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Veteran vendors, prison inmate workers battle over contracts

Who puts the “R” in CDCR?

Lately, by the California Department of Corrections and Rehabilitation’s own admission, almost no one.

But two groups who claim they do are the Prison Industry Authority (PIA), which employs thousands of prisoners while they’re incarcerated, and the small vendors who contract with the state and who hire some of the inmate workers when they get released.

They’re not only fighting over who rehabilitates better, but who has the right to sell peanut butter and other food products to Corrections and other state agencies.

A group of small and disabled veteran businesses have been lobbying for months to push back against the PIA, which they say is trying to take a lot of their contracts.

The PIA, meanwhile, said they’re not going after anyone’s turf, because the amount of goods PIA produces is going down as a consequence of realignment. As the prison population falls and more prisoners end up in county facilities, the inmate workforce they have to draw on is shrinking. The PIA currently employs 5,900 prisoners at 22 facilities. Within the prison system, many inmates consider PIA employment a privilege because it helps in getting a job on the outside.

Much of the lobbying against the PIA appears to be going through a group called the Coalition of Small and Disabled Veterans Businesses (CSDVB). But Reslock said he hadn’t heard of the group until they faxed every member of the Legislature a letter complaining about alleged PIA expansion on Aug. 26.

That letter called on legislators “to urge the Governor to issue an Executive Order that would stop the California Prison Industry Authority (PIA) from its intention to expand its Food Enterprise into areas where contracts have already been awarded to small and disabled veteran businesses.” The fax was sent out by Lori Kammerer of Kammerer & Company,
“That’s an unsupportable allegation she’s making,” said Eric Reslock, chief of external affairs for the PIA. “I’m just gobsmacked by it.”

Kammerer has lobbied for the coalition for almost two-and-a-half years. But, records on the secretary of state’s website show the group has never paid her a cent.
“That’s very odd,” Reslock said. “I don’t work for free.”

But Kammerer has been paid $28,000 this year by San Joaquin Distributors, a Fresno-based food service contractor who works with the state. The CEO of San Joaquin, Stephen Simpson, is also listed as the executive of the coalition. The phone number listed for the coalition is the number for Kammerer & Company.

The coalition and San Joaquin are interested in the same bills — AB 150 and SB 67, in particular. Both bills would direct the Department of General Services to direct a percentage of vendor contracts to, you guessed it, small and disabled veteran businesses.

Staff for Sen. Curren Price, D-Inglewood, said that AB 67 is a two-year bill they will continue to push in 2012. Assemblyman Henry Perea, D-Fresno, author of AB 150, does not plan to reintroduce his bill.

A spokesperson for the California Fair Political Practices Commission said there didn’t appear to be anything improper about the arrangement. Lori Kammerer also said that she checked to make sure the setup was legal. Simpson is one of 16 members of the coalition’s executive committee, she said. While the group hasn’t had their own bank account, they’re in the process of setting one up and having lobbying payments go through them.

“It was just easier for him to pay,” Kammerer said. “For all intents and purposes, the coalition has paid.”

According to Kammerer’s letter, the coalition represents “the interests of more than 20,000 Certified Small Businesses (CSBs) and Disabled Veteran Business Enterprises (DVBEs) who are under contract with state agencies.”

“We don’t have a website yet,” Kammerer said. “It’s just been a very lean group.”

Kammerer said that they have been pushing for more specific, binding rules around contracting with state agencies – rules designed to make sure the vendors are doing the work themselves and not just subcontracting it out, for instance.

In 2006, then-Gov. Arnold Schwarzenegger signed an executive order urging state agencies to do 25 percent of their contracting with “Small and Disadvantaged Business Enterprises.” Overall, the state has generally met this non-binding target, Kammerer said – but some state agencies do lots of contracting with small vendors, while some do very little.
She also said these vendors constitute a major anti-recidivism program. Part of the rules around these vendors make it advantageous for them to hire ex-cons – and she estimated that former inmates made up about half of the workforce of coalition members.

But some sources speaking off the record have questioned how small some of these “small businesses” really are. San Joaquin is one of several vendors with ties to Titus Enterprises, a state contractor founded in 1959. Today, Titus Enterprises is run by Phillip Simpson, Stephen Simpson’s brother. Stephen Simpson is also the stepfather of Chris Adolph, who runs another vendor, Adolph, Inc.

Stephen Simpson said that a “small business” for the purposes of state vendors is considered to have annual revenues under $14 million, though there’s nothing legally-binding about the state doing business with vendors of this size. San Joaquin has annual revenues of around $10 million, he said, and much of his work is done with prisons – which, he said, are pushed to buy from the PIA, usually at a higher cost.

“If you were to ask the people at each correctional facility, the people who buy the food, if they had their choice they wouldn’t buy anything from PIA,” Simpson said.

The PIA’s Reslock contends that Simpson has it backwards — that Corrections has asked them to make more food. Corrections buys about $110 million worth of food every year. Only $14.5 million of this comes from the PIA, while $39 million comes from small, disabled veteran and minority businesses. He also pointed to a May report from the state auditor which looked at prices on a variety of food items and found that more often than not, the PIA was cheaper than other vendors.

“For them to claim they’re the source of opportunity for our inmates, I like to see some data on that because I don’t think that’s credible,” Reslock said.

One thing both sides agree on is the fact that providing jobs for inmates and ex-inmates is an important aspect in bringing down the state recidivism rate.

But Kammerer said that as the population falls inside state prisons – and as the remaining inmates skew towards more serious offenders locked up for longer periods – the focus should be on ex-cons, not cons.

“Why are we focusing on job training for lifers?” she asked.


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