SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Free Market Prison Industries Reform 
Act of 1998''.

SEC. 2. GENERAL PROVISIONS RELATING TO STRUCTURE AND FUNCTION OF 
              FEDERAL PRISON INDUSTRIES.

    Title 18, United States Code, is amended by striking sections 4121 
through 4122 and inserting the following:
``Sec. 4121. Definitions
    ``In this section--
            ``(1) the term `industry' means an endeavor that utilizes 
        incarcerated persons to produce one or more goods or provide 
        one or more services, or both;
            ``(2) the term `product' includes services;
            ``(3) the term `prisoner contributions' means an amount 
        which shall be used for--
            ``(A) payment of fines and restitution owed by the prisoner 
        pursuant to court order;
            ``(B) reasonable charges for room and board, as determined 
        under rules made by the Attorney General;
            ``(C) allocations for support of the inmate's family 
        pursuant to statute, court order, or agreement by the inmate; 
        and
            ``(D) contributions, of not less than 5 percent but not 
        more than 20 percent of the fee paid on account of the inmate, 
        to any fund established by law to compensate the victims of 
        crime;
            ``(4) the term `assembled good' means a good which is the 
        result of the assembly of fabricated goods, as such terms are 
        defined in 19 CFR 10.11 et seq.; and
            ``(5) the term `foreign-made good' means a good that the 
        Director of Bureau of Labor Statistics determines is a product 
        of which 95% or more of the amount sold in the United States is 
        fabricated in a foreign place.
``Sec. 4122. Administration of Federal Prison Industries
    ``(a)(1) Federal Prison Industries is established as a Government 
corporation of the District of Columbia.
    ``(2) Federal Prison Industries shall be administered by a board of 
7 directors appointed by the President to serve at the will of the 
President without compensation. The President, in appointing such 
directors, shall consider for appointment a person recommended by each 
of the following:
            ``(A) The Speaker of the House of Representatives.
            ``(B) The minority leader of the House of Representatives.
            ``(C) The majority leader of the Senate.
            ``(D) The minority leader of the Senate.
    ``(b) Federal Prison Industries shall provide industries operated 
as a Limited Sales Project, Private Sector Project, or a Prison 
Industry Enhancement Project. The goal of such industries shall be to 
generate the greatest amount of prisoner contributions as is reasonably 
possible and provide employment for the greatest number as is 
reasonably possible of those inmates who are eligible to work who are--
            ``(1) in the custody of the Bureau of Prisons;
            ``(2) convicted by general courts martial and confined in 
        any institution within the jurisdiction of any department or 
        agency comprising the Department of Defense, to the extent and 
        under terms and conditions agreed upon by the Secretary of 
        Defense, the Attorney General, and Federal Prison Industries; 
        or
            ``(3) confined in any penal or correctional institution of 
        the District of Columbia to the extent and under terms and 
        conditions agreed upon by the District of Columbia Department 
        of Corrections, the Attorney General, and Federal Prison 
        Industries.
    ``(c) Federal Prison Industries shall so conduct its operations so 
that it realizes annual positive net revenues.
    ``(d) Federal Prison Industries shall avoid capturing more than a 
reasonable share of the market among Federal departments, agencies, and 
institutions for any specific product of a Limited Sales Project.
    ``(e)(1) Any department or agency of the Department of Defense may, 
without exchange of funds, transfer to Federal Prison Industries any 
property or equipment suitable for use in performing the functions and 
duties covered by agreement entered into under subsection (b)(2).
    ``(2) The Department of Corrections of the District of Columbia 
may, without exchange of funds, transfer to the Federal Prison 
Industries any property or equipment suitable for use in performing the 
functions and duties covered by an agreement entered into under 
subsection (b)(3).
    ``(f) Nothing in this chapter shall prohibit any industry from 
offering for sale on the open market--
            ``(1) assembled goods; or
            ``(2) foreign-made goods.''.
    ``(g) Federal Prison Industries is not required to comply with the 
Competition in Contracting Act of 1984 or with the Federal Acquisition 
Regulations.
    ``(h) Federal Prison Industries may provide vocational training for 
qualified inmates without regard to their Federal Prison Industries 
work or other assignments.''.

SEC. 3. EXISTING INDUSTRIES.

    Chapter 307 of title 18, United States Code, is amended by adding 
at the end the following:
``Sec. 4130. Limited Sales Projects
    ``(a) Any industry not operated as a Private Sector Project or a 
Prison Industry Enhancement Project shall be operated as a Limited 
Sales Project.
    ``(b) An industry operated as a Limited Sales Project shall--
                    ``(A) sell its products only to--
                            ``(i) the Federal Government;
                            ``(ii) State and local governmental 
                        entities; or
                            ``(iii) outside the United States;
                    ``(B) be operated directly by Federal Prison 
                Industries; and
                    ``(C) be located in a facility provided by the 
                Bureau of Prisons.

SEC. 4. NEW INDUSTRIES.

    (a) In General.--Chapter 307 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 4131. Private Sector Projects
    ``(a) Except as provided in subsection (g), each industry located 
at a facility activated by the Attorney General on or after the date 
which is one year after the date of the enactment of the Prison 
Industries Reform Act of 1998 shall be operated as a Private Sector 
Project. Each industry located at a facility that was activated before 
that date may be operated as a Private Sector Project.
    ``(b) An industry operated as a Private Sector Project shall--
            ``(1) sell its products generally on the open market;
            ``(2) be operated by a private person under a contract with 
        Federal Prison Industries for the use of prison labor; and
            ``(3) be located in a facility operated by the Bureau of 
        Prisons or a private person under a contract with the Attorney 
        General, or elsewhere as may be determined by the Attorney 
        General.
    ``(c) Except as otherwise provided in this section, Federal Prison 
Industries shall enter into a contract with a private person to operate 
the Private Sector Project on terms beneficial to the mission of 
Federal Prison Industries. The contract shall include a provision for 
payment of a fee for the use of the services of the inmates working in 
that Project.
    ``(d) Before entering into a contract with a private person under 
subsection (c), Federal Prison Industries shall prepare and make public 
a notice soliciting private persons to submit bids for the contract. 
Federal Prison Industries shall submit that notice to the committees on 
the judiciary of the House of Representatives and the Senate on or 
before the date such notice is made public.
    ``(e) When reviewing bids submitted by a private person to operate 
and manage a Private Sector Project, Federal Prison Industries shall 
give preferences to private persons who propose to use the Private 
Sector Project for operations that otherwise would be located in a 
foreign place, unless Federal Prison Industries determines that other 
bids are of greater benefit to the mission of Federal Prison 
Industries.
    ``(f) The Attorney General may determine the portion of any 
compensation paid by the private person pursuant to a contract under 
subsection (c) that will be distributed as wages to inmates who work in 
the industry. The remainder of such compensation shall be retained by 
Federal Prison Industries and distributed as prisoner contributions in 
accordance with section 4133.
    ``(g) If Federal Prison Industries is unable to enter into a 
contract with a private person with respect to a Private Sector Project 
within 18 months after the latter of the date on which notice is given 
pursuant to subsection (d) or on which the Attorney General activates 
the facility at which the industry is to be located, Federal Prison 
Industries may operate that industry as a Prison Industry Enhancement 
Project.
``Sec. 4132. Prison Industry Enhancement Projects
    ``(a) Each industry that is in operation on the day which is one 
year after the date of the enactment of the Prison Industries Reform 
Act of 1998 and located at a facility activated before such day may be 
operated as a Prison Industry Enhancement Project. Any industry 
described in section 4131(g) and which Federal Prison Industries 
determines will not be operated as a Private Sector Project shall be 
operated as a Prison Industry Enhancement Project.
    ``(b) An industry operated as a Prison Industry Enhancement 
Project' shall--
            ``(1) sell its products generally on the open market;
            ``(2) be operated by Federal Prison Industries; and
            ``(3) be located in a facility operated by the Bureau of 
        Prisons or a private person under a contract with the Attorney 
        General.
    ``(c) The Attorney General may determine the portion of the net 
revenues of the Prison Enhancement Project to be distributed as wages 
to inmates who work in the industry. The remainder of such revenue 
shall be retained by Federal Prison Industries and distributed as 
prisoner contributions in accordance with section 4133.
    ``(d) Not later than 2 years after the date of the enactment of the 
Prison Industries Reform Act of 1998, Federal Prison Industries shall 
operate not less than 5 industries existing on such date as Private 
Sector Projects or Prison Industry Enhancement Projects. Not later than 
3 years after such date, Federal Prison Industries shall operate not 
less than 20 such industries as Private Sector Projects or Prison 
Industry Enhancement Projects.''.
    (b) Elimination of Old Provision Respecting New Industries.--Title 
18, United States Code, is amended by striking section 4123.

SEC. 5. CONFORMING AMENDMENTS.

    (a) Mandatory Source Requirement.--Section 4124 of title 18, United 
States Code, is amended--
            (1) in subsection (a)--
                    (A) by striking ``The'' and inserting ``Except as 
                otherwise provided by law, the'';
                    (B) by inserting ``(in each of the executive, 
                legislative, and judicial branches)'' after ``United 
                States''; and
                    (C) by striking ``the industries'' and inserting 
                ``Limited Sales Projects'';
            (2) in subsection (d), by striking ``products and 
        services'' and inserting ``products of Limited Sales 
        Projects''; and
            (3) by adding at the end the following:
    ``(e)(1) Subsection (a) does not require the purchase by Federal 
entities of any assembled goods.
    ``(2) Subsection (a) does not require the purchase by Federal 
entities of any foreign-made goods. ''.
    (b) Prison Industries Fund.--Section 4126(c) of title 18, United 
States Code, is amended--
            (1) by inserting ``(in an amount not greater than that 
        provided in chapter 81 of title 5)'' after ``operations, and 
        compensation'';
            (2) by striking the period at the end of paragraph (4) and 
        inserting a semicolon;
            (3) by striking the matter in subsection (c) that follows 
        paragraph (4) and inserting the following:
            ``(5) in paying, under rules and regulations promulgated by 
        the Attorney General, prisoner contributions.''.

SEC. 6 CLERICAL AMENDMENTS.

    The table of sections for chapter 307 of title 18, United States 
Code, is amended--
            (1) so that the item relating to section 4121 reads as 
        follows:

``4121. Definitions.''.
            (2) by striking the item relating to section 4123; and
            (3) by inserting after the item relating to section 4129 
        the following new items:

``4130. Limited Sales Projects.
``4131. Private Sector Projects.
``4132. Prison Industry Enhancement Projects.''.

SEC. 7. MODIFICATION OF PROHIBITION ON SALES OF PRISONER-MADE PRODUCTS.

    Section 1761 of title 18, United States Code, is amended by 
striking subsections (b) through (d) and inserting the following:
    ``(b)(1) This section does not apply to good, wares, or merchandise 
manufactured or produced, or services provided, by inmates at an 
industry--
            ``(A) provided by Federal Prison Industries; or
            ``(B) provided by a State, unless--
                    ``(i) the industry is operated by a person other 
                than the State; and
                    ``(ii) after September 30, 2008, the State does not 
                have in effect any requirement that the departments and 
                agencies of the State purchase a portion of their 
                requirements for products produced by any industry 
                provided by that State.
    ``(2) As used in this subsection, the term `State' means a State of 
the United States and any commonwealth, territory, or possession of the 
United States.''.

SEC. 8. STUDY OF FOREIGN-MADE GOODS.

    The Director of the Bureau of Labor Statistics shall make a initial 
determination of those goods (described by Standard Industrial Product 
Code published by the Office of Management and Budget) of which 95 
percent or more of the amount sold in the United States are fabricated 
in a foreign place. The Director shall report that determination to 
Congress, not later than 180 days after the date of the enactment of 
the Prison Industries Reform Act of 1998.

SEC. 9. RESTRUCTURING.

    (a) Plan.--The Attorney General shall, not later than one year 
after the date of the enactment of this Act, develop and submit to 
Congress a plan, together with any recommendations for any necessary 
implementing legislation, for restructuring Federal Prison Industries. 
The plan shall provide--
            (1) for the reduction in the use of Limited Sales Projects 
        measured as a percentage of the total sales of Federal Prison 
        Industries (or any successor) by 40 percent before the end of 
        the 5-year period beginning on the date of the enactment of 
        this Act;
            (2) except as provided in subsection (b)--
                    (A) for the phase out of the use of Limited Sales 
                Projects by September 30, 2008; and
                    (B) for the phase out of the use of Prison Industry 
                Enhancement Projects by September 30, 2013;
            (3) the creation of a non-governmental entity to succeed to 
        the rights and obligations of Federal Prison Industries;
    (b) Alternate Provisions of Plan.--
            (1) Generally.--The plan may provide that if the number of 
        inmates employed in industries provided by Federal Prison 
        Industries 3 years after the submission date is less than the 
        number of inmates so employed on the submission date, then--
                    (A) the 40 percent reduction described in 
                subsection (a)(1) is not required and Limited Sales 
                Projects may also be used to provide industries after 
                September 30, 2008, but to no greater extent (measured 
                as a percentage of the total sales of Federal Prison 
                Industries (or any successor)) than used on the 
                submission date; and
                    (B) Prison Industry Enhancement Projects may also 
                be used to provide industries after September 30, 2013.
            (2) Definition.--as used in this subsection, the term 
        ``submission date'' is the date the plan is submitted to 
        Congress under subsection (a).
    (c) Implementation of Plan.--To the extent the plan may be 
implemented without the enactment of legislation, the plan shall go 
into effect 180 days after the date of its submission to Congress, 
unless Congress shall by law otherwise provide.
Free Market Prison Industries Reform Act of 1998 - Amends the Federal criminal code to revise provisions governing Federal Prison Industries (FPI). 
Directs that FPI:  (1) be administered by a board of seven directors appointed by the President; (2) provide industries operated as a Limited Sales Project, Private Sector Project, or Prison Industry Enhancement Project, aimed at generating the greatest amount of prisoner contributions and providing employment for the greatest number possible of inmates who are eligible to work and in the custody of the Bureau of Prisons, convicted by general courts martial and confined in an institution under Department of Defense jurisdiction, or confined in a District of Columbia penal or correctional institution; and (3) conduct its operations so that it realizes annual positive net revenues. 
Allows any such prison industry to offer for sale on the open market assembled or foreign-made goods.  Exempts FPI from compliance with the Competition in Contracting Act of 1984 or with the Federal Acquisition Regulations. 
(Sec. 3) Requires any prison industry not operated as a Private Sector Project or a Prison Industry Enhancement Project to be operated as a Limited Sales Project, which shall:  (1) sell its products only to the Federal Government, State and local governmental entities, or outside the United States; (2) be operated directly by FPI; and (3) be located in a facility provided by the Bureau of Prisons. 
(Sec. 4) Requires each industry located at a facility activated by the Attorney General one year or more after this Act's enactment to be operated as a Private Sector Project, with an exception.  Permits each industry located at a facility that was activated before that date to be operated as a Private Sector Project.  Directs that such a Project:  (1) sell its products generally on the open market; (2) be operated by a private person under a contract with FPI for the use of prison labor; and (3) be located in a facility operated by the Bureau of Prisons or a private person under a contract with the Attorney General, or elsewhere as may be determined by the Attorney General. 
Requires FPI:  (1) to enter into a contract with a private person to operate the Private Sector Project on terms beneficial to FPI's mission, including provision for payment for the use of the services of the inmates working in that Project; (2) before entering into such contract, to prepare and make public a notice soliciting private persons to submit bids; and (3) when reviewing bids, to give preference to private persons who proposed to use the Project for operations that otherwise would be located abroad, with an exception. 
Allows each industry that is in operation one year after this Act's enactment and located at a facility activated before such date to be operated as a Prison Industry Enhancement Project, which shall: (1) sell its products generally on the open market; (2) be operated by FPI; and (3) be located in a facility operated by the Bureau of Prisons or a private person under a contract with the Attorney General. 
Requires FPI, not later than:  (1) two years after this Act's enactment date, to operate not fewer than five industries existing on such date as Private Sector Projects or Prison Industry Enhancement Projects; and (2) three years after such date, to operate not fewer than 20 such industries as Private Sector Projects or Prison Industry Enhancement Projects. 
(Sec. 7) Rewrites provisions regarding the prohibition on sales of prisoner-made products.  Makes such prohibition inapplicable to goods, wares, or merchandise manufactured or produced, or services provided, by inmates at an industry provided by FPI, or by a State, unless:  (1) the industry is operated by a person other than the State; and (2) after September 30, 2008, the State does not have in effect any requirement that State departments and agencies purchase a portion of their requirements from products produced by any State prison industry. 
(Sec. 8) Requires the Director of the Bureau of Labor Statistics to make an initial determination of those goods of which 95 percent or more of the amount sold in the United States are fabricated in a foreign place. 
(Sec. 9) Directs the Attorney General to develop and submit to the Congress a plan for restructuring FPI that provides for:  (1) the phasing out of the use of Limited Sales Projects and of Prison Industry Enhancement Projects by September 30 of 2008 and 2013, respectively; and (2) the creation of a non-governmental entity to succeed Federal Prison Industries.
Free Market Prison Industries Reform Act of 1998