Fps Fpi Justification and Sum of Program Changes
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Federal Prison System Federal Prison Industries, Incorporated Table of Contents Page No. I. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ll. Summary of Program Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Ill. Appropriations Language and Analysis of Appropriations Language 6 ....... IV. Decision Unit Justification A. Federal Prison Industries 1. Program Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Performance Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Performance, Resources, and Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a. Performance Plan and Report for Outcomes b. Strategies to Accomplish Outcomes c. Resutls of Program Assesment Rating Tool (PART) Reviews V. Exhibits A. Organizational Chart . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B. Summary of Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Program Increases by Decision Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Resources by DOJ Strategic Goal/Objective (Not Applicable) . . . . . . . . . . . . . . . E. Justification for Base Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Crosswalk of 2006 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Crosswalk of 2007 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. Summary of Reimbursable Resources (Not Applicable) . . . . . . . . . . . . . . . . . . . I. Detail of Permanent Positions by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J. Financial Analysis of Program Increases/Offsets . . . . . . . . . . . . . . . . . . . . . . . . . . K. Summary of Requirements by Grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L. Summary of Requirements by Object Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . M. Status of Congressionally Requested Studies, Reports, and Evaluations (Not Ap N. Summary of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10 12 14 15 16 N/A 17 18 19 N/A 20 21 22 23 N/A 24 I. Overview for Federal Prison Industries, Incorporated A. General Overview 1. Introduction Federal Prison Industries’(FPI) mission is to employ and provide work skills training to the greatest practical number of inmates in Federal correctional facilities necessary to ensure the safe and secure operation of such institutions, and in doing so, to produce market priced, quality goods and services in a self-sustaining manner that minimizes the potential impact on private business and labor. Beginning in FY 2007, electronic copies of the Department of Justice’s congressional budget justifications and Capital Asset Plan and Business Case exhibits can be viewed or downloaded from the Internet using the Internet address: http://www.usdoj.gov/jmd/2008justification/. FPI was created by Congress in 1934, and is a wholly owned Government corporation that operates at no cost to the U.S. taxpayer. The Corporation is authorized to operate industries in Federal penal and correctional institutions and disciplinary barracks (18 U.S.C. 4121-4129). UNICOR is the trade name for FPI. The Director of the Federal Prison System (FPS), who has jurisdiction over all Federal penal and correctional institutions, is the Chief Executive Officer. FPI reduces inmate idleness by providing a full-time work program and continually strives to attain the goal of employing approximately 25 percent of the eligible inmate population. Many of the inmates do not have marketable skills. FPI provides a program of constructive industrial work and services wherein job skills can be developed and work habits acquired. Earnings from the Corporation’s industrial activities are used for all operating costs of the Corporation, including purchase of raw materials and equipment, staff salaries and benefits, compensation to inmates performing in industrial work details, and compensation to former inmates for injuries they received while in Federal prisons. A board of six Directors, appointed by the President, reviews and approves the policies of the Corporation, long-range Corporate plans, establishment of new industries, and bylaws and capital investments in excess of $500,000. The Board also makes annual reports to Congress on the conduct of the business of the Corporation and the condition of its funds. General management of the Corporation is vested in an Assistant Director of the FPS, who serves as Chief Operating Officer, and carried out by a staff of 32 Corporate Management employees located in Washington, DC. Expenses of this function are subject to Congressional limitation. As of September 30, 2006, there were 21,205 inmates employed in 108 factories. Inmates manufacture items such as furniture, clothing, electronics, and metal products, and provide such services as printing, data processing and laundry. Products and services of the Corporation are sold primarily to Federal Agencies. The Departments of Defense and Justice, the Postal Service, the Department of Homeland Security, and the General Services Administration are FPI’s largest customers. The growth of the BOP and the corresponding need to increase inmate employment while minimizing FPI’s effect on private labor and business continue to be FPI’s major challenge. For FY 2008, a total of 2,075 positions and 1,930 workyears are requested for FPI. Further, $2,477,000 is included as the Administrative Expenses limitation. This includes a program increase for the operation of one factory at Pollock, Louisiana which will employ a total of 288 inmates in Fiscal Year 2008. 2. Issues, Outcomes, and Strategies Strategic Goal 4: Ensure the fair and efficient operation of the Federal Justice System. Strategic Objective 4.5: Provide services and programs to facilitate inmates’ successful reintegration into society consistent with community expectations and standards. FPI’s performance goals are part of the Department of Justice (DOJ). The primary FPI goal, inmate population management, is to proactively manage the offender population through meaningful work programs. FPI meets this objective by reducing undesirable inmate idleness through a full time work program that provides constructive industrial work wherein job skills can be developed and work habits acquired. Inmate idleness is the number one cause of inmate unrest and violence in prison, and FPI employs over 20,000 inmates and provides skills training to help ensure the safe and secure operation of the institutions. FPI plays a vital role in the management of inmates, and also improves the likelihood that inmates will remain crime-free upon their release from BOP custody. A 2005 study, to establish a baseline was conducted of 15,406 FPI participants and an equal number of comparison subjects released between 1994 through 1998. Results indicate that inmates who participate in FPI are significantly less likely to recidivate. For FY 2008, a total of 2,075 positions and 1,930 workyears are requested for FPI. This request represents a program increase of 17 positions and 16 workyears over the FY 2008 current services. These positions are being requested for the operation of one factory at Pollock, Louisiana which will employ 288 inmates. Further, $2,477,000 is included as the Administrative Expenses. Impact on performance: This increase will provide employment to over 288 inmates, and keep them constructively occupied while providing them valuable work related experience and skills. Activation Funding Date New Facility: FCI Pollock, LA (1,152 beds) Total, Increase (1,152 beds) 10/2007 Pos. 17 __ 17 FTE 16 __ 16 The dates reported above reflect the funding stream for operations, not when inmates will arrive at the new institutions. Operational expenses are cumulative and reflect post and future months of ramped activity (staffing, equipment purchase and install, etc.) until the facility is ready to house inmates. In fact, the activation process normally continues for up to two years. 3. Full Program Costs FPI operates as a revolving fund and does not receive an annual appropriation. This budget reflects the full value of anticipated orders received (Revenue) less the associated costs to produce the products ordered and maintain the facilities for manufacturing. FPI maintains a proprietary, full accrual accounting system. The revenue and costs presented in the budget are based upon historical data, market trends of FPI’s sales of products and services, and projected expansion (growth) of the BOP. FPI monitors the following program’s activities, Sales Volume, Number of Factories and Inmate Employment. These activities directly relate to FPI’s goal of population management. FPI sales have been significantly impacted by the passage of Sections 811 and 819 of the National Defense Authorization Acts of 2002 and 2003, and Section 637 of the FY 2004 and 2005 Omnibus Appropriations Bill which changed the nature of FPI’s mandatory source status, as well as several administrative initiatives by the FPI program’s Board of Directors. The impact has primarily been seen in the FPI Office Furniture Business Group, which has historically comprised a major portion of FPI’s total sales. FPI’s Office Furniture sales in FY 2006 were $118 million, down from $140 million in FY 2005, $141 million in FY 2004, $152 million in FY 2003, and $218 million in FY 2002. The $100 million less in sales during FY 2006 as compared to the peak sales year of FY 2002 represents a 46 percent decrease. In response, the FPI program has closed some factories and realigned several others as part of an effort to reduce its operating costs. The FPI program continues to improve customer service relationships and develop other innovative strategies. These initiatives have resulted in FPI’s inmate employment decreasing by 1,355 inmates from the FY 2001 total of 22,560 to 21,205 in FY 2006. This represents a decrease of 6 percent. Overall sales in FY 2006 of $717,544,000 decreased 6 percent from FY 2005 sales of $765,396,000. However, FPI earnings decreased to $71,257,000 in FY 2006 compared to $114,345,000 in FY 2005, a decrease of 38 percent. This was due to the Electronics Business Group’s earnings decreasing to $62,743,000 in FY 2006 from $94,515,000 in FY 2005 in continued support of the Department of Defense’s war effort. Sales by the Electronics Business Group represent 33 percent of FPI’s total sales and 88 percent of FPI total earnings. Electronics sales decreased to $233,182,000 in FY 2006 from $287,009,000 in FY 2005, a 19 percent decline. 4. Performance Challenges External Challenges FPI does not receive appropriated funding for operations and must maintain itself through the results of operations. Historically, FPI operates on a very low margin. The margins are much below that which would be seen by a non-government corporation of similar size and longevity. FPI has been able to sustain itself despite unprecedented growth in the number of inmates. The growth demands of the BOP are expected to continue for the foreseeable future. The delicate balancing act between self sufficiency and growth create a sizable challenge for FPI. Additionally, FPI is faced with challenges that may impact this balance. These challenges include changes to FPI’s position as a supplier to the Federal Government (preference provided to FPI) and increase in costs not controlled by FPI (staff pay schedule and benefits cost). Internal Challenges FPI faces challenges similar to that of a non-government corporation. These challenges include: control of costs, collection of account receivables, control of raw material inventory levels, and stability of sales. II. Summary of Program Changes Description Item Name FCI Pollock, Louisiana (1,152 beds) Operation of FPI Factory Pos. FTE 17 16 Dollars ($000) $11,720 Page 13 III. Appropriation Language and Analysis of Appropriation Language Appropriation Language Federal Prison Industries, Incorporated The Federal Prison Industries, Incorporated, is hereby authorized to make such expenditures, within the limits of funds and borrowing authority available, and in accord with the law, and to make such contracts and commitments, without regard to fiscal year limitations as provided by section 9104 of title 31, United States Code, as may be necessary in carrying out the program set forth in the budget for the current fiscal year for such corporation, including purchase (not to exceed five for replacement only) and hire of passenger motor vehicles. (Department of Justice Appropriation Act, 2007) Limitation on Administrative Expenses Federal Prison Industries, Incorporated Not to exceed $2,477,000 of the funds of the corporation shall be available for its administrative expenses, and for services as authorized by 5 U.S.C. 3109, to be computed on an accrual basis to be determined in accordance with the corporation’s current prescribed accounting system, and such amounts shall be exclusive of depreciation, payment of claims, and expenditures which such accounting system requires to be capitalized or charged to cost of commodities acquired or produced, including selling and shipping expenses, and expenses in connection with acquisition, construction, operation, maintenance, improvement, protection, or disposition of facilities and other property belonging to the corporation or in which it has an interest. (Department of Justice Appropriation Act, 2007) Analysis of Appropriation Language No substantive changes proposed. IV. Decision Unit Justification A. Federal Prison Industries TOTAL 2006 Enacted w/Rescissions and Supp. 2007 Estimate Adjustments to Base & Technical Adj’s. 2008 Current Services 2008 Program Increases 2008 Offsets 2008 Request Total Change 2007-2008 Perm. Pos. FTE Amount 2,458 2,295 $766,662 2,058 1,914 900,445 0 0 617 2,058 1,914 901,062 17 16 11,720 0 0 0 2,075 1,930 912,782 17 16 $12,337 1. Program Description: Federal Prison Industries, Inc. (FPI) reduces inmate idleness by providing a full-time work program and continually strives to attain the goal of employing approximately 25 percent of the eligible inmate population. Health, security level and other factors determine eligibility for work in FPI. Many of the inmates do not have marketable skills. FPI provides a program of constructive industrial work wherein job skills can be developed and work habits acquired. FPI’s operations are self-supporting. Revenues are derived from the sale of products and services to other Federal departments, agencies, and government institutions which purchase products listed on FPI’s Schedule of Products. FPI provides services on a non-mandatory, preferred source basis. Operating expenses such as the costs of raw materials and supplies, inmate wages, staff salaries, and capital expenditures are applied against these revenues, resulting in operating income or loss, which is reapplied toward operating costs for future production. Institution factories and shops are operated by civilian supervisors and managers, training and overseeing the work of inmates. The factories utilize raw materials and component parts purchased from the private sector to produce finished goods. FPI’s major Government customers include the Department of Defense and Justice, the Postal Service, the Department of Homeland Security and the General Services Administration. Institution factories manufacture such items as furniture, clothing, electronics, and metal products, and provide such services as printing, data processing, laundry and recycling activities. Orders for goods and services are obtained through marketing and sales efforts by civilian staff. A portion of the earnings realized by these operations is reinvested to improve and build new facilities and purchase equipment, maintain the existing equipment base, and provide working capital. Extensive testing and product development procedures are required to operate modern factories that produce products which meet Government specifications. Inmate training is also extensive because most of the inmates have no previous training, experience or skills. Much of the needed training occurs on-the-job, with the civilian supervisors and experienced inmates explaining and demonstrating the work to newly assigned inmates. Where skills require more formal training, such as soldering, classroom instruction is provided by UNICOR staff. FPI makes capital investments in building and improvements, machinery and equipment as necessary in the conduct of its industrial operations. Other expenses charged to the industrial manufacturing program include inmate accident compensation. In 1988 Congress amended FPI’s statute regarding the production of new products and significant product expansion (18 U.S.C. 4122). Before any significant product expansion or new products are manufactured, a review process is conducted, which includes full notice to and input from the public and interested parties. Implementing guidelines were first promulgated in 1990 and updated in 1997, with input from the private sector. As required under the Federal rules, commonly referred to as the Guidelines process, when FPI proposes to produce a new product or expand its market share of an existing product, they first must conduct a market impact study. This study must identify and consider the number of vendors currently meeting the requirements of the Federal government; the proportion of the Federal market for the product currently served by small business, small disadvantaged businesses, or businesses operating in labor surplus areas; the size of the Federal/non-Federal markets for the product; the projected growth in the Federal government’s demand for the product; and the projected ability of the Federal market to sustain both FPI and private vendors. FPI then must announce in the Federal Business Opportunities (Fed Biz Opps) its proposal and invite comments from private industry. FPI must also directly notify those trade associations affected and allow them to provide comment. FPI’s Board of Directors is appointed by the President and by statute is composed of six members representing Industry, Labor, Retailers and Consumers, Agriculture, the Secretary of Defense and Attorney General. The Board is provided copies of the market impact study, the comments received, and FPI’s recommendations. The Board also holds hearings which the public can attend and provide testimony. At the conclusion of the above process, the Board renders its decision, which is also published in the Federal Business Opportunities (Fed Biz Opps). Parties can appeal to the Board if and when market conditions change or new facts could impact the decision. 2. PERFORMANCE AND RESOURCES TABLE Decision Unit: Federal Prison Industries DOJ Strategic Goal/Objective: 4.5 Workload/Resources Workload Base number of factories Number of Inmate Jobs added Inmates employed at year-end Total Costs and FTE (reimbursable FTE are included, but reimbursable costs are bracketed and not included in the total) TYPE/ STRATEGIC OBJECTIVE Performance Program Activity Performance Measure Efficiency Measure Sales Volume Comparative Recidivism for FPI inmates vs. non-FPI inmates (3 yrs.) Comparative Recidivism for FPI inmates vs. non-FPI inmates (6 yrs.) Number of Inmates Employed Final Target Actual Estimate Changes Requested (Total) FY 2006 FY 2006 FY 2007 Current Services Adjustments and FY 2008 Program Changes FY 2008 Request 115 726 20,446 108 1,485 21,205 115 0 21,205 1 288 288 116 288 21,493 FTE 2,295 $000 766,662 FTE 2,295 FY 2006 $000 790,620 FY 2006 FTE 1,914 $000 900,445 FY 2007 President’s Budget FTE 16 $000 12,337 FY 2008 Current Services Adjustments and Program Change FTE 1,930 $000 912,782 FY 2008 Request FTE $000 FTE $000 FTE $000 FTE $000 FTE $000 2,295 766,662 2,295 790,620 1,914 900,445 16 12,337 1,930 912,782 15% 23% 15% 0 15% 10% 10% 10% 0 10% 21,500 288 21,788 25% 0 25% 20,446 21,205 OUTCOME Number of inmates employed as a percentage of inmates housed in low, medium, and high security 25% institutions. * The FY 2006 Final Target has not been revised from the FY 2007 President’s Budget. Data Definition, Validation, Verification, and Limitations: 1. Base number of factories equal the number of factories at the beginning of the year and previous year’s base number of factories adjusted to agree with previous year-end results. 2. Sales volume is equal to gross revenues for the fiscal year. 3. Decrease is the result of reduction of cost and delayed activations. 4. In FY2005, a Baseline was established for comparative recidivism rates for FPI inmates vs. non-FPI inmates who are less likely to recidivate 3 years after release and less likely to recidivate 6 years after release. In addition, FY 2006 – FY 2008 targets have been developed. 2. PERFORMANCE MEASURE TABLE (cont’d) Decision Unit: Federal Prison Industries Department of Justice Strategic Goal/Objective: 4.5 Performance Report and Performance Plan Targets Performance Comparative Recidivism for FPI Measure inmates vs. non-FPI inmates (3 yrs.) Comparative Recidivism for FPI inmates vs. non-FPI inmates (6 yrs.) Efficiency Measure Number of Inmates Employed BY 2000 Actual FY 2001 Actual FY 2002 Actual FY 2003 Actual FY 2004 Actual N/A N/A N/A N/A N/A FY 2005 Actual Baseline Established N/A N/A N/A N/A N/A 21,688 22,560 21,778 20,274 19,337 FY 2006 Target Actual FY 2007 Target FY 2008 Target 15% 23% 15% 15% Baseline Established 10% 10% 10% 10% 19,720 20,446 21,500 21,788 21,205 3. Performance, Resources and Strategies a. Performance Plan and Report for Outcomes Inmate Employment: The Federal Prison Industries (FPI) actual inmate employment of 21,205 at the end of FY 2006 is 4 percent above the target level of 20,446. The projected number of inmates employed increases consistent with the activation of new institutions. The recidivism measure was new in FY 2005. Baseline data for this measure was established in FY 2005. A study, to establish a baseline was conducted of 15,406 FPI participants and an equal number of comparison subjects released between 1994 through 1998. Results indicate that inmates who participate in FPI are significantly less likely to recidivate. Now that baseline information is available, FPI will begin targeting and collecting data to report in outyears against a long-term and annual PART measure. The FY 2008 target is 15 percent less likely to recidivate 3 years after release and 10 percent less likely to recidivate 6 years after release. b. Strategies to Accomplish Outcomes FPI’s performance goals are part of the Department of Justice (DOJ). The primary FPI goal, population management, is to proactively manage the offender population through meaningful work programs. FPI meets this objective by reducing undesirable inmate idleness through a full time work program that provides constructive industrial work wherein job skills can be developed and work habits acquired. Inmate idleness is the number one cause of inmate unrest and violence in prison, and FPI employs over 20,000 inmates and provides skills training to help ensure the safe and secure operation of the institutions. FPI plays a vital role in the management of inmates, and also improves the likelihood that inmates will remain crime-free upon their release from BOP custody. For FY 2008, a total of 2,075 positions and 1,930 workyears are requested for FPI. Further, $2,477,000 is included as the Administrative Expenses limitation. c. Results of Program Assessment Rating Tool (PART) Reviews N/A Program Increases Item Name: FCI Pollock, LA Budget Decision Unit: Federal Prison Industries, Inc. Strategic Goal/Objective: 4.5: Provide services and programs to facilitate inmates successful reintegratio into society consistent with community expectations and standards. Organizational Program: Inmate Work Programs Component Ranking of Item: 1 of 1 Program Increases: Positions 17 17 New Facility FCI Pollock, Louisiana (1,152 beds) Total, Increase FTE 16 16 (Non-Appropriated) Dollars ($000) ($11,720) ($11,720) Description of Item This request represents a program increase of 17 positions and 16 workyears for FY 2008. These positions are being requested for the operation of factories at Pollock, LA which will employ 288 in Justification FPI reduces inmate idleness by providing a full-time work program for the inmate population. The operatio of work programs at the location cited will provide employment for approximately 288 inmates. Impact on Performance (Relationship of Increase to Strategic Goals) FPI employment of inmates reduces inmate idleness at BOP facilities and provides job skills and work habit that assist an inmate's reintegration into society. This request supports the DOJ Strategic Plan, Goal IV ensure the fair and efficient operation of the Federal Justice System and provide services and programs to facilitate inmates' successful reintegration into society, consistent with community expectations and stan Funding (Dollars in thousands) Base Funding FY 2006 Enacted Pos FTE 0 FY 2007 Estimate Dollars 0 Pos $0 FTE 0 FY 2008 President's Budget Currrent Services Dollars Pos FTE Dollars 0 $0 0 0 $0 Personnel Increase Cost Summary Type of Position AW I&E Factory, Business & Sys Mgr Assistant Factory Mgr QA Mgr, Contract Spec. & Acct Ungraded Positions Total Personnel Non-Personnel Increase Cost Summary Cost per Position ($000) 108.0 77.3 64.0 53.3 56.4 359.1 Number of Positions Requested 1 3 1 3 9 17 FY 2008 Request ($000) 108.0 232.0 64.0 160.0 508.0 1,072