B-175249, APR 11, 1972

B-175249: Apr 11, 1972

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IT APPEARS THAT THE AWARD OF THE PURCHASE ORDER WAS FULLY AUTHORIZED. INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 10. IT IS UNDERSTOOD THAT THE INQUIRY WAS PROMPTED BY THE PREVIOUS REQUEST OF A FEDERAL PRISON OFFICIAL THAT THE FEDERAL PRISON INDUSTRIES BE CONTACTED THE NEXT TIME LASL REQUIRED CANVAS PROTECTIVE SHOE COVERS. FIVE QUOTATIONS WERE RECEIVED. YOUR FIRM'S QUOTATION WAS LOW AT $1.20 PER PAIR F.O.B. YOU CONTEND THAT THE PROCUREMENT SHOULD NOT HAVE BEEN MADE FROM FEDERAL PRISON INDUSTRIES AND THAT PRIVATE INDUSTRY SHOULD HAVE BEEN ALLOWED TO SUPPLY THIS PRODUCT. WILL HAVE TO BE DISCHARGED. ARE IN PERTINENT PART AS FOLLOWS: "(A) FEDERAL PRISON INDUSTRIES SHALL DETERMINE IN WHAT MANNER AND TO WHAT EXTENT INDUSTRIAL OPERATIONS SHALL BE CARRIED ON IN FEDERAL PENAL AND CORRECTIONAL INSTITUTIONS FOR THE PRODUCTION OF COMMODITIES FOR CONSUMPTION IN SUCH INSTITUTIONS OR FOR SALE TO THE DEPARTMENTS OR AGENCIES OF THE UNITED STATES.

B-175249, APR 11, 1972

BID PROTEST - FEDERAL PRISON INDUSTRIES, INC. - PROPRIETY OF PURCHASE ORDER AWARD DECISION DENYING THE PROTEST OF MINX PRODUCTS, INC., AGAINST AN AWARD BY THE UNIVERSITY OF CALIFORNIA OF A PURCHASE ORDER TO FEDERAL PRISON INDUSTRIES, INC., FOR A PROCUREMENT OF CANVAS PROTECTIVE SHOE COVERS TO BE USED AT THE ATOMIC ENERGY COMMISSION LOS ALAMOS SCIENTIFIC LABORATORY (LASL), LOS ALAMOS, N.M. IN VIEW OF THE PROVISIONS OF 18 U.S.C. 4124 AND THE IMPLEMENTING AEC PROCUREMENT REGULATIONS 9-5.5206-17, IT APPEARS THAT THE AWARD OF THE PURCHASE ORDER WAS FULLY AUTHORIZED. ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO MINX PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 10, 1972, TO A CONGRESSMAN PROTESTING THE AWARD BY THE UNIVERSITY OF CALIFORNIA OF A PURCHASE ORDER TO FEDERAL PRISON INDUSTRIES, INC., WASHINGTON, D.C., FOR FURNISHING OF 38,400 PAIRS OF CANVAS PROTECTIVE SHOE COVERS FOR USE AT THE ATOMIC ENERGY COMMISSION (AEC) LOS ALAMOS SCIENTIFIC LABORATORY (LASL), LOS ALAMOS, NEW MEXICO.

ON SEPTEMBER 30, 1971, THE UNIVERSITY OF CALIFORNIA, WHICH OPERATES LASL UNDER AEC COST-TYPE CONTRACT NO. W-7405-ENG-36, SUBMITTED AN INQUIRY TO FEDERAL PRISON INDUSTRIES, INC., CONCERNING ITS CAPABILITY AND PRICE FOR PRODUCING 38,400 PAIRS OF CANVAS PROTECTIVE SHOE COVERS. IT IS UNDERSTOOD THAT THE INQUIRY WAS PROMPTED BY THE PREVIOUS REQUEST OF A FEDERAL PRISON OFFICIAL THAT THE FEDERAL PRISON INDUSTRIES BE CONTACTED THE NEXT TIME LASL REQUIRED CANVAS PROTECTIVE SHOE COVERS. ON NOVEMBER 4, 1971, FEDERAL PRISON INDUSTRIES ADVISED LASL THAT ITS UNIT PRICE FOR 38,400 PAIRS OF CANVAS PROTECTIVE SHOE COVERS WOULD BE $1 PER PAIR F.O.B. LOS ALAMOS, NEW MEXICO. ON DECEMBER 1, 1971, THE UNIVERSITY ISSUED REQUEST FOR QUOTATION SX2-67191 TO SIX COMMERCIAL SUPPLIERS, INCLUDING YOUR FIRM, FOR THE PRODUCTION AND DELIVERY OF THE SAME QUANTITY OF CANVAS PROTECTIVE SHOE COVERS. FIVE QUOTATIONS WERE RECEIVED. YOUR FIRM'S QUOTATION WAS LOW AT $1.20 PER PAIR F.O.B. LOS ALAMOS, NEW MEXICO. SINCE THE PRICE QUOTED BY FEDERAL PRISON INDUSTRIES DID NOT EXCEED THE CURRENT MARKET PRICE FOR THE SHOE COVERS, THE UNIVERSITY ISSUED A PURCHASE ORDER FOR THEM TO FEDERAL PRISON INDUSTRIES.

YOU STATE THAT FOR THE PAST 11 YEARS YOUR FIRM HAS BEEN THE SUCCESSFUL BIDDER ON CANVAS PROTECTIVE SHOE COVERS PURCHASED IN LARGE QUANTITIES BY THE UNIVERSITY OF CALIFORNIA FOR USE IN LASL. YOU CONTEND THAT THE PROCUREMENT SHOULD NOT HAVE BEEN MADE FROM FEDERAL PRISON INDUSTRIES AND THAT PRIVATE INDUSTRY SHOULD HAVE BEEN ALLOWED TO SUPPLY THIS PRODUCT. YOU STATE THAT LOSS OF THE CONTRACT BY YOUR FIRM MEANS THAT TWO OF THE THREE SEWING MACHINE OPERATORS EMPLOYED BY YOU, WHO YOU STATE NEED THEIR JOBS, WILL HAVE TO BE DISCHARGED. YOU MAINTAIN THAT YOUR FIRM, A SMALL BUSINESS CONCERN, CAN NOT COMPETE WITH FEDERAL PRISON INDUSTRIES BECAUSE IT PAYS ONLY TOKEN WAGES.

THE PROVISIONS OF 18 U.S.C. 4122, ARE IN PERTINENT PART AS FOLLOWS:

"(A) FEDERAL PRISON INDUSTRIES SHALL DETERMINE IN WHAT MANNER AND TO WHAT EXTENT INDUSTRIAL OPERATIONS SHALL BE CARRIED ON IN FEDERAL PENAL AND CORRECTIONAL INSTITUTIONS FOR THE PRODUCTION OF COMMODITIES FOR CONSUMPTION IN SUCH INSTITUTIONS OR FOR SALE TO THE DEPARTMENTS OR AGENCIES OF THE UNITED STATES, BUT NOT FOR SALE TO THE PUBLIC IN COMPETITION WITH PRIVATE ENTERPRISE.

"(B) ITS BOARD OF DIRECTORS SHALL PROVIDE EMPLOYMENT FOR ALL PHYSICALLY FIT INMATES IN THE UNITED STATES PENAL AND CORRECTIONAL INSTITUTIONS, DIVERSIFY, SO FAR AS PRACTICABLE, PRISON INDUSTRIAL OPERATIONS AND SO OPERATE THE PRISON SHOPS THAT NO SINGLE PRIVATE INDUSTRY SHALL BE FORCED TO BEAR AN UNDUE BURDEN OF COMPETITION FROM THE PRODUCTS OF THE PRISON WORKSHOPS, AND TO REDUCE TO A MINIMUM COMPETITION WITH PRIVATE INDUSTRY OR FREE LABOR."

AS INDICATED IN THE FOREGOING QUOTATION, THE EXTENT OF THE INDUSTRIAL OPERATIONS IN FEDERAL PENAL AND CORRECTIONAL INSTITUTIONS IS FOR DETERMINATION BY THE FEDERAL PRISON INDUSTRIES. IN ADDITION, 18 U.S.C. 4124 PROVIDES AS FOLLOWS:

"THE SEVERAL FEDERAL DEPARTMENTS AND AGENCIES AND ALL OTHER GOVERNMENT INSTITUTIONS OF THE UNITED STATES SHALL PURCHASE AT NOT TO EXCEED CURRENT MARKET PRICES, SUCH PRODUCTS OF THE INDUSTRIES AUTHORIZED BY THIS CHAPTER AS MEET THEIR REQUIREMENTS AND MAY BE AVAILABLE."

FURTHER, ATOMIC ENERGY COMMISSION PROCUREMENT REGULATIONS 9-5.5206-17 PROVIDE:

"AEC OFFICES AND COST-TYPE CONTRACTORS SHALL PROCURE ITEMS LISTED IN THE SCHEDULE OF PRODUCTS MADE IN FEDERAL PENAL AND CORRECTIONAL INSTITUTIONS

MOREOVER, THE "CANVAS GOODS SCHEDULE" OF PRODUCTS MADE IN FEDERAL PENAL

"THE MANDATORY PROVISIONS UNDER SECTION 4124 OF TITLE 18 U.S.C. APPLY TO ALL ITEMS OF CANVAS GOODS *** ."

IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY LEGAL BASIS TO OBJECT TO THE AWARD OF THE PURCHASE ORDER TO FEDERAL PRISON INDUSTRIES.