FEDERAL PRISON INDUSTRIES, INC. (FPI) INDUSTRY INVOLVEMENT GUIDELINES VIOLATION EXPANSION OF BAGS & SACKS FEDERAL PRISON INDUSTRIES, INC. (FPI) This notice serves to announce that the Board of Directors for FPI has formally ratified FPI's prior significant expansion of bags and sacks. On September 25, 1998, FPI submitted a notice to the Commerce Business Daily regarding the finding by Urbach, Kahn & Werlin (UKW) that FPI had significantly expanded its production of bags and sacks without obtaining approval to do so from the Board of Directors. The notice appeared in the September 29, 1998, printed version of the CBD. The notice stated UKW had determined that FPI significantly expanded its production of bags and sacks in 1994. The notice also stated that UKW recommended that FPI's Board of Directors ratify FPI's significant expansion of bags and sacks. The notice explained that UKW was unable to identify a clearly identifiable bag industry; FPI's production capacity for bags was difficult to evaluate in terms of compliance with the Guidelines; a majority of FPI's sales come from mail bags for the U.S. Postal Service, where contract delivery requirements have resulted in large swings in sales levels since 1989; and a large portion of FPI's bag sales come from contracts to the United States Postal Service for mail bags. Since FPI does not have the benefit of the mandatory source with the Postal Service, UKW indicates that these sales should be excluded from other sales in determining the impact on private sector manufacturers. FPI concurred with UKW's recommendation and recommended that its Board of Directors ratify FPI's significant expansion of bags and sacks and bring this issue to closure. The notice requested that interested parties submit any comments regarding this matter to FPI within 45 days of the notice's publication. FPI received no comments on the matter. For the reasons discussed in the earlier notice and in light of FPI receiving no comments regarding this matter, FPI's Board of Directors ratified FPI's significant expansion of bags and sacks during its meeting on January 28, 1999, in Tallahassee, Florida. As discussed in FPI's expansion guidelines, any interested party has a right to raise any question at any time with FPI's Board of Directors. All comments should be addressed to: Manager, Planning, Research and Activation, Federal Prison Industries, Inc., 320 First Street, NW, Washington, D.C. 20534. Posted 06/03/99 (W-SN338704).

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