According to the link below , a hell of a lot of goods - including a lot of military items - are made in US prisons!
http://www.motherjones.com/politics/2008/07/what-do-prisoners-make-victorias-secret
The Washington State prison system is one I have no knowledge of. Those references may or may not be true.
However the federal prison system only allows goods from the FPI (Federal Prison Industries) to be sold/distributed either back to the prison for use or to other government agencies. Products include anything from furniture to military uniforms to office furniture. Any profits go back into the cost of incarceration. Basically the inmates are working to pay their own costs and getting a small subsidy.
Some jails take another approach (jails being short time incarceration don't really have an industriy as such to pay their costs) Rather whaen I worked at the county jail, we charged the inmates for their incarceration. There was a $10 booking fee and a $3 per day incarceration fee. The money was deducted from whatever money they had at the time of booking and from any subsequent deposits into their inmate accounts. Obviously they weren't required to make any more deposits but if they didn't, they would be unable to make purchaces from the canteen (most inmates spend around $60 per month in the canteens)
The " ...pennies on the dollar" amount the article quotes as the inmates pay is misleading. They are allowed to take college and university course in their off duty time and being incarcerated (and legally considerred unemployed with zero income) makes them eligble for tution grants and waivers worth thousands per month.