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"Pass Throughs"
October 24, 2002
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Whenever FPI accepts an order, it is with the intention of manufacturing the product in the prescribed manner, with extensive use of inmate labor. Sometimes, though, events such as a prison lock down, factory fire, fog, or machine failure occur, causing such delays in production that may render FPI unable to complete an order and/or meet the customer's required delivery date. In the past, FPI has asked vendors who commercially produced the same items to provide the product to the customer to avert any inconvenience to the purchaser. Such instances represented less than 2 percent of FPI's total annual office furniture sales. The Board of Directors elected, however, to adopt a resolution discontinuing this practice.
On October 24, 2002, FPI's Board of Directors adopted the following resolution: "The Board directs that the practice of "pass-through" of finished goods items that would otherwise be manufactured by FPI be discontinued; and that customers be given the right to accept late delivery, or be granted an immediate waiver to purchase that portion of the order elsewhere; and that such transactions be tracked and documented." The resolution became effective immediately.
Waivers granted based upon price
March 10, 2003
On March 10, 2003, the Board of Directors adopted the following resolution: "The Board directs that FPI grant waivers in all cases where the private sector provides a lower price for a comparable product that FPI does not meet. This policy is effective immediately."
Inmate access to personal and sensitive information
March 10, 2003
FPI takes measures to ensure that inmates do not have access to personal and sensitive information. The FPI Board of Directors adopted a resolution on March 10, 2003, directing that FPI deny inmates access to personal information of any kind. This includes credit card numbers, medical records, social security numbers, credit records, and other personal information. This policy became effective immediately.
FPI is responsible for ensuring that inmates do not have access to personal information, as determined by FPI's Board of Directors. FPI products purchased by government credit card are not processed by inmates.
Inmate Value Added
April 28, 2003
**On April 28, 2003, the Board adopted the following resolution: "The Board directs that FPI stop selling products for which FPI's value added does not contribute at least 20 percent to the selling price of a product. For purposes of this resolution, value added shall be defined as the sales price of an FPI product minus the cost of raw materials.
Elimination of mandatory source for products in which FPI's share of the Federal market exceeds 20 percent
June 26, 2003
On April 28, 2003, the Board adopted the following resolution: " The Board directs FPI to end the application of mandatory source for products for which FPI's share of the Federal market exceeds 20 percent." On June 26, 2003, the resolution was revised as follows: "The Board of Directors directs Federal Prison Industries to limit the application of mandatory source to products for which FPI's share of the Federal market is less than 20 percent."
Customers who plan to purchase products in which FPI's Federal market share exceeds 20 percent need not initiate a waiver request to procure the item(s) from the private sector. FPI identifies those products no longer subject to FPI's mandatory source, by FSC, on a webpage titled Mandatory Source Exceptions. The list will be updated annually.
The 20 percent Market Share resolution was amended by the FPI Board of Directors in August 2008 such that its applicability to Federal Supply Classes (FSC's) controlled by the Department of Defense (DOD) was superseded by Section 827 of the Defense Authorization Act of 2008, rendering the resolution no longer applicable to those FSC's controlled by DOD. For those FSC's, Section 827 rules would be in force (See Information on Purchases from DOD). Moreover, for the remaining FSC's to which the 20 percent resolution is still applicable, a subsequent amendment was made to clarify that each year, upon publication of FPI's most recent Market Share Report, the reevaluation of FPI market share would identify new FSC's to be added to the 20 percent list, as well as FSC's which FPI market share does not reach this threshold, and thus would no longer apply. The latter FSC's would be deleted from the 20 percent list (approved by the Board of Directors, March 17, 2010).
Blanket Waiver Threshold
FPI's Board of Directors increased the blanket waiver threshold relating to small dollar value purchases from a threshold of $3,000 to a threshold of $3,500. This is a waiver of mandatory source for purchases totaling $3,500, or less. Customers may, however, still purchase from FPI at, or below, this threshold if they so choose.
FPI's blanket waiver originated from its Board's adoption of a resolution on March 3, 2016, and not from a Federal Acquisition Resolution (FAR) exemption under the micro-purchase statute.
Notes:
** Note: Both the "Pass Through" and "Inmate Value-Added" Board Resolutions were temporarily suspended by the Board of Directors on August 18, 2016. The resolutions will be suspended for several months during a period in which FPI is undergoing extensive transition and consolidation of its factory network to gain long-term production efficiencies, returning FPI to ongoing financial sustainability. During this time, the two resolutions have been suspended in order to continue to meet customer requirements in an uninterrupted fashion. Efforts will be made to notify customers of this change in advance during this temporary transition period.