The Obama administration is using prison labor to advance its green energy agenda, enriching foreign companies and some of the president’s largest campaign donors in the process.
Federal Prison Industries, most commonly known by the trade name UNICOR, is a wholly owned subsidiary of the U.S. Department of Justice. Established by Franklin Delano Roosevelt in 1934, UNICOR was intended as a voluntary work-training program for federal inmates. It has recently gone into business supplying federal agencies with green energy technology such as solar panels.
Hundreds of federal inmates earn between $0.23 and $1.15 per hour manufacturing solar panels at UNICOR facilities in New York and Oregon. The panels are then sold to a variety of government agencies, which are obligated by law to purchase them.
One of the alleged rationales for the program is to allow federal agencies to purchase domestically produced solar panels at an affordable price. UNICOR’s website insists its solar panels "are domestically sourced and produced, meeting the requirements of the Buy American Act, Trade Agreement Act, and the American Recovery and Reinvestment Act."
However, the agency signed a five-year $219 million contract in 2009 with Taiwan-based Motech Industries to provide the individual solar cells used to assemble the panels.
It is a common trick employed to get around "Buy American" restrictions, said Rep. Bill Huizenga (R., Mich.). Products manufactured using foreign components still qualify if they are physically assembled in the United States. "It's yet another outrage on what is happening with our tax dollars," he told the Washington Free Beacon. Huizenga has sponsored legislation to reform UNICOR in an effort to ensure that prison labor "is not taking business away from the private sector."
UNICOR typically partners with private companies to install the panels and help the agencies put in place other energy-saving measures. Major beneficiaries of this system include Constellation Energy, which was recently acquired by the Exelon Corporation, a Chicago-based utility provider with deep ties to the Obama administration.
Less than two week after the two firms finalized their merger, Constellation won a 20-year contract to provide renewable energy to 10 State Department facilities, including its Foggy Bottom headquarters, as well as a portion of the White House campus.
The "first-of-its-kind federal contract" will help the department contribute to President Obama’s executive order mandating a 28-percent reduction in greenhouse gas emissions by 2020, according to a company press release. It will also spur the development of several new green energy projects facilities, including a 5-megwatt solar project in New Jersey that will use panels provide by UNICOR.
Constellation is one of the most prolific providers of green energy to federally owned facilities, sporting contracts with the General Services Administration (GSA) for the U.S. Capitol building, the Federal Reserve, the Smithsonian Institution, the United Nations building in New York, and a host of federal buildings in several states.
The company appears to have cornered a market that failed solar company Solyndra sought to break into before filing for bankruptcy in September 2011, despite receiving more than half a billion dollars in taxpayer-backed loans. Emails uncovered by congressional investigators reveal that former Solyndra CEO Chris Gronet "spoke very openly" with President Obama about "the need for installation of Solyndra’s rooftop solar on U.S. government buildings."
Constellation, like Solyndra, received hundreds of millions of dollars for green energy projects in the 2009 stimulus package. The company, Peter Schweizer notes in Throw Them All Out, was identified as a promising investment by liberal billionaire George Soros, who bought 300,000 shares of Constellation that same year.
Constellation’s new parent company, Exelon, is one of the most politically connected firms in the country, as well as one of President Obama’s top sources of campaign contributions.
Exelon employees, including a number of current and former top executives, have donated at least $246,000 to Obama since 2007, including at least $83,000 this cycle.
"Chicago-based Exelon stands out as one of the best patrons throughout Obama’s political career," notes Politico’s Darren Samuelsohn. "Its employees make up the largest group of donors this cycle from the energy and natural resource sector."
Exelon was Obama’s fourth-largest campaign donor when he ran for Senate in 2006, contributing more than $73,000, according to the Center for Responsive Politics. The firm donated $326,000 to Obama’s presidential campaign in 2008.
Frank Clark, who recently retired as chairman and CEO of Commonwealth Edison, another Exelon subsidiary, helped advise Obama before his 2008 presidential run and has been a prolific campaign bundler ever since. Clark has already raised between $100,000 and $200,000 for the president in the current cycle.
Exelon board member John Rogers has bundled more than $500,000 for the president this cycle, as he did in 2008, and has personally contributed at least $100,000 to the pro-Obama Super PAC Priorities Action. Rogers, who played on the Princeton basketball team with Obama’s brother-in-law, Craig Robinson, recently attended the wedding of senior White House adviser Valeria Jarrett’s daughter in Chicago.
The connections extend well beyond the large campaign contributions of top executives. Obama campaign adviser David Axelrod is a former consultant to the company. Former White House chief of staff Rahm Emanuel helped broker the $8.2 billion merger between PECO Energy and Unicom that led to the firm’s creation in 2000. It was the biggest deal of Emanuel’s two-year career as an investment banker in Chicago, during which he pocketed more than $16.2 million, according to congressional disclosure forms.
Obama’s close ties to Exelon became a contentious issue during the Democratic primary in 2008, when Hillary Clinton accused her opponent of cutting deals "behind closed doors" to benefit "one of his largest contributors."
Exelon was a vigorous proponent of cap-and-trade legislation, even going so far as to leave the U.S. Chamber of Commerce over the group’s opposition to the bill. It was also poised to be one of the biggest financial beneficiaries of the bill’s passage, which ultimately never happened. One study estimated that Exelon "could see its operating income jump by almost $1.7 billion" under a cap-and-trade regime.
Exelon still managed to secure its share of federal funding. In 2011, it received a $646 million taxpayer-guaranteed loan to build a solar facility in California and created only 20 permanent jobs.
The administration’s cozy relationship with Exelon is emblematic of a Democratic party that has been corrupted by powerful special interest groups, said Jay Cost, a political analyst and author of Spoiled Rotten: How the Politics of Patronage Corrupted the Once Noble Democratic Party and Now Threatens the American Republic.
"Democrats like to say they are for the people over the powerful. It’s just not true," he told the Washington Free Beacon. "We have not seen a government raid the public treasury to pay off constituent groups to such an obscene extent in American history. A hundred years from now historians will look back at this administration and hold their nose."
UNICOR maintains it is "preparing inmates for the green economy" and that the program reduces the recidivism rate among prisoners, though a 2011 Congressional report found that studies looking into that claim "are not conclusive."
UNICOR did not return requests for comment.
The same report noted that little about the UNICOR operation appears to have changed since its founding nearly a century ago: "Most of FPI’s current operations are based on a manufacturing, mass-production, low-skilled labor economy of the 1930s. Inmates employed in FPI are working in ‘a labor-intensive manner’ where the emphasis is on employing as many inmates as possible with each inmate producing little output."
UNICOR has a history of using its competitive advantage—federal law typically requires government agencies to buy its products, even if cheaper alternatives are available—to undercut private businesses.
A military clothing manufacturer in Tennessee recently lost out to UNICOR on a $45 million contract to make products for the Department of Defense, the New York Times reported in March. As a result, the firm laid off about 100 employees.
Earlier this year, Senate Minority Leader Mitch McConnell (R., Ky.) intervened on several occasions to prevent Kentucky manufacturers from losing federal contracts to UNICOR.
"Why are we going to use taxpayer dollars to purchase materials that are literally taking business away from the private sector?" said Rep. Huizenga. "And let’s be honest, let’s pull the pin on the hand grenade. If this was Chinese prison labor, we'd be rejecting every single one of these imports."