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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: January 31, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Defense; Raising the Threshold for Federal Prison Industries (FPI) Exceptions

SOURCE: FPI Memorandum, dated January 24, 2000

AGENCIES: Department of Defense (DOD)

ACTION: Notice

SYNOPSIS: On January 24, 2000, FPI Chief Operating Officer Steve Schwalb issued a memorandum for DOD procurement personnel announcing that FPI is granting DOD an administrative waiver for orders totalling $250 or less that require delivery within 10 days. In effect, this increases the threshold in paragraph (e) of Federal Acquisition Regulation (FAR) 8.606, Exceptions, from $25 to $250.

EFFECTIVE DATES: January 24, 2000.

SUPPLEMENTAL INFORMATION: FAR Subpart 8.6, Acquisition from Federal Prison Industries, Inc., lists the procedures for purchasing required supplies listed in the Schedule of Products Made in Federal Penal and Correctional Institutions. FAR 8.605, Clearances, states "clearance is required from FPI before supplies on the Schedule are acquired from other sources, except when the conditions in [FAR] 8.606 apply." FAR 8.606(e) authorizes agencies to forgo FPI clearances when "orders are for listed items totaling $25 or less that require delivery within 10 days."

Section 855 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105-85) required DOD and FPI to review the procurement practices that government procurement transactions between DOD and FPI, and to provide recommendations to improve the process. One of the recommendations was to increase the threshold for administrative waivers from $25 to $250. FPI accepts this recommendation and has increased the threshold. This waiver applies only to DOD, and it "does not preclude DOD staff from purchasing any product or service directly from FPI, provided it can supply the product or service as needed."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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