February 18, 2005

The EPA ended a recycling deal with Federal Prison Industries after private companies challenged it.

By Tom Avril, Inquirer Staff Writer

A large company that employs federal prisoners has lost a contract to recycle computers for the federal government, after a challenge from small, privately owned recyclers who said the $800 million corporation represented unfair competition.

The contract for Federal Prison Industries Inc., a federally owned corporation also known as Unicor, was terminated by the U.S. Environmental Protection Agency on Wednesday, agency officials said.

Contracts remain in effect for seven small businesses that also were picked by the EPA, including Hesstech Inc., based in Edison, N.J.

The EPA terminated Unicor's contract upon receiving guidance from the federal Small Business Administration, which determined that the prison company was not a qualified bidder.

Federal regulations state that Unicor has the right to bid on government contracts that are limited to businesses with annual revenue below $10 million - as this one was - even though Unicor's revenue is 80 times that much.

But in a ruling earlier this month, the Small Business Administration found that Unicor's right to bid on small-business contracts was limited to supplying items, not services.

The EPA will not choose another recycler to replace Unicor unless it appears that the remaining seven companies cannot handle the work, agency procurement officer Oliver Voss said.

"We awarded these things in December, and we want to start work," Voss said.

The contract requires recyclers to ensure that materials are handled safely, and to document that any dismantled components are in turn sold to other companies that will handle them safely.

Electronics can contain toxic metals such as lead and mercury. Many machines are exported to Asia, where some are torn apart or melted down by workers with no protective equipment.

The EPA contract is designed to prevent such abuses, but some environmental groups say the agency's requirements fall short.

The EPA says the federal government is the largest computer purchaser, buying 7 percent of the world's total and disposing of 10,000 machines a week.

Unicor would have recycled computers at seven locations, including the federal prison at Fort Dix in Burlington County. No longer.

"Chalk this up as one small victory for small businesses," said Amy E. Laderberg, a lawyer with the Washington office of Crowell & Moring L.L.P., which represented one of the small businesses that had challenged the Unicor contract.