FPI Public Notices
Public Comment on Proposed Waiver ProceduresProposed
Waiver Processing
Instructions & Information
Comments Received to Date
On behalf of Associated Builders and Contractors (ABC) and our more than 23,000 construction and construction-related firms across the nation, I would like to submit the following comments to FPI's request for public comment as it relates to the "Proposed Waiver Processing Instructions & Information."
ABC supports FPI reform and believes that the only true reform will come through legislation, similar to that passed in FY' 2001-02 as part of the Department of Defense (DoD) Authorization Bill, which now allows for the DoD to procure its goods from sources other than FPI if the contracting officer determines that the price, quality of product and time of delivery from FPI does not meet their needs.
We believe that the time has come for legislation that would eliminate the mandatory contracting requirement that federal agencies are subject to with regards to products made by the FPI. While ABC’s members and all other market participants must compete for government contracts, FPI does not compete for its contracts. Instead, FPI is simply awarded contracts through its “mandatory source” status. Unlike ABC members, who must fully perform in accordance with the terms and specifications of the government’s contract or face harsh consequences, FPI determines the adequacy of its own performance. Additionally, FPI, not the purchasing agency, determines the reasonableness of the product’s price.
Most alarming to ABC has been the number of FPI expansions through creative interpretations of the statutory charter. FPI’s authorizing statute does not provide authority to act as a federal subcontractor or supplier; nonetheless, FPI does so, going as far as to have FPI products mandated for use by contractors. Additionally, FPI asserts authority to sell services on a non-competitive basis within the federal market and, recently, within the commercial market as well. Construction and construction-related services fall within the newest self-paved road for FPI expansion.
Without reform, FPI will continue its unfettered expansion in the federal and commercial marketplace, even though the private sector has proven it can better address the needs of government agencies and taxpayers by providing higher quality products, in a timelier manner, and for a lower price. Simply put, FPI should be forced to become a more responsible supplier to federal agencies and the taxpayer, allowing the private sector to compete fairly with FPI for federal contracts by eliminating the requirement that government agencies purchase products from FPI.
ABC was founded on the principles of free enterprise and open competition
unencumbered by favoritism or subjective interference by the federal
government. To that end, we oppose the unfair competitive advantage that
this federally funded corporation currently possesses. ABC fully supports
the elimination of FPI's mandatory source status, which will finally level
the playing field for our members to compete with FPI.
Received from Geoff Burr @ Associated Builders & Contractors,
Inc.
The Contract Services Association of America (CSA) is commenting on the recent public notice on the proposed Waiver Processing Instructions & Information.
CSA is the premier industry representative for private sector companies that provide a wide array of services to Federal, state, and local governments. Our members are involved in everything from maintenance contracts at military bases and within civilian agencies to high technology services, such as scientific research and engineering studies. Many of our members are small businesses, including 8(a)-certified companies, small disadvantaged businesses, women-owned businesses, and Native American-owned firms. Our goal is to put the private sector to work for the public good.
CSA is pleased to note that the Federal Prison Industries (FPI) has acknowledged that the Department of Defense (DOD) is exempt from the requirement to obtain a waiver if the contracting officer decides to purchase from a private-sector vendor (per provisions in the FY 02 and FY03 National Defense Authorization Acts). FPI also appears to recognize the need for any Federal agency contracting officer to conduct market research in order to get the best product for the best price. However, CSA is concerned over the FPI proposed procedure that a contracting officer must comply with in order to obtain a waiver from FPI as well as with the fact that the final decision for granting a waiver rests with FPI.
The procedures for non-DOD agencies to obtain a waiver from FPI is completely contrary to normally required competitive procurement practices for Government contracting as well as overall Government policy, which states that “in the process of governing, the Government should not compete with its citizens. The competitive enterprise system, characterized by individual freedom and initiative, is the primary source of national economic strength.” It is also contrary to the bi-partisan efforts of the last several years to encourage greater commercial practices in how the Federal government conducts its business. These reform initiatives (e.g., the 1994 Federal Acquisition Streamlining Act, the 1996 Clinger-Cohen Act, the 2003 Services Acquisition Reform Act, and the FAR Part 15 rewrite) have led to greater attention paid to contractor past performance in source selections and the use of performance-based contracting. These are concepts fully supported by the Administration, which through the President’s Management Agenda, stresses competition as the best means to help agencies fulfill their missions, as well as improving overall the Government’s efficiency and effectiveness in order to get the best deal for the American taxpayer.
CSA believes that both industry and the Government benefit from fair competition based on price, quality, and performance. To that end, we support the current legislative and regulatory efforts to reform FPI’s operating practices and “level the playing field” between private sector vendors and FPI in the Federal marketplace. We believe the same standards and requirements currently imposed on private sector vendors should also be applied to FPI contracts. Until fundamental FPI reform can be enacted, limiting the significant adverse impact of FPI’s mandatory source status is essential to ensuring the best deal for the U.S. taxpayer. Therefore, we remain concerned over FPI’s current practices and its waiver procedures.
Thank you for the opportunity to provide our comments. If there are any questions, or if we can be of assistance, please contact Cindy Hsu, Legislative and Regulatory Director, at (703) 243-2020. These comments are submitted by Gary Engebretson, President, Contract Services Association of America.
Knoll, Inc, appreciates the opportunity to provide comments pertaining to FPI’s waiver process. We agree entirely with the comments of Herman Miller, Inc.; the Office Furniture Dealers’ Alliance (OFDA); the Business and Furniture Manufacturer’s Association (BIFMA), that have been posted on the UNICOR website as of 29 January 2004, and offer the following:
1. There has been much confusion and misinformation associated with implementation of the “new” Defense Department procedures signed into law by the President more than two years ago. It is vital that updated UNICOR waiver instructions for DoD leave absolutely no doubt about who is responsible for deciding whether or not UNICOR products are comparable to products available from the private sector.
Knoll urges that the sentence recommended by Mr. Nelson of Herman Miller, Inc, be added with the following alteration: “This comparability determination is wholly the responsibility of the contracting officer. The procedures of FAR 8.605 do not apply.” The waiver instructions must make it crystal clear that DoD contracting officers, not UNICOR employees or UNICOR subcontractors, make this determination.
2. UNICOR’s price-based waiver procedures are illogical. If a Federal customer goes to a UNICOR catalog and simply orders UNICOR products at published prices, UNICOR will accept the order without question. Yet, if the Federal customer conducts market research and determines that a comparable product is available from the private sector at a lower price, UNICOR requires the opportunity to drop its price to beat the private sector price. But, to the best of our knowledge, the next Federal customer, unless he has done his “market survey” homework, will pay the published UNICOR prices for the same products that UNICOR just sold at a reduced price to another Federal agency.
The message being sent to the non-DOD agencies is clear: UNICOR will compete for DOD business because now there is no choice, but will lower prices for other Federal customers only when forced to do so. And, even then, by requiring the agency to submit pricing information from private sector offerors, the agency has no way of knowing if they are in fact getting UNICOR’s best price.
Knoll, urges that UNICOR, on its own, establish procedures that will enable non-DoD agencies to conduct best-value procurements that include UNICOR. The way to do this is to have UNICOR submit pricing along with other prospective suppliers, and give contracting officers the authority to make the final “best value” decision.
3. Under “Budgetary/Funds Availability,” agencies are instructed to “indicate the maximum dollar amount available” if there are any budgetary constraints associated with the purchase. Knoll and our competitors sell to countless government customers, and these days every one of them faces constant funding and budgetary constraints. In any competitive situation, for a prospective vendor to ask, “what is the maximum dollar amount you have available?” would be unprofessional at best. For a customer to tell the vendor would probably be a procurement integrity violation.
If the income of UNICOR’s private-sector contractor “partners” is in any way tied to UNICOR sales volume, we believe that requiring agencies to disclose available dollar amounts as part of the waiver process, or at any time during the acquisition process would pose the same procurement integrity questions for UNICOR.
Again, Knoll appreciates the opportunity to comment openly on UNICOR’s proposed waiver procedures, and to see the comments of other interested parties posted on the UNICOR website. We are somewhat surprised, however, that after a month only four responses have been received. We suspect that this is the result of the holidays and a lack of knowledge that comments were being sought BY UNICOR on the website. We trust that UNICOR will not conclude that no one was interested other than the four office furniture-related sources parties who responded.
The U.S. Chamber of Commerce appreciates the opportunity to comment on the proposed “Waiver Processing Instructions and Information” procedures. The U.S. Chamber is the world’s largest business federation representing more than three million businesses and organizations of every size, sector and region. These comments are offered on behalf of U.S. Chamber members, small and large, that rely on an efficient, fair competitive process in providing the federal government with goods and services to sustain and grow their businesses.
While the Chamber strongly supports comprehensive reform legislation, many steps can be taken to provide tangible interim relief for the business community, which is currently adversely impacted by FPI’s preferential status in the federal market. The Chamber commends the Federal Prison Industries (FPI) Board of Directors for seeking public comments in its attempt to advance this administrative action that was endorsed by the Bush Administration. Clear, effective implementation of this Board-adopted resolution is essential.
The most notable element of the proposed "Waiver Processing Instructions and Information" is the attempt to issue implementing procedures for the resolution relating to price-based waivers adopted by the Board on March 10, 2003. Directing FPI to grant price-based waivers allows Federal managers to more readily use competition to obtain “best-value” for the taxpayer dollars being expended through the Federal buying process. The key to effective implementation of this resolution is to empower the buying agency. Unfortunately, the proposed procedures effectively empower FPI, rather than the buying agency, to make the determination of whether FPI’s offered product best meets the mission needs of the buying agency. FPI, or more specifically FPI’s Ombudsman, will decide whether FPI’s offered product is "comparable." We strongly urge that this language be redrafted to reflect the true intent of the resolution, which is to empower the buying agency with ultimate decision-making authority.
The proposed procedures also seek to impose upon the Federal buying agencies a requirement to enunciate "minimum, mission critical standards" in order to obtain a waiver based on determination by the buying agency that FPI's offered product does not represent the best value for the taxpayer dollars being expended. The procedures seek to supplant a "best value" standard with a minimum acceptable standard. Even if the agency does make the effort to enunciate the required standards and finds that the FPI-offered product fails to meet them, that decision is subject to review and reversal by FPI’s Ombudsman. Again, we strongly urge that the language be redrafted to reflect that the buying agency has ultimate authority.
Industry, government and the American taxpayer benefit from fair competition based on price, quality, and performance. On behalf of the U.S. Chamber, we urge our comments be taken into consideration in final implementation of the proposed "Waiver Processing Instructions and Information" procedures.
The Coalition for Government Procurement appreciates this opportunity to submit comments on FPI’s new “Proposed Waiver Processing Instructions and Information.” The Coalition has worked closely with Congress and industry through the years as the issue of FPI’s mandatory source status has been debated, and we look forward to the implementation of a procurement plan that is fair and just for the agencies, the taxpayer, the prisoner.
The Coalition is a 330-member association of companies selling commercial solutions to the federal government. Our members include both large and small businesses, many of them suppliers to DOD. Coalition members account for nearly 75% of all sales made through GSA Multiple Award Schedule contracts and over half of all commercial solutions purchased annually by the government. We have worked with government officials for over 22 years to ensure common sense in government procurement.
FPI’s efforts to create a new waiver process which would bring together all the present policies with respect to waivers into a single place is acknowledged by the Coalition. The call for comments by FPI on its waiver process and opportunity for public comment and feedback on the process itself, then, is a positive step on the part of FPI toward the system of procurement that provides open disclosure and public participation.
First and foremost, the Coalition urges FPI to create the "Waiver Processing Instructions and Information" with the goal being to make the process as clear as possible for everyone involved. Clarity is in FPI’s best interest to the same extent as it is to the customer. Creating a system that will not result in subsequent steps and increased time demands is of the highest priority.
The Coalition is concerned that the "Department of Defense (DoD) Buying Activities” description does not clearly state that the DoD buyer, after conducting researching, has the right to make the decision as to whether or not the FPI offering is comparable. The posted language as suggested by FPI will cause confusion unless clarified. Again, in this instance, clarification is necessary to avoid certain confusion. We find FPI’s consistent inability to acknowledge existing law a concern. The waiver instructions should clearly reflect law and regulations for DoD and others.
Finally, there is uncertainty as to whether the reference to "Minimum, Mission Critical Standards" has the ability to change a "best value" standard to a minimum acceptable standard. Standards are set for a reason: to ensure quality. These standards cannot be jeopardized. The best value standard is one broadly used in government procurement. We feel it should be used here. Changing a procurement standard without a full procurement-focused rule-making is inappropriate.
While federal agencies are considered to be the prime customer of FPI, the procurement process as it stands today is lacking the benefits of fair market interaction and, in turn, improved value dependent upon the presence of competition. Both industry and the federal government benefit from fair competition based on price, quality, and performance. To be truly reformed, FPI must compete with the private sector. While this would require FPI to improve its quality and customer service, it would greatly improve the value received by the federal government and will ultimately help FPI while providing a procurement policy that is fair for the taxpayer.
The Coalition appreciates the opportunity to provide comments.
If there are any questions, or if we can be of assistance, please contact
Kathryn Coulter, Director of Policy, at 202-331-0975.
Received from Kathryn Coulter @ Coalition for Government Procurement
From my review I believe that the section identified as "1. Department of Defense (DoD) Buying Activities" is potentially confusing in that the language does not specifically state who makes the decision after research as to whether or not the FPI product is comparable to private sector products.
I would recommend that additional sentences be added from DFARS 208.602 - Policy (published in the Federal Register for the Final Rule on November 14, 2003). The sentences to clarify the comparability determination would be: "This is a unilateral determination made at the discretion of the contracting officer. The procedures of FAR 8.605 do not apply".
Received from David Nelson @ Herman Miller
On behalf of the over 5,000 office furniture dealers across the country, the Office Furniture Dealers Alliance (OFDA) would like to submit the following comments to FPI's request for public comment as it relates to the "Proposed Waiver Processing Instructions & Information."
OFDA would like to first recommend that any requests for comment be given in a timely manner. The current request was issued on December 23, 2003, right before the holiday when many people have left town until the New Year. If FPI wants real input then OFDA recommends that FPI avoid issuing such requests at during such periods. It would be very helpful if FPI would issue such requests and allow for more time for people to comment.
OFDA supports FPI reform and believes that the only true reform will come through legislation, similar to that passed in FY' 2001-02 as part of the Department of Defense Authorization Bill, which now allows for the DoD to procure its goods from sources other than FPI if the contracting officer determines that the price, quality of product and time of delivery from FPI does not meet their needs. This regulation became effective December 15, 2003. OFDA believes that if FPI is serious about reforming its practices that it will follow the lead set by Congress and adopt the same rules and regulations that currently apply to the DoD and apply them to all civilian agencies as well.
Just as we saw large corporate companies fail when left to monitor themselves. The same can be said about FPI. No government corporation should be left to monitor itself without oversight as FPI is allowed to operate currently. FPI has been given the chance to make real changes in this area and have failed. OFDA would encourage FPI, if they are truly serious about making real changes, to follow the lead of Congress and adopt the measures passed by the Congress as part of the DoD Authorization Bill. FPI should not be allowed to have the final say as to whether a waiver is granted or not. This decision is best made by the contracting officer who is better able to decide what the needs of their department and/or agency are - not FPI.
There has been a lot of confusion the past year or so with the policies being implemented by the FPI Board of Directors. OFDA would like to recommend that all policies be clearly defined and interpreted on the FPI web site so that there can be no issues of what exactly the policies are and mean. In the past, policies adopted by the Board have been posted that have been confusing and misleading. Clearly defining any policies will help solve this problem.
OFDA would also recommend that any new policies adopted by the FPI Board of Directors be done so with the direct input of the private sector and labor community. By including business and labor in the process FPI might be able to avoid confusion as to the intent of policies adopted by the Board.
Even if FPI adopts new rules governing how and when waivers will be given, OFDA does not believe that the policies will have much of an impact. If you carefully read through the current policies and the policy language suggested as "reform efforts" by the Board and/or FPI career staff, it is apparent that the changes to the policies are only cosmetic. For example, the "Proposed Waiver Processing Instructions and Information" seek to empower FPI, rather than the buying agency to make the determination of whether FPI offered product is "comparable."
Similarly, the proposed procedures seek to impose upon the buying agency a requirement to enunciate "minimum mission critical standards" in order to obtain a waiver based on determination by the buying agency that FPI's product does not meet the best value for the taxpayer dollars being spent. The procedure seeks to supplant a "best value" standard with a minimum acceptable standards and finds that the FPI offered product fails to meet them, that decision is subject to review and reversal by FPI's Ombudsman, who in the opinion of OFDA cannot operate in an objective capacity when working so closely with those career staff who are directly responsible for running the FPI program.
As to the issue of blanket waivers the board adopted during its August 13-14, 2003 meeting, implementing procedures relating to its resolution to require the waiver of application of mandatory source based on FPI's share of the market.
The Board resolution, adopted June 26, 2003 reads as follows:
"The Board of Directors directs Federal Prison Industries to limit the
application of mandatory source to products for which FPI's share of
the Federal market is less than 20 percent."
The FPI staff-drafted implementing procedures simply restate the procedures FPI has been using to calculate market share. By using broad product class groupings, FPI can have 50% or even 100% of the Federal market for many specific items, while staying well below the 20% threshold for the overall class. FPI has determined that it only has 20 percent of the Federal market for three classes of products: "Electrical Portable and Hand Lighting Equipment (Federal Supply Class (FSC) 6230), "Household and Commercial Utility Containers" (FSC 7240), and "Household Furnishings" (FSC 7210). The implementing procedures specifically authorize FPI to make unlimited sales to Federal agencies "in accordance with applicable laws and regulations.
"Under FPI's current authorizing statute, "sales by Federal Prison Industries are considered intragovernmental transfers." (18 U.S.C. 4124(c)). Hence, agency awards, especially for services, are frequently made to FPI as a result of non-competitive negotiations that provide private sector offerors with no opportunity to compete.
If FPI is serious about reform it will support language as provided in legislation passed by the House of Representatives in 2003 (H.R.1829, the "Federal Prison Industries Competition in Contracting Act), which makes explicit that Federal agency purchases of FPI-offered products or services are to be acquired by procurement contracts, which generally must be won on a competitive basis, affording the private sector with an opportunity to compete.
OFDA is disappointed FPI did not seek public comment regarding these implementing procedures relating to waivers based on market share.
H.R. 1829 would require them to do so and to take such decisional actions in open session, on the record, rather than behind closed doors with only the FPI career management staff providing the briefest summary of the meeting.
OFDA again urges FPI to support those reforms working there way through Congress. H.R. 1829 and S. 346 are the only vehicles of real meaningful reform that will get FPI back on track while allowing contracting officers to get the "best value" for the tax payer dollar. Without embracing these reforms (H.R. 1829 and S. 346) FPI is merely looking to cloud the issue by implementing "new" policies that are not effective and only look to strengthen FPI's control of the process and the rules under which they are allowed to change as they see fit.
We appreciate the opportunity to submit our views on this very important issue. It is OFDA's hope that FPI will come to the same conclusion that OFDA and others have, that real reform will only be possible if and when FPI embraces those policies supported by Congress in the form of S. 346 and H.R. 1829.
Received from Paul A. Miller @ Office Furniture Dealers Alliance
The Business and Institutional Furniture Manufacturer's
Association
(BIFMA) urges Federal Prison Industries (FPI) to make the "Waiver
Processing Instructions and Information" as clear as possible for
everyone. Clarity is in everyone's interest. This Web site method of
gathering comment and posting what others have said is an excellent
step
toward what FPI needs in every facet of its operation... total
transparency.
While we believe FPI's mandatory source power and waiver
process should be
completely done away with, until that occurs we call upon FPI to support
the reforms already passed and those now going through Congress by
readying their policies for those changes. The FY' 2001-02 reform that
was
part of the Department of Defense Authorization Bill allows for the
DoD to
procure its goods from sources other than FPI if the contracting officer
determines that the price, quality of product and time of delivery from
FPI does not meet their needs. This should be the place to start. It
is
the law and the information needs to state, very clearly, that it is
a
unilateral determination made at the discretion of the DoD contracting
officer and that the procedures of FAR 8.605 do not apply.
H.R. 1829 and S. 346 will bring comprehensive reform to
Federal Prison
Industries and allow contracting officers to get the best value for
the
tax payer's dollar. To convince their federal customers, government
vendors, Congress, and the taxpayer that FPI is willing to comply rather
than resist these changes, the agency needs to promote the new rules
and
regulations that now apply to the DoD and extend them to all civilian
agencies as well. Contracting officers are better able than FPI to decide
what the needs of their departments are. The buying agency, solely,
should
make the determination of whether FPI offered product is "comparable."
Received from Brad Miller @ Business and Institutional Furniture Manufacturer's Association
Updated January 28, 2004
