HR 2758 IH

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 performance by their other suppliers, and for other purposes.

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 Georgia, 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 following bill; which was referred to the Committee on the Judiciary

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 performance by their other suppliers, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Federal Prison Industries Competition in Contracting Act of 1997'.

SEC. 2. GOVERNMENT-WIDE PROCUREMENT POLICY RELATING TO PURCHASES FROM FEDERAL PRISON INDUSTRIES.

Section 4124 of title 18, United States Code, is amended to read as follows:

`Sec. 4124. Government-wide procurement policy relating to purchases from Federal Prison Industries

`(a) IN GENERAL- Purchases from Federal Prison Industries, Incorporated, a wholly owned Government corporation, as defined in section 9101(3)(E) of title 31, may be made by a Federal department or agency only in accordance with this section.

`(b) SOLICITATION AND EVALUATION OF OFFERS AND CONTRACT AWARDS- (1) When a procurement activity of a Federal department or agency has a requirement for a specific product or service that is authorized to be offered for sale by Federal Prison Industries (in accordance 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 Industries, 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 determination 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 reasonably expect to receive the contract award on a competitive basis; and

`(B) the contract award is necessary to maintain 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 procurement activity determines that--

`(A) the prison-made product or service to be furnished will meet the requirements of the procurement activity (including any applicable prequalification requirements and all specified commercial or governmental standards pertaining to quality, testing, safety, serviceability, and warranties);

`(B) timely performance of the contract can be reasonably expected; and

`(C) the contract price does not exceed a current market price.

`(5) A determination by the Attorney General pursuant to paragraph (3) shall be--

`(A) supported by specific findings by the warden 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 determination described in paragraph (3) within 30 days after Federal Prison Industries has been informed of a contracting opportunity by a procurement activity, the procurement activity shall conduct a procurement for the product in accordance with the procedures generally applicable to such procurements by the procurement activity.

`(c) COMPETITIVE OFFERS FROM FEDERAL PRISON INDUSTRIES- A timely offer from Federal Prison Industries shall be eligible for award in accordance with the specification and evaluation factors specified in any competitive solicitation.

`(d) PERFORMANCE BY FEDERAL PRISON INDUSTRIES- 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 DECISION- (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 department 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 activity'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 department or agency shall report purchases from Federal Prison Industries to the Federal Procurement Data System (as referred to in section 6(d)(4) of the Office of Federal 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 threshold (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 Industries 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 INDUSTRIES.

Section 4122(b) of title 18, United States Code, is amended --

(1) by redesignating paragraph (6) as paragraph (10); and

(2) by striking paragraphs (4) and (5) and inserting the following paragraphs:

`(4) A decision to authorize Federal Prison Industries 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 analysis 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 production or performance will commence (or expand) and the subsequent 3 fiscal years;

`(iv) whether the industry producing the product in the private sector--

`(I) has an unemployment rate higher than the national average;

`(II) has a rate of employment for production workers that has consistently shown an increase during the previous 5 years; or

`(III) has an import to domestic production 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 Government and the demands of entities other than the Federal Government for the specific product or service 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 occupations that will provide them with a means of earning a livelihood upon release.

`(C)(i) The board of directors may not approve a proposal to authorize the production and sale of a new specific 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 proposal to authorize the production and sale of a new prison-made product or to expand production of a currently authorized product if the product is--

`(I) produced in the private sector by an industry 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 `construction' 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 participation by interested parties, the board of directors shall--

`(A) give additional notice of a proposal to authorize 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 representing private sector workers who could reasonably be expected to be affected by approval of the proposal, which notice shall offer to furnish copies of the analysis required by paragraph (5) and shall solicit comment on the analysis;

`(B) solicit comments on the analysis required by paragraph (5) from trade associations representing vendors and labor unions representing private sector workers who could reasonably be expected to be affected by approval of the proposal to authorize the production and sale of a new product or expand the production of a currently authorized product; and

`(C) afford an opportunity, on request, for a representative of an established trade association, labor union, or other representatives of private industry to present comments on the proposal directly to the board of directors.

`(7) The corporation shall provide to the board of directors its recommendation regarding action on the proposal taking into consideration the comments received.

`(8) The board of directors shall consider a proposal to authorize the sale of a new product or service (or to modify the volume of sales for a currently authorized product or service) and take any action with respect to such proposal, during a meeting that is open to the public, unless closed pursuant to section 5526 of title 5.

`(9) In conformity with the requirements of paragraphs (5) through (8) of this subsection, the board of directors may--

`(A) authorize the donation of products produced 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 CONGRESS.

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 departments 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 product; and

`(D) the number and disposition of disputes submitted to the heads of the Federal departments 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 employed inmates by the term of their incarceration; and

`(C) the various hourly wages paid to inmates 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 Industries 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 report 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 (including ancillary finished components or assemblies) so as to produce a significant change in form or utility, without necessarily changing or altering the component 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 (verified through appropriate price analysis or cost analysis), 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 Commerce data, has experienced competition from imports 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 manufacture or assembly employing Federal prison inmates for not less than 75 percent of the hours of direct labor required for the production of the product;

`(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 Federal Procurement Data System for any specific product during the 3 preceding fiscal years, that does not exceed 20 percent of the Federal market for the specific 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 product that is designed and manufactured to meet requirements distinct in function and predominant material of manufacture from another product, as described by--

`(A) the 7-digit classification for the product in the Standard Industrial Classification (SIC) Code (or any successor classification system) published by the Office of Management and Budget (or if there is no 7-digit code classification for a product, the 5-digit code classification); 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 (including group, part number and section), as determined by the General Services Administration.'.

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 published not later than 60 days after the date of the enactment 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 regulations 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 subsection (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 issued 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.'.

END