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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: May 15, 2003

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

SOURCE: Federal Register, May 15, 2003, Vol. 68, No. 94, page 26265

AGENCIES: Department of Defense (DOD)

ACTION: Proposed Rule

SYNOPSIS: DOD is proposing to amend 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 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 notice of the June 3, 2002, meeting to discuss the interim rule, see the May 13, 2002, FEDERAL CONTRACTS DISPATCH "Meeting on 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."

DATES: Comments on the proposed rule must be submitted on or before July 14, 2003.

ADDRESSES: Respondents may submit comments directly on the web site at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an alternative, respondents may e-mail comments to: dfars@acq.osd.mil. Also, respondents who cannot submit comments through the web site or by e-mail may submit comments to Defense Acquisition Regulations Council, Attn: Susan Schneider, OUSD(AT&L)DP(DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062, or by fax to 703-602-0350. Cite "DFARS Case 2002-D003" when making comments on this proposed rule.

FOR FURTHER INFORMATION CONTACT: Susan Schneider, 703-602-0326.

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."
  
  
• Specify 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;
  
  
• Specify 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;
  
  
• Specify that a DOD contractor may not be required to use FPI as a subcontractor; and
  
  
• Prohibit the award of a contract to FPI that would allow an inmate worker access to classified or sensitive information.

This proposed rule further implements the requirements of Section 811 and implements Section 819 of Public Law 107-314. Comments received in response to the April 26, 2002, interim rule and during the June 3, 2002, meeting were considered in the development of this proposed rule.

This proposed rule would make the following changes:

• New DFARS 208.601-70, Definitions, would define "competitive procedures" as including the procedures in FAR 6.102, Use of Competitive Procedures, the 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, would be revised as follows:
  
  
  • To paragraph (a) (in proposed paragraph (a)(i)), which requires the contracing 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.
    
    
  • Proposed paragraph (a)(ii) would be added, and it would require 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, proposed paragraph (a)(iv)(A)(2) would permit 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." Currently, the contracting officer is limited to using "competitive procedures" only (current paragraph (a)(ii)(A)).
    
    
  • If the contracting officer determines the FPI product is not comparable, proposed paragraph (a)(iv)(B) would require that FPI be included in the solicitation process and evaluated as any other offeror. This requirement would apply to small business set-asides as well.
    
    
  • Proposed paragraph (a)(iv)(C) would require 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, would be 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 208.602(a)(iv) are used."
  
  
• New DFARS 208.670, Performance as a Subcontractor, would prohibit 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, would prohibit 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., would require that FPI be included when using competitive procedures in accordance with DFARS 208.602(a)(iv).
  
  
• DFARS 252.219-70XX, Alternate A, would 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)."
  
  
• DFARS 252.219-70YY, Alternate A, would be used when a partial small business set-aside is use 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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