Federal Prison Industries, Inc. (FPI) Standards and Procedures That Facilitate FPI's Ability To Accomplish Its Mission

Part III

Department of Justice

_______________________________________________________________________

Federal Prison Industries

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28 CFR Part 302

Federal Prison Industries, Inc. (FPI); Standards and Procedures That

Facilitate FPI's Ability To Accomplish Its Mission; Proposed Rule

Proposed Rules

DEPARTMENT OF JUSTICE

Federal Prison Industries, Inc.

28 CFR Part 302

[BOP 1081-P]

RIN 1120-AA84

Federal Prison Industries, Inc. (FPI) Standards and Procedures

That Facilitate FPI's Ability To Accomplish Its Mission

AGENCY: Federal Prison Industries, Inc., Justice.

ACTION: Proposed rule.

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SUMMARY: This document proposes to codify Federal Prison Industries,

Inc. (FPI)'s standards and procedures that facilitate FPI's ability to

accomplish its mission. The publication of these procedures marks the

culmination of a process that began several years ago in efforts to

clarify certain provisions of FPI's statute, 18 U.S.C. 4121 et seq. It

represents a continuing effort to make the use of FPI as a provider of

goods and services to the Government as simple and efficient as

possible. The document's provisions include: purpose and scope;

definitions; a mission statement; roles and responsibilities of FPI's

Board of Directors, Chief Executive Officer, Chief Operating Officer,

and the Ombudsman; agency meeting procedures; inmate employment levels;

provision of products as a mandatory source; provision of products as a

non-mandatory source; provision of services to the commercial market;

provision of products and services as a preferential source; waiver and

appeal procedures; pricing; and new product development or expansion.

FPI is codifying these procedures in order to clarify its procedures

and to foster its relationship with its customers and suppliers by

providing for public review and comment.

DATES: Comments due by March 8, 1999.

of services to the commercial market;

provision of products and services as a preferential source; waiver and

appeal procedures; pricing; and new product development or expansion.

FPI is codifying these procedures in order to clarify its procedures

and to foster its relationship with its customers and suppliers by

providing for public review and comment.

DATES: Comments due by March 8, 1999.

ADDRESSES: Rules Unit, Office of General Counsel, Bureau of Prisons,

HOLC Room 754, 320 First Street, NW., Washington, DC 20534.

FOR FURTHER INFORMATION CONTACT: Marianne S. Cantwell, Corporate

Counsel, Federal Prison Industries, Inc., phone (202) 305-3501.

SUPPLEMENTARY INFORMATION:

Background

1. Why Is FPI Promulgating This Rule?

Federal Prison Industries, Inc. (FPI) is proposing to issue this

rule to codify its standards and procedures that facilitate FPI's

ability to accomplish its mission. FPI is promulgating this rule as a

proactive measure in order to clarify its standards and procedures. It

represents a continuing effort to make the use of FPI as a provider of

goods and services to the Government as simple and efficient as

possible. The rules are descriptive of the functions of FPI's Board and

other managing officials, and are descriptive of existing standards and

procedures utilized to accomplish FPI's mission.

2. What Is FPI's Mission?

The United States Congress created FPI in 1934, just four years

after the creation of the Federal Prison System. The Congress

immediately recognized the need for constructive work programs in the

nation's prisons both to occupy inmates' time and train them to be

productive citizens. FPI's mandate has remained the same since its

creation: to train and employ the greatest number of inmates possible

in a self-supporting manner. FPI is the most important correctional

management program of the Federal Bureau of Prisons to relieve inmate

idleness and to ensure the orderly operation of Federal prisons

risons both to occupy inmates' time and train them to be

productive citizens. FPI's mandate has remained the same since its

creation: to train and employ the greatest number of inmates possible

in a self-supporting manner. FPI is the most important correctional

management program of the Federal Bureau of Prisons to relieve inmate

idleness and to ensure the orderly operation of Federal prisons. FPI

provides inmates with valuable training opportunities, teaches a work

ethic, and prepares inmates for reintegration into the community.

FPI is statutorily required (see 18 U.S.C. 4122(a)) to: provide

employment for the greatest number of those inmates in the United

States penal and correctional institutions who are eligible to work as

is reasonably possible; diversify, so far as practicable, prison

industrial operations; operate the prison shops so that no single

private industry shall be forced to bear an undue burden of competition

from the products of the prison workshops; and to reduce, to a minimum,

competition with private industry or free labor.

3. How Does This Rule Affect Previous FPI Guidelines Published in the

Federal Register?

In accordance with its statutory authority to announce in a

publication designed to most effectively provide notice to potentially

affected private vendors the plans to produce any new product or

significantly expand production of an existing product, FPI previously

published notices in the Commerce Business Daily. Revised guidelines

for new product development were published in the Federal Register on

August 7, 1996 (61 FR 41248) for notice and comment and were issued in

a notice document on March 12, 1997 (62 FR 11465). These guidelines are

now being incorporated into FPI's proposed standards and procedures.

Executive Order 12866

The rule has been considered to constitute a ``significant

regulatory action'' under section 3(f) of Executive Order 12866, and,

accordingly, the Office of Management and Budget has reviewed the

proposed rule.

and were issued in

a notice document on March 12, 1997 (62 FR 11465). These guidelines are

now being incorporated into FPI's proposed standards and procedures.

Executive Order 12866

The rule has been considered to constitute a ``significant

regulatory action'' under section 3(f) of Executive Order 12866, and,

accordingly, the Office of Management and Budget has reviewed the

proposed rule.

Executive Order 12612

This rule will not have a substantial direct effect on the states,

on the relationship between the national government and the states, or

on the distribution of power and responsibilities among the various

levels of government. Therefore, in accordance with Executive Order

12612, it has been determined that this rule does not have sufficient

federalism implications to warrant the preparation of a Federalism

Assessment.

Regulatory Flexibility Act

The Chief Executive Officer, FPI, in accordance with the Regulatory

Flexibility Act (5 U.S.C. 605(b), has reviewed this rule and by

approving it certifies that this rule will not have a significant

impact on a substantial number of small entities within the meaning of

the Act. The principal effect of these rules is that they will improve

the ability of FPI to serve its customers and will help FPI's Board of

Directors to comply with its statutory mandate of assuring that no

single industry is unduly impacted by FPI's operations.

Unfunded Mandates Reform Act of 1995

This rule will not result in the expenditure by State, local and

tribal governments, in the aggregate, or by the private sector, of

$100,000,000 or more in any one year, and it will not significantly or

uniquely affect small governments. Therefore, no actions were deemed

necessary under the provisions of the Unfunded Mandates Reform Act of

1995.

Small Business Regulatory Enforcement Fairness Act of 1996

ll not result in the expenditure by State, local and

tribal governments, in the aggregate, or by the private sector, of

$100,000,000 or more in any one year, and it will not significantly or

uniquely affect small governments. Therefore, no actions were deemed

necessary under the provisions of the Unfunded Mandates Reform Act of

1995.

Small Business Regulatory Enforcement Fairness Act of 1996

This rule is not a major rule as defined by section 804 of the

Small Business Regulatory Enforcement Fairness Act of 1996. The

promulgation of this rule will not result in an annual effect on the

economy of $100,000,000 or more; a major increase in costs or prices;

or significant adverse effects on competition, employment, investment,

productivity, innovation or on the ability of United States companies

to compete with foreign-based companies in domestic and export markets.

Plain Language Instructions

We try to write clearly. If you have a suggestion on how to improve

the clarity of this rule, please call or write: Roy Nanovic, Rules

Unit, Office of General Counsel, Bureau of Prisons, 320 First Street,

NW, HOLC Room 754, Washington, DC 20534; phone (202) 514-6655.

Comments on Rule

Interested persons may participate in this proposed rulemaking by

submitting data, views, or comments in writing to the Rules Unit,

Office of General Counsel, Bureau of Prisons, 320 First Street, NW,

HOLC Room 754, Washington, DC 20534. Comments received during the

comment period will be considered before final action is taken.

Comments received after the expiration of the comment period will be

considered to the extent practicable. All comments received remain on

file for public inspection at the above address. The proposed rule may

be changed in light of the comments received. No oral hearings are

contemplated.

List of Subjects in 28 CFR Part 302

Prisoners.

eriod will be considered before final action is taken.

Comments received after the expiration of the comment period will be

considered to the extent practicable. All comments received remain on

file for public inspection at the above address. The proposed rule may

be changed in light of the comments received. No oral hearings are

contemplated.

List of Subjects in 28 CFR Part 302

Prisoners.

Accordingly, pursuant to the order of FPI's Board of Directors,

part 302 in chapter III of 28 CFR is proposed to be revised as set

forth below.

Steve Schwalb,

Acting Chief Executive Officer, Federal Prison Industries, Inc.

PART 302--FEDERAL PRISON INDUSTRIES, INC. (FPI) STANDARDS AND

PROCEDURES THAT FACILITATE FPI'S ABILITY TO ACCOMPLISH ITS MISSION

Sec.

302.1 Purpose and scope.

302.2 Definitions.

302.3 Board of Directors: roles and responsibilities.

302.4 Chief Executive Officer: roles and responsibilities.

302.5 Chief Operating Officer: roles and responsibilities.

302.6 Ombudsman.

302.7 Meetings.

302.8 Inmate employment levels.

302.9 Mandatory source.

302.10 Provision of products as a non-mandatory source.

302.11 Provision of services to the commercial market.

302.12 Preferential source.

302.13 ``Escape Proof'' guarantee.

302.14 Waiver policy.

302.15 Appeals to waiver denials.

302.16 Pricing.

302.17 Industry involvement guidelines procedures.

302.18 Definitions and application of significant terms in product

development guidelines process.

302.19 General comments on FPI business operations.

Authority: 18 U.S.C. 4122 and 4124, and by resolution of the

Board of Directors of FPI.

Sec. 302.1 Purpose and scope.

ee.

302.14 Waiver policy.

302.15 Appeals to waiver denials.

302.16 Pricing.

302.17 Industry involvement guidelines procedures.

302.18 Definitions and application of significant terms in product

development guidelines process.

302.19 General comments on FPI business operations.

Authority: 18 U.S.C. 4122 and 4124, and by resolution of the

Board of Directors of FPI.

Sec. 302.1 Purpose and scope.

It is the mission of FPI (also referred to as ``the Corporation''),

a wholly owned government corporation, to employ and provide skills

training to the greatest practicable number of inmates in Federal

correctional facilities necessary to ensure the safe and secure

operation of such institutions, and in doing so, to produce market

priced, quality goods in a self-sustaining manner that minimizes, to

the extent feasible, potential impact on private business.

Sec. 302.2 Definitions.

(a) Assembled refers to the process of uniting or combining

articles or components, so as to add value by producing a change in

form or utility.

(b) Contracting office means any element of an entity of the

Government that has responsibility for identifying and/or procuring

Federal Government requirements for commodities or services. It

includes the contracting officer and members of all offices within the

definitions of ``contracting activity,'' ``contracting office,'' and

``contract administration office'' contained in the Federal Acquisition

Regulation, 48 CFR 2.101.

(c) Departments or agencies of the United States means any entity

of the Executive Branch, including military departments, government

corporations, independent agencies, and appropriated or non-

appropriated fund entities of the United States Government. The terms

Federal departments and agencies, departments and agencies of the

United States, Government departments and agencies, departments, and

agencies are used interchangeably.

ed States means any entity

of the Executive Branch, including military departments, government

corporations, independent agencies, and appropriated or non-

appropriated fund entities of the United States Government. The terms

Federal departments and agencies, departments and agencies of the

United States, Government departments and agencies, departments, and

agencies are used interchangeably.

(d) Inmate product refers to products that are manufactured and/or

assembled in whole or in part by prisoners. Inmate products may include

component parts of such products, or items ancillary to such products,

obtained from a commercial source, which are either physically

attached, or not physically attached, to the end product. In

determining whether such component parts or ancillary items are inmate

products that may be supplied to the customer by prison industries,

consideration will be given to such matters as the following: How

closely is the item linked by utility to the basic product? Would

separate purchase of the item by the customer involve significant

inconvenience, delay, and/or expense to the customer? Would refusal to

supply the item result in justifiable waiver requests which could cause

inmate idleness? Are such items routinely provided by commercial

suppliers in connection with sale of the end product? Is the item

relatively minor in relation to the end product?

(e) Manufactured refers to the process of fabricating products from

raw or prepared materials, so as to impart new forms, qualities,

properties, and combinations.

(f) Schedule of Products means the list of commodities and services

offered by FPI to its customers for which FPI is a mandatory or

preferred source.

of the end product? Is the item

relatively minor in relation to the end product?

(e) Manufactured refers to the process of fabricating products from

raw or prepared materials, so as to impart new forms, qualities,

properties, and combinations.

(f) Schedule of Products means the list of commodities and services

offered by FPI to its customers for which FPI is a mandatory or

preferred source.

(g) Services refers to both economic activity that is rendered in

such a way that it does not culminate in a tangible product (e.g.,

laundry and administrative support services) and economic activity that

does culminate in tangible products, especially when the services

aspect of the operation is not ordinarily viewed as involving a

manufacturing process. If the activity is sufficiently transformative,

it will be viewed as manufacturing in nature and therefore a product

rather than service. For example, repair work will ordinarily be

considered a service, because in most instances, the operation does not

transform the object into a new object, but involves restoration of the

object to a prior condition and return to the original owner. For this

reason, furniture refinishing is also ordinarily considered a service.

However, when the operation performed is sufficiently transformative so

as to result in a new item, it is no longer viewed as a service, but a

product. Assembly, such as packaging of various items in bags or

cartons, is considered a service. But assembly involving cut and sew

operations, which produce a radically different end product from

components through employment of manufacturing techniques, are

considered products and not services

iently transformative so

as to result in a new item, it is no longer viewed as a service, but a

product. Assembly, such as packaging of various items in bags or

cartons, is considered a service. But assembly involving cut and sew

operations, which produce a radically different end product from

components through employment of manufacturing techniques, are

considered products and not services. Examples of services currently

provided by FPI include: data conversion; optical scanning; engine

accessories repair and rebuilding; forklift repair and rebuilding; kit

assembly; radio carrier modification; cable/electrical parts

refurbishing; vehicular components repair and rebuilding; furniture

repair; bag repair; equipment assembly; mail distribution; printing and

data entry.

(h) The words products, supplies and commodities are used

interchangeably.

(I) UNICOR is the trade name for Federal Prison Industries, Inc.

(FPI). The term UNICOR is used interchangeably with FPI.

Sec. 302.3 Board of Directors: roles and responsibilities.

(a) FPI's Board of Directors consists of six directors appointed by

the President of the United States, pursuant to 18 U.S.C. 4121. The

Board determines in what manner and to what extent industrial

operations shall be carried on in Federal correctional institutions,

consistent with the statutory responsibilities created in Chapter 307

of title 18 United States Code.

(b) In addition, the Board has the following general

responsibilities:

(1) Amend FPI's bylaws as needed;

(2) Review and approve general policies and long range corporate

plans, including the annual operating plan and strategic plans;

(3) Review and approve capital investments in excess of $500,000;

(4) Assure that the Corporation remains liquid, that its assets are

properly valued and maintained, and that adequate reserves are

established for this purpose;

(5) Assure that there is a fair and adequate means for review of

the impact of FPI on the private sector;

ans, including the annual operating plan and strategic plans;

(3) Review and approve capital investments in excess of $500,000;

(4) Assure that the Corporation remains liquid, that its assets are

properly valued and maintained, and that adequate reserves are

established for this purpose;

(5) Assure that there is a fair and adequate means for review of

the impact of FPI on the private sector;

(6) Hold meetings with the independent auditors regarding

preparation and completion of the annual audit of the Corporation's

financial performance, at which the Board will review the Corporate

response to the auditor's Management Letter and provide comments to

this response to the Department of Justice Inspector General;

(7) Hold periodic reviews of finances to include sales, earnings,

and operating cash as measured against expected objectives;

(8) Meet routinely with the Ombudsman to receive reports of

concerns or complaints from the public of FPI's impact, and other

observations and suggestions;

(9) Establish inmate employment levels, consistent with Bureau of

Prisons' needs and FPI's mission and mandates.

Sec. 302.4 Chief Executive Officer: roles and responsibilities.

The Chief Executive Officer of FPI, who is also the Director of the

Bureau of Prisons (BOP), is responsible for carrying out the duties and

responsibilities of the Corporation, including but not limited to:

(a) Making management decisions not delegated to the Chief

Operating Officer;

(b) Assuring that orders and resolutions of the Board are

implemented;

Officer: roles and responsibilities.

The Chief Executive Officer of FPI, who is also the Director of the

Bureau of Prisons (BOP), is responsible for carrying out the duties and

responsibilities of the Corporation, including but not limited to:

(a) Making management decisions not delegated to the Chief

Operating Officer;

(b) Assuring that orders and resolutions of the Board are

implemented;

(c) Assuring that full and accurate accounts of receipts and

disbursements in books belonging to the Corporation are maintained, as

well as other transactions of the Corporation, so that the proper and

correct financial condition of the Corporation can be ascertained at

any time.

Sec. 302.5 Chief Operating Officer: roles and responsibilities.

The Chief Operating Officer of FPI, who is also an Assistant

Director of the BOP, is responsible for the day to day management of

the affairs of the Corporation, so as to carry out the responsibilities

of the Corporation, and to perform all duties and make all decisions,

except where authority has been retained by the Board of Directors or

the Chief Executive Officer. The Chief Operating Officer may re-

delegate authority as deemed appropriate.

Sec. 302.6 Ombudsman.

(a) The position of Ombudsman was established by the Board of

Directors to achieve improved relations with the private sector, to

provide a mechanism for resolving customer issues, and to provide the

Board with information in addition to that provided by the normal

corporate chain of command. The Ombudsman reports directly to both the

Chief Operating Officer and the Board of Directors. In addition, the

Ombudsman meets with and provides reports to the Board of Directors.

eve improved relations with the private sector, to

provide a mechanism for resolving customer issues, and to provide the

Board with information in addition to that provided by the normal

corporate chain of command. The Ombudsman reports directly to both the

Chief Operating Officer and the Board of Directors. In addition, the

Ombudsman meets with and provides reports to the Board of Directors.

(b) In order to assist with dispute resolution prior to any request

for review pursuant to 18 U.S.C. 4124(b), the Board has established a

waiver appeal process, and has vested the Ombudsman with independent

authority to make decisions concerning issues arising in conjunction

with the mandatory source waiver appeal process, and to make

recommendations to the Chief Operating Officer concerning vendor and

other customer issues.

Sec. 302.7 Meetings.

The Board will hold at least one regularly scheduled meeting each

year in either Washington, DC, or at a location in proximity to one of

the Federal prisons, and such additional or special meetings as it

deems appropriate. Meetings may be held in person or through electronic

means. Time will be set aside for the Board to meet in executive

session at each meeting, if the directors so desire. In addition to

these meetings, the Board may schedule periodic teleconferences to

review the monthly financial reports and other matters.

Sec. 302.8 Inmate employment levels.

nal or special meetings as it

deems appropriate. Meetings may be held in person or through electronic

means. Time will be set aside for the Board to meet in executive

session at each meeting, if the directors so desire. In addition to

these meetings, the Board may schedule periodic teleconferences to

review the monthly financial reports and other matters.

Sec. 302.8 Inmate employment levels.

(a) Inmate employment levels in FPI will be commensurate with the

needs of the BOP, and the mission and mandates of FPI. Considerations

shall include the interests of the public, including industry and

labor. As the nature and size of the inmate population change, the need

of the BOP for industrial jobs may also change. Thus, an annual

assessment will be performed of the number and types of jobs necessary

to fill the BOP's needs in such a way that FPI's mandates are also

fulfilled. This assessment will take into account the fact that FPI has

multiple missions, as set forth in its enabling statute and Executive

Order. Two of the most important missions are the following: inmate

employment must be maximized to combat idleness, to the extent

consistent with the need to protect industry and free labor from undue

impact; and, best efforts should be made so that the jobs that are

created enhance inmate work habits and skills, so as to increase the

probability that inmates will be able to succeed in the community upon

release.

(b) It is the primary responsibility of both the Chief Executive

Officer, and the Chief Operating Officer of FPI, working together, to

determine the optimal mix of BOP and FPI jobs. It is the responsibility

of the Board to assure that employment levels are consistent with FPI's

mission and mandates and do not unduly impact the private sector.

Sec. 302.9 Mandatory source.

unity upon

release.

(b) It is the primary responsibility of both the Chief Executive

Officer, and the Chief Operating Officer of FPI, working together, to

determine the optimal mix of BOP and FPI jobs. It is the responsibility

of the Board to assure that employment levels are consistent with FPI's

mission and mandates and do not unduly impact the private sector.

Sec. 302.9 Mandatory source.

(a) By federal law, FPI is the mandatory source of products for all

Federal departments, agencies, and all other Government institutions of

the United States, provided that these products are available and meet

the agency's requirements as set forth in this section. See, however,

Secs. 302.10 and 302.12(a).

(b) As a Government agency with a statutory mandate to provide

employment for the greatest number of those inmates as is reasonably

possible (18 U.S.C. 4122(b)(1)), FPI operates with a mandatory

procurement preference granted by Congress (18 U.S.C. 4124(a)). Also,

purchases from FPI are an exception to the rules that normally govern

the way goods are procured by the United States because FPI's ``sales''

to other Government agencies actually constitute intergovernmental

transfers of goods, rather than traditional sales. Therefore, purchases

from FPI are not subject to the Federal Acquisition Regulation (FAR)

provisions governing procurement from the private sector. See

Memorandum from Walter Dellinger, Acting Assistant Attorney General,

Office of Legal Counsel (OLC) (Sept. 13, 1993). Thus, FPI need not

abide by FAR provisions in its agreements with its customers in order

to remain a mandatory source for its products. However, in its

discretion, FPI may include these terms in its agreements at the

request of its customers.

ement from the private sector. See

Memorandum from Walter Dellinger, Acting Assistant Attorney General,

Office of Legal Counsel (OLC) (Sept. 13, 1993). Thus, FPI need not

abide by FAR provisions in its agreements with its customers in order

to remain a mandatory source for its products. However, in its

discretion, FPI may include these terms in its agreements at the

request of its customers.

(c) FPI is the mandatory source for all products on its Schedule of

Products (``Schedule''). The Schedule is a general, though not an

exhaustive, list of all the categories of products and services

available to departments and agencies from FPI. Since it does not

contain all permutations of options and features available for each

product, it may not always be clear whether a particular product

offered by FPI has the necessary features desired by a Federal

customer. In case of doubt, the contracting officer or activity should

contact FPI, and FPI will determine whether a particular product is

included in the Schedule and whether an agency's requirement can be met

by FPI. Copies of the Schedule are available from the FPI Customer

Service Center at Lexington, Kentucky (1-800-827-3168); FPI's

Washington, DC headquarters; from the customer's sales representative,

or through the Internet at http://www.unicor.gov.

(d) A contracting activity should not solicit bids, proposals,

quotations, or otherwise test the market for the purpose of seeking

alternative sources to FPI. Thus, proposals should not be sought where

FPI is the presumptive provider (i.e., where the product is listed in

FPI's Schedule of Products) and a waiver has not been granted. Both the

language and the purpose of FPI's statute are inconsistent with the

idea that FPI, itself a part of the Government, shall enter into

competition with private manufacturers in bidding for the business of

other Government establishments

t be sought where

FPI is the presumptive provider (i.e., where the product is listed in

FPI's Schedule of Products) and a waiver has not been granted. Both the

language and the purpose of FPI's statute are inconsistent with the

idea that FPI, itself a part of the Government, shall enter into

competition with private manufacturers in bidding for the business of

other Government establishments. What is contemplated by the statute is

not a sale, but a transfer of property from one Government

establishment to another. 18 Comp. Gen. 627, 628 (1939).

(e) Neither efficiency, administrative convenience,

interchangeability, compatibility, nor uniformity with non-FPI products

constitute a basis for using commercial sources, without first

obtaining a waiver.

(f) FPI is the mandatory source for products irrespective of

whether they are deemed to be an integral or structural part of a

building; FPI is also the mandatory source for products irrespective of

whether the product is acquired and/or used outside the United States

or abroad (but see Sec. 302.14(f) regarding waiver policy); FPI is also

the mandatory source for all products on the Schedule, irrespective of

whether they are acquired via a consolidated procurement effort. Thus,

in situations where FPI provides some, although not all, of the

products which are offered in a packaged solicitation, FPI remains

mandatory for those products on its Schedule, and a waiver must be

obtained pursuant to procedures in this subpart before products on

FPI's schedule can be purchased pursuant to a consolidated procurement.

(g) FPI's status as a mandatory source extends to contractors when

they provide products for Government use. The contracting activity

shall insert in solicitations and contracts a clause which identifies

the products which must be purchased from FPI as a mandatory source.

Also, such contractors may use FPI as a supply source for services and

non-mandatory products.

Sec. 302.10 Provision of products as a non-mandatory source.

urce extends to contractors when

they provide products for Government use. The contracting activity

shall insert in solicitations and contracts a clause which identifies

the products which must be purchased from FPI as a mandatory source.

Also, such contractors may use FPI as a supply source for services and

non-mandatory products.

Sec. 302.10 Provision of products as a non-mandatory source.

(a) FPI may offer its products on a competitive basis and not as a

mandatory source. Thus, for example, it may choose to follow

competitive procedures in responding to a solicitation in the Commerce

Business Daily (CBD) for a product which it currently does not produce

(i.e., a ``new product'' as defined infra). In this situation, provided

that FPI in no way relies on its status as a mandatory source, FPI need

not seek Board approval pursuant to the guidelines process to produce

this product. The public will be made aware of FPI's decision to

competitively bid for a product by the publication of a notice in the

CBD. Once a new product is produced by FPI competitively, the product

will remain a competitive product, and will not be added to the

Schedule as a mandatory source item. Whatever share of the market FPI

acquires on a competitive basis will be deemed to be a reasonable share

of the market.

(b) FPI may also waive its mandatory source status for certain

products which it currently produces, provided such initiatives are

announced to the public for comment and approved by the Board. Non-

mandatory products also include products which are provided by FPI as a

preferential source of supply pursuant to Sec. 302.12, and products

which are provided to such agencies as the U.S. Postal Service, which

by statute are not subject to FPI's mandatory source of supply.

Sec. 302.11 Provision of services to the commercial market.

FPI may offer services to the commercial market, as approved by its

Board of Directors.

Sec. 302.12 Preferential source.

FPI as a

preferential source of supply pursuant to Sec. 302.12, and products

which are provided to such agencies as the U.S. Postal Service, which

by statute are not subject to FPI's mandatory source of supply.

Sec. 302.11 Provision of services to the commercial market.

FPI may offer services to the commercial market, as approved by its

Board of Directors.

Sec. 302.12 Preferential source.

(a) Products. FPI is a preferential source of supply where it is

not a mandatory source. Thus, for example, products which are offered

to the U.S. Postal Service, which agency by statute is exempted from

FPI's mandatory source, may be purchased from FPI directly, without the

contracting activity going through competitive procurement procedures.

(b) Services. FPI is a preferential, though non-mandatory, source

of services for all Government departments and agencies. This means

that services may be purchased from FPI without a contracting activity

going through competitive procurement procedures.

Sec. 302.13 ``Escape-Proof'' guarantee.

FPI is committed to the complete and continual satisfaction of its

customers. If at any time an item or service that FPI has provided does

not entirely meet the expectations of the customer, FPI will promptly

repair or replace it, entirely at the expense of FPI. For information

on this warranty, contact the Customer Service Center at (800) 827-

3168.

Sec. 302.14 Waiver policy.

(a) When a contracting office or activity believes a product on

FPI's Schedule does not meet the customer's requirements, but that

similar products from a commercial source will, and the contracting

activity wishes to purchase the product from a commercial source, it

must submit a request for a waiver to FPI and obtain a waiver prior to

purchasing the product from the commercial source.

cy.

(a) When a contracting office or activity believes a product on

FPI's Schedule does not meet the customer's requirements, but that

similar products from a commercial source will, and the contracting

activity wishes to purchase the product from a commercial source, it

must submit a request for a waiver to FPI and obtain a waiver prior to

purchasing the product from the commercial source.

(b) A waiver request should include:

(1) A description of the product for which the waiver is requested;

(2) The justification for seeking a waiver, including specifics

concerning price, quantity, and delivery date where such information is

relevant to the waiver request;

(3) The name and title of the appropriate contact person, as well

as the complete mailing address, phone and fax numbers, and e-mail

address when available.

(c) Waivers will not ordinarily be given based on price, where

FPI's product does not exceed current market price as determined by

FPI.

(d) Waivers based on delivery will not ordinarily be granted when

FPI's delivery schedule is consistent with deliveries for comparable

products on the Federal Supply Schedule or under standard commercial

practices. Delivery requirements inconsistent with those referenced on

the GSA Federal Supply Schedule require written certification from the

contracting officer. Thus,

where expedited delivery is needed, a written statement from the

contracting activity is required, providing the reasons and attesting

to the fact that the products required are available from an

alternative source in the time frame required.

(e) When a waiver is requested based on an assertion that FPI's

product will not perform to standards or does not represent best value,

or in some other way does not meet the specifications of the customer,

the contracting activity must provide, in writing, details describing

the non-conforming characteristics of the FPI product compared to the

product from a commercial source.

ame required.

(e) When a waiver is requested based on an assertion that FPI's

product will not perform to standards or does not represent best value,

or in some other way does not meet the specifications of the customer,

the contracting activity must provide, in writing, details describing

the non-conforming characteristics of the FPI product compared to the

product from a commercial source.

(f) Waivers are granted or denied on a case-by-case basis. Class

waivers are not usually issued, except when the product is not

available from FPI. However, FPI has granted a class waiver for all

supplies that are acquired for use outside the United States when these

supplies are both manufactured by and purchased from sources outside

the United States.

(g) Generally, considerations of aesthetics are not an acceptable

basis for a waiver. However, exceptions may be made, and waivers

granted, for example, to achieve ``match'' with products that will be

located in proximity to the required products.

(h) In order to avoid a situation where FPI exercises its status as

a mandatory source after a commercial vendor has gone through the

effort and expense of preparing a bid package, FPI will exercise

special care with regard to procurements that inadvertently have been

announced in the Commerce Business Daily (CBD). Although solicitations

for products manufactured by FPI should not appear in the CBD without

first obtaining a waiver from FPI, occasionally, through error, such

solicitations do appear. The FAR (48 CFR 5.203) requires a 15 day

waiting period between the date of the CBD synopsis and the issuance of

solicitations. Therefore, FPI will ordinarily exercise its mandatory

source status by requesting cancellation of the solicitation during

this 15 day interval.

ot appear in the CBD without

first obtaining a waiver from FPI, occasionally, through error, such

solicitations do appear. The FAR (48 CFR 5.203) requires a 15 day

waiting period between the date of the CBD synopsis and the issuance of

solicitations. Therefore, FPI will ordinarily exercise its mandatory

source status by requesting cancellation of the solicitation during

this 15 day interval.

(i) Waivers will not be required where public exigency requires

immediate delivery or performance. However, purchase from commercial

sources pursuant to this provision must be simultaneously reported to

FPI, with an explanation of the emergency necessitating the commercial

procurement. The emergency must not be brought about by poor planning

nor otherwise due to circumstances that could have been avoided through

the exercise of reasonable prudence.

(j) Waiver decisions will ordinarily be issued within seven (7)

working days from the date of the request, once all information

necessary to make a decision is provided to FPI. Project level waiver

requests may require longer to process because of their complex nature.

Where the requester requires a reply in less than seven (7) working

days, the requester should explain the reasons.

Sec. 302.15 Appeals to waiver denials.

If the waiver request is denied, the order must be awarded to FPI

unless the decision is overturned on appeal. All appeals must be made

as a matter of first instance to the FPI Ombudsman. The appeal should

include the 7-digit waiver identification number found on the waiver

denial letter, together with any supplemental information on why the

waiver denial should be reversed. Appeals should ordinarily be filed

within 7 working days of the notification of a waiver denial. Decisions

of the Ombudsman will ordinarily be issued within 7 working days from

the date of the appeal. A further appeal may be taken by either party

under 18 U.S.C. 4124(b).

Sec. 302.16 Pricing.

enial letter, together with any supplemental information on why the

waiver denial should be reversed. Appeals should ordinarily be filed

within 7 working days of the notification of a waiver denial. Decisions

of the Ombudsman will ordinarily be issued within 7 working days from

the date of the appeal. A further appeal may be taken by either party

under 18 U.S.C. 4124(b).

Sec. 302.16 Pricing.

(a) By federal law, the prices of FPI's products cannot exceed the

current market price. The determination of what constitutes the current

market price, the methodology employed to determine the current market

price, and the conclusion that a product of FPI does not exceed that

price is the responsibility of FPI to determine, subject to dispute

under 18 U.S.C. 4124(b). FPI determines market price one of three ways:

(1) When a comparable product is available from private sector

manufacturers, a review of commercial catalog prices will be used to

establish a ``range'' for current market price;

(2) Where a comparable product cannot be identified, current market

price is established through negotiating a price based on cost,

including applicable overhead, plus a margin for earnings; and

(3) Where a purchasing activity executes ``concurrent buys'' (i.e.,

where the purchasing activity simultaneously purchases identical

products from both FPI and a commercial supplier), FPI will provide the

product at a comparable price, and at terms and conditions comparable

to those provided by the commercial supplier.

d on cost,

including applicable overhead, plus a margin for earnings; and

(3) Where a purchasing activity executes ``concurrent buys'' (i.e.,

where the purchasing activity simultaneously purchases identical

products from both FPI and a commercial supplier), FPI will provide the

product at a comparable price, and at terms and conditions comparable

to those provided by the commercial supplier.

(b) General Services Administration's Federal Supply Schedule (FSS)

is relevant to, but not necessarily determinative of, the current

market price for a product, as it may not duplicate in all features the

FPI product and FPI's costs. In many cases, there will be no exact

comparability between FPI's product and a commercial product, and thus

adjustments will be required to determine the comparable current market

price. Factors to be considered in determining the price range will

typically include similarity of materials, methods and costs of

construction, product durability, presence of ancillary features,

extent of warranties and nature of the market. Data collected by

general market surveys do not establish current market price, but may

be provided to FPI to be factored into its determination of current

market price. A price established by FPI utilizing one of the

methodologies identified in this section fulfills the obligations of a

contracting officer to obtain a fair and reasonable price under FAR

(e.g. 48 CFR part 15).

Sec. 302.17 Industry involvement guidelines procedures.

The following steps will be followed whenever FPI is considering

producing a new product (Sec. 302.18(b)) or significantly expanding

production of an existing product (Sec. 301.18(d)).

gies identified in this section fulfills the obligations of a

contracting officer to obtain a fair and reasonable price under FAR

(e.g. 48 CFR part 15).

Sec. 302.17 Industry involvement guidelines procedures.

The following steps will be followed whenever FPI is considering

producing a new product (Sec. 302.18(b)) or significantly expanding

production of an existing product (Sec. 301.18(d)).

(a) Parties who are known to have an interest in a potential

proposal by FPI to produce a new specific product or significantly

expand in the production of an existing product will be contacted prior

to the drafting of any market impact study to obtain relevant

information for purposes of developing a comprehensive and fair study.

The information sought may include, but is not limited to, how a

specific product is defined, size of the market, future market trends,

and dependence of industry providers on the federal market.

(b) All proposals to produce a new product or to significantly

expand the production of an existing product shall be announced in the

CBD, and a copy of the announcement shall be mailed to known interested

parties.

(c) The announcement will state that interested parties may obtain

a copy of the study which analyzes the impact, if any, on the private

sector resulting from the proposed production initiatives by writing to

the Manager, Planning, Research, and Activation, Federal Prison

Industries, 320 First Street, NW, Washington, DC 20534. The

announcement will further state that comments on the study should be

submitted in writing to the Manager at the same address. It will

further state that comments are due no later than 45 days from the date

of the announcement and that the comments should address the issue of

what percentage, if any, of

and Activation, Federal Prison

Industries, 320 First Street, NW, Washington, DC 20534. The

announcement will further state that comments on the study should be

submitted in writing to the Manager at the same address. It will

further state that comments are due no later than 45 days from the date

of the announcement and that the comments should address the issue of

what percentage, if any, of

the government market for the specific product constitutes a reasonable

share of the market. All comments related to definition of the product,

determination of the size of the market, impact on the private sector,

and study methodology must be submitted at this time, to allow time for

adequate consideration of these comments prior to FPI's dissemination

of its final study and recommendations. Failure to provide this

information in a timely manner may result in the information not being

considered or being given less weight by the Board or not being

considered at all.

(d) FPI will contact known trade associations representing

manufacturers of the relevant product, provide them with a copy of the

announcement and the market analysis, and request their written and

oral comments in an attempt to arrive at a mutually agreeable

percentage figure as to what constitutes a reasonable share of the

market. FPI will also provide a copy to the appropriate labor

representatives. The same time frames apply as in paragraph (c) of this

section.

(e) Public comments including all attachments should be kept as

brief as possible and, without Board permission, no public submission

may exceed twenty-five (25) pages.

(f) A recommendation will be prepared by FPI to be provided to the

Board of Directors on what constitutes a reasonable market share for

the specific product in question. The recommendation will address all

comments which are timely and relevant.

including all attachments should be kept as

brief as possible and, without Board permission, no public submission

may exceed twenty-five (25) pages.

(f) A recommendation will be prepared by FPI to be provided to the

Board of Directors on what constitutes a reasonable market share for

the specific product in question. The recommendation will address all

comments which are timely and relevant.

(g) A copy of the written comments submitted in response to the

announcement, FPI's responses to the comments, and FPI's final

recommendation to the Board of Directors shall be made available to

commenters who filed a timely submission. The material will be made

available to the commenters no less than forty-five (45) days before

the date of the Board meeting at which the proposal for production of

the specific product at issue will be considered. In addition, all

commenters will be advised, in an appropriate manner, of the date,

time, and location of the Board meeting at which the proposal will be

discussed, and advised of the opportunity to address the Board in

person.

(h) A final submission for the sole purpose of commenting on FPI's

recommended production levels may be provided by commenters to the

Board for its consideration. The final submission, including any

attachments, should be as brief as possible and, without Board

permission, may not exceed ten (10) pages. Comments related to the

study methodology, i.e., how the specific product is defined,

determination of the size of the market, and impact of FPI on the

private sector, should be submitted within the 45 day review period

after announcement of the study in the CBD (see paragraph (c) of this

section), and not at this stage of the process, in order to be given

due consideration by the Board. This final submission should be sent to

the Manager, Planning, Research and Activation, for transmittal to the

Board

f the market, and impact of FPI on the

private sector, should be submitted within the 45 day review period

after announcement of the study in the CBD (see paragraph (c) of this

section), and not at this stage of the process, in order to be given

due consideration by the Board. This final submission should be sent to

the Manager, Planning, Research and Activation, for transmittal to the

Board. If a commenter wishes to appear at the Board meeting to make a

statement, that request should be made on the first page of the final

submittal, together with the names of the individuals desiring to

appear before the Board.

(i) All final submittals, together with any request to appear

before the Board, must be received by the Manager at least fifteen (15)

days in advance of the Board meeting.

(j) The following rules will apply at the in-person presentation:

(1) In order to accommodate the largest number of commenters, and

to assure access by the Board to the fullest array of comments and

opinions concerning expansion proposals by FPI, as a general rule

hearings will be held in Washington, DC. However, the Board reserves

the right to determine that a hearing should be held in a location

other than Washington, DC, provided that sufficient notice is given to

the public. The presentation to the Board is open to the public.

However, the hearing may be closed, or other safeguards taken, where

the Board determines that proprietary information must be safeguarded,

or for other good and sufficient reason(s).

(2) A maximum of 30 minutes will be allotted to each commenter for

presentation to the Board, unless the Board extends the time;

tice is given to

the public. The presentation to the Board is open to the public.

However, the hearing may be closed, or other safeguards taken, where

the Board determines that proprietary information must be safeguarded,

or for other good and sufficient reason(s).

(2) A maximum of 30 minutes will be allotted to each commenter for

presentation to the Board, unless the Board extends the time;

(3) The record before the Board at the time of the presentation is

limited to the market study, comments and materials submitted in a

timely manner in response to the market study, FPI's recommendations,

and materials submitted by commenters in response to FPI's

recommendations. No new documentation or arguments from commenters

should be presented at the presentation that have not been submitted in

compliance with the rules in this section, unless permitted by the

Board. The Board reserves the right to exclude from consideration or

give less weight to information which was not submitted in compliance

with this section.

(4) The Chairman of the Board will preside at the hearing and

impose such further rules as are reasonable to assure a full and

orderly presentation, covering such matters as who may address the

Board, the order in which presentations are made, what documents will

constitute the record, what issues are relevant, and any questions

concerning how much time is to be allotted to each presentation. The

Federal Rules of Civil Procedure and formal rules of evidence will not

be followed.

(5) The Board members may direct questions to a commenter to elicit

further information, and may request that additional material be

provided for the record.

(6) The proceedings will be recorded and a transcript made

available at the requestor's expense.

much time is to be allotted to each presentation. The

Federal Rules of Civil Procedure and formal rules of evidence will not

be followed.

(5) The Board members may direct questions to a commenter to elicit

further information, and may request that additional material be

provided for the record.

(6) The proceedings will be recorded and a transcript made

available at the requestor's expense.

(k) The Board will determine whether a proposed new product may be

produced or whether a proposed expansion of an existing product should

be approved, and what the reasonable market share is with regard to the

specific product in question. In determining the reasonable market

share for a specific product, the Board will balance the interests of

the Corporation with the interests of the affected private sector,

employing the criteria spelled out in the relevant statutes,

legislative history, and corporate regulations.

(l) The decision of the Board will be made by majority vote. In the

case of a tie, the position of the group which includes the Chairman

will prevail.

(m) The decision, together with the reasons for the decision, will

be published in the CBD within 10 days of the date of the Board's

decision.

(n) Any request for exception to the provisions of this section

shall be made to the Board and shall be considered only in compelling

circumstances. Requests should be addressed to Chairman, Board of

Directors, Federal Prison Industries, Inc., 320 First Street, NW,

Washington, DC 20534.

Sec. 302.18 Definitions and application of significant terms in

product development guidelines process.

.

(n) Any request for exception to the provisions of this section

shall be made to the Board and shall be considered only in compelling

circumstances. Requests should be addressed to Chairman, Board of

Directors, Federal Prison Industries, Inc., 320 First Street, NW,

Washington, DC 20534.

Sec. 302.18 Definitions and application of significant terms in

product development guidelines process.

(a) Specific product. (1) A ``specific product'' refers to the

aggregate of items which are similar in function (e.g., bags and

sacks), or which are frequently purchased for use in groupings (e.g.,

dormitory and quarters furniture) to the extent provided by the most

current Federal Supply Classification (FSC) Code. Specific products

will equate to the most current 4-digit FSC Code, published by the

General Services Administration, Federal Procurement Data Center

(FPDC). As a general rule, products will be deemed to be different

specific products if they are identified by a distinct 4-digit FSC

code.

(2) The following standards will be used to determine how ``items''

should be treated:

(i) Items classified within the same 4-digit FSC code will be

presumed to comprise a single specific product (unless otherwise

determined by FPI, or with input from the relevant industry).

(ii) The predominant material of manufacture (e.g., nylon vs.

canvas) will not ordinarily be a factor in defining an item as a

separate specific product. Material will be considered as part of

routine review in determination of what constitutes a specific product.

be

presumed to comprise a single specific product (unless otherwise

determined by FPI, or with input from the relevant industry).

(ii) The predominant material of manufacture (e.g., nylon vs.

canvas) will not ordinarily be a factor in defining an item as a

separate specific product. Material will be considered as part of

routine review in determination of what constitutes a specific product.

(iii) In certain instances, with approval of its Board of

Directors, FPI may combine FSC codes where multiple FSC's comprise a

particular industry. In requesting the Board to combine FSC's, FPI will

give careful consideration, and be especially sensitive to, companies

that manufacture products (such as various items of apparel) in

multiple FSC codes. Moreover, situations will be avoided where FPI

would have to request Board approval of production and/or expansion in

several ``specific products'' (e.g., office seating, case goods, and

systems furniture), each of which often involves many of the same

companies within a single potentially affected industry (e.g., office

furniture).

(iv) The rationale for any proposed combining of FSC's will be

published by FPI in the CBD to seek input from the potentially affected

industry. Input received in its submission will be forwarded by FPI to

the Board of Directors for consideration and final determination.

(v) In some instances, an item may be considered separate from

another product in the same 4-digit FSC category, if its function

differs substantially. In such cases, the 4-digit Standard Industrial

Classification (SIC) code may be used as a back-up measure to more

accurately define the product.

ion will be forwarded by FPI to

the Board of Directors for consideration and final determination.

(v) In some instances, an item may be considered separate from

another product in the same 4-digit FSC category, if its function

differs substantially. In such cases, the 4-digit Standard Industrial

Classification (SIC) code may be used as a back-up measure to more

accurately define the product.

(vi) SIC codes will be used at the 4-digit level to determine the

size of the domestic market for a particular product. For purposes of

product definition in the domestic market, FPI will combine 4-digit SIC

codes when the data suggests the product under examination may

encompass several different 4-digit SIC codes, with no substantial

difference in the product (e.g., men's vs. women's apparel).

(b) New product. A ``new product'' is a ``specific product'' which

FPI has not manufactured or produced within the past five years. In

cases where it has been determined that more than one specific product

exists within a 4-digit FSC, the 4-digit SIC code will be used as a

secondary indicator to determine whether the product is ``new.'' In

such cases, a new product will be defined as a ``specific product'' in

the four-digit SIC which FPI has not produced within the past five

years.

(c) ``Good Faith'' CBD announcements.

(1) There may be circumstances in which FPI plans to produce items

that FPI does not consider to be a new product, but which an affected

party may reasonably construe to be a new product. In these

circumstances, the items will be announced for comment in the CBD. The

purpose of this provision is to give private industry an added level of

input into such decisions made by FPI, since it is not possible to

anticipate every possible situation or question that could arise within

the outlined definition.

duct, but which an affected

party may reasonably construe to be a new product. In these

circumstances, the items will be announced for comment in the CBD. The

purpose of this provision is to give private industry an added level of

input into such decisions made by FPI, since it is not possible to

anticipate every possible situation or question that could arise within

the outlined definition.

(2) The parameters for publishing such internal decisions that are

made and announced subject to this paragraph (c) will be as follows:

items that a reasonable person could construe to be a product separate

and distinct from another item which FPI is making or recently made

would be subject to announcement even though their function is similar.

As an example, the production of extreme cold weather trousers would be

announced, although FPI already produces bullet resistant fragmentation

vests, and both are items of protective clothing.

(3) Items that are essentially the same product, or those that are

variations of an existing FPI product (e.g., a new style of seating)

would not be subject to announcement of any kind. However, FPI will

resolve any question as to whether to announce in favor of

announcement.

(4) In submitting comments to FPI, the following procedures will

apply:

(i) Comments will be due within 21 days of the date of publication;

(ii) Relevant comments will focus on and address why the item

should be considered a new product, separate and distinct from a

similar item currently being produced by FPI. Comments may include such

factors as: the manufacture of the item involves substantially

different material and processes; companies that produce this item

specialize in manufacturing only that item; the manufacturing processes

are unique and are not easily adaptable to produce other similar items;

dered a new product, separate and distinct from a

similar item currently being produced by FPI. Comments may include such

factors as: the manufacture of the item involves substantially

different material and processes; companies that produce this item

specialize in manufacturing only that item; the manufacturing processes

are unique and are not easily adaptable to produce other similar items;

(iii) While the primary purpose of the comment provision will be to

determine if an item should be defined as a new product, comments

related to market share and/or the impact that such a production

decision may have on the firm will also be considered to the degree

they are relevant;

(iv) All comments received in response to these announcements will

be considered by FPI.

(5) The commenter will be advised whether FPI decides to go through

the guidelines process.

(6) As always, any interested party has a right to raise any

question at any time with the Board of Directors (see Sec. 302.19), and

thus may appeal to FPI's Board of Directors any issue or decision

relating to whether a product is a new product. However, pending such

review, FPI may proceed with its plans in accordance with the decision

as announced in this process described in this paragraph (c), unless

and until the decision is reversed.

(d) ``Significant expansion of an existing product''.

(1) Proposed production increases by FPI which may increase its

market share will be reviewed during the Corporation's annual planning

cycle and be deemed a significant product expansion under the following

circumstances:

rket share of greater than

20%, but less than 25%, FPI could increase its market share to 25%,

before the increase would be deemed to be significant. The allowable

increase in market share from 15 to 20% in one year, should not allow

FPI (assuming its sales increase by more than 10%) to increase its

share again from 20 to 25% in a subsequent year without going through

the guidelines process.

(3) Market shares will be calculated on the basis of FSC's for

planning purposes. If based on initial assessment, it is determined

that a comprehensive impact study, and Board approval, is likely to be

required, a comprehensive analysis of market share will be undertaken

to fully assess whether the guidelines process should be initiated.

(4) Situations where FPI production remains constant, but market

share increases as a result of other factors, including market changes,

will not require FPI to initiate the guidelines process. The fact that

25% may ``trigger'' the guidelines does not necessarily mean the Board

of Directors cannot approve an FPI production level resulting in a

federal market share above 25%. The prior three years' data will be

used to determine the share of the federal government market, to ensure

that annual fluctuations are taken into account and normalized. FPI may

produce at the rate of previously achieved annual sales levels,

adjusted for inflation, without initiating the guidelines process.

(5) In cases where FPI sales inadvertently or insubstantially

exceed Board authorized levels, FPI will make every effort to adjust

its production by a corresponding amount the following year. If FPI

plans call for continued growth, it will invoke the guidelines process

without delay and seek Board approval of future production levels.

Should the Board decide on a production level lower than that which FPI

already achieved, FPI will adjust its future plans and, if necessary

scale back, to comply with the Board's decision.

its production by a corresponding amount the following year. If FPI

plans call for continued growth, it will invoke the guidelines process

without delay and seek Board approval of future production levels.

Should the Board decide on a production level lower than that which FPI

already achieved, FPI will adjust its future plans and, if necessary

scale back, to comply with the Board's decision.

(6) In cases of extreme public exigency, such as national disaster

or national defense emergency, FPI may exceed guidelines thresholds,

provided FPI receives specific orders or requests from senior

Department of Defense and/or Executive Branch officials. Increased

sales resulting from national exigencies will not be considered a

violation of guidelines ceilings in the year which they occurred. In

such cases, the higher production levels achieved by FPI will be

temporary, and will not be used as part of FPI's baseline for future

calculations of significant expansion. Such exceptional events will be

subject to approval by FPI's Chief Operating Officer, with concurrence

of FPI's Board of Directors.

(7) Subject to other provisions noted in this paragraph (d), FPI's

sales for fiscal year 1997 will be utilized as the base year for future

application.

Sec. 302.19 General comments on FPI business operations.

(a) Any interested party having any general comment concerning the

business operations of FPI may write to the Chief Operating Officer, or

to the Chairman of the Board of Directors, and bring such matters to

the attention of either or both officials. Where appropriate, a

response shall promptly be made. The Board shall be kept advised of all

comments and responses.

(b) Correspondence should be addressed as follows:

(1) Chief Operating Officer, Federal Prison Industries, Inc., 320

First Street, NW, Washington, DC 20534, Attn: General Comments; or

(2) Board of Directors, Federal Prison Industries, Inc., 320 First

Street, NW, Washington, DC 20534, Attn: General Comments.

hall promptly be made. The Board shall be kept advised of all

comments and responses.

(b) Correspondence should be addressed as follows:

(1) Chief Operating Officer, Federal Prison Industries, Inc., 320

First Street, NW, Washington, DC 20534, Attn: General Comments; or

(2) Board of Directors, Federal Prison Industries, Inc., 320 First

Street, NW, Washington, DC 20534, Attn: General Comments.

(c) This section does not apply to inmate complaints which are

properly raised through the BOP's Administrative Remedy Program (28 CFR

part 542).

[FR Doc. 99-135 Filed 1-6-99; 8:45 am]

BILLING CODE 4410-05-P