HR 2965 RCS 
(1) the product offered by Federal Prison In-
dustries will meet the requirements of the procure-
ment activity (including commercial or governmental 
standards or specifications pertaining to design, per-
formance, testing, safety, serviceability, and warran-
ties as may be imposed upon a private sector sup-
plier of the type being offered by Federal Prison In-
dustries); 
(2) timely performance of the contract by Fed-
eral Prison Industries can be reasonably expected; 
and 
(3) the negotiated price does not exceed a fair 
and reasonable price. 
(c) CONTRACTUAL TERMS.—The terms and condi-
tions of the contract and the price to be paid to Federal 
Prison Industries shall be determined by negotiation be-
tween Federal Prison Industries and the Federal agency 
making the purchase. The negotiated price shall not ex-
ceed a fair and reasonable price determined in accordance 
with the procedures of the Federal Acquisition Regulation. 
(d) PERFORMANCE
OF
CONTRACTUAL
OBLIGA-
TIONS.— 
(1) IN
GENERAL.—Federal Prison Industries 
shall perform the obligations of the contract nego-
tiated pursuant to subsection (c). 
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HR 2965 RCS 
(2) PERFORMANCE DISPUTES.—If the head of 
the contracting activity and the Chief Operating Of-
ficer of Federal Prison Industries are unable to re-
solve a contract performance dispute to their mutual 
satisfaction, such dispute shall be resolved pursuant 
to section 4124(e)(3) of title 18, United States Code 
(as added by section 2 of this Act). 
(e) LIMITATIONS ON USE OF AUTHORITY.— 
(1) IN GENERAL.—As a percentage of the sales 
made by Federal Prison Industries during the base 
period, the total dollar value of sales to the Govern-
ment made pursuant to subsection (b) and sub-
section (c) of this section shall not exceed— 
(A) 90 percent in fiscal year 2008; 
(B) 85 percent in fiscal year 2009; 
(C) 70 percent in fiscal year 2010; 
(D) 55 percent in fiscal year 2011; and 
(E) 40 percent in fiscal year 2012. 
(2) SALES
WITHIN
VARIOUS
BUSINESS
SEC-
TORS.—Use of the authority provided by subsections 
(b) and (c) shall not result in sales by Federal Pris-
on Industries to the Government that are in excess 
of its total sales during the base year for each busi-
ness sector. 
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HR 2965 RCS 
(3) LIMITATIONS RELATING TO SPECIFIC PROD-
UCTS.—Use of the authorities provided by sub-
sections (b) and (c) shall not result in contract 
awards to Federal Prison Industries that are in ex-
cess of its total sales during the base period for such 
product. 
(4) CHANGES IN DESIGN SPECIFICATIONS.—If a 
buying agency directs a change to the design speci-
fication for a specific product, the costs associated 
with the implementation of such specification change 
by Federal Prison Industries shall not be considered 
for the purposes of computing sales by Federal Pris-
on Industries for the purposes of paragraphs (2) and 
(3). 
(f) ADDITIONAL AUTHORITY TO SUSTAIN INMATE 
EMPLOYMENT.—During the period specified in subsection 
(g), the authority of section 4122(b)(11)(C)(ii) of title 18, 
United States Code (as added by section 3), may be used 
by the Board to sustain inmate employment. 
(g) DURATION
OF AUTHORITY.—The preferential 
contracting authorities authorized by subsection (b) may 
not be used on or after October 1, 2012, and become effec-
tive on the effective date of the final regulations issued 
pursuant to section 17. 
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