Diane Cardwell / New York Times News Service

As chief financial officer of a military clothing manufacturer, Steven Eisen was accustomed to winning contracts to make garments for the Defense Department.

But in December, Eisen received surprising news. His company, Tennier Industries, which is in a depressed corner of Tennessee, would not receive a new $45 million contract.

Tennier lost the deal not to a private sector competitor, but to a corporation owned by the federal government, Federal Prison Industries.

Federal Prison Industries, also known as UNICOR, does not have to worry much about its overhead. It uses prisoners for labor, paying them 23 cents to $1.15 an hour. Though the company is not allowed to sell to the private sector, the law generally requires federal agencies to buy its products, even if they are not the cheapest.

Eisen, who laid off about 100 workers after losing the new contract, said the system took sorely needed jobs from law-abiding citizens. “Our government screams, howls and yells (about) how the rest of the world is using prisoners or slave labor to manufacture items, and here we take the items right out of the mouths of people who need it,” he said.

Though Federal Prison Industries has been around for decades, its critics are gaining more sympathy this year as jobs, competition and the role of government have become potent political issues.

Recently, a clothing company complained that the government company had expressed interest in making Air Force windbreakers like one worn by the president. Last month, amid negative news reports and pressure from the Senate minority leader, Mitch McConnell, FPI said it would stop competing for the contract because it could damage the private company that makes the jackets, Ashland Sales and Service.

In addition, a bipartisan coalition of lawmakers is resuscitating a bill to overhaul the way the prison manufacturing company does business, proposing to eliminate its preferential status.

Under current practice — governed by intricate laws, regulations and policies — an agency must buy prisoner-made goods if the company offers an item that is comparable in price, quality and time of delivery to that of the private sector, with certain exceptions. The company’s prices are not always the lowest, but it frequently has been able to underbid private companies, congressional aides say.

The bill seeks to limit those advantages by putting a limit on FPI’s sales to the federal government, opening more product areas to private companies and strengthening requirements that the prices for prisoner-made products be competitive. The legislation would also impose federal work-safety standards and higher wages, starting at $2.50 an hour.

Separately, McConnell has introduced a bill that would subject the Bureau of Prisons, including its manufacturing company, to greater congressional oversight.

The prisons’ view

FPI has traditionally relied on office furniture, electronics and clothing manufacturing for the bulk of its business, but it has been moving into new industries like renewable energy. The company already has one factory each in New York and Oregon to build solar panels and is looking into making energy-efficient lighting and small wind turbines.

According to the Bureau of Prisons, inmates who go through the program are 24 percent less likely to return to jail and 14 percent more likely to find employment upon release because of the skills and experience they receive. The program operates in a range of industries — including fleet management and data services — to lessen the effect on any particular one.

The move into solar panels and other energy technologies is meant to help government agencies meet mandates for using energy from renewable sources and to “provide inmates with job skills in a new and growing market,” according to Julie Rozier, a spokeswoman for the company.

Across the country, some correctional facilities have begun preparing inmates for the green economy, offering training in solar panel installation and energy-efficient heating, ventilation and cooling systems. Inmates do not install solar panels, but assemble them; when fully operational, the plants in Otisville, N.Y., and Sheridan, Ore., can employ about 400 inmates and produce 75 megawatts worth of panels a year, Rozier said.

Pushing for action

So far, response from the solar industry has been measured, with representatives saying that production is too small to pose a serious threat. A pool of trained solar workers might even be beneficial, says the Solar Energy Industries Association.

But industries that have long been competing against the federal company, like the clothing and furniture industries, are leaning on lawmakers to do something.

Chris Reynolds, president of Campbellsville Apparel in Kentucky, said he had contacted McConnell, R-Ky., to express concern about possible competition for his military T-shirt contract, a move that inspired McConnell’s bill.

“My employees just cannot believe the fact that a prisoner who should be paying a debt to society is being promoted through the federal government to take a job from an American taxpaying citizen,” he said.