oversight

Examination of Financial Statements of Federal Prison Industries, Inc., Fiscal Year 1971

Published by the Government Accountability Office on 1971-12-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                               LM095452
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Examina%i




Department of Justice




OF 2’HE



           I
                     COMPTROLLER           GENERAL   OF      THE      UNITED   STATES
                                      WASHINGTON.     D.C.         20548




     B-114826




     To the     President   of the Senate    and the
,’   Speaker      of the House   of Representatives
4
 P
             This is our       report         on examination      of the financial               state-
     ments    of Federal       Prison          Industries,   Inc., Department                 of Jus-
     tice, for the fiscal        year        ended June 30, 1971.

              Our   examination            was made pursuant                   to the   Government
     Corporation       Control       Act     (31 U.S.C. 841j.

              Copies  of this      report  are         being sent to the Director,     Of-
     fice   of Management          and Budget,          and to the Attorney   General.




                                                      Comptroller                 General
                                                      of the United               States




                              50TH      ANNIVERSARY                   1921-    1971
    I
    I

    I
    I
    I      *
    I
     I   COMPTROLLERGENERAL'S                                   EXAMINATION OF FINANCIAL STATE!:ENTS OF
    I
     '   REPORTTO THE CONGRESS                                f FEDERAL PRISONINDUSTRIES,     INC., FISCAL                        76+
    I                                                           YEAR 1971
    I                                                      ~ Department    of Justice   B-114826       !7
    I                                                      2-
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 ;        DIGEST
         ------
 I
 I
I
I        WHYTHE EXAMINATION WASMADE
I
                  The Government      Corporation           Control     Act    requires       the Comptroller          General
I
I                 to make an--.- annual audit
                                           -_--.- -of       the Federal
                                                                    ---         Prison     Industries,     Inc.           “d ‘2
I

I
I        &'PlBION ON FINANCIAL STATEMENTS
I

                  In the opinion          of the General        Accounting      Office,       the corporation's             fi-
                  nancial      statements      included       in this    report     (schs.      1 through       3) present
                  fairly     its financial        position      at June 30, 1971, and the results                      of its
                  operations        and the sources        and application         of its funds for the year
                  then ended,        in conformity        with generally        accepted        accounting        principles
I                 applied      on a basis consistent            with that of the preceding                 year--except
                  for the provision          of a reserve        for anticipated           adjustments        of sales
                  prices     of certain      products--       and with applicable           Federal      laws.


         OTHERMATTERS OF INTEREST

                  The corporation's     sales    to Government     agencies     in fiscal    year 1971 totaled
                  about $44.5 million,       about $7.8 million        less than in the preceding        year.
                  This decrease     was due to general      cutbacks      in spending     by Government    agen-
                  cies.   Net profit    for the year was $338,000           compared    with a net profit
                  of about $6.3 million       in the preceding       year.    This decrease      was primarily
                  due to the decrease      in sales.

                  The inventories       of materials  and supplies   at June 30, 1971, of about
                  $9.5 million      were about $2 million    less than at June 30, 1970.      This                                de-
                  crease   resulted     from efforts  by management    to minimize cash outflows                                  dur-
                  ing the year.

                  The depreciable        value of buildings       and improvements     of about    $16.9 mil-
                  lion   at June 30, 1971, was about $3.5 million              greater    than at June 30,
                  1970.      This increase     resulted   primarily     from the completion      of major
                  construction      projects.


         RECOMMENDATIONS
                      OR SUGGESTIONS

                  This    report     contains      no recommendations            or   suggestions.




         Tear   She=                                                   1                        DEC.l4,19?1
MATTERSFOR CONSIDERATIONBY THE CONGRESS
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    This report   is submitted      to the   Congress   as required   by the   Government   I
                                                                                            I
    Corporation   Control    Act.                                                           I
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                                                2
                         Contents
                                                                    Page

DIGEST                                                                1

GENERALCOMMENTS                                                       3

MANAGEMENT                                                            4

OPERATIONS                                                            5

CHANGE IN ACCOUNTING PRACTICE                                         6

SCOPEOF EXAMINATION                                                   7

OPINION OF FINANCIAL STATEMENTS                                       7

FINANCIAL STATEMENTS

Schedule

   1       Statement of financial     condition,     June 30,
             1971 and 1970                                            9

   2       Statement of income and expense, fiscal
             years ended June 30, 1971 and 1970                      10

   3       Statement of sources      and application of
             funds, fiscal year      ended June 30, 1971             11

   4       Statement of cost of goods and services  sold,
             fiscal  years ended June 30, 1971 and 1970              12

   5       Statement of vocational     training and place-
             ment expenses, fiscal     years ended June 30,
             1971 and 1970                                           13
APPENDIX

   I       Statement of sales by industry,         fiscal   years
             ended June 30, 1971 and 1970                            14
COMPTROLLERGENERAL'S                              EXAMINATION OF FINANCIAL STATEMENTS OF
REPORTTO THE CONGRESS                             FEDERAL PRISON INDUSTRIES,    INC., FISCAL
                                                  YEAR 1971
                                                  Department of Justice   B-114826


DIGEST
------

WHYTHE EXAMINATION WASMADE

    The Government   Corporation               Control  Act       requires      the Comptroller           General
    to make an annual    audit   of            the Federal        Prison     Industries,     Inc.

OPINION ON FINANCIAL STATEMENTS

    In the opinion          of the General        Accounting       Office,       the corporation's             fi-
    nancial      statements      included       in this    report      (schs.      1 through       3) present
    fairly     its financial        position       at June 30, 1971, and the results                      of its
    operations        and the sources         and application         of its funds for the year
    then ended,        in conformity         with generally        accepted        accounting        principles
    applied      on a basis consistent            with that of the preceding                  year--except
    for the provision          of a reserve          for anticipated          adjustments        of sales
    prices     of certain      products--       and with applicable            Federal      laws.


OTHERMATTERSOF INTEREST

    The corporation's     sales    to Government    agencies     in fiscal    year 1971 totaled
    about $44.5 million,       about $7.8 million       less than in the preceding        year.
    This decrease     was due to general     cutbacks      in spending     by Government    agen-
    cies.   Net profit    for the year was $338,000          compared    with a net profit
    of about $6.3 million       in the preceding      year.    This decrease      was primarily
    due to the decrease      in sales.

    The inventories       of materials and supplies   at June 30, 1971, of about
    $9.5 million      were about $2 million   less than at June 30, 1970.      This                                  de-
    crease   resulted     from efforts by management    to minimize cash outflows                                    dur-
    ing the year.

    The depreciable        value of buildings       and improvements     of about $16.9 mil-
    lion   at June 30, 1971, was about $3.5 million              greater   than at June 30,
    1970.      This increase     resulted   primarily     from the completion     of major
    construction      projects.


RECObB!ENDATIONS
               OR SUGGESTIOfiJS

    This    report     contains      no recommendations             or   suggestions.




                                                          1
MATTERSFOR G'OlJSIDERATIOlV
                          BY THE COIGRESS

    This report   is submitted   to the Congress as required   by the Government
    Corporation   Control Act.




                                           2
                          GENERALCOMMENTS

       The Federal  Prison Industries,     Inc., a wholly owned
Government corporation     created pursuant to the act of
June 23, 1934 (48 Stat.      1211; 18 U.S.C. 41211, functions
within   the Department of Justice      under the general direction
and supervision    of the Attorney     General.

       The corporation     conducts industrial  operations      in Fed-
eral penal and correctional        institutions and in the mili-
tary disciplinary      barracks at Fort Leavenworth,     Kansas, for
the purpose of providing       employment for physically     fit   in-
mates.    These operations     are designed to give the inmates
an opportunity     to acquire knowledge and skill      in trades
and occupations      that will   enable them to earn a livelihood
upon their release.

      The nature of the industrial        operations   established
in the institutions        is determined on the basis of the type
of work that will       furnish   the most appropriate    training
and, at the same time, keep to a minimum the competition
with private     industry.      The number of inmates employed in
the industries      during fiscal    year 1971 averaged 4,556, or
about 22 percent of the average number of inmates incarcer-
ated.

       Under the act which created the corporation,        Govern-
ment agencies are required       to purchase,   at prices not to
exceed current    market prices,     such products   of the indus-
tries   as meet the agencies'     requirements    and as may be
available.     The corporationVs     Board of Directors   has estab-
lished the policy that prices shall not be materially           below
current    market prices.

       The corporation       cunducts a vocational    training    program
for qualified        inmates in connection    with the institutional
industrial      activities    and operates a placement service to
assist     inmates in obtaining       employment upon their    release.
During fiscal       year 1971, 7,756 inmates were enrolled         in 181
groups for training         in various   trade courses and 4,808 in-
mates completed the courses.
                             MANAGEMENT

      The operating   policies   of the Federal Prison Industries,
Inc.,  are prescribed   by   a board  of six directors  appointed
by the President    of the United States to serve for indefinite
terms without compensation.        At June 30, 1971, the board
members were:

                Name                                Representing

Sanford Bates, consultant      in           Attorney      General   of the
   public administration                       United     States
William E. Morgan, president
   emeritus,    Colorado State
  University                                Agriculture
George Meany, president,
   AFL-CIO                                  Labor
James L. Palmer, member,
   Board of Directors,
   Marshall Field Company                   Retailers      and consumers
John Marshall Briley,
   lawyer-industrialist                     Secretary      of Defense
Berry N. Beaman, industrialist              Industry

      The officers     of the corporation    at June 30, 1971, were:

Sanford Bates                       President
James L. Palmer                     Vice President
Norman A. Carlson                   Commissioner of Industries
J. J. Clark                         Acting Associate Commissioner        of
                                       Industries
Paul Plein                          Secretary

The President     and the Vice President   are members of, and
are selected by, the Board of Directors.         Under the bylaws
the Director     of the Bureau of Prisons,    Department of Justice,
is the Commissioner of Industries       and the acting executive
officer    of the corporation,    The Associate Commissioner of
Industries    and the Secretary   serve as the chief operating
and administrative      officers of the corporation.




                                     4
                             OPERATIONS

      The corporationfs      sales to Government agencies in fis-
cal year 1971 amounted to $44.5 million,         a decrease of
$7.8 million    from that of the preceding year due to general
cutbacks in spending by Government agencies.           The decrease
in sales was the principal        reason for the decrease in the
net profit   from about $6.3 million       in the preceding yea:r to
$338,000 in fiscal      year 1971.

      We were informed by corporation     officials      that   the de-
crease in sales of $7.8 million    resulted      principally      from
decreases in sales of about:

      --$3.9 million     at the canvas speciality  shop, Atlanta,
         Georgia, due to the United States Postal Service's
         reduction   in its requirements  for mailbags and to a
         conversion    to nylon mailbags.

      --$2.4 million   at the electronics       shops McNeil Island,
         Washington,  due to a reduction      in the Department of
         Defense procurement budget.

      --$1.2 million    at the electronics       shop, Danbury, Con-
         necticut,   due to changes in contracts       by customers,
         which necessitated     curtailment    of production,   and to
         reductions   in electronic     procurements   by the Depart-
         ment of Defense.

      --$1 million     at the shoe factory, Leavenworth,    Kansas,
         due to a decrease in price of the military      oxford
         purchased by the Defense Supply Agency and to ,a loss
         of production    during an inmate strike.

      The Board of Directors declared a dividend of $3 mil-
lion in March 1971; because of the financial    results for the
year, however, the dividend was not paid.

       The inventories    of materials and supplies at June 30,
1971, amounted to about $9.5 million,      a decrease of about
$2 million    from the amount at June 30, 1970. We were in-
formed that the primary reason for the decrease in invento-
ries was the effort      of management at all locations to reduce
inventories     to the lowest workable levels to minimize cash
outflows*
                                    5
       As of June 30, 1971, the depreciated           value of buildings
and improvements totaled        $16,9 million,     an increase of
about $3.5 million      over the value at June 30, 1970.           The
cost of construction      in process,      $1,6 million,at    June 30,
1971, was about $2.6 million         less than at the beginning of
the fiscal    year.    The changes in the depreciated         value of
buildings   and improvements and in the cost of construction
in process primarily      resulted     from completion     of construc-
tion projects     during the year.

     The locations       at which major    construction     projects    were
completed follow.

                              cost of
      Location              construction              Proiect

Marion,   Illinois           $1,559,000      Industries     building
                                             Industries     building     ad-
Danbury, Connecticut             349,000        dition
Marion, Illinois                 299,000     Vocational     building
Atlanta,  Georgia                286,000     Air-conditioning        system

                     CXANGE
                     L      IN ACCOUNTING PRACTICE

        The corporation    adopted the practice     of establishing      a
reserve for contingencies,        to provide for anticipated         ad-
justments    of prices on certain      products   sold to the Depart-
ment of Defense, under contracts          awarded on the basis of
 tentative   prices subject     to adjustment    at a later    date.
The corporation      adopted the practice      of establishing     the re-
 serve to report more realistically         sales and profits      under
 the contracts.




                                     6
                       SCOPE,   OF EXAMINATION

       Our examination     of the financial    statements   of Federal
Prison Industries,      Inc., for fiscal     year 1971 was made in
accordance with generally        accepted auditing    standards and
included such tests of the accounting          records and financial
transactions    and such other auditing       procedures as we con-
sidered necessary in view of the nature and volume of the
transactions    and the effectiveness       of the internal    controls,
including    the internal    audit function.

        Our examinations    at the various     institutions    are made
on a cyclical     basis.    The fiscal    year 1971 examinations       were
made at the central      office   in Washington, D.C., and at the
institutions    in Allenwood, Pennsylvania;          El Reno, Oklahoma;
Lewisburg,    Pennsylvania;     Petersburg,   Virginia;     Sandstone,
Minnesota;    Terre Haute, Indiana;       and Texarkana, Texas.

                 OPINION OF FINANCIAL STATEMENTS

        In our opinion,    the accompanying financial       statements
(schs. 1, 2,    and   3)  present   fairly   the financial   position
of the Federal Prison Industries,          Inc.,   at June 30, 1971,
and the results      of its operations     and the sources and ap-
plication    of its funds for the year then ended, in confor-
mity with generally       accepted accounting principles        applied
on a basis consistent        with that of the preceding year--except
for the provision       of a reserve for anticipated       adjustments
of sales prices of certain        products--and     with applicable
Federal laws.
                        FEDERAL                 PRISON               INDUSTRIES,                       I N c.


                                              STATEMENT OF FINANCIAL CONDITION
                                                    JUNE 30, 1971 AND 1970


                                                                                                                            Increase or
                                                                                    1971                 1970               decrease(-)
                                     ASSETS
FUNDS WITH U.S. TREASURY:
   Available  for operations                                                s     9,262,202   $ 8,844,382                   $ 417,820
    Special       deposits         (bond and tax deductions)                         46,852                25,935                20,917
ACCOUNTS RECEIVABLE, principally                from Government
  agencies                                                                        4,766,687            7,614,161            -2,847,474
INVENTORIES, at cost:
    Finished  goods                                                               4,186,428            2,610,587              1,575,841
    Work in process                                                               3,450,825            2,893,973                 556,852
    Materials  and supplies                                                       9,470,167           11,545,702            -2,075,535
         Total      inventories                                                 17,107,420            17,050,262                 57,158
PLANT AND EQUIPMENT, at cost or appraised                    value   less
  depreciation:
    Machinery and equipment                                                     10,773,691             9,323,896              1,449,795
    Buildings    and improvements                                               16,904,387            13,390,331              3,514,056
    Construction    in process                                                   1,595,095             4,245,068            -2,649,973
                                                                                                  /
         Total      plant      and equipment                                    29,273,173            26,959,295             2,313,878
SUNDRY ASSETS                                                                       142,917              177,040                -34,123
         Total      assets                                                  $ 60,599,251      $ 60,671,075                  $-- -71,824

      LIABILITIES                             AND        CAPITAL
LIABILITIES:
     Accounts payable                                                       $ 1,468,74U       $        2,531,169          -$1,062,429
     Accrued liabilities                                                      1,025,284                   879,343               145,941
     Employees' accrued annual leave                                          1,031,203                   872,188               159,015
     Reserve ror contingencies                                                   276,134a                                       276,134
     Deposit fund liabilities  (bond and tax deductions)                          46,852                   25,935                20,917
          Total      liabilities                                                  3,848,213            4,308,635              -460,422
INVESTMENT OF U.S. GO-:
    Initial  capital                                                              4,176,04U            4,176,04O
    Property  received from other               Government     agencies,
       net                                                                        2,719,694            2,438,ola                281,676
          Capital                                                                 6,895,734            6,614,058                281,676
     Net income since inception  (schedule   2)                                 131,855,304       131,748,382b                  106,922
     Less dividends  paid into U.S. Treasury                                     a2,000,000        82,000,OOO
          Retained          income                                               49,855,304           49.748,382                106,922
          Total      investment        of U.S. Government                        56,751,038           56,362,440                388,598
          Total liabilities             and investment     of U.S.
            Government                                                      $-~60,599,251     $ 60,671,075                  $ -71,824

eEstablished   to provide   for anticipated     price adjustments     of $264,193 on items                         sold     during
  the year and $11,941 to reflect      a potential    loss of a receivable.
b
  Exclusive  of a reduction    of $230,715 representing      adjustments    affecting prior                        years'     transac-
  tions.




                                                                     9
SCHIZDULE              2


                                FED           ERAL                PR:S@h                  INDUSTRIES,                           I ?; c.

                                                                 SWTEYF.hT        OF   INCOME      AND EXPFXSE

                                                     FISCAL            YEARS MDED JLJNE 30,           1971 AKD 1970




   TOTAL SAWS           OF PRODUCTS AND SERVICES                                                        $47,332,317a           $58,355,621        -$11,023,304

   LESS SALES BE'IWIWEENINDUSTRIES                                                                         2.861.054             6,059.838          -3.198.784

   SALES TO COV!BNMKNT                  AGENCIES                                                         44.471,x3              52,295,783          -7,824,520

   COST UF GOODS AND SERVICES                        SOLD (schedule               4)                     37,469,620             40.459.567          -2.989.947

   GROSS PROFIT                                                                                           7,001,643             11,836,216          -4.834.573

   Add:
           Miscellaneous          sales         income,          net                                         140,821                 114,066               26,755
           Sundry     income,      net                                                                       120.837                  81.544          _-39.293

                                                                                                           7,263,301            12,031,826.         4,768,525

   Less:

           Management          service    contracts                                                            19,450                 12,292                    7,158
           Salaries--indirect             civilian                                                           614,642                 553,282                  61,360
           Loss on disposition              of asszts                                                        134,273                  75.648                  58,425
           Christmas         packages     to inmates                                                           28,173                 26;842                    1,331
           Industries         relocating        expense                                                         9,136                 10,115                     -979
           Sundry expense                                                                                      86,235                232.116               -145,881
           Organization           expense                                                                      87.655                   2.094                 85.561

                                                                                                              979.564                912.589                   66.975

           Sales      expense:
                   Outgoing    freight                                                                         67,779                  54,152                  13,627
                   Shipping                                                                                   245,731                232,335                   13,396
                   Catalog,    samples           and sundries                                                   12,712                 10.694                   2,018

                        Total         sales     expense                                                       326.222                297.181                   29.041

           Administrative        expense:
                 Salaries                                                                                     660,408                671.279                 -10,871
                 TFWel                                                                                         46,341                 55.556                   -9,215
                 Audit    expense                                                                             112,836                 35;ooo                   77,836
                 Rent for Washington                    office                                                 23.936                 23,936
                 Other                                                                                        110.759                 95.437                   15.322
                        Total administrative         expense  subject                       to
                             limitation     set by the Congress:
                                (1971 - $1,003,000)                                                           954,280                881,208                   73,072
                                (1970 - $882,000?
                   Depreciation         on machinery  and equipment                                              3,063                  2,804                      259
                   Depreciation         on buildings  and improvements                                           1.511                  1.511
                        Total     administrative                   expense                                    958.854                885,523                   73.331

           Incentive       awards         to civilians                                                           o .960               10.805                  '-3.845
                                                                                                           2.271.600              2.106.098                  165.502

   NET INDUSTRIAL           PROFIT                                                                         4.991.701a             9.925.72s          4.934.027


           Accident    compensation                                                                            97,422                102,872                  -5,450
           Vocational    training     and placement    expenses                          (sched-
              ule 5)                                                                                       3.853,737              3,021.911                  831,826
           Meritorious     compensation     to inmates                                                        702.905                546,568                 156.337

                                                                                                           4.654,064              3.671.351          _       982.713
   NET PROFIT          TO RETAINED             INCOME (schedule              1)                         $ em--.337.637         $ ~---_.
                                                                                                                                   6.254.377        $-5,916,740
                                                                                                                                                     ~.__---
    aSales and profits                 have     been      reduced     by $264,193   and a reserve                established        to provide      for       an-
     ticipated payments                 for     price       adjustments     cm items sold during                 the vear       under tentative           prices.




                                                                                           10
                                             SCHEDULE
                                                    3

              FEDERALPRISONINDUSTRIES,INC.
       STATEMENT
               OF SOURCES
                        ANDAPPLICATIONOF FLlNDS
             FISCAL YEARENDEDJUNE30, 1971
FUNDSPROVIDED:
   Sales of products and services            $44,471,263
   Miscellaneous sales                         3,093,482
   Sundry income--current year                   101,569
   Cain on disposal of fixed assets               19,268
   Sundry income earned in prior years             2,200
   Decrease in net working capital             1,982,438
       Total funds provided                  $49,670,220
FUNDSAPPLIED:
   Purchase of machinery and equipment       $ 2,564,926
   Purchase of buildings and improve-
     ments                                     1,490,040
   Cost of goods and services sold, less
     depreciation and amortization ex-
     pense                                    35,908,808
   Miscellaneous sales costs                   2,952,661
   Managementservice contracts                    19,450
   Salaries-- indirect civilian                  614,642
   Loss on disposal of fixed assets             c134,273
   Christmas packages to inmates                  28,173
   Industries relocating expense                   9,136
   Sundry expenses                                86,235
   Organization expenses                          87,655
   Sales expenses                                326,222
   Administrative expenses                       954,280
   Incentive awards to civilians                   6,960
   Accident compensation                          97,422
   Vocational training and placement
     expense, less depreciation                3,453,517
   Ekritorious cmpensation to inmates            702,905
   Operating expenses incurred k-~
     prior years                                 232,915
       Total funds applied                   $49,670,220



                              11
sC;~EDYLEA


                   FEDERAL                 PRISON                    INDUSTRIES,                  I   N    C.


                              SI',\TEMENT OF COST OF GOODS AND SERVICES SOLD

                                FISCAL YEARS ENDED JUNE 30,               1971 AND 1970


                                                                                                                 Increase    or
                                                                                                                 decrease(-)

MATERIALS USED                                                             $24.910.375      $27,514,169         -$2,603,794

LABOR, DIRECT INMATE                                                          2.506.127      -2.424,996           _    81,131

MANUFACTURING EXPENSES:
    Salaries--civilian                                                        6,223,795       5,522,332               701,463
    Labor, indirect--inmate                                                      675,705         623,665               52,040
    Light,      heat, power, and water                                           874,838         800,278               74,560
    Travel                                                                        98,880          91,225                 7,655
    Rents and royalties                                                           80,533          58,248               22,285
    Amortization          of deferred      expense                                28,002          31,591               -3,589
    Telephone        and telegraph                                                22,173          22,693                   -520
    Depreciation:
           Machinery        and equipment                                        941,410         782,192              159,218
           Buildings        and improvements                                     403,166         345,403                 57,763
    Factory       supplies                                                    1,265,079       1,275,864               -10,785
    Loss and damaged goods                                                        58,063          56,363                   1,700
    Building        repairs     and maintenance                                   95,270         103,847                 -8,577
    Machine repair           parts                                               689,411         675,762                 13,649
    Freight,        express,     and parcel      post                             89,149          73,201                 15,948
    Vehicle       operation                                                       40,332          32,737                   7,595
    Minor equipment            and repairs                                       371,981         366,472                   5,509
    Accident        compensation--lost         time due to injury                   4,697           3,800                     897
    Special       clothing                                                        36,548          37,485                    -937
    Office      supplies,       printing,     and stationery                       73,851         64,299                   9,552
    Experimental          expense                                                   3,454         19,189               -15,735
    Publications                                                                    5,864           5,014                     850
    Special       meals                                                           12,258          13,282                 -1,024
    Packing and storing                                                           76,409          87,332              -10,923
    Grading and testing                                                             4,737         10,759                 -6,022
    Expenses reclassified--not               applicable      to manu-
       facturing                                                               -174,417         -204,344                29,927
    Commercial         labor and services                                          8,010            2,940                5,070
    Social      security                                                              293              912                 -619
    Life insurance                                                                25,683           22,537                3,146
    Health insurance                                                              66,839           43,129               23,710
    Retirement                                                                   419,478          353,949               65,529

                 Total   manufacturing       expenses                        12,521,491      11.322.156            1,199.335
                 Total   manufacturing       charges                         39,937,993      41,261,321          -1,323,328
Add:
    Work in process         inventory,     beginning                          2,893,973        2,538,596              355,377
Deduct:
    Work in process         inventory,     ending                             3,450,825        2,893,973              556,852
           Cost of goods manufactured                                        39,381,141      40,905,944          -1,524,803

Add:
    Finished   goods inventory,    beginning                                  2,610,587       2,6.?0,419                -9,832
Deduct:
    Finished   goods inventory,    ending                                     4,186,428       2,610,587            1,575,841
    Costs reclassified     as assets or other             expenses               335,680         456.209            -120,529
COST OF GOODS AND SERVICES SOLD (schedule                  2)               $37.4699620     $40.459,567         -$2.989,947



                                                                73
                                                                         SCHEDULE5


     FED    E R A T,       ? R T'S 0 IJ        INDUSTRIES,                 I tz c.


     S'I‘ATEtIEfJTOF VOCATIONALTRAINING AND PLACEMENTEXPEfiJSES
                 FISCAL YEARS ENDED JUNE 30, 1971 AND 1970


                                                                          Increase or
                                               1971            1970       decrease(-)
Personnel compensation                    $2,433,544     $1,931,569        $501,975
Personnel benefits                           197,463        138,966          58,497
Travel and transportation     of
   persons                                     121,141          89,490       31,651
Transportation   of things                      15,865          12,049         3,816
Rent, communications, utilities                138,404          78,949        59,455
Printing   and reproduction                     99,412          51,435       47,977
Other services                                  57,172          80,593      -23,421
Supplies and materials                         390,516         336,792        53,724
         Total expenses subject
           to limitation  set by
           the Congress:        *          3,453,517         2,719,843      733,674
                (1971, $4,175,000)
                (1970, $2,850,000)
Depreciation:
    Machinery and equipment                    235,472         186,959       48,513
    Buildings and improvements                 164,748         115,109       49,639
         Total     (schedule   2)         $3.853.737     $3,021,911        $831.826




                                          13
                                                                                                                                                                                                Average “umber
                                                                                                                                                  Sales                  Increa-P          ur     of inmates  in
                                                                                            Lucatiux                           --     iv- -        --~        1970       decreas.          =)   l”dustry,_J~

                                                                                     El Rena                              $            872,641        $ l,lJ45.279       $     -Ii.,538                  76
                                                                                     La Tu”a                                           669.165              997.Yc14           -,.6:.;39                 44
       DO.                                                                           Lea\...\rnrth                                  3,015;556           3,007;649                   7 ;%J7              124
       Do. lnote a)                                                                  Atlalita                                          lbi,3L8              A/‘, if2             -A,LY4                  ~6
      Cable                                                                          Petersburg                                         69,883               17,1&                  52,723                 6
      car,\as specialty                                                              Atlanta                                        6,192,LLS          10,054,866            -3,862,641                 176
       Do.                                                                           lerre      Haute                               1,597,907           1,416,023                 181.884               126
                                                                                      Fort Leavenworth                                 206,567              AZ.959                  -6,392               41
                                                                                     Leaveworth                                        511,194          i,292,817               -781,623                109
        Do.                                                                          Lewisburg                                         509,102              514,637                -5,535                91
        Do (note b)                                                                   Lompoc                                                                136,785             -136.76;
      Dair)                                                                          La Tuna                                            L37,950             LOO,318                 37 ,,>32             lb
      Electrollics                                                                   McNeil        Island                           2,797,018            5,236,493           -2,439,475                 102
        DO.                                                                           Danbury                                       1,116,@02           2,353,818            -1,L37,816                  99
      Electronic          catle                                                       Lompoc                                        l,c!42.934                692,576             350,358               129
      Feather        products        (?ote b>                                         Texarkana                                                               241,511           -241,511
      Fv~rnlture.         wood                                                        Leavenworth                                      8;4 598                790,387               34,211              10L
        Do (note c)                                                                   Texarkana                                        321:914                                    321,914                50
      Furr~ture.          wood and flter      (note              t)                   Ashland                                                                   25,892            -25,892
      F.m.rm-e; .ood and refinlsting                                                  McNeil Island                                    5i5,736                 480,841              34,895              i36
      F,-rrniture,        customs                                                     Allenwood                                        456,929                 443,124              13,805                71
      Furniture,          new1                                                        Lewisburg                                     2,738,505               3,036,318           -297,813                L91
         Do.                                                                          Marion                                           811,861                 363,101           448,760                  83
      Garment                                                                         Alderson                                      1,238,057                  842,271           395,786                123
      GLOW                                                                            Danbury                                          335,199                 320,179              15,020                82
         DO.                                                                          Sandstone                                        239,598                 278,262            -38,664                 53
       Instructional            system (note c)                                       Lompoc                                             44,845                                     44,845                  5
      Machine,         die, and tool                                                  El Rena                                       1,532,945               1,7i7,627           -214,682                112
      tiacrress                                                                       Atlanta                                       2,085,702               1,675,869             409,833                 62
      Netal      equipment                                                            Terminal         Island                          612,585                976,639           -364,054                  87
      fletal     specialty                                                            Milan                                            778,236                836,809             -58,573                 76
      Parachute          (note a)                                                     Atlanta                                          231,047                 154,676              76.?71                17
      Printing                                                                        LOmpOC                                           449,756                 408,854              40,9L~2               39
         Do.       -                                                                  Marion                                            516,143                392,837            123,306                 63
         Do.                                                                          Sadstone                                          315,928                295,521              20,407                 38
      Plastics                                                                        Terre     Haute                                  474,564                 336,819            137,745                  39
      S1g5                                                                            Atlanta                                          301,521                  87,391            214,130                  3:
         Do.                                                                          McNeil Island                                    476,741                 499,014            -22,273                 46
       st.oe                                                                          Leavenworth                                   4,333,149               5,370,106        -1,036,957                 471
      iextile,         cotcon                                                         Atlanta                                       3,689,910               6,433,566        -23743,656                  602
      Textile,         woolen                                                         Terre Haute                                   2,324,738               2,189,316             135,422                246

              Total      mar~lfacturlng          ar.d processing                                                               44,655,679                  55,623,736    -10,968,057                  4,094

SERVICING:
    Automatic   data processing                                                      Alderso”                                          183,249                 160,224              23.~25                48
    Cot repair     (note d)                                                           Safford                                            35,151                                     35,151
    Furniture    repair    and refinishing                                           La Tuna                                           412,707                 374,884              37,823                ::
      DO.                                                                            Lompoc                                            401,892                 327,897              73,995                68
      DO.                                                                            Petersburg                                        224,460                 186,778              37,682
      DO.                                                                            Seaeoville                                        136,039                 112,661              23,378                2
      DO.                                                                            Talrahassee                                       474,049                 276,889            197,160                 49
      DO.                                                                            Terminal     Island                               382,135                 557,027          -174,892                  66
    Keypunck                                                                                  do.                                        65,029                 81,324            -16,295                 15
    Roadwtael   rebuilding      (note e)                                             Texarkana                                            9,600                279,981          -270,381                    7
     Small engine repair       (note f)                                              Ashland                                                                                                                3
    Tire reconditioning                                                              Petersburg                                        2;1,932                 216,324               5,608                23
      DO.                                                                            TeXai-ka”a                                        130,395                 157,896            -27,501                 20
              Total      servicing                                                                                                  2.676,638               2,731,885             -55,247                462

              Total                                                                                                             47,332,317                 58,355,621    -LL,1)23,304
                                                                                                                                                                           -___                       4,556
                                                                                                                                                                                                      -
                      iess     sales    between          industries                                                                 2,861,054               6,059,838        -3,198,784

              Total      sales       to Government            agencies                                                     S&,471,263                     $52,295,783    $-7,824,520

aI”dustry        transferred           from     Springfield             effective            July        1,    1970.
b
  Industry       was discontinued               during        fiscal          year     1970.

‘Industry        established           I” but      no production                 during         fiscal         year      1970.
d
  Industry       establlshed           in fiscal          year        1971.
eIr,dustry       was discontinued               during        fiscal          year      1971.

flndustry        established           and discontinued                 without           sales      during           fiscal           year       1971.




                                                                                                              14
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