[Federal Register Volume 59, Number 241 (Friday, December 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30973]


[[Page Unknown]]

[Federal Register: December 16, 1994]


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COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED
 

Procurement List Additions

AGENCY: Committee for Purchase From People Who Are Blind or Severely 
Disabled.

ACTION: Additions to the Procurement List.

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SUMMARY: This action adds to the Procurement List tree marking paint 
and tracer element to be furnished by nonprofit agencies employing 
persons who are blind or have other severe disabilities.

EFFECTIVE DATE: January 17, 1995.

ADDRESSES: Committee for Purchase From People Who Are Blind or Severely 
Disabled, Crystal Square 3, Suite 403, 1735 Jefferson Davis Highway, 
Arlington, Virginia 22202-3461.

FOR FURTHER INFORMATION CONTACT: Beverly Milkman (703) 603-7740

SUPPLEMENTARY INFORMATION: On September 2, 1994, the Committee for 
Purchase From People Who Are Blind or Severely Disabled published 
notice (59 FR 45666) of proposed addition to the Procurement List. 
Comments were received from six members of Congress, the current 
contractor, two other firms that regularly bid on the items, an 
association representing paint manufacturers, and several past and 
present representatives of the Federal agency that is the primary user 
of the tree marking paints.
    Several commenters raised questions about the capability of the 
nonprofit agency to provide the tree marking paints in accordance with 
the Government's quality, quantity, and delivery requirements, 
including the possibility of negative effects on the Federal timber 
management program. They also challenged the nonprofit agency's ability 
to continue the ongoing product development efforts that are critical 
to providing the customer with a paint that is as effective and safe as 
possible. They noted that such development has been facilitated by the 
competition among paint firms to obtain future contracts: competition 
that would no longer exist if the paints were added to the Procurement 
List.
    Several other points made by more than one commenter related to 
potential problems associated with the lack of continuing competition 
if the tree marking paints were added to the Procurement List for 
future provision by only one organization and its preferred 
supplier(s). The problems cited include the inability of the Government 
to continue to realize decreasing prices for the paints; the absence of 
backup capability to supply the paints in the event the nonprofit 
agency fails to perform; and adverse impacts on the three firms that 
have invested significant resources in developing and maintaining the 
capacity to furnish the paints. Several commenters suggested that in 
light of these concerns, only a portion of the tree marking paints 
required by the Government should be added to the Procurement List.
    With respect to the capability of the nonprofit agency to provide 
the tree marking paints in accordance with Governmental requirements, 
both the central nonprofit agency representing the nonprofit agency in 
question and the Government agency which purchases the paints have 
inspected the nonprofit agency. Both have informed the Committee that 
they consider the nonprofit agency capable of supplying the paints in 
accordance with Governmental quality, quantity, and delivery 
requirements. The customer has also certified that the nonprofit 
agency's tree marking paints meet its Qualified Products List 
requirements.
    In regard to the other points, the Committee is satisfied that the 
approach to be used by the nonprofit agency in supplying the paints 
will avoid the problems raised by the commenters, and has concluded 
that splitting the requirement would be inappropriate. The nonprofit 
agency's approach will permit current and past contractors for the 
paints, as well as other suppliers with expertise in paint formulation, 
to compete annually to supply the nonprofit agency with the paints or 
base concentrates that constitute the major part of the end product 
furnished to the Government.
    The opportunity for continued substantial involvement--on a 
competitive basis--in supplying the paints should provide ample 
incentive for profit-making paint contractors to participate in future 
development efforts associated with these particular paints. The 
Committee is also persuaded that the nonprofit agency will be able to 
support ongoing product development efforts because of its track record 
in working with paint firms to upgrade and reformulate other paints 
being supplied to the Government under the JWOD Program. In addition, 
in the unlikely event that none of the three commenting paint firms 
decides to compete to supply the paint, the nonprofit agency has 
promised to work with another firm (or firms) to develop a different 
Qualified Products List tree marking paint. This will assure that the 
incentive to continue improving the product to achieve a competitive 
advantage remains.
    Continuing competition among qualified firms to supply the paints 
will also provide the opportunity for further price reductions as a 
result of competition. If such competition produces reductions in the 
price of the paints or concentrates, the Committee's fair market 
pricing system will pass along those reductions to the Government.
    With respect to backup capability, the continued involvement of the 
three paint firms which commented in supplying materials for the tree 
marking paints in question, as well as tree marking paint sales by at 
least one of those firms to other markets support a conclusion that 
they could assume responsibility for furnishing the product if the 
nonprofit agency experienced problems. Moreover, the nonprofit agency 
has provided information demonstrating backup capability using one of 
its other facilities as well as commercial aerosol packagers.
    In considering impact on the three commenting paint firms of adding 
the tree marking paints to the Procurement List, the Committee noted 
that each will retain the opportunity to compete to supply a 
substantial component of the end product. Consequently, any potential 
impact on those suppliers of placing the tree marking paints on the 
Procurement List is significantly less than would be the case if they 
had no sales prospects associated with the paints. However, even in the 
absence of the opportunity to compete, none of the commenting firms 
will in the Committee's judgment experience severe adverse impact as a 
result of the addition of the paints to the Procurement List.
    With respect to the current contractor, the annual value of this 
contract represents an extremely small percentage of its total sales. 
As a result, even taking into account that firm's recent investment in 
specialized filling equipment, the Committee does not consider the loss 
in question to constitute severe adverse impact. With respect to the 
other two firms, one of which has not received a contract for these 
paints for several years, because neither is a current contractor, 
their objections to the addition must be considered objections to 
losing the opportunity to bid on future procurements for the tree 
marking paints. Under the competitive bidding system, no bidder is 
guaranteed that it will receive a contract. Accordingly, the Committee 
does not consider loss of the opportunity to bid on future procurements 
to constitute severe adverse impact.
    Several commenters questioned whether the nonprofit agency would 
meet the requirement of the Javits-Wagner-O'Day (JWOD) Act that 75 
percent of the direct labor hours be performed by people who are blind. 
One commenter suggested that the action might not create much 
employment for people who are blind. Another question involved the 
appropriateness of a majority of the sales dollars going to a for-
profit company.
    The JWOD Act's direct labor requirement with regard to nonprofit 
agencies employing blind persons stipulates that 75% of the total 
direct labor hours performed by such a nonprofit agency be carried out 
by people who are blind. Contrary to the suggestion by certain 
commenters and confirmed by a court decision, there is no requirement 
that 75% of the total direct labor required to produce a commodity be 
performed by people who are blind. Every year for the past decade, 
people who are blind have performed over 85% of the direct labor hours 
at the nonprofit agency in question. Consequently, the Committee has 
concluded that the organization not only meets, but substantially 
exceeds the direct labor requirements of the JWOD Act.
    In considering items for the Procurement List, the Committee 
focuses on the amount of employment the item will generate for people 
with severe disabilities. The amount of sales dollars paid to for-
profit entities is not an appropriate criterion since providing most 
commodities to the Government requires nonprofit agencies to make 
substantial purchases of materials from for-profit firms. In this case, 
the Committee is satisfied that the amount of employment that will be 
generated for people who are blind justifies placing the paints on the 
Procurement List.
    Two commenters mentioned the risk assessment study currently 
underway because of Federal employee concerns about the paints' effects 
on their health and safety. One questioned the nonprofit agency's 
ability to develop any new formulations required as a result of the 
study, while another expressed concerns that the study would be 
compromised by the addition of another paint. As indicated above, the 
Committee is satisfied that the nonprofit agency, working with other 
firms involved in formulating paints, will be able to develop new 
formulations in response to internal or external initiatives. In 
addition, both the nonprofit agency and the Federal agency which has 
commissioned the risk assessment study confirmed that the nonprofit 
agency's Qualified Products List paints are already included in the 
study. Consequently, the Committee has concluded that adding the paints 
to the JWOD Program will not compromise the study's results.
    Two of the three commenting paint firms argued that tree marking 
paints should not be added to the Committee's Procurement List because 
they are not commodities and, thus, the Committee has no authority over 
them. The firms argue that the paints are very complex and time-
consuming to produce, while a commodity is a commonly available item.
    The word ``commodity,'' as used in the JWOD Act, is a generic term 
for a product. Nonprofit agencies are currently producing many highly 
complex items for the Government under the JWOD Program. Some of these, 
like the tree marking paints, are Qualified Products List items. The 
Committee finds no basis in its legislation or past practice that would 
lend credibility to the contention that tree marking paints are not 
commodities within the meaning of the Act.
    Several commenters, including all three paint firms, contended that 
the nonprofit agency would not be able to supply the paints at fair 
market prices as required by the JWOD Act. One cited the agency's 
inability to win the contract through the competitive bidding pro- cess 
as evidence of its position. The nonprofit agency has been advised of 
the fair market prices as calculated from the most recent set of bids 
on the basis of the Committee's fair market pricing procedures. The 
nonprofit agency has indicated through its central nonprofit agency 
that it is willing to supply the paints using those prices as the base 
prices for the paints, in accordance with the Committee's fair market 
pricing system.
    Comments were also received regarding concerns about the adverse 
impact of adding the tree marking paints to the Procurement List on the 
economies of areas in which two of the three paint firms have 
production facilities. The Committee believes that any potential impact 
on these areas' economies is outweighed by the creation of employment 
for people who are blind, whose national unemployment rate 
substantially exceeds that of people who are not blind or do not have 
severe disabilities.
    One of the paint firms commented that the nonprofit agency is not a 
manufacturer or regular dealer under the Walsh-Healey Public Contracts 
Act, and thus should not be permitted to supply the paints under the 
JWOD Program. The manufacturer/regular dealer requirement was repealed 
by section 7201 of the Federal Acquisition Streamlining Act of 1994, 
Public Law 103-455.
    One Federal agency representative commented that, contrary to the 
Committee's finding in its notice announcing the proposed addition, 
placing the paints on the Procurement List would result in additional 
reporting by the Federal Government. However, the Committee's finding, 
as required by the Regulatory Flexibility Act, applied to additional 
reporting requirements on small entities, not on the Federal 
Government. This same commenter challenged the Committee's statement in 
its proposal notice that there are no known regulatory alternatives 
which would accomplish the JWOD Act objectives in connection with the 
tree marking paints. Since the commenter suggested no such alternatives 
and did not explain his conclusion, the Committee has no basis on which 
to determine that some other alternative exists.
    As a result of changes in the nonprofit agency's supply approach 
following the comment period, representatives of the three commenting 
paint firms and their trade association appeared before several 
Committee members and staff prior to the preparation of a decision 
package. At that meeting, they identified potential obstacles to 
supplying the nonprofit agency with paints or concentrates. Problems 
cited included liability risks for the paint firms since they could not 
control the nonprofit agency's treatment of their paints during the 
packaging and distribution process, the complex nature of the paints, 
and the possibility that the approach proposed might result in flawed 
paints because they would have to be handled by a second entity prior 
to reaching the customer.
    One paint company representative questioned the ability of the 
nonprofit agency to schedule shipments from the paint companies and to 
the customer in a way that was consistent with the paints' shelf-life 
requirements. Another representative expressed doubt that her firm 
could compete with a paint or concentrate supplier located in the same 
town as the nonprofit agency. All requested additional time to explore 
the problems and opportunities associated with supplying the paints or 
concentrates to the nonprofit agency.
    The Committee recognizes that the approach to be used by the 
nonprofit agency differs from that currently being employed by the 
paint companies, but is not persuaded by the evidence presented that 
the obstacles cited by the paint companies and their association are 
insurmountable. The Committee notes that working out liability 
responsibilities with suppliers is a normal business process and that 
at least two of the four firms identified as potential suppliers of the 
paints or concentrates have not raised the liability issue as a 
concern. Moreover, the nonprofit agency has indicated that the 
application of routine testing procedures would identify responsibility 
for any problems with the paints, thus eliminating the paint 
manufacturers' concerns that they would be held liable for mistakes 
made by others. The Committee believes that these same testing 
procedures will assure that the products received by Government 
customers meet Federal specifications.
    With respect to potential shelf-life problems, the Committee 
believes that the nonprofit agency's record with other products with 
shelf-lives, including paints and a first aid kit containing several 
medical items, demonstrates that the agency's quality control expertise 
is sufficient to prevent the shipment of paints without adequate shelf-
lives. The Committee does not believe the objection of one paint 
company to competing with a supplier in the nonprofit agency's city is 
a sufficent reason for rejecting the proposed addition to the 
Procurement List. Location advantages and disadvantages are present in 
all open market competition, and other factors often outweigh 
disadvantages associated with transportation costs. In this respect, 
the Committee notes that although the other two firms have similar 
location disadvantages, neither has raised this as an obstacle.
    At the end of the appearance, the Committee gave the paint 
companies and trade association an opportunity to submit written 
versions of their presentations, which they decided against doing. The 
Government agency which buys the paints needs to procure them 
immediately. In the absence of evidence that the Committee's proposed 
approach would cause insurmountable problems in producing the paint, 
the Committee has decided that no further delay in adding the paints to 
the Procurement List is acceptable.
    After consideration of the material presented to it concerning 
capability of qualified nonprofit agencies to provide the commodities, 
fair market price, and impact of the addition on the current or most 
recent contractors, the Committee has determined that the commodities 
listed below are suitable for procurement by the Federal Government 
under 41 U.S.C. 46-48c and 41 CFR 51-2.4.
    I certify that the following action will not have a significant 
impact on a substantial number of small entities. The major factors 
considered for this certification were:
    1. The action will not result in any additional reporting, 
recordkeeping or other compliance requirements for small entities other 
than the small organizations that will furnish the commodities to the 
Government.
    2. The action will not have a severe economic impact on current 
contractors for the commodities.
    3. The action will result in authorizing small entities to furnish 
the commodities to the Government.
    4. There are no known regulatory alternatives which would 
accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 46-
48c) in connection with the commodities proposed for addition to the 
Procurement List.
    Accordingly, the following commodities are hereby added to the 
Procurement List:

Tree Marking Paint and Tracer Element

8010-01-273-3769
8010-01-273-3768
8010-01-273-3767
8010-01-273-3766
8010-01-274-2569
8010-01-274-2568
8010-01-274-2564
8010-01-380-1779
8010-01-380-1770
8010-01-380-1706
8010-01-380-1710
8010-01-380-1777
8010-01-380-1781
8010-01-380-1708
8010-01-273-3765
8010-01-273-3764
8010-01-273-3763
8010-01-273-8705
8010-01-274-2567
8010-01-274-7795
8010-01-274-2563
8010-01-380-1732
8010-01-380-1700
8010-01-380-1727
8010-01-380-1756
8010-01-380-1702
8010-01-380-1745
8010-01-380-1735
8010-01-274-2574
8010-01-274-2573
8010-01-274-2572
8010-01-274-2571
8010-01-274-2566
8010-01-274-2565
8010-01-274-2562
8010-01-380-1766
8010-01-380-1755
8010-01-380-1769
8010-01-380-1763
8010-01-380-1739
8010-01-380-1757
8010-01-380-1753
8010-01-274-2561
8010-01-274-2560
8010-01-273-9348
8010-01-273-9347
8010-01-273-9345
8010-01-273-9344
8010-01-273-9343
8010-01-295-2896

    This action does not affect current contracts awarded prior to the 
effective date of this addition or options exercised under those 
contracts.
Beverly L. Milkman,
Executive Director.
[FR Doc. 94-30973 Filed 12-15-94; 8:45 am]
BILLING CODE 6820-33-P