BILL ANALYSIS
AB 1771
Page 1
Date of Hearing: April 22, 2010
Counsel: Kimberly A. Horiuchi
ASSEMBLY COMMITTEE ON PUBLIC SAFETY
Tom Ammiano, Chair
AB 1771 (Mendoza) - As Amended: April 12, 2010
As Proposed to be Amended in Committee
SUMMARY : Provides that the requirements imposed on state
agencies to purchase Prison Industry Authority (PIA) products
make maximum utilization of these products, and consult with PIA
staff to develop new products and adapt existing products to
meet their needs shall not restrict state agencies from entering
into purchase orders or contracts of $25,000 or less with
California certified small businesses, micro-businesses, or
disabled veteran business enterprises, as defined. This shall
only apply to contracts or purchase orders for products provided
at a lower price than the price available from PIA.
EXISTING LAW
1)Provides that the PIA is hereby authorized and empowered to
operate industrial, agricultural, and service enterprises
which will provide products and services needed by the state,
or any political subdivision thereof, or by the federal
government, or any department, agency, or corporation thereof,
or for any other public use. Products may be purchased by
state agencies to be offered for sale to inmates of the
California Department of Corrections and Rehabilitation (CDCR)
and to any other person under the care of the state who
resides in state-operated institutional facilities. Fresh
meat may be purchased by food service operations in
state-owned facilities and sold for onsite consumption.
[Penal Code Section 2807(a).]
2)All things authorized to be produced, as specified, shall be
purchased by the state, or any agency thereof, and may be
purchased by any county, city, district, or political
subdivision, or any agency thereof, or by any state agency to
offer for sale to persons residing in state-operated
institutions, at the prices fixed by PIA. State agencies
shall make maximum utilization of these products, and shall
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consult with the staff of the authority to develop new
products and adapt existing products to meet their needs.
[Penal Code Section 2807(b).]
3)States that notwithstanding any other provision of existing
law, products and byproducts of agricultural and animal
husbandry enterprises, except nursery stock, may be sold to
private persons, at public or private sale, under rules
prescribed by the PIA. (Penal Code Section 2814.)
4)Lists the purposes of the PIA as:
a) To develop and operate industrial, agricultural, and
service enterprises employing prisoners in institutions
under CDCR's jurisdiction, which enterprises may be located
either within those institutions or elsewhere, all as may
be determined by the authority.
b) To create and maintain working conditions within the
enterprises as much like those which prevail in private
industry as possible, to assure prisoners employed therein
the opportunity to work productively, to earn funds, and to
acquire or improve effective work habits and occupational
skills.
c) To operate a work program for prisoners which will
ultimately be self-supporting by generating sufficient
funds from the sale of products and services to pay all the
expenses of the program, and one which will provide goods
and services which are or will be used by CDCR, thereby
reducing the cost of its operation. (Penal Code Section
2801.)
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's Statement : According to the author, "AB 1771 will
help promote fairness in state purchasing, provide assistance
to small businesses and save the state money by allowing state
departments to award contracts of less than $25,000 for goods
or services by certified micro-businesses, small businesses or
Disabled Veteran Business Enterprises (DVBEs) without seeking
an exemption of the PIA mandate if they are able to make the
product for less than the PIA.
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"The PIA is a prison inmate work program created in 1983 to
develop profitable enterprises while helping inmates gain
marketable job skills. The PIA currently employs
approximately 5,900 inmates at 22 prisons. Penal Code Section
2807(b) establishes the PIA and mandates that 'state agencies
shall make maximum utilization of these products.' This PIA
mandate effectively gives PIA precedence over other vendors
during the contract bid evaluation process, regardless of the
price of the product. The PIA mandate drives up state costs
and unnecessarily reduces business opportunities for private
companies. By reducing the impact of the PIA mandate and
setting the bidding preference for micro-businesses and small
businesses at the same level as the PIA, the state would
expand the number of businesses that can compete for small
state projects, with likely savings for most bids. The state
already certifies California small businesses,
micro-businesses and DVBEs to provide a 5% bidding preference
on applicable state solicitations. However, the PIA mandate
supersedes this preference, resulting in increased state
costs. Additionally, by spending state money to support the
PIA instead of small businesses that pay taxes, the state is
losing money that would have been collected through business
and sales taxes.
2)The PIA : According to the PIA's Web site, "The PIA is a
state-operated organization that was created by Chapter 1549,
Statutes of 1982 (California Penal Code Section 2800), to
provide productive work assignments for inmates in
California's adult correctional institutions. The PIA
provides work assignments for approximately 5,900 inmates and
operates over 60 service, manufacturing, and agricultural
industries at 22 prisons throughout California. The PIA is
self-supporting and does not receive an annual appropriation
from the Legislature. PIA's revenue comes from the sale of
its products and services to governmental organizations.
"The PIA's industries produce over 1,400 goods and services
including: office furniture, clothing, food products, shoes,
printing services, signs, binders, eye wear, gloves, license
plates, cell equipment, and much more. PIA products and
services are available to government entities, including
federal, state, and local governmental agencies. The
California Penal Code prohibits PIA from selling its products
and services to the general public.
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"Up to 40% of an inmate's wages is deducted for court-ordered
restitution/fines and is transferred to the Crime Victims'
Restitution Fund. In Fiscal Year 2005-06, over $700,000 of
PIA inmates' earnings was deposited. Since Fiscal Year
1992-93, $6.5 million has been deposited to the Fund. Inmates
receive wages of $0.30 to $0.95 per hour before deductions.
"In 2000, PIA began the development of the Inmate Employability
Program to enhance the ability of inmates to obtain private
sector jobs upon their release from prison. The program
documents and certifies an inmate's skills, work experience,
and positive work habits acquired while assigned to PIA's
enterprises.
"The PIA's job assignments are voluntary - inmates are not
required to work; however, inmates are generally eager to
participate, as waiting lists are common for many PIA
assignments. The PIA work assignments can help inmates learn
work skills and habits to become productive members of
society.
"The PIA factories operate within Federal and State health,
safety, and occupational regulations.
"The PIA inmate work assignments provide productive activity,
thereby reducing idleness and prison violence. In 1998, the
CDCR completed a study which found that inmates assigned to
PIA had a lower rate of reported serious incidents than
inmates assigned to other CDCR assignments (academic,
education, vocational education, and support services).
"The Prison Industry Board (PIB) was established to oversee the
operations of PIA, much like a corporate board of directors.
The 11-member PIB sets general policy for PIA, oversees the
performance of existing PIA industries, determines which new
industries shall be established, approves its annual plan, and
appoints and monitors the performance of the General Manager.
The PIB also serves as a public hearing body charged with
ensuring that PIA enterprises do not create a substantial
adverse impact on California industry."
3)The Use of Prison Labor : The law of prison work and wages
starts with the Thirteenth Amendment, which allows slavery and
involuntary servitude as punishment for crimes: "Neither
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slavery nor involuntary servitude, except as a punishment for
crime whereof the party shall have been duly convicted, shall
exist within the United States, or any place subject to their
jurisdiction." (United States Constitution, Amendment XIII,
1.) However, once convicted, prisoners can be required to
work, even pending appeal. [See Tourscher v. McCullough (3d
Cir. 1999) 184 F.3d 236, 240; Plaisance v. Phelps (5th Cir.
1988) 845 F.2d 107, 108; Omasta v. Wainwright (11th Cir.
1983)696 F.2d 1304, 1305; Stiltner v. Rhay (9th Cir. 1963) 322
F.2d 314, 315.]
The Fair Labor Standards Act (FLSA) generally requires that
workers be paid a minimum wage, but is silent as to coverage
of state prison labor. (See 29 USCS 201-219.) Prisoners have
no constitutional right to be paid at all for the work they
are forced to perform. [See generally Murray v. Miss. Dep't
of Corrs. (5th Cir. 1990) 911 F.2d 1167 (per curiam):
"Compelling an inmate to work without pay is not
unconstitutional. The thirteenth amendment specifically
allows involuntary servitude as punishment after conviction of
a crime, see United States Constitution, Amendment XIII, 1,
and this Court has held that 'compensating prisoners for work
is not a constitutional requirement but, rather, is by the
grace of the state'."]
Thus, prisoners producing goods and services used by state
prisons have not been considered employees under the FLSA.
[See Tourscher 184 F.3d at p. 243; Hale v. Arizona (9th Cir.
1993) 993 F.2d 1387, 1392-98 (en banc).] One court decision
illustrates why prisoners are not paid minimum wages:
"Forced prison labor for the prison is not subject to the FLSA.
The relationship is not one of employment; prisoners are taken
out of the national economy; prison work is often designed to
train and rehabilitate; prisoners' living standards are
determined by what the prison provides; and most such labor
does not compete with private employers . . . . As a result,
no Court of Appeals has ever questioned the power of a
correctional institution to compel inmates to perform services
for the institution without paying the minimum wage.
Prisoners may thus be ordered to cook, staff the library,
perform janitorial services, work in the laundry, or carry out
numerous other tasks that serve various institutional missions
of the prison, such as recreation, care and maintenance of the
facility, or rehabilitation. Such work occupies prisoners'
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time that might otherwise be filled by mischief; it trains
prisoners in the discipline and skills of work; and it is a
method of seeing that prisoners bear a cost of their
incarceration." [Danneskjold v. Hausrath (2d Cir. 1996) 82
F.3d 37, 43.]
Cheap labor can give an unfair advantage to an enterprise that
competes in the marketplace. Low-wage prison labor surely
raises the specter of such unfair competition. Thus, prison
industries can pose an unfair competitive advantage which
inmate employers' gain by paying wages below the statutory
minimum. However, Congress has addressed the problem of
unfair competition by regulating prison-made goods. The
Ashurst-Sumners Act, 18 United Stats Code Sections 1761-62,
penalizes the knowing transportation of prison-made goods in
commerce and was specifically intended to combat unfair
competition. [Kentucky Whip & Collar Co. v. Illinois Central
R.R. Co. (1937) 299 U.S. 334, 351.]
For the government, competition in the marketplace is not a
dominant mode and profits are not the ultimate goal. A
governmental advantage from the use of prisoner labor is not
the same as a similar low-wage advantage on the part of a
private entity: while the latter amounts to an unfair
windfall, the former may be seen as simply paying the costs of
public goods, including the costs of incarceration.
According to an article in the Sacramento Bee summarizing the
efficacy of PIA goods and the needs of small businesses:
"PIA officials say their prices are competitive and that savings
also should be measured by success in reducing prison violence
and keeping paroled felons from re-offending and being
re-incarcerated at a cost of about $50,000 per year. 'There
are lots of benefits beyond just, "Can we go out and buy this
stuff more cheaply?" ', said Barry Krisberg former president
of the National Council on Crime and Delinquency.
"The issue pits lawmakers' desire to prepare prisoners for
gainful employment against recession-related pressure to
bolster private businesses struggling to survive. Nationally,
the Federal Prison Industries program, responding to similar
pressure, loosened a mandate on federal agencies in 2004 to
allow purchases from private vendors offering lower prices."
[Sanders, Prison Industries Maintain Monopoly even in Tough
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Times, Sacramento Bee (April 13, 2010) found at
http://www.sacbee.com/2010/04/13/2674085/prison-industries-main
tain-monopoly.html.]
4)Prior Legislation :
a) AB 664 (Parra), of the 2007-08 Legislative Session,
would have provided that dairy products produced under the
hospices of PIA may only be sold, purchased and used by
food service operations in state-owned facilities, and
prohibits dairy products from being sold directly to
private persons. AB 664 was held on the Appropriation
Committee's Suspense File.
b) SB 1734 (Cox), of the 2005-06 Legislative Session, would
have provided that dairy products produced by the PIA
within California prisons can only be sold, purchased, and
used by food service operations within state-owned
facilities, as specified. SB 1734 was held on the Senate
Appropriations Committee's Suspense File.
REGISTERED SUPPORT / OPPOSITION :
Support
California Correctional Supervisors Organization
Opposition
None
Analysis Prepared by : Kimberly Horiuchi / PUB. S. / (916)
319-3744