Summary: Pursuant to a congressional request, GAO examined the operations of the Federal Prison Industries (UNICOR) to determine whether improvements were needed in: (1) setting and maintaining prices for its products and services; (2) staying abreast of and dealing with customer problems; and (3) granting clearances for federal agencies to buy elsewhere.
GAO found that UNICOR was not doing the market checks that its pricing policy requires to ensure compliance with the law requiring that its prices do not exceed market prices. Neither UNICOR policy nor federal regulations define market prices or how they should be determined. Some UNICOR officials stated that the checks were not being performed because of: (1) lack of time and staff; (2) difficulties in finding comparable items and identifying differences in product specifications; and (3) difficulty in getting data from some private-sector firms. Although agency officials had mixed views, most of the customers contacted had few complaints about the prices and products. In addition, the prices reviewed did not exceed the highest price charged or quoted. However, UNICOR continues to have problems implementing its cost accounting system since job cost data are needed to facilitate assessing and setting prices and evaluating factory performance. GAO found that data on customer complaints indicated that UNICOR customers were not experiencing significant problems. However, a standard complaint form will be used to: (1) facilitate reporting by product divisions and factories; (2) stay abreast of the level of complaints; and (3) identify recurring or systematic problems. GAO also found that two-thirds of the clearances granted were issued within 10 days of the date UNICOR received the order. GAO believes that the clearance process could be avoided by improving corporate catalogs to note special products which it does not make and products which do not require a clearance.
