FPI PRODUCTION OF TRUNKS, SWEATSHIRTS AND SWEATPANTS FEDERAL PRISON INDUSTRIES, INC. (FPI) On August 18, 1999, FPI's Board of Directors revised FPI's authorized sales ceilings for trunks, sweatshirts and sweatpants. FPI's primary customer for these items is the Department of Defense (DoD). Recently, DoD decided to replace its existing physical fitness uniforms (PFUs), which affects trunks and sweatsuits. The new versions have substantially increased costs due to the choice of fabric. The number of units of these items made by FPI will remain stable, but FPI's sales will exceed Board-authorized ceilings for each item in FY 2001, and for trunks, beginning in FY 2000. FPI requested that its Board of Directors revise the sales ceilings to reflect the units of production previously approved by the Board and the costs for the new raw materials. FPI's Board of Directors revised the sales ceiling for trunks from $7.8 million to $8.7 million in FY 2000; from $8.1 million to $11.6 million in FY 2001; and from $8.3 million to $11.6 million in FY 2002. The Board of Directors revised the sales ceiling for sweatshirts and sweatpants from $7.5 million to $15.1 million in FY 2001 and FY 2002. In making its request to the Board, FPI emphasized that the increased cost of raw materials is the only reason that sales will increase over the previous Board-authorized ceilings. FPI noted its request will allow FPI to continue to meet the needs of one its most important customers, the Defense Supply Center, Philadelphia. Further, FPI pointed out its market share for these items will not increase as the size of the Federal market based on the number of units purchased will remain constant, increasing only in dollar value, based on the increased sales costs associated with the new fabric. The number of units to be produced by FPI in accordance with the new sales ceiling thresholds will also not change from the number of units authorized for production by FPI in the Board's original decisions. As discussed in FPI's industry involvement guidelines, any interested party has a right to raise a question at any time with FPI's Board of Directors. Any correspondence should be addressed to: Manager, Planning, Research and Activation, Federal Prison Industries, 320 First Street, NW, Washington, DC 20534. Posted 11/08/99 (W-SN398960).

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