C. E. Niehoff & Co. Founded 1923

2021 Lee Street Evanston, Illinois 60202 U.S.A.

April 28, 1999

Mr. Robert C. Grieser
Manager, Planning, Research & Activation
Federal Prison Industries, Inc.
320 First Street, NW
Washington, D.C. 20534

Dear Mr. Grieser:

Thank you for your April 12, 1999 letter and copy of the "Competitive Impact Study" I have both corrections and comments on this study. I will present in summary form.

Corrections:
C. E. Niehoff & Co. is a small business employing 210 full time employees.

C. E. Niehoff & Co. is a (1998 data) 20 million dollars in sales company with 66.4% going to the army. The difference is loss of sales to the US Army through Vehicle Manufactures (Prime Contractors) and direct spares purchases.

C. E. Niehoff & Co. was a 24 million dollar company in 1996 and was approximately 80% dependent on the US Army. (page 19 of the study).

Sielman S. A. is the foreign vendor referenced and has the contract for one of the generators noted in the study. The other contract is completed and when procured again will be awarded to the lowest responsible bidder. I believe that will be C. E. Niehoff & Co.

Comments:

FPI has chosen two generators (alternators or charging systems are the same thing) which are for combat vehicles. All of the data is for passenger cars and light truck. The US Army owns nearly 50,000 HMMWV's and 12,000 FMTV's and were shown as having a fleet of 10,709 vehicles. The study analyzes commercial vehicles and proposes the manufacture of combat and tactical alternators.

C. E. Niehoff & Co. provides charging systems for tactical and combat vehicles under FSC 2920. These vehicles are not even shown in the table on pages 5 & 6. What is shown is commercial vehicles such as cars and light trucks which use charging systems of a very different nature and represent a relatively small part of FSC 2920.

C. E. Niehoff & Co. does not manufacture charging systems for cars and light trucks. Most of FSC 2920 is for parts for combat and tactical vehicles representing a market significantly smaller than 26 million listed on page 11 of the report. FSC 2920 is all Electrical parts for vehicles, not just generators.

Briefly, FPI has zeroed in on two generators for combat vehicles and justified the impact using automotive statistics and understating C. E. Niehoff & Co.'s market dependence. Most of the information presented in the report has nothing to do with the two NSN's proposed to be manufactured by FPI.
Should you have any questions, please contact me at 1-847-866-1681, or by fax at 1847-492-1242.
Sincerely,

Georg Buhrfeind
President
C. E. Niehoff & Co.

GB/Ik

cc: J. W. Glover