Carl Levin

Mr. LEVIN

Mr. LEVIN. The Chair just asked if there is objection to the modification.

Mr. LEVIN. Mr. President, section 806 of the defense authorization bill which is before the Senate is a commonsense provision. It was adopted by the Armed Services Committee. Basically, it says the private sector ought to be allowed to bid on items that the Department of Defense is buying, if the Department of Defense declares that it is necessary that the private sector be allowed to bid. That may sound so obvious that people may be scratching their heads saying, well, obviously the private sector ought to be allowed to bid if the Department of Defense believes the product which is offered by the private sector is what is needed by the Department of Defense. But that is not the way it is now. The way it is now is that Federal Prison Industries can make a unilateral decision that it is going to supply the Department of Defense with a product, and the private business people out there who want to just simply compete for a product can be prohibited from doing so. That, it seems to me, is the height of unfairness in a society which has a private sector, has private businesses, has labor that is working in those private businesses, and where a Government agency says that product, produced by that private company, is a product that we want because it is a better product than FPI can give us or it is a product that can be given to us more cheaply than the prisons can give it to us. What an extraordinary way it is to run a Government, that we have agencies in this Government that want to buy a product, be it textiles or furniture or what have you, that are told they cannot compete that product with the private sector competing; they have to buy it from Federal Prison Industries even though it costs the agency more or it is of lower quality. What an extraordinary way to be inefficient, to waste taxpayers' money, and to force agencies that are supposed to be protecting taxpayers' money to spend it on lesser quality items or on more expensive items--just because Federal Prison Industries unilaterally has decided it is going to supply the Department of Defense. That is not fair. That is not fair and we have to eliminate it. Section 806 simply says that the Department of Defense--not Federal Prison Industries--should determine whether or not a product manufactured by Federal Prison Industries meets the needs of the Department of Defense. The approach that is taken by Section 806 is consistent with the basic tenet of how our whole procurement system works, which is the people who buy and use products should be the ones who decide whether the quality, price, and delivery of those products meet their needs. Yet amazingly enough, the FPI, Federal Prison Industries' current rules prohibit Federal agencies from even looking at private sector products to determine whether they might be superior to what Federal Prison Industries has. The regulations of Federal Prison Industries say: A contracting activity should not solicit bids, proposals, quotations or otherwise test the market for the purpose of seeking alternative sources to the Federal Prison Industries. If that is not absolutely extraordinary, that Federal Prison Industries is telling the Department of Defense, when they go and buy textiles or shoes or whatever they are buying, that they may not even test the market, seeking alternative sources to Federal Prison Industries. They may not solicit bids, proposals, quotations, or test the market for the purpose of seeking alternative sources to Federal Prison Industries. What kind of an upside-down situation is this? What kind of a topsy- turvy situation is it that the Department of Defense cannot even solicit a quote from somebody to supply a product if Federal Prison Industries says they may not do so? Unilaterally, the seller is telling the buyer: You can't even go out and seek other quotes or seek competition. Boy, that sure turns the purchasing process of the Department of Defense and our other agencies right on its head. What the Department of Defense is required to do, instead of doing what ordinary buyers do, which is to seek the best product at the best price, is to accept Federal Prison Industries' determination. Federal Prison Industries is the sole arbiter of whether its products meet the requirements of the Department of Defense. Section 8104 of the Federal Acquisition Streamlining Act requires the Department of Defense and other agencies to conduct market research before soliciting bids or proposals for products that may be available in the commercial marketplace. They are supposed to solicit bids, but they do not do that. They are not allowed to do that. Under the FPI rules, they have to buy it from Federal Prison Industries if the Industries on their own, unilaterally, decide they are going to force the Department of Defense to buy a product. All that the provision does is to reverse the rule which prohibits the Department of Defense from conducting market research and permits the Department of Defense to look at what private sector companies have to offer, as it would do in the case of any other procurement. If Federal Prison Industries offers a product that is comparable in price, quality, and time of delivery to products available from the private sector, the Department would still be required to purchase that product on a sole-source basis from Federal Prison Industries. But if the DOD determines that Federal Prison Industries' product was not competitive, then it would be permitted to conduct a competition and go to another source. That seems to me to be the least that we can do to protect the taxpayers from the misuse of Federal funds on products that fail to meet the needs of the Department of Defense. Federal Prison Industries has repeatedly claimed that it provides quality products at a price that is competitive with current market prices. The statute, indeed, is intended to do exactly that, provided Federal Prison Industries will provide the Federal agencies products that meet their requirements and prices that do not exceed current market prices. But the FPI is unwilling to permit agencies to compare their products at prices with those available in the private sector. Under Federal Prison Industries' current interpretation of the law, it need not offer the best product at the best price. It is sufficient for it to offer an adequate product at an adequate price and insist on its right to make the sale. When Federal Prison Industries sets the price, it then seeks to charge what it calls a market price, which means that at least some vendors in the private sector charge a higher price, and the FPI's proposed regulation specifies that the determination of what constitutes the current market price, the methodology employed to determine the current market price and the conclusion that a product of Federal Prison Industries does not exceed that price is--you got it--the sole responsibility of Federal Prison Industries. That is the situation. They are supposed to buy at market price, but they make a determination as to whether or not, in fact, what they are forcing an agency to buy is being set at a market price. The General Accounting Office reported in August of 1998: The only limit the law imposes on Federal Prison Industries' price is that it may not exceed the upper end-- Upper end-- of the current market price range. Moreover, the manner in which Federal Prison Industries seeks to establish the current market price range appears calculated to result in a price far higher than the Department of Defense would pay under any other circumstances. According to the proposed regulation codifying FPI's pricing policies, ``a review of commercial catalog prices will be used to establish a `range' for current market price.'' The contrast is very sharp because when the Department of Defense buys from commercial vendors, it seeks to negotiate, and generally obtains, a steep discount from catalog prices. FPI appears to have difficulty even matching the undiscounted catalog prices. Last August, the General Accounting Office compared Federal Prison Industries' prices for 20 representative products to private vendors' catalog prices for the same or comparable products and found that for four of these products, FPI's price was higher than the price offered by any private vendor. That is 4 out of 20. In 4 out of 20 cases, GAO found that the price FPI charged was higher than the price offered by any private vendor. For five of the remaining products, the FPI price was at the ``high end of the range.'' Those are the words of the General Accounting Office. FPI's price was at the ``high end of the range'' of prices offered by private vendors--ranking sixth, seventh, seventh, eighth, and ninth of the 10 vendors reviewed. In other words, for almost half of the FPI products reviewed, the FPI approach appeared to be to charge the highest price possible rather than the lowest price possible to the Federal consumer. We have complaint after complaint from frustrated private sector vendors asking us: Why can't we compete? Why are we in the private sector precluded from bidding on an item? Here is one vendor's letter: Federal Prison Industries bid on this item, and simply because Federal Prison Industries did, it had to be given to Federal Prison Industries. FPI won the bid at $45 per unit. My company bid $22 per unit. The way I see it, the Government just overspent my tax dollars to the tune of $1,978. Do you seriously believe that this type of procurement is cost- effective? I lost business, my tax dollars were misused because of unfair procurement practices mandated by Federal regulations. This is a prime example, and I'm certain not the only one, of how the procurement system is being misused and small businesses in this country are being excluded from competition with the full support of Federal regulations and the seeming approval of Congress. It is far past time . . . to require [FPI] to be competitive for the benefit of all taxpayers. A third frustrated vendor, who had been driven out of business by FPI, told a House committee: Is it justice that Federal Prison Industries would step in and take business away from a disabled Vietnam veteran who was twice wounded fighting for our country . . . therefore effectively destroying and bankrupting that . . . business which the Veterans' Administration suggested he enter? There is a very fundamental unfairness which exists in this system. It is one that we need to correct. The Department of Defense took a survey recently of DOD customers for Federal Prison Industries' products. The results are eye-opening. The survey provided DOD customers five categories in which to rate Federal Prison Industries' products: excellent, good, average, fair, or poor. According to the data reported jointly by the Department of Defense and the Federal Prison Industries in April, a majority of Department of Defense customers rated FPI as average, fair, or poor in price, delivery, and as an overall supplier. On price: 54 percent of the Department of Defense's electronics customers, 70 percent of DOD clothing and textile customers, 46 percent of DOD dorm and quarters furniture customers, 53 percent of DOD office case goods customers, 57 percent of DOD systems furniture customers rated FPI prices as average, fair, or poor. On delivery, the same kind of figures: 50 percent of DOD electronics customers rated FPI delivery as averaged, fair, or poor; 62 percent of DOD clothing and textile customers rated FPI delivery as average, fair, or poor. That did not make any difference. FPI said it was going to sell, and once FPI made that determination, the Department had no alternative. It does not make any difference whether the delivery is lousy, whether the price is too high, whether the overall performance is poor. It makes no difference. Forget competition. FPI said: We are going to sell. Forget fairness to a business with workers in that business. FPI said: Tough. You have to buy from us. So the bottom line is that fully 35 percent of the Department of Defense customers indicated they have had a problem with an FPI product delivered in the last 12 months. The reason they are having problems is because there is a lack of competition. We think, given the fact that such a small amount of money is paid to prisoners for their labor, that Federal Prison Industries could supply these products much more cheaply than the private sector. But that is not the case. The case is that the private sector very often can supply these products to our agencies more cheaply than can the prison industries. But if the Federal Prison Industries decides in its unilateral, sole, exclusive judgment that it is going to supply the Department of Defense, that is it. That is it. This is an injustice to the people who have worked hard to put together a business. It is an injustice to the people who work for those businesses. This is one of those weird cases where you have business and labor coming together before us on the same side of an issue. The American Federation of Labor, AFL-CIO, urges that this section remain in the bill. We have the alert from the Chamber of Commerce as well. Members of the Senate, business and labor--our good friend from Texas calls those special interests, business and labor. People who have worked hard to put together a business and people who work in those businesses are not being allowed to compete. Sorry. Federal Prison Industries says you are going to buy that product. That is what they tell the DOD. You are going to buy it. You may not like the price, you may not like the delivery, you may not like the quality, but we are not going to let anybody else compete for that sale. So that is the fundamental unfairness that this language would correct. It does not tell the Department of Defense they cannot buy it from Federal Prison Industries. It simply says that if the Department of Defense determines on price or quality that the private sector can do as well, then it--not the FPI; the Department of Defense--may compete and determine whether or not they can save the taxpayers any money. I am going to close and then turn this over to my friend and my colleague from Michigan for his comments. But I just want to read one additional quote from the Master Chief Petty Officer of the Navy before the National Security Committee of the House a couple years ago. He said that the FPI monopoly on Government furniture contracts has undermined the Navy's ability to improve living conditions for its sailors. Master Chief Petty Officer John Hagan said: Speaking frankly, the [FPI] product is inferior, costs more, and takes longer to procure. [The Federal Prison Industries] has, in my opinion, exploited their special status instead of making changes which would make them more efficient and competitive. The Navy and other Services need your support to change the law and have FPI compete with [private sector] furniture manufacturers. Without this change, we will not be serving Sailors or taxpayers in the most effective and efficient way. Mr. President, I yield the floor. I am happy to yield time to my distinguished colleague from Michigan.

Mr. LEVIN. How much time would the Senator wish?

Mr. LEVIN. I am happy to yield 10 minutes to the Senator from Michigan.

Mr. LEVIN. I am happy to yield to the Senator.

Mr. LEVIN. Is that divided in some way or under the control of Senator Warner and myself? How is that?

Mr. LEVIN. I thank the Chair. The Senator from Delaware is here and I will be happy to yield--how much time do the opponents have?

Mr. LEVIN. I move to lay that motion on the table. The motion to lay on the table was agreed to. Vote on Amendment No. 392

Mr. LEVIN. I apologize. I was discussing something with the chairman. We didn't hear the unanimous consent request relative to time, at least I didn't.

Mr. LEVIN. Mr. President, there is no objection on this side.

Mr. LEVIN. Mr. President, I wonder whether or not we might be able to schedule an amendment earlier in the morning for Senator Kerrey.

Mr. LEVIN. At 10:30; is that the effort?

Mr. LEVIN. I wonder if I could inquire of the chairman as to the two amendments he is referring to.

Mr. LEVIN. What was the other amendment?

Mr. LEVIN

Mr. LEVIN. Mr. President, I move to reconsider the vote.

Mr. LEVIN. As modified.

Mr. LEVIN. Mr. President, the suggestion was we immediately take up the two Wellstone amendments that we are going to voice vote, then go back to the Roberts amendment, and then come back to the third amendment afterwards.

Mr. LEVIN. Mr. President, if the chairman will yield, may I make a suggestion that after we conclude the debate on the pending amendment, we immediately proceed to the first of the two Wellstone amendments, accept those before lunch, and then determine at that time whether to conclude the debate on the third. In any event, the rollcall vote on the third amendment will have to come after lunch under the existing unanimous consent agreement.

Mr. LEVIN. Mr. President, I will be voting for this amendment because it is worded very differently from earlier versions. This version of the amendment simply requires the President to certify whether or not the new Strategic Concept of NATO imposes any new commitment or obligation on the United States. In 1991, we had major changes in the alliance's Strategic Concept. These were huge changes. Section 9 of the alliance's new Strategic Concept in 1991, for instance, said: Risks to allied security are less likely to result from calculated aggression against the territory of the allies but rather from the adverse consequences of instabilities that may arise from serious economic, social and political difficulties, including ethnic rivalries and territorial disputes which are faced by many countries in Central and Eastern Europe. They could lead to crises inimical to European stability and even to armed conflicts which could involve outside powers or spill over into NATO countries. Then in paragraph 12, it says: Alliance security must-- This is 1991--not this new one, but the Strategic Concept that was adopted in 1991. Alliance security must take into account the global context. Alliance security interests can be affected by other risks of a wider nature, including proliferation of weapons of mass destruction, disruption of the flow of vital resources, and actions of terrorism and sabotage. The reason that this 1991 Strategic Concept was not sent over to the Senate for ratification was very straightforward, very simple, in my judgment; and that is that the Strategic Concept then did not contain new commitments or obligations for the United States. This is a strategic concept; this is not a legally binding document. This is not a treaty-specific document which contains obligations and commitments on the part of the parties. This is a strategic concept document, both in 1991 and in 1999. So when my good friend from Kansas says that I said the Congress was asleep in 1991, the Congress was not asleep in 1991. The Congress was exactly right in 1991. When this Strategic Concept was adopted in 1991, there were no new obligations or commitments that required the Senate to ratify this document. And there are no new obligations or commitments now. The President has already told us that. He has already sent a letter to Senator Warner. The President has sent a letter to Senator Warner dated April 14, 1999, that says: The Strategic Concept will not contain new commitments or obligations for the United States. So the certification, which is required in this amendment--and rightfully so, by the way, in my judgment--has already been made. I see no reason it would not be made again. So I do not believe that the Congress was sleeping in 1991, and it surely is not sleeping now. Senator Roberts is, as far as I am concerned, very appropriately saying to the administration, if this contains new commitments or obligations--if it contains new obligations and commitments--then you should send this to us as a treaty amendment. Of course, I happen to think that is correct. This amendment does not find that there are new obligations and commitments. An earlier version of this amendment, by the way, did. This amendment does not do that. This amendment says to the President: Tell the Congress whether or not the new Strategic Concept--those are the precise words of this amendment--constitutes, involves, contains, new obligations or commitments.

Mr. LEVIN. I apologize.

Mr. LEVIN. Mr. President, let me just add to what the Senator from Virginia just said in response to our good friend from Delaware. What I really fear, perhaps the most, is the substitution of the judgment of a political body for the judgment and findings of the appropriate chain of command. We are a political body. The chain of command at the time, which has been reviewed by the Defense Department, repeatedly made findings and held these two officers accountable. For us now to substitute our judgment more than five decades later for that of the chain of command, it seems to me, is a very, very bad precedent in terms of holding officers accountable for events. Mr. President, the Department of Defense recently reviewed this entire matter--the so-called Dorn report--and I have quoted these findings before, but I will pick out two of them, which seems to me go to the heart of the matter. This is a quote: To say that responsibility is broadly shared is not to absolve Admiral Kimmel and General Short of accountability. Of course, accountability should be broadly shared, and maybe it wasn't as broadly shared as it should have been, but the issue is whether or not this accountability, 57 years ago, is going to be set aside by a political body 57 years later.

Mr. LEVIN. My time is over, but I will be happy to yield.

Mr. LEVIN. Mr. President, will the Senator yield a minute?

Mr. LEVIN. It is very appropriate.

Mr. LEVIN. Mr. President, I wonder if it would be in order, if there would be any objection, to ask unanimous consent that no further business be held between now and the recess so that people know there is not going to be any additional----