You can blame or thank FDR.

Federal Prison Industries (later UNICOR) is a "New Deal" program created by FDR by executive order in 1934 and later by statute.

Federal prisoners were sitting in dank cells in many cases doing nothing except training each other in crime and recidivism was high. The program was designed to get them training work by having them make products and services only for the Federal government, so as not to compete with private workers and unions in the larger market. It was set up as a corporation to be self-sustaining and any profits go back into the program, and they are not allowed to sell to anyone else but the Federal govenment and most arms of the Federal government are pretty much required to buy from them in many cases.

It's been that way since 1934 without a whole lot of changes.

What's apparently going on in this current story is that the Obama administration wanted to get solar panels in federal government buildings and UNICOR wasn't making them, so they worked on getting them to do so. I'm sure a lot of GOP would like to see that go to private contractors instead. And it's certainly not creating private jobs doing that, but it is saving tax dollars and some federal prisoners will be trained in making something more desirable than office furniture. No one can buy or use the solar panels they make except the Federal government buildings.

Sources:

Wikipedia on FPI/Unicor

Funding Universe on it; excerpt:

Federal Prison Industries, Inc. (FPI) was formed in 1934 during a period when social reform and economic recovery were priorities in the United States. At the time, federal prisoners were unproductive and inactive, and officials in the Department of Justice were concerned that this idleness was creating an increasingly dangerous federal prison system. To occupy the inmates' time and also to teach them job skills and a work ethic that would prove valuable upon their release, the Department of Justice lobbied for a program that allowed men and women incarcerated in federal prisons to manufacture goods for government use. Because President Franklin D. Roosevelt's New Deal included the creation of a number of new agencies and programs and thus an expansion of the government, the Department of Justice argued that the federal prisoners would be filling a necessary niche.

Unicor's PDF Brochure: Factories with Fences, 75 Years of Changing Lives

which explains in more detail its history and mission and how its creation was intended to reform a lot of abuses and problems regarding previous prison labor systems and practices.

Federal Bureau of Prisons on it; excerpt

Who are the Customers?

By statute, FPI is restricted to selling its products to the Federal Government. Its principal customer is the Department of Defense, from which FPI derives approximately 53 percent of its sales. Other key customers include the Department of Homeland Security, the General Services Administration, Federal Bureau of Prisons, Social Security Administration, Department of Justice, United States Postal Service, Department of Transportation, Department of the Treasury, Department of Agriculture, and the Department of Veterans Affairs.

For further information about UNICOR, please visit their website at www.unicor.gov.