Jun 11, 2013

Labor and Business Win Prison Industry Battle

By Bob Sloan

Today prison industries are booming with hundreds of thousands of prisoners employed in factories manufacturing a myriad assortment of products and providing services such as call centers, customer service, marketing, reservations and manual labor for municipalities.  Thousands of American workers have been displaced by companies choosing low paid prisoners as a labor force.  Many of these companies realize additional profits from subsidized leases for state manufacturing facilities within prison compounds.  This has been the trend since 1999 but today, as a Burl Ives lyric proclaims, “times, they are a changin’…”

Nevada represents the latest resistance to prison programs taking jobs out of the private sector and allowing unfair competition between private businesses where one company has access to low paid prisoners for their private workforce.

On May 29^th legislation reining in control of Nevada’s prison industry program, passed the state Senate and was sent to the desk of Governor Brian Sandoval.  On June 1 the Governor signed the new legislation and it becomes law in Nevada on July1, 2013.  The introduction, passage and signing into law of this necessary legislation is a huge victory for opponents of prison industry programs in the U.S. – and signals to other states the need for similar vigilance of prison industrial programs.

Senator Debbie Smith

Known as Senate Bill (SB) 478, the Nevada legislation was introduced and sponsored by the Senate’s Interim Finance Committee as a means of tightening controls over Nevada’s prison industry partnerships. Author of the bill was Senator Debbie Smith, Chair of the Senate Finance and Interim Finance Committees.

Private companies (union and non-union) joined ranks with union leaders in support of changing state laws regarding prison industry operations in Nevada.  

Sen. Richard Bryan

Former Nevada Governor and U.S. Senator, Richard Bryan, met several times with the state Board of Prison Commissioners and appeared before both Senate and Assembly committee meetings where he argued that necessary changes must be made to the existing prison industry regulations.

Senator Bryan was not involved in the actual writing or introduction of this measure (Senate Bill 478), but in interviews he stated he supported the proposed original legislation as it would open the program to needed transparency that would limit unfair competition complained of by workers and businesses in Nevada.  The Senator has not spoken publicly since the legislation was amended and passed, so it is unknown if he continues to fully support the amended language of SB 478.

AFLCIO Exec. Sec. Treasurer, Danny Thompson

Ironworkers Local 433 Bus. Agent, Robbie Conway

Support also came from the AFLCIO, the local Ironworkers union and several law enforcement unions.  The AFLCIO’s Executive Secretary Treasurer, Danny Thompson and Ironworkers Local 433 Business Agent, Robbie Conway were the most vocal and outspoken union representatives on the prison industry issue.  Both made appearances before the Board of Prison Commissioners, the Nevada Senate and Assembly at hearings and meetings to object to the use of inmate labor to openly compete for the jobs of unemployed Nevada workers.

While both Thompson and Conway objected to prisoners being used by private companies to compete against other private businesses and workers, they were very concerned about the safety of Nevadans from projects built using prisoners in a “training program”.  One such project was the bridge over Interstate 15 in North Las Vegas.  Another is the Wet ‘N Wild water park project being built in Summerlin.  A third is the SkyVue Wheel on the Las Vegas strip.

All of these projects were scheduled to be built with structural steel components manufactured by prisoners working in a prison industry training program located at High Desert State Prison.  That was the intent until the public became informed about the use of prisoners manufacturing key structural components for such projects and in response the Governor ordered the closure of the prison industry where the steel was made.

This state action in Nevada follows similar legislative amending in Texas in 2009-2010 after businesses complained of unfair competition from prison industry operations there.  The Texas circumstances are nearly identical with a situation that consequently evolved in Nevada just three years later.

Lufkin Industry’s trailer division was shut down due to an undisclosed operation by a prison company making the same products and selling them competitively in Lufkin’s market.  Following this discovery, the Texas legislature enacted laws to protect workers and competitors from prison operated industries using inmate labor.

This legislative session, Nevada was forced to take similar steps to protect workers and business owners from suffering the same fate as workers in Texas.

Silver State Industries (SSI), operated by the Nevada Department of Corrections (NDOC) enters into contracts with private companies to allow the use of inmates as a labor force for manufacturing goods.  Previously these partnerships were developed quietly with a total lack of transparency or notice to competing companies regarding any possible impact upon private business or Nevada’s unemployed workers competing for business or jobs.

Director Cox of the Nevada Department of Corrections candidly admitted earlier this year that he and his department had not been following requirements and protocols called for by state law and department regulations.  Besides the undisclosed competition using inmate labor, there is an issue of lost money from possible mismanagement of the NDOC.

One of more of these “industry” operations using prisoners as a labor force for select private companies resulted in substantial dollars lost to the state due to non-payment of leases, wages, utility costs and other expenses advanced to companies in an effort of keeping them operating and prisoners employed.  SSI’s current account receivables are in excess of $600,000 and previously in 2010 $800,000 was sent to collectors to try and recover.

As a result of poor business practices, SSI has lost hundreds of thousands of dollars and nearly exhausted a $1.5 million dollar contingency fund.  The industry closed by order of the Governor was a metal/steel fabrication plant at the High Desert State Prison.  This single operation is at the center of the controversy surrounding prison labor and unfair competition that formed the basis for the new legislation.

Silver State Industries had a long standing contract with Alpine Steel, LLC that allowed inmates to manufacture structural steel used in public and private projects secured through standard industry bid procedures.  Alpine used the cheap labor they paid to inmate workers as a means to secure numerous competitive contracts utilizing low labor projections/costs.  Other companies protested they were losing work and thus unable to hire more unemployed steel workers due to unfair competition from Alpine using state prisoners as the company’s “private workforce”.

When it was discovered Alpine was not paying the lower wages owed to the inmate workers or salaries of NDOC supervisory staffers, the story elicited strong reactions from taxpayers and lawmakers alike.  In addition to these payroll defaults, Alpine was behind on agreed lease and utility payments and had failed to reimburse the state for worker comp premiums on the inmate workers – for a period of approximately four years.  The state paid the wages of staffers, the work comp premiums and utility costs which mean the “taxpayers” were subsidizing a substantial amount of Alpine’s operation.

Under media and public pressure, the Governor became involved in December of last year.  Almost immediately, Alpine’s prison industry operation was ordered closed.  Following the closure Alpine and the NDOC negotiated a repayment agreement with the Attorney General’s office that was very favorable to Alpine’s owner.  The agreement allows Randy Bulloch to make monthly payments to the state over a period of another four years until the debt is paid.  Surprisingly, this agreement does not provide for any interest, fine or penalty for the huge debt from the default(s).  Ultimately the state wound up on the hook for $438,000+ owed by Bulloch.

NDOC Deputy Director, Brian Connett

These default(s) were known to NDOC Director Cox and Deputy Director Brian Connett (Deputy Director of the Prison Industry) but neither took any positive steps to recover the money owed and bring Alpine current.

As originally proposed, SB 478, subsection 7 required notices and an opportunity to be consulted about proposed new prison industry projects be provided to private companies and labor organizations.  It further required the NDOC Director and Deputy Director of Prison Industries to provide the Senate Interim Finance Committee (IFC) on Industrial Programs with information on possible impacts upon labor or sales from proposed new prison industries.

Instead of requiring the NDOC to consult directly with businesses that may be affected by new or proposed industries, the amended legislation (subsections #7 in the amended text) calls for other state agencies or departments to conduct studies and submit reports of possible conflicts involving labor or market sales.

Though the legislation as passed does not contain all the provisions hoped for by supporters, necessary key provisions calls for more transparency and oversight over prison industries – and their competition against private companies having to compete against low prison wages.

Two key provisions of SB 478 are the provision that the NDOC must provide documentation to the IFC for approval of new programs and then if approved there, any proposed program must be considered by the Board of Prison Commissioners (composed of the Governor, AG and Secretary of State) for final approval.  Though this provision was already in place, these were circumvented previously.  The second change is the addition of a second union representative added to the IFC Industrial Program Committee.  This will help ensure Nevada workers are protected from unfair prison labor displacing them or taking jobs from a constantly dwindling job market.

Provisions that the NDOC seek approval for new industry projects from the Bureau of Prison Commissioners, provide notice to the private sector, consultation with businesses and labor on proposed new industries and that any industry have an “insignificant” impact upon displacement of workers; were requirements that were not followed.  These actions – or lack of action – were behind the need for this new legislation in the first place.  Ironically this failure to inform or consult directly with competing companies and unions necessitated SB 478…yet as passed, that critical component has been removed from the final language of the bill.

Cox originally took the position of “neutral” on the proposed legislation…then changed that to “opposed” to the bill.  Finally after negotiating out the requirement to provide direct notice to labor or competing companies, Cox and the NDOC came out in “support” of the measure.  This manipulation gives the appearance that the NDOC wants to avoid any direct notice or contact with the very businesses the prison industry program will be competing against.

The default by one company resulted in complaints against the NDOC for using inmate labor to compete unfairly against private companies.  Everyone involved realized the potential for lost jobs in the private sector along with lost sales to competing companies and led to hearings and meetings before the Board of Prison Commissioners and several Senate and Assembly Committee meetings in 2012 and early this year.

Ultimately information that came out in those hearings and through the media revealed that the NDOC’s prison industry program was “off the chain” (to use the vernacular) and being operated without any true oversight – by the NDOC or other government authorities.  In the end Alpine Steel did Nevadans a favor by their defaulting across the board.  The action of this one company is what angered the public and led to a quick response from lawmakers and the Executive branch.

Unexpectedly, the NDOC continued to use Randy Bulloch as a spokesman for continuing prison industry operations as they were.  Bulloch appeared at nearly every Committee hearing; before the Interim Finance Committee on Industrial Programs, the Board of Prison Commissioners, the Senate Judiciary Committee and before the General Assembly – side by side with SSI Deputy Director, Connett – speaking in support of continuing the prisoner “training program” and arguing that using such labor was really not unfair competition.  At one point he argued if he and other companies using inmate labor had to pay prisoners fair or comparable wages, it would result in closing prison industries altogether.  In advancing that argument he failed to realize that while the low wages and cheap lease of state owned industry facilities to his company provided increased profits, such came at the expense of workers displaced by the prisoners and businesses that lost contracts to Alpine due to the use of prison labor.

This was the “unfair competition” businesses, the public and organized labor protested against and the legislature agreed with them on.  That’s why it was unexpected to see Bulloch, Cox and Connett continue to confer and present arguments against reform of the prison industry in the face of widespread calls demanding reform by everyone else.

SB 478 surprised everyone – lawmakers and public alike – by how quickly it advanced through the Senate and then Assembly once introduced.  Historically proposed legislation takes a substantial amount of time being discussed, amended and again discussed before ever getting to the point of a vote.  This bill introduced on March 25^th passed in just over 60 days and will become law approximately 90 days after submission.

The NDOC and the department’s head of SSI will remain in charge of the state’s prison industry program.  Even after demonstrating the agency and top administrators violated the state laws and administrative regulations, the NDOC has been able to successfully maintain overall control.

I weighed in on this issue in Nevada as soon as the issue became public.  As the Executive Director of the Voters Legislative Transparency Project (VLTP), I provided research, a “white paper” report with documentation to Governor Sandoval, AG Cortez-Masto, Secretary of State Miller, members of the state Assembly, the IFC on Industrial Programs, the Senate and personally to Director Cox.

VLTP Directors and staff traveled to Nevada to be in attendance at some of those meetings and spoke directly with Mr. Bulloch and others on the issues.  Many of the tough questions posed to Cox and Bulloch in subsequent hearings or meetings originated from the VLTP analysis and report.

VLTP has publicly supported the legislative efforts to bring the prison industry program in Nevada under control and force it to operate in a transparent manner.  I’m gladdened that all the effort put into solving this issue has been successful and will benefit workers and businesses moving forward.

The final version of SB 478 came as a result of compromise between lawmakers, businesses, union leaders, workers and the NDOC.  None of those involved got everything they wanted but that’s how “compromise” works.  It’s a needed step in the right direction and now new SSI industry programs or projects will come under intense scrutiny and vetting prior to implementation.  Such scrutiny was absent previously.

Expecting the same government bodies; the Legislature’s IFC and the Board of Examiners to protect the interests of workers and competing business owners is difficult.  Oversight and transparency will be the key ingredients to keeping the prison industry program from once again getting out of control.  This new legislation appears to provide both.

By Bob Sloan Consumer exploitation, corporate behavior, Ethics in Government, exploitation and manipulation, inmate labor, Jobs, Labor, Nevada, organized labor, Prison Industries, Prison Industry, prison labor, Privatized Prison System, slave labor No comments Tags: Alpine Steel LLC, Brian Connett, Director of NDOC Greg Cox, Disenfranchisement, inmate labor, Model Legislation, Nevada Department of Corrections, prison labor, privatization, privatized prison system, randy bulloch, transparency, Wet 'N Wild