I
105TH CONGRESS
1ST SESSION
H. R. 2758
To amend title 18, United States Code, to minimize the unfair competition
for Federal contracting opportunities between Federal Prison Industries
and private firms (especially small business concerns), to provide to
Federal agencies in their dealings with Federal Prison Industries the
contract administration tools generally available to assure quality per-
formance by their other suppliers, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 29, 1997
Mr. HOEKSTRA (for himself, Mr. FRANK of Massachusetts, Mr. COLLINS, Mrs.
MALONEY of New York, Mr. HILLEARY, Mr. SCHUMER, Mr. COBLE, Mr.
CLAY, Mr. BARTLETT of Maryland, Mr. HAMILTON, Mr. DEAL of Geor-
gia, Mr. TORRES, Mr. MANZULLO, Mr. DEFAZIO, Mr. STUMP, Mr.
EHLERS, Mr. OXLEY, Mr. HEFLEY, Mr. TAYLOR of North Carolina, Mr.
EWING, Mr. UPTON, Mr. EVERETT, Mr. ENGLISH of Pennsylvania, Mr.
CHAMBLISS, Mr. LINDER, Mr. NETHERCUTT, Mr. CRANE, Mr. RIGGS,
Mr. HOSTETTLER, Mrs. EMERSON, Mr. BILBRAY, Mr. BURR of North
Carolina, Mr. KNOLLENBERG, and Mr. BALLENGER) introduced the fol-
lowing bill; which was referred to the Committee on the Judiciary
A BILL
To amend title 18, United States Code, to minimize the
unfair competition for Federal contracting opportunities
between Federal Prison Industries and private firms (es-
pecially small business concerns), to provide to Federal
agencies in their dealings with Federal Prison Industries
the contract administration tools generally available to
assure quality performance by their other suppliers, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Federal Prison Indus-
tries Competition in Contracting Act of 1997’’.
SEC. 2. GOVERNMENT-WIDE PROCUREMENT POLICY RE-
LATING 
TO 
PURCHASES 
FROM 
FEDERAL
PRISON INDUSTRIES.
Section 4124 of title 18, United States Code, is
amended to read as follows:
‘‘§ 4124. Government-wide procurement policy relat-
ing to purchases from Federal Prison In-
dustries
‘‘(a) IN GENERAL.—Purchases from Federal Prison
Industries, Incorporated, a wholly owned Government cor-
poration, as defined in section 9101(3)(E) of title 31, may
be made by a Federal department or agency only in ac-
cordance with this section.
‘‘(b) SOLICITATION AND EVALUATION OF OFFERS
AND CONTRACT AWARDS.—(1) When a procurement ac-
tivity of a Federal department or agency has a require-
ment for a specific product or service that is authorized
to be offered for sale by Federal Prison Industries (in ac-
cordance with section 4122 of this title) and is listed in
the catalog referred to in subsection (h), the procurement
activity shall solicit an offer from Federal Prison Indus-
tries, if the purchase is expected to be in excess of the
micro-purchase threshold as defined by section 32(f) of the
Office of Federal Procurement Policy Act (41 U.S.C.
428(f)).
‘‘(2) A contract award for such product or service
shall be made using competitive procedures in accordance
with the specifications and evaluation factors specified in
the solicitation (or other request for offers), unless a de-
termination is made by the Attorney General pursuant to
paragraph (3).
‘‘(3) The procurement activity shall negotiate with
Federal Prison Industries on a noncompetitive basis for
the award of a contract if the Attorney General determines
that—
‘‘(A) Federal Prison Industries cannot reason-
ably expect to receive the contract award on a com-
petitive basis; and
‘‘(B) the contract award is necessary to main-
tain work opportunities otherwise unavailable at the
penal or correctional facility at which the contract is
to be performed to prevent circumstances that could
reasonably be expected to significantly endanger the
safe and effective administration of such facility.
‘‘(4) A contract award shall be made with Federal
Prison Industries if the contracting officer for the procure-
ment activity determines that—
‘‘(A) the prison-made product or service to be
furnished will meet the requirements of the procure-
ment 
activity 
(including 
any 
applicable
prequalification requirements and all specified com-
mercial or governmental standards pertaining to
quality, testing, safety, serviceability, and warran-
ties);
‘‘(B) timely performance of the contract can be
reasonably expected; and
‘‘(C) the contract price does not exceed a cur-
rent market price.
‘‘(5) A determination by the Attorney General pursu-
ant to paragraph (3) shall be—
‘‘(A) supported by specific findings by the war-
den of the penal or correctional institution at which
a Federal Prison Industries workshop is scheduled
to perform the contract;
‘‘(B) supported by specific findings by Federal
Prison Industries regarding why it does not expect
to win the contract on a competitive basis; and
‘‘(C) made and reported in the same manner as
a determination made pursuant to section 303(c)(7)
of the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 253(c)(7)).
‘‘(6) If the Attorney General has not made the deter-
mination described in paragraph (3) within 30 days after
Federal Prison Industries has been informed of a con-
tracting opportunity by a procurement activity, the pro-
curement activity shall conduct a procurement for the
product in accordance with the procedures generally appli-
cable to such procurements by the procurement activity.
‘‘(c) COMPETITIVE OFFERS FROM FEDERAL PRISON
INDUSTRIES.—A timely offer from Federal Prison Indus-
tries shall be eligible for award in accordance with the
specification and evaluation factors specified in any com-
petitive solicitation.
‘‘(d) PERFORMANCE BY FEDERAL PRISON INDUS-
TRIES.—Federal Prison Industries shall be required to
perform its contractual obligations under a contract
awarded by a Federal department or agency to the same
extent as any other contractor under such a contract.
‘‘(e) FINALITY OF CONTRACTING OFFICER’S DECI-
SION.—(1) A decision by a contracting officer regarding
the award of a contract to Federal Prison Industries or
relating to the performance of such contract shall be final,
unless reversed on appeal pursuant to paragraph (2) or
(3).
‘‘(2) The Chief Executive Officer of Federal Prison
Industries may appeal to the head of a Federal depart-
ment or agency a decision by a contracting officer not to
award a contract to Federal Prison Industries pursuant
to subsection (b)(4). The decision of the head of a Federal
department or agency on appeal shall be final.
‘‘(3) A dispute between Federal Prison Industries
and a procurement activity regarding performance of a
contract shall be subject to—
‘‘(A) alternative means of dispute resolution
pursuant to subchapter IV of title 5; or
‘‘(B) final resolution by the board of contract
appeals having jurisdiction over the procurement ac-
tivity’s contract performance disputes pursuant to
the Contract Disputes Act of 1978 (41 U.S.C. 601
et seq.).
‘‘(f) REPORTING OF PURCHASES.—Each Federal de-
partment or agency shall report purchases from Federal
Prison Industries to the Federal Procurement Data Sys-
tem (as referred to in section 6(d)(4) of the Office of Fed-
eral Procurement Policy Act (41 U.S.C. 405(d)(4))) in the
same manner as it reports to such System any acquisition
in an amount in excess of the simplified acquisition thresh-
old (as defined by section 4(11) of the Office of Federal
Procurement Policy Act (41 U.S.C. 403(11))).
‘‘(g) CATALOG OF PRODUCTS.—Federal Prison In-
dustries shall publish and maintain a catalog of all specific
products and services that it is authorized to offer for sale.
Such catalog shall be periodically revised as products and
services are added or deleted by its board of directors (in
accordance with section 4122(b) of this title).’’.
SEC. 3. PUBLIC PARTICIPATION REGARDING EXPANSION
PROPOSALS BY FEDERAL PRISON INDUS-
TRIES.
Section 4122(b) of title 18, United States Code, is
amended —
(1) by redesignating paragraph (6) as para-
graph (10); and
(2) by striking paragraphs (4) and (5) and in-
serting the following paragraphs:
‘‘(4) A decision to authorize Federal Prison Indus-
tries to offer a new specific product or service or to expand
the production of an existing product or service shall be
made by its board of directors in conformance with the
requirements of subsections (b), (c), (d), and (e) of section
553 of title 5, and this chapter.
‘‘(5)(A) The corporation shall prepare and furnish to
the board of directors for its consideration a detailed anal-
ysis of the probable impact on private sector firms and
their employees of a proposal to authorize the sale of a
new specific product or service or to expand production
of a currently authorized product or service.
‘‘(B) The analysis made pursuant to subparagraph
(A) shall identify and consider—
‘‘(i) the number of vendors that currently meet
the requirements of the Federal Government for the
specific product or service;
‘‘(ii) the proportion of the Federal Government
market for the specific product or service currently
furnished by small businesses during the previous 3
fiscal years;
‘‘(iii) the share of the Federal market for the
specific product or service projected for Federal
Prison Industries for the fiscal year in which pro-
duction or performance will commence (or expand)
and the subsequent 3 fiscal years;
‘‘(iv) whether the industry producing the prod-
uct in the private sector—
‘‘(I) has an unemployment rate higher
than the national average;
‘‘(II) has a rate of employment for produc-
tion workers that has consistently shown an in-
crease during the previous 5 years; or
‘‘(III) has an import to domestic produc-
tion ratio of 25 percent or greater;
‘‘(v) the total volume of domestic production
during each of the 5 previous years in the industry
producing the specific product in the private sector;
‘‘(vi) whether the specific product is an import-
sensitive product;
‘‘(vii) the requirements of the Federal Govern-
ment and the demands of entities other than the
Federal Government for the specific product or serv-
ice during the previous 3 fiscal years;
‘‘(viii) the projected growth (or decline) in the
demand of the Federal Government for the specific
product or service;
‘‘(ix) the capability of the projected demand of
the Federal Government for the specific product or
service to sustain both Federal Prison Industries
and private vendors; and
‘‘(x) whether authorizing the production of the
new product or performance of a new service will
provide inmates with the maximum opportunity to
acquire knowledge and skill in trades and occupa-
tions that will provide them with a means of earning
a livelihood upon release.
‘‘(C)(i) The board of directors may not approve a pro-
posal to authorize the production and sale of a new spe-
cific product (or continued sales of a previously authorized
product) unless the product to be furnished is a prison-
made product.
‘‘(ii) The board of directors may not approve a pro-
posal to authorize the production and sale of a new prison-
made product or to expand production of a currently au-
thorized product if the product is—
‘‘(I) produced in the private sector by an indus-
try which has reflected during the previous year an
unemployment rate above the national average; or
‘‘(II) an import-sensitive product.
‘‘(iii)(I) Federal Prison Industries is prohibited from
furnishing construction services relating to buildings,
structures, or other real property.
‘‘(II) For purposes of this clause, the term ‘construc-
tion’ has the meaning given such term by section 36.102
of the Federal Acquisition Regulation (48 C.F.R. part
36.102), as in effect on July 1, 1997 (including the repair,
alteration, or maintenance of real property in being).
‘‘(6) To provide further opportunities for participa-
tion by interested parties, the board of directors shall—
‘‘(A) give additional notice of a proposal to au-
thorize the production and sale of a new product or
expand the production of a currently authorized
product in a publication designed to most effectively
provide notice to private vendors and labor unions
proposal, during a meeting that is open to the public, un-
less closed pursuant to section 5526 of title 5.
‘‘(9) In conformity with the requirements of para-
graphs (5) through (8) of this subsection, the board of
directors may—
‘‘(A) authorize the donation of products pro-
duced by Federal industries and available for sale;
or
‘‘(B) authorize the production of a new specific
product for donation.’’.
SEC. 4. FEDERAL PRISON INDUSTRIES REPORT TO CON-
GRESS.
Section 4127 of title 18, United States Code, is
amended to read as follows:
‘‘§ 4127. Federal Prison Industries report to Congress
‘‘(a) IN GENERAL.—Pursuant to chapter 91 of title
31, the board of directors of Federal Prison Industries
shall submit an annual report to Congress on the conduct
of the business of the corporation during each fiscal year
and the condition of its funds during the fiscal year.
‘‘(b) CONTENTS
OF REPORT.—In addition to the
matters required by section 9106 of title 31, and such
other matters as the board considers appropriate, a report
under subsection (a) shall include—
‘‘(1) a statement of the amount of obligations
issued under section 4129(a)(1) of this title during
the fiscal year;
‘‘(2) an estimate of the amount of obligations
that will be issued in the following fiscal year;
‘‘(3) an analysis of—
‘‘(A) the corporation’s total sales for each
specific product sold to the Federal depart-
ments and agencies;
‘‘(B) the total purchases by each Federal
department or agency of each specific product;
‘‘(C) the corporation’s share of such total
Federal Government purchases by specific prod-
uct; and
‘‘(D) the number and disposition of dis-
putes submitted to the heads of the Federal de-
partments and agencies pursuant to section
4124(e) of this title;
‘‘(4) an analysis of the inmate workforce that
includes—
‘‘(A) the number of inmates employed;
‘‘(B) the number and percentage of em-
ployed inmates by the term of their incarcer-
ation; and
‘‘(C) the various hourly wages paid to in-
mates employed with respect to the production
of the various specific products authorized for
production and sale; and
‘‘(5) data concerning employment obtained by
former inmates upon release to determine whether
the employment provided by Federal Prison Indus-
tries during incarceration provided such inmates
with knowledge and skill in a trade or occupation
that enabled such former inmate to earn a livelihood
upon release.
‘‘(c) PUBLIC AVAILABILITY.—Copies of an annual re-
port under subsection (a) shall be made available to the
public at a price not exceeding the cost of printing the
report.’’.
SEC. 5. DEFINITIONS.
Chapter 307 of title 18, United States Code, is
amended by adding at the end the following new section:
‘‘§ 4130. Definitions
‘‘As used in this chapter—
‘‘(1) the term ‘assembly’ means the process of
uniting or combining articles or components (includ-
ing ancillary finished components or assemblies) so
as to produce a significant change in form or utility,
without necessarily changing or altering the compo-
nent parts;
‘‘(2) the term ‘current market price’ means,
with respect to a specific product, the fair market
price of the product within the meaning of section
15(a) of the Small Business Act (15 U.S.C. 644(a)),
at the time that the contract is to be awarded (veri-
fied through appropriate price analysis or cost analy-
sis), including any costs relating to transportation or
the furnishing of any ancillary services;
‘‘(3) the term ‘import-sensitive product’ means
a product which, according to Department of Com-
merce data, has experienced competition from im-
ports at an import to domestic production ratio of
25 percent or greater;
‘‘(4) the term ‘labor-intensive manufacture’
means a manufacturing activity in the private sector
in which the ratio of the value of direct labor to the
value of the product prior to shipment exceeds 20
percent;
‘‘(5) the term ‘manufacture’ means the process
of fabricating from raw or prepared materials, so as
to impart to those materials new forms, qualities,
properties, and combinations;
‘‘(6) the term ‘prison-made products’ means
specific products that require labor-intensive manu-
facture or assembly employing Federal prison in-
mates for not less than 75 percent of the hours of
direct labor required for the production of the prod-
uct;
‘‘(7) the term ‘reasonable share of the market’
means a share of the total purchases by the Federal
departments and agencies, as reported to the Fed-
eral Procurement Data System for any specific prod-
uct during the 3 preceding fiscal years, that does not
exceed 20 percent of the Federal market for the spe-
cific product;
‘‘(8) the term ‘services’ has the meaning given
the term ‘service contract’ by section 37.101 of the
Federal Acquisition Regulation (48 C.F.R. part
36.102), as in effect on July 1, 1997; and
‘‘(9) the term ‘specific product’ means a prod-
uct that is designed and manufactured to meet re-
quirements distinct in function and predominant ma-
terial of manufacture from another product, as de-
scribed by—
‘‘(A) the 7-digit classification for the prod-
uct in the Standard Industrial Classification
(SIC) Code (or any successor classification sys-
tem) published by the Office of Management
and Budget (or if there is no 7-digit code classi-
fication for a product, the 5-digit code classi-
fication); and
‘‘(B) for purposes of reporting on sales by
Federal Prison Industries, the current National
Stock Number assigned to such product under
the Federal Stock Classification System (includ-
ing group, part number and section), as deter-
mined by the General Services Administra-
tion.’’.
SEC. 6. IMPLEMENTATION IN THE FEDERAL ACQUISITION
REGULATION.
(a) PROPOSED REVISIONS.—Proposed revisions to
the Government-wide Federal Acquisition Regulation to
implement the amendments made by this Act shall be pub-
lished not later than 60 days after the date of the enact-
ment of this Act and provide not less than 60 days for
public comment.
(b) FINAL REGULATIONS.—Final regulations shall be
published not later than 180 days after the date of the
enactment of this Act and shall be effective on the date
that is 30 days after the date of publication.
(c) PUBLIC PARTICIPATION.—The proposed regula-
tions required by subsection (a) and the final regulations
required by subsection (b) shall afford an opportunity for
public participation in accordance with section 22 of the
Office of Federal Procurement Policy Act (41 U.S.C.
418b).
SEC. 7. RULE OF CONSTRUCTION.
Subsection (e) of section 4124 of title 18, United
States Code, as amended by section 2, is not intended to
alter any rights of any offeror other than Federal Prison
Industries to file a bid protest in accordance with other
law or regulation in effect on the date of the enactment
of this Act.
SEC. 8. EFFECTIVE DATE AND APPLICABILITY.
(a) EFFECTIVE DATE.—Except as provided in sub-
section (b), this Act and the amendments made by this
Act shall take effect on the date of enactment of this Act.
(b) APPLICABILITY.—Section 4124 of title 18, United
States Code, as amended by section 2, shall apply to any
requirement for a product or service offered by Federal
Prison Industries needed by a Federal department or
agency after the effective date of the final regulations is-
sued pursuant to section 6(b), or after June 30, 1998,
whichever is earlier.
SEC. 9. CLERICAL AMENDMENTS.
The table of sections for chapter 307 of title 18,
United States Code, is amended—
(1) by inserting in lieu of the item relating to
section 4124 the following:
‘‘4124. Government-wide procurement policy relating to purchases from Federal
Prison Industries.’’;
(2) by inserting in lieu of the item relating to
section 4127 the following:
‘‘4127. Federal Prison Industries report to Congress.’’;
and
(3) by adding at the end the following new
item:
‘‘4130. Definitions.’’.
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