Congressional Critic Charges Prison Industries' Reform a "Charade" A recent policy change by Federal Prison Industries, which purported to open more opportunities for competitive bidding, is a “charade,” a leading congressional critic charged. FPI’s board voted in March to allow businesses to take any contract “in all cases where the private sector provides a lower price for a comparable product that FPI does not meet.” Rep. Pete Hoekstra (R-MI) called the policy “a brand-new scheme to take jobs from the private sector and move them into Federal Prison Industries.” He spoke on the House floor May 22. Hoekstra says the policy gives FPI a chance to see a contractor’s bid and match it, claiming the contract without an additional round of bidding. According to the waiver rules on FPI’s website, a contractor must submit its “best and final” quote and FPI has five days to match it or beat it. By law, FPI’s mandatory source preference gives it the right to claim any contract it wants as long as it offers a comparable product at an equal or lower price. “Would anyone expect that FPI could not match the best price that the private sector has to offer when FPI does not incur the design and bid costs that all bidders face equally in open competition?” Hoekstra asked in a statement. He said FPI recently invoked the policy to match a bid by the Michigan office furniture manufacturer Steelcase Inc. on a $6 million contract with the Federal Aviation Administration. “We cannot compete under these circumstances,” Steelcase CEO Jim Hackett said in a statement. “After investing hundreds of hours responding to this request for bid, Steelcase was determined to be best value to the FAA. FPI was then handed our completed bid document and they simply matched our pricing and product specifications.” Hoekstra charged that “self-serving bureaucrats at FPI” have subverted the intent of the government corporation’s board of directors. He had called last year for the removal of Steve Schwalb, FPI’s chief operating officer, who is a Justice Department employee. Separately, regulators released an interim rule raising the threshold for mandatory purchases from FPI to $2,500, from the present $25. That means agencies are not required to buy products costing less than $2,500 from FPI. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council published the interim rule in the May 22 Federal Register. It is open for comment until June 23. At its March meeting, the FPI board also said it was considering limiting its share of the federal market for any product to no more than 20%. The corporation’s ombudsman, Jan Hynson, told Set-Aside Alert the issue is still “under discussion.” In his remarks on the House floor, Hoekstra said FPI is “one of the fastest growing companies in America today.” The corporation reported fiscal 2002 sales of nearly $679 million, up 16% from the year before. At a House Small Business Committee hearing in November, board members promised to rein in some of the corporation’s aggressive sales practices and open more opportunities for businesses. The Office of Management and Budget sent proposed policy changes to the board in January, according to minutes of a meeting. Board Chairman Kenneth Rocks said the OMB proposals would guide the board’s decisions. (SAA, 1/24) Rocks could not be reached.