American Power Source, an American Apparel subsidiary, makes military clothing in Fayette, Ala., but when its contract is up, Federal Prison Industries (FPI) also known as UNICOR, will get the work, replacing private industry workers with inmates.
Under a 1930 federal law, “FPI has the first right of refusal for U.S. Government contracts,” according to a Fox News report.
While American Apparel charges $29.44 per uniform, FPI, the government-backed company that uses inmates, charges the government $34.18 per uniform, or about 15 percent more.
FPI was created in the 1930s to provide training, education and employment for inmates in federal custody. FPI is active in 80 factories across the country and is not allowed to sell to the private sector. However federal law requires federal agencies to buy its products, even if they cost taxpayers more, as in the case of military uniform production.
"The way the law is – Federal Prison Industries gets first dibs and contracts up to a certain percentage before they have to compete against us," said Kurt Wilson, executive vice president of business development and government affairs. "The army combat uniform, for instance, is an item that they take off the top. As a result American tax payers pay more for it – but the bottom line is each soldier is paying more for their uniform."
Wilson says that as the number of uniforms required has decreased, people are being laid off, replaced by inmates working for FPI.
In a prepared statement, Julie Rozier, an FPI spokeswoman, said "FPI's (production) percentage has remained fairly consistent over the past decade, with slight declines. FPI is a program that directly protects society by reducing crime and preparing inmates for successful release back into society to become law-abiding citizens; FPI does not receive a congressional appropriation for its operations."
However it is taxpayers who must ultimately pay the difference between the lower market priceand federally imposed purchase of goods from FPI at a 15-percent cost increase to taxpayers.