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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: November 14, 2003

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Competition Requirements for Purchases from the Federal Prison Industries (FPI)

SOURCE: Federal Register, November 14, 2003, Vol. 68, No. 220, page 64559

AGENCIES: Department of Defense (DOD)

ACTION: Final Rule

SYNOPSIS: DOD is amending DFARS Subpart 208.6, Acquisition from Federal Prison Industries, Inc., to implement Section 811 of the National Defense Authorization Act for Fiscal Year 2002 (Public Law 101-107) and Section 819 of the National Defense Authorization Act for Fiscal Year 2003 (Public Law 107-314). Section 811 of Public Law 107-107 requires that contracting officers conduct market research before purchasing a product listed in the Federal Prison Industries (FPI) catalog, and Section 819 of Public Law 107-314 clarifies Section 811.

EDITOR'S NOTE: For more on the proposed rule being finalized, see the May 15, 2003, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Competition Requirements for Purchases from Federal Prison Industries (FPI)."

For more on the interim rule that originally implemented Section 811 of Public Law 107-107, see the April 26, 2002, FEDERAL CONTRACTS DISPATCH "Defense Federal Acquisition Regulation Supplement (DFARS); Competition Requirements for Purchases from Federal Prison Industries (FPI)."

For more on the acquisition-related provisions of Public Law 107-107, see the January 2, 2002, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2002."

For more on the acquisition-related provisions of Public Law 107-314, see the December 3, 2002, FEDERAL CONTRACTS DISPATCH "Enactment of the National Defense Authorization Act for Fiscal Year 2003."

EFFECTIVE DATE: December 15, 2003. (EDITOR'S NOTE: The DFARS hyperlinks below are not active until December 15, 2003. Until December 15, 2003, view the DFARS changes at the Federal Register site at http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/03-28440.htm).

FOR FURTHER INFORMATION CONTACT: Michele Peterson, Defense Acquisition Regulations Council, OUSD(AT&L)DPAP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; 703-602-0311; fax: 703-602-0350.

SUPPLEMENTAL INFORMATION: Section 811 of Public Law 107-107 provided that:

• Before purchasing a product listed in the FPI catalog, DOD contracting officers must conduct market research to determine whether the FPI product is comparable in price, quality, and time of delivery to products available from the private sector;
  
  
• If the FPI product is not comparable in price, quality, and time of delivery to products available from the private sector, the contracting officer must use competitive procedures to acquire the product; and
  
  
• In conducting such a competition, the contracting officer must consider a timely offer from FPI for award in accordance with the specifications and evaluation factors in the solicitation.

On April 26, 2002, DOD published an interim rule implementing Section 811, and invited comments. In addition, DOD conducted a public meeting on June 2, 2002, to hear the views of interested parties. Approximately 60 persons attended the public meeting, and 43 sources submitted written comments in response to the interim rule.

Section 819 of Public Law 107-314 clarified Section 811 by:

• Adding the phrase "that best meet DOD's needs in terms of price, quality, and time of delivery" to the phrase "if the contracting officer determines the FPI product is not comparable in price, quality, or time of delivery to products available from the private sector", so that it reads "if the contracting officer determines the FPI product is not comparable in price, quality, or time of delivery to products available from the private sector that best meet DOD's needs in terms of price, quality, and time of delivery."
  
  
• Specifying requirements for use of competitive procedures or for making a purchase under a multiple award contract if an FPI product is found to be noncomparable to products available from the private sector;
  
  
• Specifying that a contracting officer's determination, regarding the comparability of an FPI product to products available from the private sector, is not subject to review;
  
  
• Specifying that a DOD contractor may not be required to use FPI as a subcontractor; and
  
  
• Prohibiting the award of a contract to FPI that would allow an inmate worker access to classified or sensitive information.

On May 15, 2003, DOD published a proposed rule to further implement the requirements of Section 811 of Public Law 107-107 and Section 819 of Public Law 107-314. Comments received in response to the April 26, 2002, interim rule were considered in the development of the proposed rule. DOD received 16 comments in response to the proposed rule, but has decided to adopt the proposed rule as final without changes.

This final rule makes the following changes to the DFARS:

• DFARS 208.601-70, Definitions, defines "competitive procedures" as including "the procedures in FAR 6.102 [Use of Competitive Procedures], the set-aside procedures in FAR Subpart 19.5 [Set-Asides for Small Businesses], and competition conducted in accordance with FAR Part 13 [Simplified Acquisition Procedures]."
  
  
• DFARS 208.602, Policy, is revised as follows:
  
  
  • To paragraph (a) (redesignated as paragraph (a)(i)), which requires the contracting officer to "conduct market research to determine whether the FPI product to comparable to products available from the private sector," and states that this decision is a "unilateral decision made solely at the discretion of the department or agency," is added the sentence: "The procedures of FAR 8.605 [Clearances] do not apply." The FAR requires that a clearance be obtained from FPI before acquiring supplies on FPI's schedule from another source, and this sentence exempts DOD from this.
    
    
  • New paragraph (a)(ii) is added, and it requires the contracting officer to "prepare a written determination that includes supporting rationale explaining the assessment of price, quality, and time of delivery, based on the results of market research comparing FPI products to those available from the private sector."
    
    
  • If the FPI product is determined not to be comparable, new paragraph (a)(iv)(A)(2) permits the contracting officer to acquire the product through "the fair opportunity procedures in FAR 16.505 [Ordering], if placing an order under a multiple award task or delivery order contract." The contracting officer had been limited to using "competitive procedures" only (old paragraph (a)(ii)(A)).
    
    
  • If the contracting officer determines the FPI product is not comparable, paragraph (a)(iv)(B) (formerly paragraph (a)(ii)(B) requires that FPI be included in the solicitation process and evaluated as any other offeror. This requirement applies to small business set-asides as well.
    
    
  • New paragraph (a)(iv)(C) requires the contracting officer, when using a multiple award schedule issued under the procedures of FAR Subpart 8.4, Federal Supply Schedules, to "establish and communicate to FPI the requirements and evaluation factors that will be used as the basis for selecting a source, so that an offer from FPI can be evaluated on the same basis as the schedule holder; and consider a timely offer from FPI."
  
  
• DFARS 208.606, Exceptions, is revised to exempt FPI clearances "when the contracting officer makes a determination that the FPI product is not comparable to products available from the private sector that best meet the government's needs in terms of price, quality, and time of delivery, and the procedures at [DFARS] 208.602(a)(iv) are used."
  
  
• New DFARS 208.670, Performance as a Subcontractor, prohibits any requirement that a contractor, or subcontractor at any tier, use FPI as a subcontractor for performance of a contract.
  
  
• New DFARS 208.671, Protection of Classified and Sensitive Information, prohibits entering into any contract with FPI that allows an inmate worker access to any "(a) classified data; (b) geographic data regarding the location of (1) surface and subsurface infrastructure providing communications or water or electrical power distribution; (2) pipelines for the distribution of natural gas, bulk petroleum products, or other commodities; or (3) other utilities; or (c) personal or financial information about any individual private citizen, including information relating to such person's real property however described, without the prior consent of the individual."
  
  
• New DFARS 219.502-70, Inclusion of Federal Prison Industries, Inc., requires the inclusion of FPI when using competitive procedures in accordance with DFARS 208.602(a)(iv).
  
  
• New DFARS 252.219-7005, Alternate A, is required to be used when a total small business set-aside is used to acquire the product when the FPI product is determined not to be comparable. It states that "offers are solicited only from small business concerns and Federal Prison Industries, Inc. (FPI)."
  
  
• New DFARS 252.219-7006, Alternate A, is required to be used when a partial small business set-aside is used to acquire the product when the FPI product is determined not to be comparable. It states that "offers will be solicited and considered from Federal Prison Industries, Inc., for both the set-aside and non-set-aside portion of this requirement."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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