FEDERAL PRISON INDUSTRIES, INC. (FPI) AVAILABILITY OF PUBLICATION: REVIEW OF INDUSTRY INVOLVEMENT GUIDELINES PROCESS, FINAL REPORT FEDERAL PRISON INDUSTRIES, INC. (FPI) ANNOUNCES THE AVAILABILITY OF THE PUBLICATION: REVIEW OF INDUSTRY INVOLVEMENT GUIDELINES PROCESS, FINAL REPORT, DATED APRIL 1998 AND PREPARED BY URBACH, KAHN AND WERLIN PC, certified public accountants. Background: The Federal Prison Industries Reform Act of 1988 established the Industry Involvement Guidelines which, in part, provide that FPI shall: prepare a detailed written analysis of the probable impact on industry and free labor of the plans for new or expanded production; and announce to the public FPI's plans for new or expanded production and the availability of its written analysis and invite comments regarding such plans. FPI's Board of Directors make the final decision authorizing new or expanded production after reviewing the detailed written analysis and considering any written or oral comments from private industry or other interested parties. Upon being informed by FPI management of inadvertent unauthorized production, and to improve its oversight of this process, the Board directed FPI to determine whether other unauthorized production may have occurred and what could be done, to prevent future recurrence of such situations. The Board retained the services of its independent auditing firm, Urbach, Kahn, and Werlin (UKW), to conduct an historic review to determine whether there were any other such instances. The Final Report: This report is based on an extensive review and evaluation of FPI's policies and procedures for ensuring compliance with the guidelines designed to identify and prevent an undue burden on private industry by FPI. The objectives of the Urbach, Kahn & Werlin review were: to identify the extent of prior instances of significant expansion of existing products or the introduction of new products, if any, which were not subjected to the Guidelines process in accordance with the requirements of the Act; to identify potential future significant expansions due to sales growth; to review and evaluate changes to key definitions in the Act, which are in effect on an interim basis; and to establish a practical method to identify future instances of significant expansions; and recommend procedures for improved monitoring of FPI's future compliance with the Act, including integrating an assessment of their compliance into FPI's annual independent financial audit. The procedures of the Urbach, Kahn & Werlin review included reviews of prior impact studies, FPI Board of Directors' minutes and product decisions; FPI operating plans; research on industry alignment; and analyses of product sales data, capacity data and market share calculations. These procedures were designed to identify any prior violations of the Act and to recommend policies and procedures, including recommended changes to key legislation definitions, for the establishment of systems for monitoring and complying with the guidelines. This report is available to interested parties, and requests should be made to: Manager, Planning, Research and Activation, Federal Prison Industries, Inc., 320 First Street, N.W., Washington, D.C. 20534. Posted 09/25/98 (W-SN254586).

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