on whether the advisory board was able to generate the statutorily mandated quorum to hold official meetings and perform its advisory functions.
Other CommentsOther individuals providing comment relayed both general and personal experiences related to the manner in which VCE operates and the adverse effect the mandatory source requirement has on private industry. These comments included:
- Depriving businesses of the opportunity to compete,
- Unfair competition resulting in lost business and wages,
- Lack of competition which causes the products and services to be substandard and prices to be high,
- Long lead-time required to fill product orders, and
- VCE sales representatives threatening agency purchasing agents with prosecution if they did not use VCE products.
DiscussionThe joint subcommittee discussed whether VCE's operations would be adversely affected to the point of being unable to fulfill its mission if the mandatory source requirement were removed and VCE were forced to compete with private industry. Considerable discussion of the pros and cons of such a change was generated without resolution.
The joint subcommittee will further review this issue at its next meeting, scheduled for December 8th at 10:00 a.m. in Richmond.
The Honorable Glenn R. Croshaw, Chairman
Legislative Services contact: Amigo R. Wade