Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices 11465

requirements of section 201.6 of the

Commission’s Rules of Practice and

Procedure (19 CFR 201.6). All written

submissions, except for confidential

business information, will be available

for inspection by interested persons. All

submissions should be addressed to the

Office of the Secretary, United States

International Trade Commission, 500 E

Street SW., Washington DC 20436.

By order of the Commission.

Issued: March 6, 1997.

Donna R. Koehnke,

Secretary.

[FR Doc. 97–6191 Filed 3–11–97; 8:45 am]

BILLING CODE 7020–02–P

DEPARTMENT OF JUSTICE

Federal Prison Industries

Product Development and Production:

Public Involvement Procedures

AGENCY: Federal Prison Industries, Inc.,

Bureau of Prisons, Department of

Justice.

ACTION: Notice.

SUMMARY: In this document, Federal

Prison Industries, Inc. (FPI) announces

new interim definitions of three key

terms: New product, specific product,

and significant expansion of an existing

product.

ADDRESSES: Federal Prison Industries,

Inc., 320 First Street, NW., Washington,

DC. 20534.

EFFECTIVE DATE: March 12, 1997.

FOR FURTHER INFORMATION CONTACT: Mr.

Todd Baldau (202) 305–3582.

SUPPLEMENTARY INFORMATION: Last year,

FPI published notices in the Federal

Register and Commerce Business Daily

proposing revisions to the definitions of

‘‘specific product,’’ ‘‘new product’’ and

‘‘significant expansion of production’’

for use with the FPI expansion

guidelines. The Federal Register notice

was printed on August 7, 1996 (61 FR

41248). The Commerce Business Daily

notice was printed on September 20,

1996. Each notice asked interested

parties to review the revised definitions

and submit comments on the proposed

revisions to FPI. FPI received

submissions from the following

individuals and organizations:

U.S. Representative Mac Collins

(Georgia, 3rd District);

The American Defense Preparedness

Association;

The Business and Institutional

Furniture Manufacturers

Association;

Trussbilt, Inc.;

The Coalition for Government

Procurement;

The American Apparel Manufacturers

Association;

Tennessee Apparel Corporation;

Furniture By Thurston; and

The Quarters Furniture Manufacturers

Association.

FPI wishes to thank each of the

respondents for taking the time to

submit their comments. Many of the

submissions included suggestions

which FPI has incorporated into the

revised definitions. Also among the

submissions were several comments

helpful to FPI in understanding

potential implications of the proposed

revised definitions. Some of these

comments led FPI to adjust its original

proposal.

For the purposes of this notice, FPI

has separated all the comments we

received into one of four groups: (1)

Ideas, recommendations or suggestions

FPI has adopted in the revised

definitions; (2) Ideas, recommendations

or suggestions with which FPI

respectfully disagrees and has not

adopted in the revised definitions; (3)

Comments that are more relevant to

other aspects of FPI’s operations, such

as issues concerning mandatory source;

and (4) Comments which are vague,

broad or general in nature. Such

comments do not make a specific point,

making it difficult for FPI to address.

Below is a summary of all comments

received by FPI. In many instances,

similar comments from multiple parties

have been combined. Also included are

some of FPI’s responses, where

appropriate.

(I) Ideas, Recommendations or

Suggestions FPI Has Adopted

The following are ideas,

recommendations or suggestions

provided by commenters which FPI

found useful or constructive, and

incorporated, in whole or in part, into

the revised expansion definitions.

A commenter noted FPI’s initial

announcement stated ‘‘FPI announces

revised definitions of two key terms:

New product and specific product.’’

However, ‘‘significant expansion of

production’’ is also revised. FPI

acknowledges the oversight, and has

reflected this correction in the new

announcement. This notice refers to all

three revised definitions.

Commenters suggested FPI defer

issuing the new definitions, raising the

possibility Congress may require FPI to

modify the terms again, resulting in

another revision in a short period of

time. The commenter stated a delay in

issuing the definitions would permit

interested parties to take up Rep.

McCollum’s offer to discuss FPI’s

operations and regulations next year.

FPI appreciates the willingness to

accept Rep. McCollum’s invitation.

Nonetheless, the current definitions

present a myriad of problems that need

to be addressed. With the commenter’s

suggestion in mind, FPI is publishing

the new definitions as an ‘‘interim

rule.’’ This will allow time for

experience and encourage comments

during its implementation.

A commenter suggested amending the

provision dealing with cases of extreme

public exigency, where FPI would be

empowered with the authority to

increase production without penalty

when asked to do so. The commenter

advised that FPI explicitly state that its

production levels are temporary, and

will not be used as the baseline for

future calculations of what is deemed a

significant expansion of production. FPI

has incorporated such language into the

revised definitions.

Several commenters objected to the

provision allowing FPI to supply new

items of limited duration or volume.

The commenters felt this provision did

not allow for sufficient private industry

input, would be detrimental to small

businesses who sell to the Federal

government and did not provide

adequate safeguards to prevent FPI from

misuse of the provision. FPI recognizes

the concerns raised by the commenters

and has withdrawn the provision from

the revised definition.

Commenters suggested the definitions

should not eliminate an item’s

predominant material of manufacture as

a determinant of whether an item is a

separate specific product. FPI agrees,

and notes the new definitions do not

make such an elimination. Rather, the

predominant material ‘‘will not

ordinarily’’ be a factor in determining

whether an item is a separate specific

product. FPI did not mean to imply the

predominant material of manufacture is

not an important consideration, only

that in most cases, it would not result

in an item being deemed a separate

specific product. An item’s predominant

material will always be considered, and

unless deemed to be significant, will not

typically result in a distinction for a

separate specific product.

A commenter suggested that FPI state

its sales goals in units, not dollars. FPI

appreciates the suggestion and will

attempt to include production

information on units where feasible, as

well as dollars, for impact studies. The

nature of some of FPI’s work makes

stating production goals in units

difficult. It should be noted that in past

impact studies, FPI has attempted to

differentiate between inflation and real
11466 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices

growth in projecting the corporation’s

future sales and market share.

Several commenters suggested FPI

revise the provision relating to

announcements in the Commerce

Business Daily (CBD). One commenter

argued it was an undue burden on small

business owners to have to check the

CBD every day. Another suggested the

time period in which interested parties

may submit comments should be

lengthened beyond 10 days. FPI

acknowledges there may be difficulties

associated with checking the CBD,

especially for a small business. We

appreciate the comments, and have

amended the revised definitions so that

they now allow 21 days for interested

parties to comment.

Regarding submissions from

interested parties in response to the CBD

announcements referenced in the prior

paragraph, a commenter disagreed with

the restriction on submissions stating

that comments related to market share

and/or the impact resulting from such a

production decision would not

ordinarily be considered relevant to

whether an item should be considered

a new product. FPI recognizes the

importance that data relating to a

reasonable share of the market has to the

expansion process. FPI appreciates the

comment and agrees to modify the

provision so that all information will be

considered. The contested reference in

the provision has been deleted.

A commenter expressed approval of

the provision to have FPI make CBD

announcements for items FPI does not

consider to be a new product, but which

an affected party may reasonably

construe to be a new product. The

commenter noted the purpose of the

revision is to give private industry an

added level of input into such decisions

made by FPI. The commenter regarded

this as ‘‘a very constructive approach

and again will build a great deal of trust

and goodwill between FPI and the

private sector.’’ FPI appreciates the

acceptance of this provision.

A commenter noted the revised

definitions will not require FPI to

initiate the guidelines process when

FPI’s market share increases as a result

of factors other than an increase in FPI’s

production. The commenter recognized

that ‘‘asking FPI to continually track its

market share for every product is a

burdensome job.’’ The commenter

suggested that industry be encouraged

to track market size and be allowed to

petition FPI’s Board of Directors for

production relief in the event that a

significant reduction in the size of the

market can be demonstrated. FPI

appreciates the comment and concludes

that the new definitions do allow for

such action on the part of members of

the private sector.

Commenter questioned whether the

new significant expansion definition

would allow FPI to increase production

until it captures 25% of the market

before it triggers the expansion process

as long as FPI makes only incremental

increases. FPI acknowledges that while

the circumstances described are

theoretically possible, we do not believe

it is very likely. First, such a scenario

would only occur over a several year

period, since any sales increase over

10% would lead to an FPI examination

of market share, and trigger the

guidelines process if FPI exceeded the

15% and 20% market share thresholds.

As a result of the elapsed time, any

impact would be minimized. As a

potential safeguard against such a

scenario, FPI has encouraged potentially

affected industries to petition the Board

if they believe the FPI growth is having

an adverse impact on their particular

industry. This encourages the industry

to monitor FPI growth, via annual sales

and market share reports published by

FPI, in conjunction with their own

market data, and bring their concerns to

the Board’s attention, as circumstances

warrant.

A commenter suggested changing the

provision on cases where FPI’s sales

inadvertently or insubstantially exceed

authorized levels. The commenter

suggested strengthening the language

regarding FPI’s obligation to adjust its

sales levels if the corporation exceeds

its authorized sales level. FPI has

amended the language accordingly.

(II) Ideas, Recommendations or

Suggestions With Which FPI

Respectfully Disagrees and Has Not

Adopted

Though the following comments were

not incorporated into the revised

guidelines, FPI wishes to emphasize its

appreciation for the careful review by

all commenters in providing their

submissions. In the interest of making

this process as visible and open to

public scrutiny as possible, FPI has

included its reasons for choosing not to

accept the following ideas,

recommendations or suggestions.

Most of the comments with which FPI

disagrees and has not adopted deal with

the availability of data under the current

definitions or the proposed use of 4-

digit Federal Supply Class (FSC) codes

as the primary basis for determining a

‘‘specific product.’’

Commenters questioned whether

there really is unavailability of data

under the current definitions.

Commenters suggested the procurement

data sought by FPI is already collected

by GSA’s Single Item Numbers (SINs).

FPI respectfully disagrees with both

comments. The current definitions make

use of the Standard Industrial

Classification (SIC) system’s 7-digit item

codes. The government does not collect

Federal procurement data by 7-digit SIC

codes. Rather, Federal purchases are

categorized by the FSC system. FPI also

reiterates the limitations of GSA’s SIN

data. GSA does not have schedules for

every industry in which FPI operates.

Also, through research for past impact

studies, FPI has found that while

information from GSA’s schedules

provide an important piece of the

Federal market puzzle, data from the

schedules do not reflect all Federal

buys, and often fail to include large

segments of the Federal market.

Regarding the FSC system,

commenters felt an FSC code would be

too broad and encompass too many

separate items to be validly considered

a specific product. Commenters also

expressed concern over the revised

definitions allowing FPI to combine FSC

codes where multiple codes comprise a

single industry. Commenters contended

that in such instances, FPI’s true impact

would be severely understated.

FPI recognizes these concerns and

agrees that in some instances, FSC

categories are too broad to be accurate

measure of an item’s Federal market.

However, the revised definitions make

provisions for such cases. The new

definitions state, ‘‘FPI will announce in

the CBD its intent to produce any item

that could reasonably be construed to be

a new product, regardless of the fact that

such an item falls in the same 4-digit

category as an item that FPI is currently

making, or has made within the recent

past, and is not considered by FPI to be

sufficiently different from an existing

item to be considered a new product.

Moreover, borderline cases will be

announced in the CBD in order to allow

for the full public scrutiny.’’ The new

definitions also state, ‘‘In some

instances, an item may be considered

separate from another product in the

same 4-digit FSC category, if its function

differs substantially.’’

Regarding the combination of FSC

codes, it is incumbent upon FPI to be as

accurate as possible in determining its

impact on the private sector. When an

industry’s operations encompass

multiple FSC codes, FPI is obligated to

combine the codes in the effort to

measure the corporation’s true impact.

Further, FPI’s authorizing legislation

directs FPI to guard against placing an

undue burden on any single industry,

not individual companies.

FPI believes the industry involvement

guidelines process addresses concerns
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices 11467

that the use of FSC codes would allow

FPI to expand in a few limited items

without seeming to have an impact on

the industry as a whole. Under both the

current and new definitions, the

guidelines process provides ample

opportunity for public comment and

input, so that FPI’s Board of Directors

can be made aware of particular

situations that may create undue impact

on private industry.

Beyond the principal objections

mentioned above, commenters raised

other questions regarding the new

definitions. One commenter stated they

lack confidence in a system which, by

FPI’s admission, does not ‘‘develop a

simple, single principle that can be

applied in every situation to determine

when to delete unrelated items from a

4-digit FSC category and when to

combine categories.’’ FPI recognizes the

desire for a ‘‘one size fits all’’ approach.

However, in the absence of a viable

alternative, we believe the revised

guidelines offer a fair, reasonable and

logical set of standards to examine FPI’s

growth.

A commenter questioned the use of 4-

digit SIC codes as a secondary

determinant for a specific product, in

those instances where there are multiple

items within a single FSC code. The

commenter felt 4-digit SICs do not

represent any substantial protection

beyond the FSC codes. The commenter

asserted that specific product

distinctions are found at the 7-digit SIC

level. As mentioned earlier in this

section, limitations of the SIC system

were one of many factors leading to the

revision of the definitions. FPI’s initial

notice proposing the revised definitions

discussed the difficulties FPI has

experienced with SIC codes, the

primary problem being the lack of

available data. For this reason, the new

definitions will not be based upon the

SIC system. Instead, the 4-digit SIC code

will be used as a secondary determinant

for a specific product. In such cases,

cross-referencing the 4-digit SIC codes

against the FSC codes will allow FPI to

more accurately separate items that

should be considered a separate

‘‘specific product.’’

Several comments touched on the

provision concerning FPI

announcements in the CBD regarding

the planned production of items that

may reasonably be considered a new

product. One commenter doubted that a

heightened effort by FPI would provide

any meaningful restraint. The new

definitions have FPI make such

announcements when an item may be

reasonably construed to be a new

product. In cases which are

questionable, FPI will err on the side of

announcing in the CBD in order to allow

for full public scrutiny. In addition, the

new rules would provide much greater

visibility to these decisions and

determinations than is afforded under

the current guidelines.

A commenter questioned how the

new rule helps FPI meet its mission of

‘‘diversification so that no single

industry shall be forced to bear an

undue burden of competition?’’ FPI

believes the new definitions are a

significant step forward in meeting this

objective. Among the primary benefits

of the revised definitions is that they are

aimed toward measuring FPI’s impact

on an industry. The corporation’s

authorizing legislation states that FPI is

to operate so that no single industry is

forced to bear an undue burden of

competition. Most private vendors

competing for Federal business offer an

array of different items across the

industry in which they operate. Most

producers of office furniture do not

limit themselves to just credenzas. They

offer tables, desks, bookcases, etc.

Suppliers of shirts may also produce

pants, coveralls, etc.

One commenter stated FPI’s

commitment to report in the CBD all

items which could reasonably be

construed to be a separate specific

product will be the determinant of FPI’s

good faith. The commenter stated that if

FPI faithfully observes this commitment

by announcing its intent considerably

more liberally than is required and

treats comments objectively (i.e., acts in

favor of both FPI and the private sector

about 50 % of the time) industry will

likely gain confidence in the process.

FPI appreciates the commenter’s trust in

our ability to faithfully and accurately

fulfill the requirements of this

provision. Yet the fair treatment of

comments received from the private

sector does not automatically translate

into a quota system whereby the finding

will be in the private sector’s favor 50%

of the time. FPI commits that the Board

of Directors will decide each case on its

own merits, regardless of any other such

decisions. FPI points out that the

revised definitions will have FPI

‘‘announce in the CBD its intent to

produce any item that could reasonably

be construed to be a new product.’’ FPI’s

commitment to make such

announcements considerably more often

than is required is beyond the letter of

the revised definitions. However, in

seeking to build good faith with the

private sector, FPI will attempt to fulfill

this additional requirement.

Objections were raised to the

provision reading ‘‘Items that are

essentially the same product, or those

that are variations of an existing FPI

product. * * * would not be subject to

announcement of any kind.’’

Commenters felt FPI is unable to make

such definitions without industry’s

assistance. FPI respectfully disagrees

with this suggestion. FPI has the

technical and engineering knowledge to

accurately determine when items are

essentially the same or are variations of

an existing FPI product. FPI currently

makes these determinations under the

existing expansion guidelines.

A commenter suggested ‘‘new

product’’ be defined as a ‘‘specific

product which FPI has not produced

within the last three years.’’ FPI

respectfully disagreed with this

suggestion. The nature of some Federal

purchases is cyclical, so that items

bought in large amounts one year, may

be purchased in very small quantities, if

at all, for three or fours years thereafter.

FPI believes defining a ‘‘new product’’

as a ‘‘specific product FPI has not

produced within the past three years’’ is

overly restrictive, and the five year

figure is reasonable and more consistent

with Federal buying patterns.

Commenters felt the revised

‘‘significant expansion’’ definition

would greatly affect what FPI can do

without initiating the guidelines

process. One commenter expressed

opposition to any planned expansion of

FPI’s production without significant

industry input. FPI believes a primary

benefit of the new ‘‘significant

expansion’’ definition is that it clarifies

exactly what is ‘‘significant’’ by

changing the measure from capacity to

actual sales. Under the old definitions,

FPI could potentially increase sales by

a higher margin without it being

considered significant if FPI did not

expand capacity. FPI opposes the

suggestion that industry input is

necessary before any planned FPI

expansion. Rather, we defer to the

statute, which cites ‘‘significant’’

expansion. The language does not say

FPI can not have any expansion without

industry input. Both the current and

revised definitions allow for exactly the

type of private industry input suggested.

The process calls for FPI to notify

known Federal vendors and relevant

trade associations, requesting input and

relevant data for use in the upcoming

impact study. Following FPI’s issuing of

the preliminary study, interested parties

may submit comments in reaction to it.

Comments may also be submitted in

response to the revised study, and

private sector representatives have the

opportunity to appear and speak before

FPI’s Board of Directors.

Commenters objected to the proposed

market share levels limiting FPI’s

expansion. Commenters noted that new
11468 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices

definitions allow FPI to increase a

product’s market share up to 15%

without initiating the industry

involvement guidelines process. FPI

believes this is reasonable. To provide

some background, in both public

testimony and private discussions with

FPI, several industry representatives

have stated their idea of what

constitutes a ‘‘reasonable share of the

market’’ for FPI. Almost uniformly,

these officials state that a 15%–20%

market share is reasonable for FPI. In

legislation submitted by Rep. Collins, a

20% market share is referenced as the

market share acceptable for FPI’s

production. Thus, allowing FPI to boost

production of an existing product

without initiating the guidelines process

until its market share reaches 15% is

not unreasonable.

Commenters objected to allowing FPI

to increase its market share up to 15%

of a specific product, since this may

result in FPI providing 100% of certain

items upon which small businesses may

be dependent. FPI acknowledges that

among the goods and services it

provides are some items bought in

relatively low quantities. For FPI to

provide these items, as would be the

case for any business, in a selfsustaining manner (as the corporation is

mandated to operate), it must achieve

certain economies of scale. In some

instances, this may result in FPI

supplying much, or even all, of a single

Federal contract. There is no guarantee

of further Federal demand for the exact

same item. Thus, while buys of the

‘‘specific product’’ continue, a small

buy for a single item may be supplied

exclusively by FPI. FPI will monitor the

potential for such situations as it has in

the past.

A commenter noted the revised

significant expansion sliding scale

allows for a hypothetical situation in

which FPI could boost its production of

an item from $5 million and 10% of the

Federal market (out of $50 million) to

$7.5 million in sales and a 15% share

without initiating the expansion

process. the interpretation of the revised

market share scale is correct. FPI

believes this is a fair and reasonable

formula. Under this hypothetical

scenario, the value of Federal buys

available to private vendors decreases

only slightly from $45 million to $42.5

million. It should be noted that, in the

scenario described, this would be the

maximum impact FPI could have for a

given year under the new rules.

Commenters objected to having

market activities independent of FPI’s

activities irrelevant in determining what

is FPI’s reasonable share of the market.

The new definitions do not change the

factors used by the Board of Directors to

determine what is a reasonable share of

the market. As in the original rules, the

proposal does not hold FPI responsible

for a ‘‘significant expansion’’ when the

corporation’s market share increase is

due to market dips outside of FPI’s

control.

Commenters expressed concern that

the definitions have FPI’s Board of

Directors serve as the ultimate authority

for decisions on issues related to FPI’s

expansion efforts. It was suggested an

independent body would be a more

appropriate body for such

responsibilities. FPI notes such

concerns, but does not agree. It was

Congress’ intent to have FPI’s

Presidentially-appointed Board of

Directors oversee and direct FPI’s

operations, insuring the credibility of

the industry involvement guidelines

process. By statute, the Board is called

upon to make such decisions, after

balancing the often numerous and

complex concerns of all parties

involved. The Board’s job is to review

and analyze all information presented to

them as part of each proposal, including

data from FPI and private industry. The

new definitions make no change from

the current rules on this issue.

Several commenters expressed

concern that the revised guidelines

would allow FPI to ignore, nullify or

modify previous new product or

expansion decisions made by FPI’s

Board of Directors. FPI points out the

revised definitions specifically state that

prior decisions by FPI’s Board would

not be affected. Thus, recent Board

decisions regarding FPI expansion

proposals relating to shipping/storage

containers, dormitory and quarters

furniture, office case goods, etc., all still

apply.

(III) Comments That Are More Relevant

to Other Aspects of FPI’s Operations

The following are ideas,

recommendations or suggestions

provided by commenters which, though

often insightful and/or constructive, are

more relevant to other aspects of FPI’s

operations, and do not directly address

the merits of the revised expansion

definitions. In the interest of being open

to public scrutiny, FPI has included a

brief response to each of the comments

below.

A commenter noted that the revised

definitions do not alter FPI’s mandatory

source status. FPI recognizes that its

status as a mandatory source of supply

for the Federal government is an

important issue for many commenters.

However, the mandatory source issue is

more relevant to the discussions

(mentioned in the previous section) that

are planned by Rep. McCollum and

other members in the Congress.

A commenter suggested FPI ought to

consider the production of other

mandatory source operations, such as

NIB, NISH and 8A firms, when

considering the ability of the Federal

market to sustain FPI and private

vendors. FPI appreciates the suggestion,

which is more relevant to the manner in

which the corporation prepares its

actual impact studies. FPI agrees that

data relating to production by sources

such as NIB and NISH is an important

piece of information.

A commenter argued FPI should not

use comparisons of the Federal market

and total domestic market as

justification for production of a new

product or a significant expansion of

production for an existing product. FPI

recognizes the importance of all factors

involved in determining what

constitutes a reasonable share of the

Federal market. Under both the existing

guidelines and the new definitions, it is

up to FPI’s Board of Directors to

determine what is a reasonable share.

The statute calls for consideration of

several factors in the impact studies,

including the size of the Federal market

as well as the size of the total domestic

market.

A commenter objected to FPI lumping

together Federal purchases from civilian

agencies and the Department of Defense

(DoD). FPI’s authorizing legislation

restricts the corporation to selling its

goods and services to the Federal

government. There is no distinction

made between DoD and any other

Federal department or agency. On this

issue, the revised definitions make no

change from the current guidelines.

A commenter claimed the option of

manufacturing for the commercial

market has eroded for many products

supplied by FPI. The commenter stated

that when FPI produces an item

previously supplied by private vendors,

private sector jobs are almost certain to

be lost. FPI notes that the ability of

private vendors to find non-Federal

markets for their goods is one of the

factors FPI’s Board of Directors assess

when they consider the level of FPI’s

impact on the private sector. This

responsibility is not changed from the

existing definitions.

A commenter contended that much of

the machinery used by private vendors

to produce goods for the Federal

government is specialty equipment not

easily converted to manufacture other

products. FPI recognizes some vendors

buy equipment specifically to compete

for Federal contracts and in some cases,

such equipment is not easily converted

to other uses. Such decisions are the
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices 11469

responsibility of each vendor. Removing

FPI as a supplier of Federal goods

would not eliminate all the competition

and risk from competing for Federal

contracts. Both the current and revised

definitions are designed to help insure

that FPI’s operations do not place an

undue burden on any one industry.

When assessing FPI’s impact, one of the

many factors FPI’s Board of Directors

take into account is the ability of the

affected vendors to produce similar

items for non-Federal customers or

make other items with the same

machinery.

A commenter suggested that a

consistent definition of ‘‘reasonable

share of the market’’ must be

established. The commenter stated that

until then, expediting the expansion

process would only allow FPI to take

bigger bites of new or existing markets

more quickly. FPI acknowledges the

inability of interested parties to reach an

agreement on what constitutes a

reasonable share of the market for FPI.

This is particularly frustrating in light of

the fact that FPI has worked extensively

with various private sector vendors,

trade associations and public policy

groups on this and related prison

industry issues for the past seven years.

This is why the Congress left the final

decision of what constitutes a

reasonable share to the FPI Board of

Directors, upon weighing the issues and

concerns of all parties.

(IV) Comments Which are Vague, Broad

or General in Nature

The following are ideas,

recommendations or suggestions

provided by commenters which are

vague, broad or general in nature. The

comments do not always make a

specific point and FPI is not in a

position to appropriately address each

of the comments. Nevertheless, the

corporation has included a brief

response to each comment.

A commenter suggested that the

revised definitions threaten small

businesses. Though respectfully

disagreeing with this statement, FPI

finds its vague in that it fails to explain

how the revised definitions have a

particular effect on small businesses

that is different from how the rule

would affect any other business.

Several commenters expressed their

belief that FPI proposed the revised

definition to allow FPI greater freedom

to expand into new product areas.

While disagreeing with this comment,

FPI also finds it ironic. In the past, most

of the vendors and trade associations

with which FPI has worked have

suggested that FPI make a greater effort

to diversify its operations, so as to

alleviate its impact on industries in

which FPI already operates. This

comment suggests these parties have

changed their position, and do not wish

further diversification by FPI.

One commenter stated that new

definitions are especially disconcerting

in light of FPI’s ‘‘public rhetoric about

partnering and cooperation with

industry.’’ The commenter suggested the

revised definitions signify that FPI ‘‘is

not truly interested in partnering and

will continue to expand, absent a highprofile, bluntly adversarial campaign.’’

It is FPI’s belief that the new definitions

are a step forward in the corporation’s

efforts toward greater cooperation and

more partnerships with private

industry. The new definitions help

address the problems related to the

availability of data, while also providing

a number of safeguards for potentially

affected industries.

A commenter stated the revised

definitions are more arbitrary and less

transparent than the current system.

Other commenters suggested the revised

definitions, if implemented, would only

make it easier for FPI to arrive at the

results it desires. While disagreeing

with these sentiment, FPI finds them to

be broad comments. FPI has spelled out

the problems associated with the

existing rules, the corporation’s

rationale for change, and the protections

built into the process to safeguard the

concerns of industry and enhance the

opportunity for public comment. The

revised definitions are a sincere attempt

by FPI to rectify some of the existing

problems, and we believe they will

result in improvements to the process

for all concerned. Since the rule will be

published for implementation as an

interim measure, allowing further

comment during implementation, we

believe FPI has maximized the chances

for the process to work for all parties as

intended.

As mentioned earlier, FPI is

announcing implementation of these

revised definitions on an interim basis.

Until such time that FPI’s Board of

Directors determines that the definition

should be made final, the corporation

reserves the right to make further

modifications based on input from any

of the following sources:

(1) The ongoing independent audit of

FPI’s use of and compliance with the

original expansion guidelines being

conducted by the accounting firm of

Urbach, Kahn and Werlin;

(2) The examination of FPI’s

methodology use to calculate the

Federal market for goods and services

supplied by FPI. This analysis is

currently underway and is being

conducted by a panel of independent

Federal procurement experts;

(3) Comments relating to the revised

definitions and procedures received by

FPI from private industry or organized

labor; and,

(4) FPI’s own experience as the

corporation works with the revised

definitions.

Any further comments on these

definitions may be submitted to FPI at

the address listed above. Any such

comments will be considered and noted,

but will not necessarily receive a

response in the Federal Register or

Commerce Business Daily.

FPI now publishes the following

definitions of ‘‘specific product’’, ‘‘new

product’’, and ‘‘significant expansion of

an existing product’’. These are interim

definitions. The decision to further

modify these definitions, and/or

institute the definitions on a permanent

basis is solely at the discretion of FPI’s

Board of Directors.

Revise Definitions

1. Specific Product

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. There are

currently 685 federal supply classes

designated within the Federal

Procurement Data System. FPI currently

produces within 74 of these classes.

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.

The following means will be used to

determine how items should be treated:

—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).

—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 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
11470 Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices

be especially sensitive to, companies

that manufacture products (such as

various items of apparel) in multiple

FSC codes. Moreover, situations should

be avoided by FPI where it 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).

The rationale for any proposed

combining of FSC’s will be published by

FPI in the Commerce Business Daily to

seek input from the potentially affected

industry. In all cases, input received in

its submission will be forwarded by FPI

to the Board of Directors for

consideration and final determination.

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.

SIC codes will continue to 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).

2. 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.

‘‘Good Faith’’ CBD Announcements—

Items not deemed by FPI to be a New

Product.

Under current rules, management

decisions as to whether production of

an item constitutes a new product are

made by FPI staff, based on the SIC

classification system, without public

involvement. Under the proposed new

rules, 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 Commerce Business Daily. 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 proposed definition.

The parameters for publishing such

internal decisions that are made and

announced subject to this provision 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.

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.

In submitting comments to FPI, the

following guidelines will apply:

—Comments will be due within 21 days

of the date of publication;

—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;

—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 as they are

relevant;

—All comments received in response to

these announcements will be

considered by FPI. The commenter

will be advised whether FPI decides

to go through the guidelines process.

As always, any interested party has a

right to raise any question at any time

with the Board of Directors (see 28 CFR

301.2), 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

above, unless and until the decision is

reversed.

3. Significant Expansion of an Existing

Product

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:

(1) Sales (measured in constant

dollars) for the specific product will

increase by more than 10 percent, or $1

million, in any given year, whichever is

greater; or

(2) In any case where FPI’s market

share is greater than 25%, any increase

in FPI’s market share resulting from an

increase in FPI production would be

deemed to be significant for purposes of

triggering the guidelines process.

Discussion: When either criterion is

met, an analysis of the federal

government market for the specific

product will be conducted and an

estimate of FPI’s current and projected

market share will be developed. The

production increase will be deemed

‘‘significant’’ when FPI’s market share

position changes in accordance with the

following sliding scale. If FPI currently

has a 15% or less share of the federal

market, any increase in market share

would be permissible, provided that the

particular increase does not result in FPI

exceeding a 15% market share. If FPI

has a market share greater than 15%, but

less than 20%, FPI could increase its

market share to 20%, before the increase

would be deemed to be significant. If

FPI has a market 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 to (assuming its

sales increases by more than 10%)

increase its share again from 20 to 25%

in a subsequent year without going

through the guidelines process.

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 detailed in depth

analysis of market share will be

undertaken to fully assess potential

impact.

Situations where FPI production

remains constant, but market share
Federal Register / Vol. 62, No. 48 / Wednesday, March 12, 1997 / Notices 11471

1Of course, these officials and these organizations

are not precluded from making further comment at

this time.

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.

In cases where FPI sales inadvertently

or insubstantially exceed Board

authorized levels, FPI will make every

effort to adjust its production by a

corresponding among 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.

In cases of extreme public exigency,

such as national disaster or national

defense emergency, such as during

Operation Desert Storm, 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.

Subject to other provisions noted in

this procedure, FPI’s sales for the

current fiscal year will be utilized as the

based year for future application.

Prior decisions of FPI’s Board of

Directors will remain unaffected by

these changes to the definitions.

These proposed rules have been

reviewed by FPI’s Growth Strategies

Implementation Committee. The

following officials are represented on

the Committee:

Executive Vice President, Envelope

Manufacturers Association of

America

Vice President—Government Affairs,

Screen Printing and Graphic

Imaging Association International

Manager, Break-Out Procurement Center

Representative Program, Small

Business Administration

Former Senior Staff Member, Brookings

Institution

Head of Office of Wages and Industrial

Relations, AFL–CIO

President, State/Federal Correctional

Vendors Association

Their comments and suggestions have

been incorporated into this proposed

procedure.1

All comments received in response to

this proposed procedure have been

provided to the FPI Board of Directors,

which has approved these procedures

for publication and implementation on

an interim basis.

Robert Grieser,

Manager, Planning, Research and Activation

Branch.

[FR Doc. 97–6143 Filed 3–11–97; 8:45 am]

BILLING CODE 4410–05–M

Office of Juvenile Justice and

Delinquency Prevention

Agency Information Collection

Activities: Proposed Collection;

Comment Request

AGENCY: Office of Justice Programs,

Justice.

ACTION: Notice of Information Collection

Under Review; Evaluation of the

Comprehensive Community-Wide

Approach to Gang Prevention,

Intervention, and Suppression

Program—‘‘Aggregate Data Forms:

Police and School.’’

Office of Management and Budget

(OMB) approval is being sought for the

information collection listed below.

This proposed information collection

was previously published in the Federal

Register and allowed 60 days for public

comment.

The purpose of this notice is to allow

an additional 30 days for public

comments. Public comments are

encouraged and will be accepted until

April 11, 1997. This process is

conducted in accordance with 5 Code of

Federal Regulation, Part 1320.10.

Written comments and/or suggestions

regarding the item(s) contained in this

notice, especially regarding the

estimated public burden and associated

response time, should be directed to the

Office of Management and Budget,

Office of Information and Regulatory

Affairs, Attention: Department of Justice

Desk Officer, Washington, DC, 20503.

Additionally, comments may be

submitted to OMB via facsimile to 202–

395–7285. Comments may also be

submitted to the Department of Justice

(DOJ), Justice Management Division,

Information Management and Security

Staff, Attention: Department Clearance

Officer, Suite 850, 1001 G Street, NW.,

Washington, DC 20530. Additionally,

comments may be submitted to DOJ via

facsimile to 202–514–1534. Written

comments and suggestions from the

public and affected agencies should

address one or more of the following

points:

(1) Evaluate whether the proposed

collection of information is necessary

for the proper performance of the

functions of the agency/component,

including whether the information will

have practical utility;

(2) Evaluate the accuracy of the

agencies/components estimate of the

burden of the proposed collection of

information, including the validity of

the methodology and assumptions used;

(3) Enhance the quality, utility, and

clarity of the information to be

collected; and

(4) Minimize the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submission of

responses.

Overview of this information

collection:

(1) Type of information collection:

New collection.

(2) The title of the form/collection:

Evaluation of the Comprehensive

Community-Wide Approach to Gang

Prevention, Intervention, and

Suppression Program—‘‘Aggregate Data

Forms: Police and School.’’

(3) The agency form number, if any,

and the applicable component of the

Department sponsoring the collection.

Form: None. Office of Juvenile Justice

and Delinquency Prevention, Office of

Justice Programs, United States

Department of Justice.

(4) Affected public who will be asked

or required to respond, as well as a brief

abstract. Primary: Not-for-Profit

Institutions. Other: State, Local, or

Tribal Government. The study will

obtain interview and test information on

youth background, social adjustment,

deviancy/crime activity, self-esteem,

and depression/personality adjustment.

It will determine the effectiveness of the

program, comparing program subjects to

non-program gang youth of the same