Scope of Procurement Priority Accorded to the Federal Prison Industries Under 18 U.S.C. § 4124

• Court: Department of Justice Office of Legal Counsel
• Decided: November 8, 1989
• Status: Published

Opinion

Scope of Procurement Priority Accorded to the Federal Prison Industries under 18 U.S.C. § 4124

The procurem ent priority a ccorded to “products” o f the Federal Prison Industries under 18 U.S.C § 4124 d o e s not include services.

November 8, 1989

M e m o r a n d u m O p in io n for the G e n eral C oun sel G e n e r a l S e r v ic e s A d m in is t r a t io n

This memorandum responds to your request for our opinion whether the procurement priority accorded to “products” o f the Federal Prison Industries (“FPI”) under 18 U.S.C. § 4124 for sale to federal agencies includes services as well as commodities.1 The General Services Administration (“GSA”) maintains that “products” under section 4124 refers solely to commodities and not to services.2 FPI contends that “products” includes services.3 For the reasons set forth below, we con­ clude that “products” does not include services under the statute. This dispute over the meaning o f section 4124 began in 1986, when the GSA proposed to amend the Federal Acquisition Regulations (“FAR”) to deny FPI priority consideration over commercial suppliers in the acquisition o f services by federal agencies. 51 Fed. Reg. 21,496 (to be codified at 48 C.F.R. pt. 8) (proposed June 12, 1986). Currently, the FAR provide that FPI has a priority over commercial sources with respect to services as well as commodities. 48 C.F.R. § 8.603(a)(2). GSA proposed the change to make the regulations consistent with section 4124, on which the regulations are based. FPI challenged this proposal, arguing that the word “products” in section 4124 must be understood to

1 Letter for Douglas W Kmiec, Assistant Attorney General, Office o f Legal Counsel, from Robert C. MacKichan, Jr., General Counsel, General Services Administration (Jan 4, 1989) ( “GSA Letter”), attach­ ing GSA Position on Procurement of Services From Federal Prison Industries ( “GSA Memorandum”). 2GSA Letter at 1-2; GSA Memorandum at 1-5 3 Letter for William P. Barr, Assistant Attorney General, Office o f Legal Counsel, from J Michael Quinlan, Director, Federal Bureau o f Prisons (June 19, 1989) ( “FPI Letter”), enclosing Letter for GSA/FAR Secretariat, from Harry H. Flickinger, Acting Assistant Attorney General for Administration, Department o f Justice (Oct. 16, 1986) (UJMD Letter”), Letter for General Counsel, GSA, from Eugene N Barkin, General Counsel, Bureau o f Prisons (July 31, 1973)

345 include services and that priority over commercial sources is therefore mandated.4 Section 4124 requires federal agencies and institutions to purchase “such products o f the industries authorized by this chapter as meet their requirements and may be available.”5 Neither section 4124 nor related sections contains a definition o f “products.” See 18 U.S.C. §§ 4121-4128. The natural meaning o f the word suggests, however, that it means a com­ modity,6 rather than the provision o f labor that constitutes the usual meaning o f the word “service.”7 This interpretation o f “products” in sec­ tion 4124 is confirmed by section 4122(a), which provides that FPI was created to determine what operations shall be conducted in federal penal institutions “for the production of commodities.”8 18 U.S.C. § 4122(a); accord id. § 4122(b)(1) (FPI to operate prison workshops so no one pri­ vate industry bears an undue burden o f competition from the workshops’ “products”); id. § 4122(b)(2) (FPI to concentrate on providing to federal agencies “only those products” that maximize inmate employment); id. § 4122(b)(3) (FPI to diversify its products); id. § 4122(b)(4) (FPI decision to introduce a new product or expand production o f a product to be made by board o f directors). FPI argues that it is dangerous to impose today’s “plain meaning” on the words o f a statute written half a century ago.9Both the statute and the

4 FPI does not challenge the pnonty the FAR currently give to services provided by the blind or other severely handicapped under 41 U.S.C. § 48. See FPI Letter at 2 (“[W]e strongly urge that the proposed amendment to the FAR not be adopted and that the current version, establishing a priority for FPI for services between the blind and commercial sources, be continued.”) (emphasis added); JMD Letter at 6 n.7 ( “Continued priority for FPI in the provision o f services would not effect [sic] the priority, over FPI, in the provision o f services that exists for the Workshop for the Blind and Other Severely Handicapped (B O S H )" The GSA is thus o ff point with its warning that “[a] determination by the Office o f Legal Counsel that 18 U.S.C. § 4124 does afford FPI priority status in Government contracting in the service area could have a severe impact on the mandatory source program for workshops for the blind and hand­ icapped administered by the Committee for Purchase from the Blind and Other Severely Handicapped.” GSA Letter at 2. 5Section 4124 provides in relevant part as follows The several Federal departments and agencies and all other Government institutions o f the United States shall purchase at not to exceed current market prices, such products o f the industries authorized by this chapter as meet their requirements and may be available 6 Webster’s Third New International Dictionary 1810 (1986) ( “Webster’s”) defines “product” as “the result o f work or thought” (emphasis added). It defines “commodity” as “an econom ic good . . a prod­ uct o f agriculture, mining, or sometimes manufacture as distinguished from s e r v ic e s Id . at 458 (emphasis added) We are not persuaded by FPI’s argument that the word “product” necessarily includes services simply because the term “Gross National Product” has been defined to include both goods and services. That phrase is a term o f art imported from a different context and, thus, cannot be dispositive o f the issue 7 Webster’s defines “service” as “useful labor that does not produce a tangible commodity " Id. at 2075 (emphasis added) 8As originally enacted, this section referred to “articles and com m odities” Act o f May 27,1930, ch. 340, § 3, 46 Stat. 391 (1930). The words “articles and” were deleted in 1948 during a recodification that was not intended to have any substantive effect. Legislative History o f Title 18, United States Code at 2649 (1948). 9 "One simply cannot apply today’s precise definitions o f terms, such as services, to the same words used fifty years earlier in a far looser context.” JMD Letter at 4.

346 legislative history, however, lead us to conclude that the Congress that initially passed this statute in the 1930’s understood the distinction between “products” and “commodities,” on the one hand, and “services” on the other. The very chapter under consideration permits the Attorney General to make “the services o f United States prisoners” available to federal agencies for use on public works projects, 18 U.S.C. § 4125(a), yet “services” is not mentioned in section 4124. Clearly, the Congress o f that period was familiar with the word “services” and understood it to have a meaning distinct from “products.”10 FPI argues that since federal prisoners had in fact performed services since at least the early years o f this century, “products” as used in the statute should be understood to include services. FPI points out that, at various times, federal prisoners have been engaged in laundry services, tire recapping, furniture refinishing, and typewriter repair.11 FPI argues that such services “must be presumed to have been sanctioned by that legislation” — and therefore that “products” must include “services” — “in the absence of a clear legislative mandate to the contrary.”12 We dis­ agree. The issue before us is not whether federal prisoners may perform services; it is whether 18 U.S.C. § 4124 grants the FPI a procurement pri­ ority for such services. We think the plain meaning o f that statute shows that services are not covered. The legislative history of section 4124 confirms our conclusion. With one exception, the examples o f prisoner activities discussed at the time o f the statute’s enactment all involved the manufacture of commodities, and that example was omitted from the version finally enacted.13Subsequent amend-

10 Our conclusion is reinforced by the language o f the Robinson-Patman Price Discnmination Act passed in 1936. 15 U S.C § 13. This Act makes it unlawful for persons engaged in commerce “to dis­ criminate in pnce between different purchasers o f commodities o f like grade and quality.” Id (emphasis added) Over the past half-century, courts have firmly established that the word “commodity” in this con­ text refers to “a product as distinguished from a service ” Baum v. Investor's Diversified Servs , Inc., 409 F.2d 872, 874 (7th Cir. 1969) (emphasis added), see also May Dep’t Store v. Graphic Process Co , 637 F.2d 1211, 1214-16 (9th Cir 1980). We hesitate, therefore, to declare that Congress in the 1930’s failed to grasp the distinction between commodities and services. 11JMD Letter at 1 12Id at 2 13Dunng the floor debate, reference was made to a jo b that would qualify as a service 72 Cong. Rec. 2146 (1930). Fearing that the new and expanding prison industries would displace federal civilian work­ ers, especially hundreds of employees who repaired mail bags, Representative LaGuardia offered the fol­ lowing amendment Provided further, That no class o f articles or commodities shall be produced for sale to or use o f departments o f independent establishments o f the Federal Government in United States penal or correctional institutions which at present are being produced by civilian employees at the navy yards, arsenals, mail bag repair shop, or other Government owned and operated industnal establishments, or such articles as these Government owned and operated establishments are equipped to produce 72 Cong. Rec. at 2147 (emphasis added). He viewed this amendment as necessary because “[ijt [was] con­ templated in the course o f this prison reform to have the mail bag repair work conducted in jails.” Id (statement o f Rep LaGuardia). The final version o f the statute, however, dropped the reference to mail Continued)

347 merits to the statute also fail to indicate any intent to include services among priority items. In fact, subsequent congressional action in the pro­ curement preference area indicates that Congress understood FPI’s priority to apply only to goods and not services. In 1971, Congress amended the Javits-Wagner-O’Day Act of 1938, which created a procurement preference for commodities made by the blind that was subordinate to the existing pri­ ority for FPI products. 41 U.S.C. §§ 46-48c. One of the principal objectives o f the 1971 amendment was to grant to the Committee on Purchase from the Blind and Other Severely Handicapped (“CPBOSH”) a preference for services in addition to its existing preference for commodities. See H.R. Rep. No. 228, 92d Cong., 1st Sess. 2 (1971), reprinted in 1971 U.S.C.C.A.N. 1079. The fact that Congress believed this amendment necessary only underscores the distinction between “commodities” and “services.” Furthermore, the 1971 Act expressly considered the relationship between the preference accorded to CPBOSH and the existing prefer­ ence for FPI products. It provides a preference to “any commodity or ser­ vice” on a list prepared by CPBOSH, subject to the availability o f such “commodity or service." 41 U.S.C. § 48 (emphasis added). The section goes on, however, to note that it does not apply “to the procurement o f any commodity which is available for procurement from [FPI], and which, under section 4124 ... is required to be procured from such industry.” Id. (emphasis added). The omission o f any reference to ser­ vices in this exception indicates that Congress did not believe that FPI was entitled under section 4124 to any preference for services. We are not persuaded by FPI’s argument that the legislative history of a 1988 amendment to the FPI statute “shows congressional awareness and approval o f FPI providing services.” See FPI Letter at 1. This history asserts that “[i]n addition to establishing UNICOR [another name for FPI] as a wholly owned Government corporation, the enabling legislation also provides that other Federal Government agencies are required to pur­ chase from UNICOR those goods and services that UNICOR produces when they can do so at fair market prices.” H.R. Rep. No. 864, 100th Cong., 2d Sess. 3 (1988) (emphasis added). This offhand assertion is enti­ tled to minimal weight because the procurement preference provisions were not under consideration at the time — the purpose o f the amend­ ments was to authorize FPI to borrow funds. It is hardly probative o f con­ gressional consideration of the procurement preference issue.14 In sum,

13 ( . continued) bag repair. Act o f May 27,1930, ch. 340, § 346, 46 Stat 391 (1930). We cannot infer from this failed propos­ al that Congress intended “products" to include “services." Indeed, the elimination o f this explicit reference to a service only strengthens our conclusion that Congress did not give FPI any priority over services. 14 That same report also lists FPI's operations, noting that it is engaged in “date [sic] and graphics including printing services to government agencies, signs, graphics products, and keyboard data entry systems.” Id. at 4. The undisputed fact that FPI carries out such activities, however, is not material to the issue o f whether it is entitled to a procurement priority for such activities.

348 we find nothing in the legislative history of section 4124 or related statutes that suggests FPI’s interpretation o f that section is correct.15 FPI asserts that failure to construe “products” to include services is contrary to the spirit o f the statute and would undermine related provi­ sions that require FPI to train inmates to perform skills they can use when they are released, 18 U.S.C. § 4123, and to diversify prison industri­ al operations, id. § 4122(b). Although interpreting section 4124 to reach services as well as products would no doubt enhance FPI’s ability to achieve the directives of sections 4122 and 4123, we find no indication in the statute or legislative history that Congress believed a priority for services was necessary to achieve that result.16 Where, as here, the statu­ tory language is clear, FPI’s contrary interpretation of its own enabling legislation need not be controlling. See Chevron U.S.A., Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837, 842 (1984).

LYNDA GUILD SIMPSON Deputy Assistant Attorney General Office o f Legal Counsel

15FPI also relies upon an Executive Order issued by President Roosevelt in 1934 setting up FPI This Order provided: The heads o f the several executive departments, independent establishments and Govern­ ment owned and Government controlled corporations shall cooperate with the corporation in carrying out its duties and shall purchase, at not to exceed current market prices, the prod­ ucts or services o f said industries, to the extent required or permitted by law. Exec Order No 6917, § 9 (1934) (emphasis added). This Order pointedly avoids imposing any require­ ment above and beyond the terms o f the statute; that is the point o f the phrase “to the extent required or permitted by law ” Thus, since section 4124 provides only a preference for “products,” the Order cannot be said to extend further. In fact, the Order’s reference to “products or services” only confirms the inap­ propriateness o f reading the statute’s word “products” to include services 16We also disagree with FPI’s assertion that our interpretation is contrary to the spirit of the statute’s general goals o f training prisoners and preventing them from sitting idle. See JMD Letter at 5. We are not persuaded that our interpretation prevents the FPI from fulfilling those goals These and other policy arguments can be presented to Congress with a request to amend section 4124.