Government-Wide Rule On FPI Ensures Best Value For Taxpayer

The Contract Services Association (CSA) filed comments on the proposed Federal Acquisition Regulation (FAR) interim rule to implement Section 637 of Division H of the Consolidated Appropriations Act for Fiscal Year 2005. Comments were due on the interim rule on June 10, 2005, although the interim rule took effect on April 11, 2005 (its publication date in the Federal Register).

CSA’s president, Chris Jahn, wrote:

“Section 637 is compatible with Sections 811 and 819 of the National Defense Authorization Acts for fiscal years 2002 and 2003 as well as with acquisition reform initiatives (i.e., the 1994 Federal Acquisition Streamlining Act, the 1996 Clinger-Cohen Act and the FAR Part 15 Rewrite) requiring Federal agencies to conduct market research, have informal discussions with industry and take similar steps to assist agencies in identifying their needs.

This section ensures that contracting offices have the freedom to explore the market for products to see if FPI’s pricing is reasonable and compares in terms of cost and quality to the private sector, or other agency providers. Thus, Section 637 applies the acquisition reform initiatives (including market research) to FPI – and by doing so FPI, the Federal agencies and the U.S. taxpayer will benefit.”

While supporting the interim rule, Jahn also noted that CSA continues to be concerned about existing clauses in the FAR that allow FPI to be included in small business set-asides. Jahn stated, “FPI has been defined as an ‘other than small business’ and, indeed, is listed in the ranks of the top 100 defense contractors – no small business is included on that list. CSA questions why FPI needs to be included in any small business set-aside programs.”

A full copy of the CSA comments is attached, and also are available on the CSA website at www.csa-dc.org.
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June 10, 2005

Ms. Laurieann Duarte
General Services Administration
FAR Secretariat (MVA)
1800 F Street, NW
Room 4035
Washington, DC 20405

Re: FAC 2005-03; FAR case 2003-023: Purchases from Federal Prison industries – Requirement for Market Research

Dear Ms. Duarte:

The Contract Services Association (CSA) appreciates this opportunity to offer comments on the proposed FAR interim rule to implement Section 637 of Division H of the Consolidated Appropriations Act for fiscal year 2005 (P.L. 108-147), as published in the Federal Register on April 11, 2005 (Fed. Reg. Vol. 70 18954). CSA supports the intent of the FAR Council’s rule.

CSA is the nation’s oldest and largest association of service contractors representing over 200 companies that provide a wide array of services to Federal, state, and local governments. CSA members do over $40 billion in Government contracts and employ nearly 500,000 workers, with nearly two-thirds of CSA companies using private sector union labor. CSA members represent the diversity of the Government services industry and include small businesses, 8(a)-certified companies, small disadvantaged businesses, women-owned, HubZone, Native American owned firms and global multi-billion dollar corporations. CSA promotes Excellence in Contracting by offering significant professional development opportunities for Government contractors and Government employees, including the only program manager certification program for service contractors.

Section 637 requires the Government contracting officers to conduct market research before purchasing products that are listed in the catalog for the Federal Prison Industries (FPI), to determine whether the FPI product is comparable in price, quality and time of delivery to products available in the private sector. If the FPI product is not comparable, Government contracting officers must use competitive procedures to acquire the product.

The statute only applies to products and the proposed rules makes it clear that, government-wide, FPI should be allowed as a provider of goods (and services) only if it can prove that its products are the best quality, best priced, delivered in the most timely manner, and in line with its customers needs.

Section 637 is compatible with Sections 811 and 819 of the National Defense Authorization Acts for fiscal years 2002 and 2003 as well as with acquisition reform initiatives (i.e., the 1994 Federal Acquisition Streamlining Act, the 1996 Clinger-Cohen Act and the FAR Part 15 Rewrite) requiring Federal agencies to conduct market research, have informal discussions with industry and take similar steps to assist agencies in identifying their needs. These reform initiatives also have led to more performance based contracting, the issuance of more refined statements of work, a reduction in procurement lead times, and an improvement in quality control.

This section ensures that contracting offices have the freedom to explore the market for products to see if FPI’s pricing is reasonable and compares in terms of cost and quality to the private sector, or other agency providers. Thus, Section 637 applies the acquisition reform initiatives (including market research) to FPI – and by doing so FPI, all Federal agencies and U.S. taxpayers will benefit.

However, CSA strongly recommends the FAR Council to strike out in section 8.601(e) the words “and services” since FPI does not have “mandatory source” status for services, nor has it ever been given the statuary right to branch out into services. Indeed, in the Council’s response to one comment, it notes that “FPI is not a mandatory source for services.”

CSA also remains concerned that the interim rule allows FPI to be included in small business set-asides. FPI has been defined as an ‘other than small business’ and, indeed, is listed in the ranks of the top 100 defense contractors – no small business is included on that list. CSA questions why FPI needs to be included in any small business set-aside programs.”

Conclusion

Thank you for the opportunity to provide our comments. If there are any questions, please contact Cindy Hsu, CSA’s Legislative and Regulatory Director at (703) 243-2020.

Sincerely,

Chris Jahn
President

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CSA is the nation’s oldest and largest association of service contractors representing over 200 companies that provide a wide array of services to Federal, state, and local governments.  CSA members perform over $40 billion in Government contracts and employ nearly 500,000 workers, with two-thirds of CSA companies using private sector union labor.  CSA members represent the diversity of the government services industry and include small businesses, 8(a)-certified companies, small disadvantaged businesses, women-owned, HubZone, Native American owned firms and global multi-billion dollar corporations.  CSA promotes Excellence in Contracting by offering significant professional development opportunities for government contractors and government employees, including the only program manager certification program for service contractors.  For more information on CSA, go to:  www.csa-dc.org.