60 -- FPI Production in FSC Code 6020 and FSC Code 6135

This notice announces decisions by the Board of Directors for Federal Prison Industries, Inc. (FPI) on two issues. The first issue deals with FPI's production in Federal Supply Classification (FSC) code 6135 - Non-rechargeable Batteries. The second issue is in regard to FPI's production in FSC code 6020 - Fiber Optic Cable Assemblies and Harnesses. FPI's new product/significant expansion guidelines were published March 12, 1997 in the Federal Register. A provision of the guidelines allows for FPI to exceed a specific product's expansion threshold in cases of public exigency, such as a national defense emergency. The guidelines require that FPI receive a specific order or request from Department of Defense (DoD) or Executive Branch officials for this provision to be invoked. Upon invoking this provision, the guidelines allow that 'increased sales resulting from national exigencies will not be considered a violation of the guidelines ceiling in the year in which they occur.' During March, 2002, FPI received an official request from the Department of the Army's Communications-Electronics Command for FPI to fulfill DoD's needs for two types of batteries in FSC code 6135. FPI's FY 2002 sales ceiling for FSC code 6135 is $6.4 million. Based on year-to-date sales, the additional work represented by the DoD request would cause FPI to exceed this sales ceiling. The DoD request stated that FPI is the only known, qualified contractor of both batteries. The DoD request also stated 'continued production and delivery of these batteries is necessary to support critical survival radio and distress strobe light requirements of all military services.' On March 28, 2002, FPI presented its Board of Directors with a request to invoke the guidelines' 'national exigency' provision. In light of the military's critical need for these items, FPI staff requested its Board approve FPI's production at the levels requested by the customer, which would result in FPI's sales in FSC 6135 reaching approximately $9.6 million. FPI's Board of Directors officially approved this request. The Board's approval means that FPI's sales in FSC code 6135 may temporarily exceed the guidelines ceiling without it constituting a guidelines violation. Also in March, 2002, FPI staff informed its Board of Directors of, and requested approval for, FPI's sales in FSC code 6020, which have exceeded the FY 2002 sales ceilings. During FY 2001, FPI waived an order from DoD for two types of fiber optic cables in FSC code 6020. Upon being notified that FPI had waived the order for these items, DoD attempted to contract with a private vendor to fill the order. However, to date, the private vendor has yet to pass all first article test requirements. In light of this, DoD requested FPI to re-bid on this product. FPI submitted a re-bid, and DoD issued a contract to FPI for both items in August, 2001. With no other qualified source for these items, DoD recently exercised its option to purchase the maximum number of units allowable under the contract from FPI. In addition, in November 2001, DoD placed a separate delivery order for these items. The total value of fiber optic cables in FSC code 6020 ordered by DoD from FPI is $4.9 million. FPI's sales ceiling for FSC code 6020 in FY 2002 is $1.3 million. FPI's sales in this category constitute a significant expansion as defined by FPI's guidelines. FPI staff informed the Board of several mitigating factors that FPI believe warrant the Board's approval of FPI's increased sales levels in FSC code 6020. These factors include: * In correspondence to FPI, DoD officials have stated 'Continued production of these two cables is critical as they provide the communications backbone' for several systems used by the Army. Therefore, FPI believes these items would qualify under the guidelines' national exigency provision; * FPI waived DoD's initial order for these items in January 2000. From that point forward, the work was available to any interested private vendor; * FPI only submitted a re-bid for the order upon a request to do so by DoD; * DoD has stated that FPI is the only known, qualified source for these items; and * DoD will be able to lessen its reliance upon FPI once a qualified second source for these items is approved. For these reasons, FPI staff requested the Board authorize a revised sales ceiling covering FSC code 6020 during FY 2002 not to exceed $6 million. The Board gave its interim approval for this request, subject to comments by interested parties. Interested parties are invited to submit comments on the Board's interim's decision regarding FPI's sales in FSC code 6020. The deadline for submitting such comments is 45 days from the submission date of this notice. It should be noted that the national emergency provision of FPI's guidelines is temporary. It does not authorize FPI to utilize the higher sales level as a future production baseline. FPI is not certain how long the current exigency will last due to the ongoing war on terrorism. While the requested production levels are deemed to be on a temporary basis, at this time, DoD does not know how long the requirement for additional production in these two Federal Supply areas will last. Interested parties have a right to raise questions at any time with FPI's Board of Directors. Any correspondence should be addressed to: Chief Administrative Officer, Research, Activation and Corporate Support, Federal Prison Industries, Inc., 320 First Street, NW, Washington, DC 20534. Attention: FPI Board of Directors.