Description
On July 26, 2004, Federal Prison Industries, Inc. (FPI), published a notice in the Federal Business Opportunities (FedBizOpps) regarding overproduction of t-shirts. The notice advised that during the preparation of the Fiscal Year (FY) 2003 Sales Report, FPI management staff noted that t-shirt production had exceeded the Board of Directors approved units for that fiscal year. The July 26th notice stated that FPI has produced t-shirts at its facility at FCI Jesup since the 1980s. In 1995, FPI began screen printing t-shirts for the Air Force at FCI Jesup. FPI received the fully manufactured t-shirts from a private vendor, screen printed them, and forwarded the t-shirts to the Defense Supply Center Philadelphia (DSCP) for the Air Force. The vendor is a member of the American Apparel and Footwear Association (AAFA) and a DSCP-qualified vendor. During FY 2003, FPI was informed that the vendor making the fabric and cutting the t-shirts had suspended domestic production operations and had begun sending the cut pieces to Mexico to be sewn. FPI advised DoD of this situation and DoD directed FPI to discontinue the purchase of the t-shirts produced outside of the U.S. In an effort to comply with DSCP’s request and continue fulfilling the contract, the local Jesup factory subsequently began to make the t-shirts in-house with domestically purchased fabric, provided by the same vendor. This action resulted in FPI inadvertently exceeding its Board approved production level in FY 2003 for manufacture of t-shirts by 230,000 units. The Board approved sales level was not exceeded. FPI therefore requested retroactive approval from the Board of this overage in unit production of t-shirts in FY 2003. FPI received comments in response to the July 26th notice from three interested parties, including two private companies that have previously been suppliers to DSCP and the principal trade association representing the industry, the AAFA. The three parties noted three basic areas of concern. First, they expressed objections to FPI inadvertently exceeding its Board approved production level in t-shirts for FY 2003. Second, in their perception, FPI has an unfair advantage because they believe FPI does not have to bid for contracts like other private vendors. Third, noncompliance of the law under the Berry Amendment was not considered a sufficient reason to increase production levels. FPI forwarded all of the comments, in their entirety, to its Board. In response to the first comment, the t-shirts in question were not counted in the production levels or sales for sewn t-shirts in FY 2003 because originally FPI had purchased the t-shirts from a private vendor. FPI then performed the screen printing of the t-shirts for the Air Force, per the contract. The screen printing service was reflected in FPI sales. Following FY 2003, the t-shirts that were sewn and screen printed by FPI were reflected in FPI sales and production figures for t-shirts. In response to the second comment, FPI, along with the private sector, has been a longstanding supplier to DoD for a portion of their requirements. FPI, by statute, is not authorized to take more than a reasonable share of the market. FPI’s overall share of apparel production for DSCP needs is approximately 8.0 percent. Moreover, FPI’s mandatory status with DoD has been modified with the implementation of Sections 811 and 819 of the Defense Authorization Act for Fiscal Years 2002 and 2003. Sections 811 and 819 require DoD to conduct market research before purchasing FPI products. The research determines whether the FPI product is comparable in price, quality, and time of delivery to products available from the private sector. If the FPI product is not comparable to the private sector, DoD must use competitive procedures to acquire the product. Therefore, no awards from DoD are guaranteed. In addition, screen printing is a service and FPI’s mandatory source has never applied to services. In response to the third comment, upon notification that the private vendor making the t-shirts was sending them to Mexico to be sewn, FPI stopped using the non-American made t-shirts. In an effort to solve the problem expeditiously, not be delinquent on shipments, and find a way to comply with the contract and the Berry Amendment, FPI produced the shirts from cut parts, inadvertently exceeding the production guidelines for t-shirts. It was the official decision of the Board to ratify FPI’s overproduction of t-shirts in FY 2003. FPI and the Board agreed to implement the following corrective actions to prevent future production oversights. 1. FPI will assure that all future applicable contract language will include a reference to the Berry Amendment, so that a similar situation does not recur. 2. Board approval will be required on future production levels. 3. FPI will work with the customer to determine the need for future actions. 4. The Board and FPI will continue to consult with AAFA on this and other matters in an effort to promote and maintain ongoing and productive dialogue and open communication. Interested parties have a right to raise questions at any time with FPI’s Board of Directors. Any correspondence should be addressed to: Chief Administrative Officer, Research, Activation, and Corporate Support, Federal Prison Industries, Inc., 320 First Street, NW, Washington, D.C. 20534. Attention: RACS Branch.