WASHINGTON — The dwindling ranks of U.S. apparel makers could generate millions of dollars in new business from the federal government as U.S. prisoners curtail their production, under legislation the House approved Thursday redrawing rules under which prisons compete with the private sector for federal contracts.

The legislation, backed by Democrats and Republicans, is considered the biggest change to Federal Prison Industries since it was created in 1934. The House voted 350-65 to require prisons to compete directly with commercial suppliers on price, quality and delivery time, a process that would be phased in over five years.

Federal agencies, including the military, are now required to first turn to U.S. prison factories for their supplies, as long as FPI’s bids don’t exceed the highest price offered by commercial suppliers.

In the last two decades, FPI business has ballooned as its basic offerings of things like license plates have increased to 250 products, ranging from police uniforms, underwear and coveralls to furniture, auto parts and electronics. Sales climbed to $679 million last year, up from $117 million in 1980.

Apparel and other textile products accounted for about one-third, or $226 million, in government sales last year. About 7,000 of the 22,000 prison workers in 111 factories sew textile products. The Congressional Budget Office estimates total FPI sales by 2008 would be trimmed by 40 percent, if the legislation becomes law.

“They shouldn’t have a monopoly on government contracts,” said Patricia Campos, lobbyist with the apparel union UNITE.

Changes to how FPI competes have been pressed on Capitol Hill for eight years and it seems the sluggish economy and decline in U.S. manufacturing jobs helped to fuel support for the bill’s passage.

“With its predatory practices, FPI has contributed to the closure of private companies and loss of tens of thousands of jobs,” said Rep. Carolyn Maloney (D., N.Y.), a co-sponsor of the bipartisan legislation. Maloney has championed the issue since 1997, when she helped reach a compromise with FPI to restore a military glove contract awarded a constituent in Queens, N.Y., Glamour Glove Co., now operating as Glove Street Inc.

Proponents of eliminating FPI’s advantage say the prisons would still retain much of their competitive edge by paying workers hourly wages of 23 cents to $1.15, while private companies must pay a minimum $5.15. FPI would still pay no taxes and the government otherwise would continue to underwrite equipment, health costs and the like.“Private companies have no such luxury,” wrote Kevin Burke, president and chief executive of the American Apparel and Footwear Association, in a Tuesday letter to lawmakers. In an interview, Burke said he expected Senate passage of the bill.

However, there are opponents to the legislation who consider prison manufacturing crucial to stemming inmate violence and teaching useful trades. They are not appeased by the legislation’s increase in vocational training and adding nonprofit undertakings to FPI’s mission, like building house frames for Habitat for Humanity.

While there appears to be strong support for the legislation among the ranks of apparel producers in the U.S., employing 294,100 workers, there was at least one dissenter.

Gail Strickland, president of Saxon Textile Corp. in New York, which produces apparel for the military and other federal branches, is concerned about prisoners becoming idle. “This is ridiculous. China and other countries are a lot more of a threat to the U.S. apparel industry than a few thousand people making things for the federal government,” she said.

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