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Federal Prison Industries



SEPTEMBER 26, 2000

Thank you for the opportunity to testify before you today. My name is Victor Arnold-Bik. I work for the Federal Supply Service, General Services Administration. I am the Sales Chief for the Personal Property Management Division located in our Crystal City, Virginia Headquarters. I am here today representing Ms. Deidre Huber, Director of Personal Property Management, who unfortunately could not be with you today.

The issues raised by recent transfers of excess personal property to the Federal Prison Industries (FPI) are of great concern to the General Services Administration (GSA), and we are working hard to address these concerns and to ensure that the goals of the Federal Property and Administrative Services Act of 1949, as amended, (Property Act) are fulfilled.

As you requested in your letter dated September 21, 2000, I would like to first explain GSA's role in the Federal excess and surplus personal property program. Then, I will address our concerns involving the recent transfers of excess personal property to FPI.

GSA Personal Property Utilization Program

Section 202 of the Property Act (40 U.S.C. 483) mandates that executive agencies, to the maximum extent practicable, use excess personal property as the first source of supply in meeting their requirements. Excess personal property is any personal property that an agency has determined that it no longer needs. Each year, hundreds of millions of taxpayer dollars are saved by managers who acquire the excess property of other agencies instead of purchasing new property. Transfers between agencies are generally made without charge for the property.

After agencies determine that property is excess, they are normally required to report it to the GSA Regional Property Management Office responsible for the geographic area in which the property is physically located. GSA makes the information on the reported excess property available to other agencies during the excess screening period, and the agencies review the information to determine whether they need any of the items of reported excess property. If an agency needs the property, it submits a request for a transfer of excess personal property. GSA evaluates competing requests for property and generally grants priority to the agency that will use the property and retain title to the property in the Federal government

GSA Personal Property Donation Program

If no Federal entity requests the excess personal property, it is declared "surplus" under the Property Act. "Surplus" is defined in the Property Act to mean that there is no Federal need for the property. Pursuant to section 203 of the Property Act, GSA transfers Federal surplus personal property to the states for donation to eligible nonfederal organizations. Donated personal property includes all types and categories of property except land or other real property, certain naval vessels, and records of the Federal Government. Each state has a State Agency for Surplus Property (SASP) that is responsible for receiving the surplus personal property from GSA and distributing it to eligible donees in the state. GSA makes available information on surplus personal property to the SASPs during the screening period, and the SASPs request property for donation in their states.
The major categories of eligible recipients under GSA's donation program are:

  • Public agencies
  • Nonprofit educational and public health activities, including programs for the homeless
  • Nonprofit and public programs for the elderly
  • Public airports
  • Educational activities of special interest to the Armed Services

Selling Surplus Federal Personal Property

When surplus property survives the screening period, i.e., no SASP requests the property, GSA regulations issued under the Property Act specify that the property is available for sale to the public. Each agency that originally reported the property as excess is responsible for determining how to sell the property once it becomes surplus. Either GSA can sell the surplus property, or the agency can make its own arrangements for selling the property. Unless they have their own authority independent of the Property Act, agencies are required to follow the requirements in section 203 of the Property Act (40 U.S.C. 484) for public sale. Under the Property Act rules, award of a sale is generally made to the high bidder. Although there are some exceptions, for sales conducted under the Property Act rules, sales proceeds are generally required to be returned to the U.S. Treasury.

Transfers to FPI

In addition to the information above, you also asked about FPI's authority to receive excess personal property. The Federal Prison Industries (FPI), as a wholly owned Government corporation, is authorized to participate in GSA's excess personal property program, because it is included in the definition of "executive agency" that applies to the Property Act. (Subsection 3(a) of the Property Act (40 U.S.C. 472(a)) defines "executive agency" to include any wholly owned Government corporation). However, different from most Federal agencies, the FPI does not use the Property Act authority to sell their personal property. We have been informed by FPI that they have their own authority to sell their personal property through 18 U.S.C. 4044.

With regard to GSA's recent decision to limit transfers of excess personal property to the FPI's Elkton, Ohio facility, this decision was prompted by allegations of potential wrongdoing with the excess personal property previously transferred to this facility. Attached for your information, are charts detailing the trends in the amounts of excess personal property that has been transferred to FPI.

GSA approved the transfers of excess personal property to FPI on the basis that FPI was planning to reutilize the property. As stated in the GSA regulations implementing the Property Act, agencies "must not acquire excess personal property with the intent to sell or trade for other assets." (41 C.F.R. 102-36.70(f)). As we became aware of the large volume of excess property being transferred to FPI, we began to seek more information as to how this property was being used. We believe that, today, the most prudent decision has been to stop transfers of excess personal property to the FPI facility at Elkton, Ohio and to question and scrutinize approvals to all other FPI facilities. We have been asking FPI how they will use excess personal property before we authorize transfers. We will continue to ask for this information and to approve transfers only where they comport with applicable regulations. We will be working with FPI and all of our customer agencies to monitor transfers of excess personal property to ensure that we are promoting the maximum reutilization of this property as required by the Property Act.

Last Reviewed: 2017-08-13