Coalition for Government Procurement v. Federal Prison Industries, Inc.

*The Honorable Peter C. Economus, United States District Judge for
the Northern District of Ohio, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0101P (6th Cir.)
File Name: 04a0101p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
COALITION FOR GOVERNMENT
PROCUREMENT, et al.,
Plaintiffs-Appellants,
v.
FEDERAL PRISON INDUSTRIES,
INC., et al.,
Defendants-Appellees.
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No. 01-2231
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 99-00919—Robert Holmes Bell, Chief District Judge.
Argued: February 6, 2003
Decided and Filed: April 12, 2004
Before: GILMAN and GIBBONS, Circuit Judges;
ECONOMUS, District Judge.*
2 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
_________________
COUNSEL
ARGUED: Stephen M. Ryan, MANATT, PHELPS &
PHILLIPS, Washington, D.C., for Appellants. Charles R.
Gross, UNITED STATES ATTORNEY, Grand Rapids,
Michigan, for Appellees. ON BRIEF: Stephen M. Ryan,
Michael T. Brown, MANATT, PHELPS & PHILLIPS,
Washington, D.C., for Appellants. Charles R. Gross,
UNITED STATES ATTORNEY, Grand Rapids, Michigan,
for Appellees. David T. Ralston, Jr., HOPKINS & SUTTER,
Washington, D.C., Philip A. Nacke, FOLEY & LARDNER,
Washington, D.C., for Amicus Curiae.
ECONOMUS, D. J., delivered the opinion of the court, in
which GILMAN, J., joined. GIBBONS, J., concurred in the
judgment only.
_________________
OPINION
_________________
PETER C. ECONOMUS, District Judge.
I. OVERVIEW
This appeal draws the court into the longstanding conflict
between the government’s policy of employing federal
inmates in the manufacture of goods and the challenges faced
by the private industries compelled to compete with inmate-
produced wares. Nearly seven decades ago, the United States
Supreme Court addressed the “evil” posed by “the sale of
convict-made goods in competition with the products of free
labor,” and opined, “[F]ree labor, properly compensated,
cannot compete successfully with the enforced and unpaid or
underpaid convict labor of the prison.” Whitfield v. Ohio, 297

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No. 01-2231 Coalition for Gov’t Procurement, et al.
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3
1Herman Miller, Inc. (“Herman Miller”), Haworth, Inc. (“Haworth”),
and Knoll, Inc. (“Knoll”). For ease of reference, the term “Coalition” as
used throughout this Opinion shall refer collectively to CGP and the
individual app ellants-plaintiffs.
2“UNICOR” is the commercial or “trade” name of Federal Prison
Industries, Inc. See 29 C .F.R. § 345 .11(a) (20 03).
U.S. 431, 439 (1936). Since Whitfield, the debate over the
use of inmate labor largely has been reserved for the
policymakers operating in the other branches of government.
The role of the courts has been limited to examining whether
the terms and conditions of inmate employment comply with
constitutional and statutory standards. See generally Hope v.
Pelzer, 536 U.S. 730 (2002) (examining liability of prison
officials pursuant to 42 U.S.C. § 1983 where said officials
disciplined an inmate for refusal to work on a “chain-gang”);
Richardson v. McKnight, 521 U.S. 399, 405-06 (1999)
(acknowledging that privately-operated prisons may be held
liable for injuries suffered by inmates employed on “chain
gangs” and “work-farms”). This appeal requires, however,
that the court re-enter the conflict and examine whether the
agency charged by Congress to manage inmate labor --
Federal Prison Industries, Inc. – has acted within its
administrative authority.
Specifically, the appellants-plaintiffs, the Coalition for
Government Procurement (“CGP”) – a non-profit trade
association representing manufacturers of office furniture --
and several CGP members,1 appeal the district court’s award
of summary judgment in favor of Federal Prison Industries,
Inc. (“FPI” or “UNICOR”),2 and its Board of Directors (the
“Board”), in this action brought pursuant to UNICOR’s
organic statute, 18 U.S.C. §§ 4121-4129 (2003), the judicial
review provisions of the Administrative Procedures Act
(“APA”), 5 U.S.C. §§ 701-706, and the Just Compensation
Clause of the Fifth Amendment to the United States
4 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
3The district court also awarded summary judgme nt to the appellees-
defendants, Steve B. Schwalb (“Schwalb”), and the United States
Attorney General. Schw alb is U NIC OR ’s Assistant Director and Chief
Operating Officer charged with supervising UNICO R’s day-to-day
operations. The Co alition brought suit against Schwalb in his official
capacity. It is well-settled that “[a] suit against a public employee in his
or her official capacity is a suit against the agency itself.” Mitchell v.
Chapman, 343 F.3d 811, 822 (6th Cir. 2003). Accordingly, the
Coalition’s claims against Schwalb are actually claims against UNICOR.
Similarly, the Coalition’s official-capacity claims asserted against the
Attorney G eneral are claims against the United States.
4All references to the term “section” are to that of title 18 of the
United States Code, unless otherwise noted.
Constitution, U.S. CONST. amend. V.3 The Coalition asserts
that UNICOR violated the foregoing provisions from 1991-
1995 when it significantly expanded its production of office
furniture without initiating the public notice and comment
procedures required by section4 4122. The Coalition further
asserts that the Board violated the organic statute and the
APA when it authorized UNICOR’s 1995-1996 requests to
significantly expand production of office furniture. Finally,
the Coalition contends that UNICOR’s direct dealings with
private manufacturers and purchasers of office furniture
violate the organic statute and the APA.
As the issues raised in this appeal are matters of first
impression among the courts of appeals, we begin our
analysis with an extensive examination of the statutory and
regulatory framework governing UNICOR’s operations. We
thereafter address the specific assignments of error.

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No. 01-2231 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
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5Stephen P. G arvey, Freeing Prisoners’ Labor, 50 STAN. L. REV.
339, 342 (199 8). Prof. Garvey’s article presents an insightful analysis of
inmate labor.
6See id. at 340-70.
7See id.
8State operated inmate-labor programs generally fell within four
classifications -- lease, contract, piece-price, and state-use. See gen erally
TH E OX F OR D HISTORY OF THE PR IS O N: THE PRACTICE OF PU N IS H M E N T IN
W ESTERN SOCIETY (Norval Morris et al. eds., 1997 ); DA V ID J. ROTHMAN ,
TH E DIS C O VE R Y O F T H E AS Y LU M 82-85 (1971). The lease system placed
inmates under the control of private-sector enterprises that compensated
the state for the prisoners’ services. Id. Under the contract-system, the
private-sector contracted with the state for labor on a d aily basis, provided
II. BACKGROUND
A. The Historical Underpinnings of UNICOR’s
Organic Statute
In the words of one leading scholar, “The history of the
prison is in large measure a history of prison labor.”5 While
the issues underlying the instant appeal are steeped in this
lengthy history, we narrow our focus to the historical events
giving rise to UNICOR.
1. Early Congressional Responses to Inmate-
Labor Programs
The emergence of the penitentiary system at the end of the
eighteenth century resulted in the states taking custody of
large and restless inmate populations whose ward placed
considerable pressures on state treasuries.6 The states
responded with efforts designed to reduce “idle hands” among
the inmates while promoting the self-sufficiency of the
penitentiary.7 Central to these efforts were inmate-labor
programs.8
6 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
the prison with materials and supervisors, and ultimately distributed the
finished product. Id. However, the state retained control and custody of
inmate laborers. Id. The piece-price system was a hybrid of the contract
system, in that employers paid a stipulated price for each finished good
rather than paying daily wages. Id. The fourth -- the state-use system --
enabled the state to contro l the manufacture of products that, in turn, were
purchased by governm ent agencies. Id.
9The Hawes-Cooper Act, ch. 79, 45 Stat. 1084, divested inmate-
manufactured goods of their interstate character thereby subjecting such
goods to strict state regulatio n. See Hawes-Coop er Act, ch. 79, 45 Stat.
1084 (1929). The Ashurst-Sumners Act, ch. 412, 49 Stat. 494, enacted by
Congress in 1935, made it a federal crime to knowingly transport inmate-
manufactured goods into a state that prohibited their sale. See Ashurst-
Sumners Act, ch. 412, 49 Stat. 494 (1935 ). Congress passed the Walsh-
Healey Act, ch. 881, 49 Stat. 2036, in 1937 , that prevented the contracting
out of inmate labor for use in federal government contracts. See W alsh-
Healey Act, ch. 881, § 1(d), 49 Stat. 2036, 2037 (1937) (codified as
amended at 41 U.S.C. §§ 35-45 ). Furthermore , Congress amended the
Ashurst-Sumners Act in 1940 to federally pro scribe the interstate
transportation and sale of inmate-made goods irrespective of state law.
See Act of Oct. 14, 1940, ch. 872, 54 Stat. 1132 (codified as amended at
18 U.S.C. §§ 1761-17 62).
As the use of inmate-labor increased throughout the
nineteenth and early-twentieth centuries, so too did the cries
from the private enterprises, trade associations and labor
unions that viewed such programs as threats to free markets
and employment. State legislatures responded by enacting
measures limiting the scope of inmate-manufactured products.
See, e.g., Whitfield, 297 U.S. at 435-440 (examining an Ohio
statute barring the sale of inmate goods manufactured outside
of the state of Ohio). Similarly, Congress enacted a series of
measures designed to curtail the interstate sale of inmate-
produced goods.9
Notwithstanding the apparent hostility exhibited by the
federal government to the states’ use of inmate labor,
Congress promoted inmate-labor programs within the federal

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penitentiary system. For instance, Congress authorized the
Attorney General in 1918
to establish, equip, maintain, and operate at the United
States Penitentiary in Atlanta, Georgia, a factory or
factories for the manufacture of cotton fabrics to supply
the requirements of the War and Navy Departments, the
Shipping Corporation, cotton duck suitable for tents and
other army purposes and canvas for mail sacks and for
the manufacture of mail sacks and other similar mail-
carrying equipment for the use of the United States
Government.
Act of July 10, 1918, ch. 144, § 1, 40 Stat. 896, 896.
Similarly, Congress authorized a factory to be constructed at
the Leavenworth, Kansas federal penitentiary for the
“manufacture of shoes, brooms, and brushes.” Act of April 3,
1924, ch. 81, 43 Stat. 33, 44-45.
Congress thereafter expanded the use of inmate labor to all
federal penitentiaries. See Act of May 27, 1930, ch. 340 §1,
46 Stat. 391, 391 (hereinafter the “1930 Act”) (“[T]he
Attorney General shall provide employment for all physically
fit inmates in the United States penal and correctional
institutions.”). Congress expressly authorized the use of
inmate labor in two areas. First, the Attorney General was “to
make available the services of United States prisoners” for
use by federal agencies and departments in the “construction
or repairing roads . . . ; clearing, maintaining, and reforesting
public lands; building levees; and for constructing or
repairing any public ways or works.” Act of May 27, 1930,
ch. 340 § 2, 46 Stat. at 391. Secondly, the Attorney General
was “to establish such industries as w[ould] produce articles
and commodities for consumption in the United States penal
and correctional institutions or for sale to the departments and
independent establishments of the Federal Government.” Act
of May 27, 1930, ch. 340 § 3, 46 Stat. at 391. The 1930 Act
also created a limited market for inmate-produced wares
8 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
10The President was “to transfer to [UNICOR] the duty of
determining in what manner and to what extent industrial operations shall
be carried on in the Federal penal and correctional institutions,” as well
as to transfer “any part or all of the other powers or duties [then] vested
in the Attorney General” relating to inmate labor. Act of June 23, 1934,
ch. 73 6 § 3 , 48 Stat. at 1211.
providing that, “The several Federal departments and
independent establishments and all other Government
institutions of the United States shall purchase at not to
exceed current market prices, such products of the industries
herein authorized to be carried on their requirements and as
may be available.” Act of May 27, 1930, ch. 340 § 7, 46 Stat.
at 392.
Congress did not, however, authorize the unfettered use of
inmate labor. It directed the Attorney General to establish
only those industries “as [would] give the inmates a
maximum opportunity to acquire a knowledge and skill in
trades and occupations which w[ould] provide them with a
means of earning a livelihood upon release.” Act of May 27,
1930, ch. 340 § 7, 46 Stat. at 392. Similarly, while the 1930
Act “provide[d] employment for all physically fit inmates,”
it did so only in such “diversified forms as [would] reduce to
a minimum competition with private industry or free labor.”
Act of May 27, 1930, ch. 340 § 1, 46 Stat. at 391. Moreover,
Congress explicitly directed that inmate-manufactured
products were “not for sale to the public in competition with
private enterprise.” Act of May 27, 1930, ch. 340 § 3, 46
Stat. at 391.
2. The Creation of UNICOR
Four years later, Congress charged the President “to create
a body corporate of the District of Columbia to be known as
‘Federal Prison Industries.’” Act of June 23, 1934, ch. 736
§ 1, 48 Stat. 1211, 1211 (hereinafter the “1934 legislation”).10
The 1934 legislation otherwise mirrored the 1930 Act with

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v. Federal Prison Industries, Inc., et al.
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11Section 744 of the 1940 ed ition of the United States Code was the
first codification of the Executive O rder. See 18 U.S.C. § 744 (1940). See
also Garza v. Miller, 688 F.2d 480 , 485 (7th Cir. 198 2).
one significant addition: the creation of a board of directors
(the “board”). Congress directed the President to appoint a
five-member board of directors, with industry, labor,
agriculture, retailers / consumers, and the Attorney General
each represented by one member. See Act of June 23, 1934,
ch. 736 § 2, 48 Stat. at 1211. While Congress vested
UNICOR with broad discretion to manage inmate-operations,
it empowered the board with the authority to balance such
operations with the need to protect private industries. See Act
of June 23, 1934, ch. 736 § 3, 48 Stat. at 1211 (“It shall be the
duty of the board of directors to 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.”).
On December 11, 1934, President Franklin D. Roosevelt
issued Executive Order 6917 (the “Executive Order”), see
(J.A. 983),11 creating UNICOR and appointing the board.
The Executive Order expressly provided:
[UNICOR] shall have power to determine in what
manner and to what extent industrial operations shall be
carried on in the several penal and correctional
institutions of the United States and shall, so far as
practicable, so diversify prison industrial operations that
no single private industry shall be forced to bear an
undue burden of competition with the products of prison
workshops. It shall also have power to do all things it is
authorized to do by said Act of June 23, 1934, and all
things incident to or necessary or proper in the exercise
of its functions.
10 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
12The Eightieth Congress’s 1948 revision of the federal criminal
code is the statutory forerunner o f UN ICO R’s organic statute. See Act of
June 25, 1 948 , Pub . L. No . 80-722, 6 2 Stat. at 851 .
13Congress expanded the board in 1948 to include a representative
from the Secretary of Defense. See Act of June 29, 1948, Pub. Law. No.
821 , § 3, 62 Stat. 110 0, 11 00.
Exec. Order No. 6917 ¶ 3. It further provided, “The heads of
the several executive departments, independent
establishments and Government owned and Government
controlled corporations shall cooperate with [UNICOR] in
carrying out its duties and shall purchase, at not to exceed
current market prices, the products or services of [UNICOR],
to the extent required by law.” Exec. Order No. 6917 ¶ 9.
B. UNICOR’s Organic Statute
1. 18 U.S.C. §§ 4121-4129
Congress incorporated the provisions of the 1930 Act, the
1934 legislation and the Executive Order as part of the
enactment of Title 18 of the United States Code.12 See Act of
June 25, 1948, Pub. L. No. 80-722, 62 Stat. 683, 851. With
limited exception, the current version of UNICOR’s organic
statute maintains its historical underpinnings.
Title 18 of the United States Code, section 4121,
establishes UNICOR as a “government corporation of the
District of Columbia . . . administered by a Board of six
directors, appointed by the President to serve at the will of the
President without compensation.13 18 U.S.C. § 4121 (2003).

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No. 01-2231 Coalition for Gov’t Procurement, et al.
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14Congress did not divide the 194 8 version of section 412 2 into
subse ctions. With minor modification, the current versions o f section
4122 (a) and (b)(1) are identical to the 194 8 version of 412 2. Com pare
Act of June 25, 1948, Pub. L. No. 80-722, 62 Stat. at 851 with 18 U.S.C.
§ 4122 (a), (b)(1). Subsections (c), (d) and (e) to the current version of
section 4122 were enacted as part of the 194 8-19 49 amendme nts
address ing inmates held by the Department of Defense and the
Commissioner of the District of Co lumbia. See Act of June 29, 1948, ch.
719 §§ 1 -2, 62 Stat. 1100, 11 00; A ct of M ay 11, 194 8, ch. 2 76, 6 2 Stat.
230. These subsections are immaterial to our analysis. The remaining
subsections found in the current version of 4122 are discussed infra.
Section 4122 (a)14 vests UNICOR with broad discretion to
manage inmate operations, providing, in pertinent part:
[UNICOR] 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.
18 U.S.C. § 4122 (a).
Section 4122(b)(1) delineates the duties of the board.
Similar to the 1934 legislation, this subsection provides:
Its board of directors shall provide employment for the
greatest number of those inmates in the United States
penal and correctional institutions who are eligible to
work as is reasonably possible, 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.
12 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
15During the 19 88 amendme nt process discussed infra, Congress
amended the earlier statute’s reference from “all physically fit inmates,”
to “the greatest number of those inmates . . . who are eligible to work as
is reasonably possible.” Com pare Act of June 25, 1948, Pub. L. No. 80-
722, 62 Stat. at 851 with 18 U .S.C. § 412 2 (b)(1).
16As with section 412 2, Congress did not divide the 1948 version of
section 412 4 into subsections. W ith minor modification, the current
versions of section 4124 (a) and (b) are identical to the former 4124.
Com pare Act of June 25, 1948, Pub. L. No. 80-722, 62 Stat. at 851 with
18 U.S.C. § 4124 (a), (b). Added in 1990, subsection (c) of the current
section 4124 prescrib es the manner in which Fede ral agencies and
dep artments must report purchases of UN ICO R’s prod ucts, see 18 U.S.C.
§ 4124 (c), while subsection (d) requires UNICOR to publish a catalog of
its prod ucts, see 18 U.S.C. § 41 24 (d).
18 U.S.C. § 4122 (b)(1).15
Section 4123 of the organic statute mirrors the 1930 Act in
that only those “forms of employment shall be provided as
will give inmates . . . a maximum opportunity to acquire a
knowledge and skill in trades and occupations which will
provide them with a means of earning a livelihood upon
release.” 18 U.S.C. § 4123. The section further limits
UNICOR’s operations so as to “not curtail the production of
any existing arsenal naval yard or other Government
workshop.” 18 U.S.C. § 4123.
Section 4124 (a)16 enshrines the mandatory obligation of
federal agencies and departments to purchase, “at not to
exceed current market prices, such products [manufactured by
UNICOR] as meet their requirements and may be available.”
18 U.S.C. § 4124 (a). Subsection (b) creates a dispute
resolution process whereby any “[d]isputes as to the price
quality, character, or suitability of [UNICOR] products shall
be arbitrated by a board consisting of the Attorney General,
the Administrator of General Services, and the President, or

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17The 194 8 version of section 412 4 provided that the dispute
resolution board was to be comprised of the “Comptroller General of the
United States, the Director of the Bureau of Federal Supply, Department
of Treasury, and the Director of the Bureau of the B udge t, or their
representatives.” See Act of June 25, 1948, Pub. L. No. 80-7 22, 6 2 Stat.
at 851. The section has been amended over the years to account for
changes within federal dep artments and agencies.
their representatives.”17 18 U.S.C. § 4124 (b). The decisions
of the dispute resolution board are “final and binding on all
parties.” Id.
The current version of Section 4125, as in the 1930 Act,
empowers the Attorney General
to make available to the heads of the several departments,
the services of United States prisoners under terms,
conditions, and rates mutually agreed upon, for
construction or repairing roads, clearing, maintaining,
and reforesting public lands; building levees, and
constructing or repairing any public ways or works
financed wholly or in major part by funds appropriated
by Congress.
18 U.S.C. § 4125 (a).
The remaining provisions of the organic statute address
UNICOR’s financial and reporting requirements. Section
4126 requires UNICOR to place “monies” generated by its
operations into the Treasury of the United States, see 18
U.S.C. § 4126 (a), and establishes accounting procedures
relating to UNICOR’s operations, see 18 U.S.C. § 4126 (b)-
(f). Section 4127 requires the board to submit an annual
report to Congress detailing UNICOR’s operations.
14 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
18See AL FR E D BL UM S T EIN & AL LE N J. BECK, PO P U LA T IO N GROWTH
IN U.S. PR IS O N S, 1980-1996, 26 PR IS O N S: CR IM E A N D JUSTICE – A REVIEW
OF RE S EA R C H 17 (199 9).
2. The 1988 Amendments and the
Comprehensive Advanced Review Process
(“CARP”)
Guided by its organic statute, UNICOR operated for
decades below the legislative radar. The 1980's witnessed,
however, a dramatic rise in the number of inmates confined
to federal institutions.18 UNICOR therefore expanded its
operations in order to provide employment “for the greatest
number of those inmates . . . who [were] eligible to work as
[] reasonably possible.” 18 U.S.C. § 4122(b)(1). Echoing the
cries of a century earlier, this increased utilization of inmate
labor drew calls from private industries seeking to curtail
UNICOR’s operations.
Congress responded in 1988 by passing a series of
amendments to UNICOR’s organic statute. See Anti-Drug
Abuse Act of 1988, 100 Pub. L. No. 690, §§ 7093- 7096, 102
Stat. 4181, 4411-14. Pertinent to the instant appeal, the
amendments to section 4122 mandated that UNICOR
“conduct its operations so as to produce products on an
economic basis, but avoid capturing more than a reasonable
share of the market among Federal departments, agencies, and
institutions for any specific product.” See Anti-Drug Abuse
Act of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4413
(codified at 18 U.S.C. § 4122(b)(2)). Additionally, the
amended section 4122 directed UNICOR to “concentrate on
providing to the Federal Government only those products
which permit employment of the greatest number of those
inmates who are eligible to work as is reasonably possible.”
Id. Furthermore, Congress instructed UNICOR to “diversify
its products so that its sales are distributed among its
industries as broadly as possible.” See Anti-Drug Abuse Act

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19W e limit our analysis to the provisions o f the organic statute
pertaining to “significant expansion,” as those are the issues raised by the
parties to the instant app eal.
20Congress required that the Comprehensive Impact Study provide,
at the minimum , information regarding:
(i) the number of vendors currently meeting the requirements of
the Federal Governm ent for the product;
(ii) the proportion of the Federal Government market for the
product currently served by sma ll businesses, small
disadvantaged businesses, or businesses operating in labor
surplus areas;
(iii) the size of the Federal Government and non-Federal
Go vernm ent markets for the pro duct;
of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4413
(codified at 18 U.S.C. § 4122(b)(3)).
The most sweeping provisions of the 1988 legislation were
those limiting UNICOR’s discretion to increase production
levels. Congress required that “[a]ny decision by [UNICOR]
to produce a new product or to significantly expand the
production of an existing product be made by the board.” See
Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 690, § 7096,
102 Stat. at 4413 (codified at 18 U.S.C. § 4122(b)(4)).
Congress further required UNICOR and the board to initiate
a notice and comment procedure prior to entering a new
product area or significantly expanding UNICOR’s existing
operations. See Anti-Drug Abuse Act of 1988, 100 Pub. L.
No. 690, § 7096, 102 Stat. at 4414 (codified at 18 U.S.C.
§ 4122(b)(4)-(5)).
Congress’s newly minted notice and comment procedure --
the comprehensive advanced review process (“CARP”)--
required the board to receive and consider a written analysis
prepared by UNICOR detailing any proposed “significant
expansion’s”19 potential impact on the private sector (the
“Comprehensive Impact Study” or “market study”)20. See
16 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
(iv) the pro jected growth in the Federal Government demand for
the product; and
(v) the pro jected ability of the Federal G overnment market to
sustain both Fed eral Prison Ind ustries and private vendors.
See Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 69 0, § 7 096 , 102 Stat.
at 4414 (codified at 18 U.S.C. § 41 22(b)(4)(A)(i)-(v)).
Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 690, § 7096,
102 Stat. at 4414 (codified at 18 U.S.C. § 4122(b)(4)(A)).
The CARP further required UNICOR to publicize the
proposal within the affected sector, provide the
Comprehensive Impact Study to the public, and solicit
comments from the affected sector. See Anti-Drug Abuse Act
of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4414
(codified at 18 U.S.C. § 4122(b)(4)(B)-(D)). Congress also
afforded interested industry representatives with “a reasonable
opportunity” to present comments directly to the board. See
Anti-Drug Abuse Act of 1988, 100 Pub. L. No. 690, § 7096,
102 Stat. at 4414 (codified at 18 U.S.C. § 4122(b)(4)(D)).
The last stage of the CARP directed UNICOR to publicize the
board’s final decision “in a publication designed to most
effectively provide notice to potentially affected private
vendors” of the affected product. See Anti-Drug Abuse Act
of 1988, 100 Pub. L. No. 690, § 7096, 102 Stat. at 4414
(codified at 18 U.S.C. § 4122(b)(5)).
3. The Guidelines
Notwithstanding Congress’s detailed attention to the
CARP, the 1988 amendments did not define the term
“significantly expand.” Therefore, on December 4, 1989,
UNICOR published an interim definition of the term in
Commerce Business Daily (“CBD”). See (J.A., 179-81, 434-
36, 667-669, 1097 ¶ 4, 1484 ¶ 36). Representatives from
private industry -- including CGP -- provided comments
regarding the interim definition. See (J.A., 1008-1024, 1813-
15).

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On January 2, 1991, UNICOR published its final definition
of “significant expansion.” See (J.A., 182-84, 437-38, 670-71,
1097 ¶ 5, 1639 ¶ 36). The final definition established a two-
tiered approach (the “Guidelines”) for identifying whether a
planned increase in production required the initiation of the
CARP. The first tier directed UNICOR to monitor “proposed
production increases . . . as part of [its] annual planning
cycle,” under the two scenarios where a significant expansion
could arise:
1. The specific product will be produced at a new
factory and not offset by a corresponding reduction in
production at another location; or
2. The specific product will be produced at an existing
factory or factories, and will be accompanied by at
least a 10% increase in capacity resulting from
expanding any of the following three inputs of
production: a) Plant size; b) Equipment capacity; c)
Inmate employment.
(J.A., 11-12, 182-84, 437-38, 670-71, 1097 ¶ 6, 1484-85 ¶ 6.)
Where either of the above scenarios occurred, the second
tier of the Guidelines required UNICOR to examine the
federal government market for the specific product and
develop an estimate of FPI’s current and projected market
share. See (J.A.,182-84, 437-38, 670-71, 1098 ¶ 7, 1485 ¶ 7).
The Guidelines required UNICOR to pursue the CARP when
its current market share position exceeded its “allowable
market share” in accordance with the following sliding scale:
UN ICO R’s Current Mrkt. Share Allowable Mrkt. Share Incre ase
0% - Less than 5 % Any increase, provided it
does not cause FPI’s
market share to exceed 5%
18 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
21See BL UM S T EIN & BECK, supra at 17.
5% - Less than 10 % 3%, provided it does not
cause FPI’s market share
to exceed 10%
10% - Less than 15% 2% provided it does not
cause FPI’s market share
to exceed 15%
15% - Less than 20% 1.5% provided it does not
cause FPI’s market share
to exceed 20%
20% - Less than 25% 1% provided it does not
cause FPI’s market share
to exceed 25%
Over 25% Any increase in market
share would be deemed
“significant”
(J.A., 182-84, 437-38, 670-71, 1098 ¶ 8, 1485 ¶ 8.)
C. The Board’s Significant Expansion Decisions
Following the promulgation of the Guidelines, UNICOR
pursued a policy of maintaining a relatively low market share
in new product areas, rather than significantly expanding its
existing operations. See (J.A., 351-52). Federal inmate
populations continued, however, to increase throughout the
early 1990's.21 This increase compelled UNICOR to shift its
policy and request that the appellee-defendant, Board,
authorize several significant expansions. See (J.A., 351-52).

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19
22The three instances were, as follows: (1) when FCI Sheridan began
manufacturing D & Q furniture in 1991; (2) when production increased
between 1991 and 1992; and (3) when production increased in 19 93. See
(J.A., 1334-1339).
1. UNICOR’s Significant Expansion of Dorm &
Quarters Furniture Production
UNICOR first proposed to significantly expand its
production of dorm and quarters furniture (“D & Q furniture”)
from approximately $20 million in annual sales in 1995 to
$35 million in annual sales by the year 2000 (hereinafter the
“D & Q furniture expansion”). See Quarters Furniture Mfrs.
Ass’n v. Federal Prison Indus., No. 95-2237 (D. D.C. Mem.
Opinion filed Aug. 28, 1998) (hereinafter “QFMA”) at 6.
Shortly after presenting the proposal to the Board, UNICOR
discovered several irregularities regarding its past compliance
with the Guidelines. Id. The Board responded by ordering an
internal investigation to determine the extent of these
irregularities. Id.
On January 26, 1996, UNICOR issued a “White Paper”
detailing its historical production of D & Q furniture. See
(J.A., 1330-1341). The White Paper identified three
occasions throughout 1991-1993 where UNICOR was
obliged, but failed, to initiate the CARP.22 UNICOR
explained that its failure to comply with the Guidelines was
the result of the inherent difficulties in monitoring inmate
employment levels, plant size, and equipment capacity, as
well as interpretative difficulties with the definition of
significant expansion. See (J.A., 1339-41). The White Paper
offered two recommendations. First, it advised that, “The
definition of Significant Expansions needs to be reviewed,
with input from the private sector, to make sure it is fair, clear
and practical in its application.” (J.A., 1341.) Secondly,
“[W]hatever factors are chosen as indicators of significant
expansion, mechanisms must be put in place so that necessary
20 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
data . . . is adequately collected.” (J.A., 1341.) With respect
to the second recommendation, the White Paper noted, “Over
the past year, formal direction has been given and a number
of steps have been taken, to correct this deficiency.” (J.A.,
1341.)
On March 8, 1996, the Board partially authorized
UNICOR’s proposed significant expansion of D & Q
furniture. See QFMA, at 6. In its decision, the Board
acknowledged the violations chronicled in the White Paper.
Id. The Board determined, however, that it would have
approved these expansions had UNICOR presented the
proposals in a timely manner. See QFMA, at 7. It further
determined that UNICOR’s then-current market share, the
limited non-federal market for D & Q furniture, and the
industry’s domination by small businesses, required a lesser
expansion than that sought by UNICOR. See QFMA, at 8-9.
Accordingly, the Board approved a significant expansion to
$26 million in annual sales by the year 2000, rather than the
$35 million requested by UNICOR. See QFMA, at 8-9.

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21
23The term “Office Furniture” refers to the class of goods at issue in
this app eal. Included in Office Furniture are three sub-classes of goo ds:
(1) systems furniture; (2) office seating furniture; and (3) office case
good s. Systems furniture are products that typically fit or attach together
to form multiple workstations such as panel systems, desking systems, as
well as filing, storage, and shelving components. See (J.A., 1476 ¶ 1).
Office seating furniture are prod ucts such as office chairs, task chairs,
stools, sofas, and modular seating. See (J.A., 1477 ¶ 2). Office case
goods are products typically associated with an individual user and
include desks, crede nzas, corner unit work surfaces, desk extensions, and
storage units. See (J.A., 1477 ¶ 3).
24UNICOR determined that its systems furniture operations
employed 940 inmates in 199 5. See (J.A., 225). UN ICOR ’s preliminary
projections revealed that the proposed expansion required an additional
810 employees. See (J.A., 225).
25UNICOR proposed to close its system furniture factory at FPC
Duluth and transfer those 10 7 inmate jobs to a newly constructed factory
at FCC Coleman. See (J.A., 225). It estimated that the factory at FCC
Coleman would employ 6 00 inmates. See (J.A., 225).
2. UNICOR’s Significant Expansion of Systems
Furniture Production
UNICOR meanwhile proposed to significantly expand its
production of Office Furniture.23 Specifically, UNICOR
proposed to expand its existing systems furniture production
from $70.5 million in annual sales in 1995 to $150 million in
annual sales by the year 2000 (hereinafter the “Systems
Furniture Expansion”). See (J.A., 203, 1102 ¶ 50).
UNICOR’s initial estimates indicated that the Systems
Furniture Expansion would increase inmate employment by
approximately eighty-six percent.24 See (J.A., 225).
UNICOR further estimated that the proposed expansion
would require the activation of a new systems furniture
factory.25 See (J.A., 225). The market share analysis
indicated that the Systems Furniture Expansion would
increase UNICOR’s federal market share from approximately
22 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
26In preparation for the hearing, UNICOR issued a final version of
the Systems Impact Study in October, 1995 (the “Final Systems Impact
Study”) that, inter alia, incorp orated and addressed the comments
submitted by the private-sector. See (J.A., 287-3 35); see also (J.A., 270-
86).
27BP IA is a trade association representing 175 office furniture
manufacture rs and 625 office furniture dealers. See (J.A., 372).
28BIFMA is a nonprofit trade association consisting of over 250
manufacturers of business, office and institutional furniture and their
supp liers. See (J.A., 583).
fifteen percent in 1995 to approximately twenty-four percent
in 2000. See (J.A., 203). As the Systems Furniture
Expansion triggered each tier of the Guidelines, the Board
initiated the CARP.
UNICOR accordingly prepared a Comprehensive Impact
Study regarding the potential impact of the Systems Furniture
Expansion on the private sector (the “Systems Impact
Study”). See (J.A., 200-49). It placed notice of the Systems
Furniture Expansion in the CBD, see (J.A., 198-99, 1101¶¶
37-39), and mailed notice to various vendors and trade
associations, including Herman Miller, see (J.A., 185-95,
1101 ¶ 38).
UNICOR thereafter provided the Systems Impact Study to
requesting entities and received various comments. See (J.A.,
249-69, 337-40, 1101 ¶¶ 41-42). CGP requested that the
Board hold a public hearing on the proposed significant
expansion.26 See (J.A., 251-69, 336-37).
The Board held a public hearing on December 7, 1995
where representatives from several trade associations – CGP,
the Business Products Industry Association (“BPIA”),27 and
the Business and Institutional Furniture Manufacturer’s
Association (“BIFMA”)28 – presented a coordinated

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opposition to the proposed significant expansion. See (J.A.,
346-419).
On February 6, 1996, the Board authorized the Systems
Furniture Expansion. See (J.A., 420-22). The Board
determined:
FPI has proposed that the corporation increase
production of systems and ADP furniture to $150 million
annually by FY 2000. After analyzing the material
submitted, and reviewing the testimony heard on this
matter, it is the finding of the Board of Directors that a
somewhat reduced expansion is appropriate and would
not result in FPI capturing more than a reasonable share
of the market or constitute an undue burden on the
systems and ADP furniture industry.
(J.A.,420). With regard to its further judgment that “the sales
levels authorized . . . [would] not place an undue burden upon
the systems and ADP furniture industry nor free labor,” (J.A.,
421), the Board emphasized four factors:
(1) The majority of the firms in the industry were “not
heavily involved in the Federal market for systems
and ADP furniture” (J.A., 421.) Indeed, “[f]or most
of the companies listed on the GSA schedules for
systems and ADP furniture, less than 4% of their
total sales [went] to the Federal government.” (J.A.,
421.)
(2) The total domestic market for systems furniture was
large and projected to grow throughout the
expansion thereby offsetting UNICOR’s increased
sales. See (J.A., 421).
(3) The industry was dominated by a small number of
large firms. See (J.A., 421-22).
24 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
29UNICOR determined that its office seating furniture processes
employed 790 inmates in 1995. See (J.A., 496). UNICO R’s preliminary
projections revealed that the proposed expansion required an additional
600 -800 employees. See (J.A., 496).
(4) UNICOR’s alternative methods to address increased
inmate populations (i.e., subcontracting, vertical
integration, recycling, and sales to charitable
organizations) failed to achieve UNICOR’s statutory
mandate to employ the maximum number of
inmates. See (J.A., 422).
The Board authorized annual sales in the amount of $130
million by the year 2000, rather than the $150 million
requested by UNICOR. See (J.A.,420-21). It “encouraged
FPI to pursue partnerships with members of the systems and
ADP furniture industry in the effort to lessen FPI’s impact on
the private sector.” (J.A., 422). The Board explained: “Since
[we have] determined that an FPI sales level less than
requested is appropriate, [we] do[] so with the expectation
that resulting partnerships should be substantial, in order to
absorb significant FPI employment.” (J.A., 422.)
3. UNICOR’s Significant Expansion of Office
Seating Furniture Production and the
Board’s Retroactive Authorization of the
1991-1992 Unauthorized Expansions
UNICOR further proposed to expand office seating
furniture production from $54.4 million in annual sales in
1995 to $110 million in annual sales by 2001 (the “Office
Seating Expansion”). See (J.A., 470). UNICOR’s initial
estimates indicated that the Office Seating Expansion would
increase inmate employment between eighty-five to one
hundred percent.29 See (J.A., 496). UNICOR further
estimated that the proposed expansion would require the

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30 UN ICOR estimated that the Office Seating Expansion required the
activation of factories at FCI Beckley, FCI Edgefield, and FCI Victorville.
See (J.A., 496).
activation of three new office seating furniture factories.30
See (J.A., 496). Pursuant to the Guidelines, UNICOR
conducted a market share analysis indicating that the Office
Seating Expansion would increase UNICOR’s federal market
share from approximately twenty-one percent in 1995 to
approximately thirty-four percent in 2001. See (J.A., 496).
Consequently, the Board initiated the CARP.
UNICOR prepared a Comprehensive Impact Study
regarding the potential impact of the Office Seating
Expansion on the private sector (the “Office Seating Impact
Study”). See (J.A., 467-526). While preparing the Office
Seating Impact Study, UNICOR again discovered that it
failed to comply with the Guidelines, this time in 1991 and
1992. See (J.A., 470, 475-76, 1497 ¶¶ 106-08). Specifically,
inmate employment levels increased more than ten percent in
each year, but UNICOR did not conduct a market share
analysis. UNICOR explained its failure in regard to the 1991
increase:
[A]t the time, FPI focused most of its guidelines [sic]
vigilance and analysis on the opening of new factories,
and did not maintain an accurate tracking of inmates
employed producing office seating. Furthermore, it was
the belief of FPI staff that the corporation’s share of the
Federal market for office furniture was decreasing, due
to a sharp increase in Federal procurements. Thus, the
public involvement guideline process [the CARP] would
not be required since there was no growth in FPI’s
market share.
(J.A., 476.) In support of this explanation, UNICOR attached
to the Office Seating Impact Study a chart from 1990
26 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
31The chart indicated that UNICO R had an estimated 10.06% market
share in 1990 and an expected market share of 8.86% in 199 1. See (J.A.,
514 ).
indicating its expected decline in market share during 1991.31
See (J.A., 514).
With respect to the 1992 increase in inmate employment,
UNICOR conceded that the increase, coupled with its
expected market share of 10.89%, required the initiation of
the CARP. See (J.A., 476). UNICOR repeated the
explanation that it failed to “track the level of inmate
employees for each product.” (J.A., 476.) It reasoned,
however, that “It [was] likely that had an examination of
FPI’s [office] seating production taken place, FPI would have
initiated the guidelines process at this time.” (J.A., 476.)
Therefore, “[i]n light of the fact that FPI failed to initiate the
industry involvement guidelines process in response to its
expansion of production in FY 1992,” (J.A., 477), UNICOR
requested the Board to “[R]atify the Corporation’s expansion
of office seating during that time, taking into consideration
the relevant data for that point in time,” (J.A., 477).
UNICOR then pursued all of the relevant procedures under
the CARP for the purposes of obtaining: (1) the Board’s
ratification of the 1991 and 1992 expansions; and (2) the
Board’s authorization of the proposed Office Seating
Expansion. See (J.A., 439-567, 1107 ¶¶ 91-92). CGP and
Knoll received versions of the Office Seating Impact Study,
see (J.A., 527-28, 531); however, they declined to respond
with any comments. BIFMA, a member of the CGP’s board
of directors, provided extensive written comments, as well as
requested a hearing. See (J.A., 553-54, 561-63, 1108 ¶¶ 98-
99); (App. to Br. of Defs.-Appellees).
In July, 1996, the Board held a public hearing regarding the
Office Seating Expansion. See (J.A., 572-646).

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Representatives from, inter alia, BIFMA, Herman Miller,
Haworth, and Knoll attended the hearing and jointly presented
statements in opposition to the proposed significant
expansion. See (J.A., 572-646, 1108 ¶¶ 101-103).
In September, 1996, the Board issued its decision:
(1) retroactively ratifying the 1991-1992 unauthorized
expansions; and (2) authorizing the proposed Office Seating
Expansion. See (J.A., 654-59). With respect to the
unauthorized expansions, the Board reasoned:
In connection with another earlier instance of
unauthorized expansion, the Board has undertaken a
review of expansion in all FPI product lines since
implementation of the guidelines, being conducted by
independent auditors.
. . . .
The question, now, however, is how to deal with this
situation in the context of office seating. Any analysis
and decision must begin with FPI’s statute, which
provides that FPI should have no unreasonable share of
the market, and should not unduly impact on any single
private industry. Any remedial action will be predicated
on what extent, if any, the statute has been violated in
these two very important aspects.
(J.A., 655.) The Board accordingly examined UNICOR’s
federal market share from1990-1994, as well as the private
sector sales of office seating. The Board concluded, “[B]ased
on market performance since 1991 the industry has not been
adversely affected, and that UNICOR’s market share is
reasonable. The Board therefore approves FPI’s request to
ratify its sales levels achieved, subsequent to and as a result
of is expanded capacity during 1991 and 1992.” (J.A. 656.)
28 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
32UNICOR estimated that the Office Case Goods Exp ansion would
employ an additional 500-750 inmates and require the activation of
factories at Forrest City, AR, a high security prison in the mid -Atlantic
region, as well as at a future site. See (J.A., 703).
Turning to the proposed Office Seating Expansion, the
Board authorized the proposal, resting its decision on four
bases: (1) the federal office seating market was slightly over
$1 billion, rather than the smaller figure advanced by BIFMA;
(2) the federal market was projected to expand during the
pertinent period, thereby minimizing UNICOR’s increased
market share; (3) the domestic office seating market was
expected to expand, thereby increasing sales for the private
sector manufacturers; and (4) UNICOR’s proposed expansion
would not affect private-sector employment as the impact of
UNICOR’s expansion would be dispersed throughout
numerous manufacturers in the industry. See (J.A., 657-58).
4. UNICOR’s Significant Expansion of Office
Case Goods Production
UNICOR also proposed to significantly expand its
production of office case goods from $30.3 million in annual
sales in 1995 to $80 million in annual sales by 2001 (the
“Office Case Goods Expansion”). See (J.A., 681). Similar to
the prior proposed expansions of systems furniture and office
seating, UNICOR projected that the Office Goods Expansion
would result in an approximately fifty percent increase in
inmate employment and require the activation of three new
factories.32 See (J.A., 703). UNICOR further projected that
its market share would increase from approximately thirteen
percent in 1995 to approximately thirty percent in 2001. See
(J.A., 703). Therefore, the Board initiated the CARP.
UNICOR prepared a Comprehensive Impact Study
regarding the potential impact of the Office Case Goods
Expansion on the private sector (the “Office Case Goods

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33The Board indicated that UNICOR estimated the size of the Federal
office ca se goods market at $2 21.3 million, whereas the private industry
estimate projected a market of $169 .4 million. See (J. A., 893).
Impact Study”). See (J.A., 678-722). UNICOR proceeded
with the CARP, and the Coalition submitted comments on the
proposed expansion. See (J.A., 723-94, 1111 ¶¶ 139-40).
The Board held a hearing on October 8, 1996 whereby
BIFMA and others presented statements in opposition to the
Office Case Goods Expansion. See (J. A. 796-890, 1111
¶ 142).
On December 17, 1996, the Board issued its decision
authorizing the Office Case Goods Expansion. See (J.A.,
891-896). The Board rested its decision on the projected
growth of the federal market, as well as the projected growth
in the domestic market for sales of office case goods. The
Board acknowledged, however, the large discrepancy between
UNICOR’s estimate regarding the size of the federal market
and the private-sector’s significantly lower estimate.33 See
(J.A., 893). In an effort to account for the discrepancy, the
Board authorized less than UNICOR’s full expansion request
– authorizing a growth to $70 million by 2001. See (J.A.,
892-93). Additionally, the Board directed UNICOR to
convene an independent panel of experts to review its
methodology for calculating the federal market, and agreed to
consider any request to modify the expansion decision in the
event the panel uncovered errors in UNICOR’s methodology.
See (J.A., 893-96).
30 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
D. Quarters Furniture Mfrs. Ass’n v. Federal Prison
Indus.
Shortly following the Board’s 1996 significant expansions
decisions, the Quarters Furniture Manufacturers’ Association
(“QFMA”) – an industry association comprised of private
manufacturers of D & Q furniture – filed a complaint in the
United States District Court for the District of Columbia
challenging the D & Q furniture significant expansion. See
QFMA, at 1-27. Principally relying on the White Paper,
QFMA alleged that UNICOR and the Board violated the APA
by failing to initiate the CARP from 1992-1995. See QFMA,
at 2. QFMA alternatively alleged that in the event the
Guidelines allowed for such unauthorized expansions, the
Guidelines themselves violated section 4122 and the APA.
Id. QFMA’s complaint requested declaratory relief, as well
as an injunction “prohibiting the defendants from continuing
to violate the statute, and directing [UNICOR] to return to
appropriate levels of production.” Id.
UNICOR conceded that it violated the Guidelines during
1992-1995, but asserted that “[T]he Board’s March 1996
decision [authorizing the significant expansion of D & Q
Furniture] superceded and effectively moot[ed] plaintiff’s
case.” See QFMA, at 10.
The court partially concurred in UNICOR’s contention,
opining that the failure on the part of QFMA to challenge
UNICOR’s current production levels precluded equitable
relief in the form of a “roll-back” of current production. See
QFMA, at 12-13. The court reasoned, however, that
“[W]here the agency wholly fails to comply with its
regulations, and provides no record for its decision, the court
should conclude that the agency acted unlawfully, and should
vacate the decision with a remand to the agency.” QFMA, at
16 (citations omitted). The court then acknowledged that “[I]t
could order the Board to adjust the future levels of FPI’s
production to return to the market that portion of the share

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that the Board decides crossed the line from reasonable to
unreasonable.” QFMA, at 12 (citation omitted). Accordingly,
the court remanded the matter to the Board “with directions
that the Board must illicit [sic] comments with respect to the
increases in FY 1991 to 1995 . . . make specific findings as to
whether FPI obtained more than a reasonable share of the
market . . . and ascertain what percent of the share was
unreasonable.” See QFMA, at 25.
E. The Underlying Action
More than a year later, the Coalition filed the underlying
action challenging UNICOR’s significant expansions in
Office Furniture production. See Coalition for Gov’t
Procurement v. Federal Prison Indus., 154 F. Supp. 2d 1140
(W.D. Mich 2001). The complaint specifically alleged seven
classes of claims. The first class of claims (Counts I-III)
alleged that UNICOR engaged in unauthorized significant
expansions of systems furniture, office seating, and office
case goods throughout 1991-1995 (hereinafter the
“unauthorized significant expansions”) in violation of section
4122 and the APA. The second class (Count IV) alleged that
the Board’s retroactive authorization of the 1991 and 1992
unauthorized expansions in office seating (hereinafter the
“retroactive authorization”) violated the APA and the organic
statute. The third class (Count V) sought relief arising from
the Board’s purported violations of the organic statute and the
APA in authorizing UNICOR’s 1995-1996 requests to
significantly expand its production of systems furniture,
office seating, and office case goods (hereinafter the “1996
significant expansion decisions”). The fourth class (Count
VI) presented a facial challenge to the Guidelines, whereas
the fifth class (Count VII) alleged that UNICOR’s
unauthorized significant expansions in 1991-1995 constituted
a compensable taking in violation of the Fifth Amendment.
The final class of claims challenged two of UNICOR’s
practices with respect to the private sector. The first alleged
that UNICOR’s practice of promoting “pass through”
32 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
34“Pass through” furniture was furniture sold by UNICO R that was
manufactured by non-prisoners. UN ICO R ackno wledged its use of “pass
through” furniture in rare circumstances where it accepted an order and
was unable to meet the federal agency’s delivery requirements because of
“fires, inmate, lockdowns, work stoppages, adverse weather including
fog, tooling problems within an internal facto ry, or as a result of a
customer accelerated due date.” (J.A., 1070.) In such cases, UNICOR
purchased the pro duct from a private sector manufacturer with who m it
had a prior contractual relationship, and then re-sold the product to the
federal agency. See (J.A., 1117 ).
furniture34 violated the APA and organic statute (Count VIII).
The second claim alleged that UNICOR’s practice of selling
Office Furniture directly to private subcontractors employed
on federal projects violated the express prohibition of section
4121, as well as the APA (Count IX).
Following lengthy discovery, the parties filed cross-
motions for summary judgment. By order dated August 8,
2001, the district granted the defendants’ motion in its
entirety, while denying the Coalition’s motion. See 154 F.
Supp. 2d at 1156.
The instant appeal ensued.
III. STANDARD OF REVIEW
This Court reviews the grant of summary judgment de
novo. See Brooks v. American Broadcasting Cos., 932 F.2d
495, 500 (6th Cir. 1991). Summary judgment is proper “if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”
FED. R. CIV. P. 56 (c). When confronted with a properly
supported motion for summary judgment, the nonmoving
party must set forth specific facts showing that there is a
genuine issue for trial. A genuine issue for trial exists “if the

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35Section 70 2 of the APA provides, in pertinent part:
A person suffering legal wrong because of agency action, or
adversely affected or aggrieved by agency action within the
meaning of a relevant statute, is entitled to judicial review
thereof. An action in a court of the United States seeking relief
other than money damages and stating a claim that an agency or
an officer or employee thereof acted or failed to act in an official
capacity or under color of legal authority shall not be dismissed
nor relief therein be denied on the ground that it is against the
United States or that the United States is an ind ispensable party.
5 U.S.C. § 702 .
evidence is such that a reasonable jury could return a verdict
for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
The Coalition advances its claims (with the exception of the
takings claim) pursuant to UNICOR’s organic statute and the
APA. It is well-settled that UNICOR’s organic statute does
not authorize a private right of action. See Galvan v. Fed.
Prison Indus., 199 F.3d 461, 465 (D.C. Cir. 1999) (“Congress
purposefully kept FPI out of the commercial world and
limited its exposure to the courts.”). However, the APA
provides for judicial review of agency action.35 See 5 U.S.C.
§§ 701-706.
When reviewing an administrative agency’s final decision
under the APA, we review the district court’s summary
judgment decision de novo, while reviewing the agency’s
decision under the arbitrary and capricious standard. See
Sierra Club v. Slater, 120 F.3d 623, 632 (6th Cir. 1997)
(citation omitted). Thus, the agency’s decision will be set
aside “only if it is arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with the law.” Slater, 120
F.3d at 632 (citations omitted). Alternatively, when the issue
is whether the agency followed the requisite legal procedure,
our review is limited, but exacting. See Natural Res. Def.
34 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
36The Coalition’s facial challenge to the Guidelines (Count VI) also
shares commo n issues of fact and law with the significant expansion
claims. The district court determined, however, that U NIC OR ’s
promulgation of new guidelines in 1997 effectively mooted Count VI.
See 154 F. Sup p. 2d at 1152. Cf. Product De velopment and Prod uction:
Pub lic Involvement Procedures, 62 FED. REG. 11 46 5 (M ar. 12, 1997).
The Co alition does not appeal this determinatio n.
Council, Inc. v. Sec. & Exch. Comm’n, 606 F.2d 1031, 1045,
1048-49 (D.C. Cir. 1979). While de novo, we tailor our
review to determine whether “statutorily prescribed
procedures have been followed.” Id. at 1045.
IV. THE CLAIMS CHALLENGING THE
U N A U T H O R I Z E D S I G N I F I C A N T
EXPANSIONS, THE 1996 SIGNIFICANT
EXPANSION DECISIONS, AND THE
BOARD’S RETROACTIVE AUTHORIZATION
The Coalition’s first three classes of claims – those
challenging the unauthorized significant expansions, the 1996
significant expansion decisions, and the Board’s retroactive
authorization (hereinafter collectively, the significant
expansion claims) – share common issues of fact and law.36
Accordingly, we initially address these claims in their
entirety.

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37CVA is a non-p rofit trade association incorporated in W ashington,
D.C. that represents over twenty-five vendors who sell products to
UNICOR. More than ha lf of CV A’s me mbe rs provide U NIC OR with
components used in the manufacture of Office Furniture.
A. Jurisdictional and Procedural Challenges
1. Mootness
The defendants, through amicus curiae, Correctional
Vendors Association (“CVA”),37 assert that the significant
expansion claims are moot. We review questions of mootness
de novo. See Craft v. United States, 233 F.3d 358, 373 (6th
Cir. 2000). The heavy burden of demonstrating mootness
rests on the party claiming mootness. See Friends of the
Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.
167, 189 (2000).
Article III of the United States Constitution vests this court
with jurisdiction to address actual cases and controversies.
See U.S. CONST. art. III, § 2. Under the “case or controversy”
requirement, we lack authority to issue a decision that does
not affect the rights of the litigants. See Southwest
Williamson County Cmty. Assoc. v. Slater, 243 F.3d 270, 276
(6th Cir. 2001). Indeed, we have a “continuing obligation” to
enquire whether there is a present controversy as to which
effective relief can be granted. Id. at 276 (citing McPherson
v. Mich. High Sch. Athletic Ass’n, Inc., 119 F.3d 453, 458
(6th Cir.1997)).
“‘The test for mootness is whether the relief sought would,
if granted, make a difference to the legal interests of the
parties.’” Bowman v. Corr. Corp. of Am, 350 F.3d 537, 550
(6th Cir. 2003) (quoting McPherson, 119 F.3d at 458). An
appeal becomes moot if events have taken place during the
pendency of the appeal that make it “impossible for the court
to grant any effectual relief whatever . . . .” Church of
36 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
Scientology of California v. United States, 506 U.S. 9, 12
(1992) (quotation omitted).
Amicus asserts that the significant expansion claims are
moot because UNICOR has completed the challenged activity
-- that is, all of the alleged unlawful increases in production
have occurred and the sales have been consummated.
However, completion of activity is not the hallmark of
mootness. Rather, a case is moot only where no effective
relief for the alleged violation can be given. See McPherson,
119 F.3d at 458.
The mootness question therefore turns on whether this court
can award the Coalition “any effectual relief.” Church of
Scientology, 506 U.S. at 12. Our analysis begins with an
examination of the relief requested.
Amicus construes the relief sought by the Coalition as
follows: (1) a declaration that the defendants violated section
4122 and the APA by repeatedly failing to initiate CARP
during 1991-1995; (2) a declaration that the Board’s 1996
significant expansion decisions violated the organic statute
and the APA; (3) an order rescinding the 1996 significant
expansion decisions; and (4) a declaration that the Board’s
retroactive authorization violated the organic statute and the
APA. See (Br. of Amicus Curiae Correctional Vendors Ass’n
Supporting Appellee and Dismissal at 5-6).
The Coalition’s multiple requests for declaratory relief
warrant caution. We previously have recognized that
declaratory judgment actions often require courts to face the
difficult task of distinguishing “between actual controversies
and attempts to obtain advisory opinions on the basis of
hypothetical controversies.” Kardules v. City of Columbus,
95 F.3d 1335, 1343-44 (6th Cir. 1996) (citation omitted); see
also Brennan v. Rhodes, 423 F.2d 706, 706-07 (6th Cir. 1970)
(stating that the Declaratory Judgment Act, 28 U.S.C.
§§ 2201-2202,“does not broaden the jurisdiction granted to

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the federal courts by the Constitution and statutes enacted
pursuant thereto,” and that, consequently, “there still must be
a case or controversy before a federal court can assume
jurisdiction and reach the merits of a [declaratory judgment
action]”). Thus, the Supreme Court has held that when
considering the potential mootness of a claim for declaratory
relief, “the question is ‘whether the facts alleged, under all the
circumstances, show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory
judgment.’” Super Tire Eng’g Co. v. McCorkle, 416 U.S. 115,
122 (1974) (quoting Maryland Cas. Co. v. Pacific Coal & Oil
Co., 312 U.S. 270, 275 (1941)).
The potential mootness of the claims challenging the
unauthorized significant expansions
At first blush, the Coalition’s request for an order declaring
that UNICOR engaged in unauthorized significant expansions
during 1991-1995 appears to lack the “sufficient immediacy
and reality” necessary to escape the mootness doctrine.
Standing alone, an order from this court declaring that
UNICOR violated the organic statute and, or, the APA nearly
a decade ago, would have little, if any, impact on the current
legal interests of the parties. See City of Los Angeles v.
Lyons, 461 U.S. 95 (1983); cf. Reeve Aleutian Airways, Inc.
v. United States, 889 F.2d 1139, 1142 (D.C. Cir. 1989) (“Past
exposure to illegal conduct fails to establish a present
controversy . . . without a showing of present adverse
effects.”).
A more searching review of the record reveals, however,
that the Coalition has forged the requisite link between
UNICOR’s past practices and the current interests of the
parties. Specifically, the Coalition contends that the Board
predicated the 1996 significant expansion decisions on data
reflecting UNICOR’s purportedly unlawful production from
1991-1995. See (Br. of Pls.-Appellants at 53) (“The 1996
38 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
decisions . . . were arbitrary and capricious for three reasons.
First, the Board failed to consider the fundamental question
of whether FPI’s previously expanded Office Furniture
production complied with its Guidelines and was
appropriate.”); (Br. of Amicus Curiae Correctional Vendors
Ass’n Supporting Appellee and Dismissal at 5) (“Plaintiffs
posit that the earlier purported unauthorized significant
expansions taint these subsequent expansions.”); see also 154
F. Supp. 2d at 1151 (“Plaintiffs also argue that the Board’s
decision on future increases failed to consider whether the
then current production levels during 1996 were even legal.”).
As it is undisputed that the Board has authorized UNICOR’s
current production levels through the 1996 significant
expansion decisions, see (J.A., 1198-1202), and the 1996
decisions, in turn, rest on UNICOR’s allegedly unlawful
production throughout 1991-1995, claims challenging the
unauthorized significant expansions potentially impact
UNICOR’s current production levels. The Coalition
transforms potential into an immediate reality by requesting
this court to issue an order (1)“directing FPI to roll back
production to the levels authorized before the violations
occurred”; (2) “giv[ing] back those sales FPI unlawfully
took”; or (3) “capping FPI’s production at current levels and
requiring FPI’s Board to fully account for the agency’s past
violations before undertaking future expansion proceedings.”
(Reply Br. of Pls.-Appellants at 27.)
The proposed relief sought demonstrates that the Coalition
seeks more than a declaration that UNICOR unlawfully and
significantly expanded from 1991-1995. The Coalition has
argued throughout the litigation that the unauthorized
significant expansions resulted in its loss of $450 million in
sales. See, e.g., (J.A., 28, 1410-11). As a remedy for this
purported loss, the Coalition persistently has sought an order
restoring the lost sales to the current market -- a result the
Coalition terms an “equitable volume sales replacement

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38For example, the complaint requested “injunctive relief to stop FPI
from continuing its violation of the Constitution, the AP A, FP I’s organic
statute, and its own regulations, and directing FPI to return to the
competitive market sales equal to in excess of $450 million, the amount
inapp ropriately taken.” (J.A., 27-2 8.) Similarly, the Coalition requested
in its motion for sum mary judgm ent that the “[c]ourt, at this time, order
FPI to reduce its planned Office Furniture sales volume, from FY 2002
through FY 2004 or any other period the [c]ourt deems reasonable, that
FPI Office Furniture sales in FY 19 90 through FY 1 995 exceed ed the
appropriate FY 1 989 levels.” (J.A., 1474.)
remedy,” see (J.A., 1471).38 While amicus interprets this
requested relief as relating exclusively to the takings claim
discussed infra, the Coalition conclusively has demonstrated
that its “equitable volume sales replacement remedy” pertains
to the unauthorized significant expansion claims.
Having discerned the thrust of the relief requested, we must
now consider whether this court has the authority to award
such relief. It is well-established that federal courts possess
broad discretion to fashion equitable remedies. See United
States v. R.W. Meyer, Inc., 932 F.2d 568, 572-73 (6th Cir.
1991) (observing the “principle of equity that the chancellor
has broad discretion to frame a decree”). It also is established
that we may craft declaratory and injunctive relief designed
to preclude a federal agency from acting in contravention of
its statutory and regulatory authority. See Howard v. Pierce,
738 F.2d 722, 730 (6th Cir. 1984) (holding that the court may
award declaratory and injunctive relief in order to ensure that
the Department of Housing and Urban Development adopted
regulations consistent with its enabling statute). Furthermore,
the court may require an agency to modify its current or
future practices in order to account for past violations of its
statutes or regulations. See Charter Township of Huron,
Michigan v. City of Dearborn, Michigan, 997 F.2d 1168,1175
(acknowledging the court’s authority to issue an injunction
requiring the agency to conduct an environmental assessment
notwithstanding the implementation of the completed action);
40 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
Northwest Envtl. Def. Ctr. v. Gordon, 849 F.2d 1241, 1245
(9th Cir. 1988) (determining that claims asserted against
federal agencies alleging that the agencies unlawfully
authorized the overfishing of coho salmon during the 1986
season were not moot because the court could award
awarding injunctive relief in the form of “higher escapement
provisions and lower quotas in 1989”).
We conclude, therefore, that this court has the broad
discretionary authority to award relief in a manner akin to the
“equitable volume sales replacement remedy” proposed by
the Coalition. We neither must determine at this stage of the
proceedings whether the Coalition ultimately is entitled to
such relief, nor must we define the specific parameters of the
relief. As we repeatedly have stated, the determinative factor
in the mootness inquiry is whether the court possesses the
authority to afford the Coalition any effectual relief. Because
the response to this query is in the affirmative, the Coalition’s
claims challenging the unauthorized significant expansions
present actual cases or controversies.
The potential mootness of the claim challenging the 1996
significant expansion decisions
The Coalition’s claim challenging the 1996 significant
expansion decisions also presents a justiciable case or
controversy. As discussed supra, the production levels
approved by the Board in 1996 are manifested in UNICOR’s
current production levels. It follows a fortiori that in the
event the Board authorized the 1996 significant expansions in
contravention of the organic statute and the APA, any
equitable remedy for these violations necessarily would
impact UNICOR’s current production levels.
Amicus attempts to escape this result by emphasizing that
the Coalition’s complaint did not request the “equitable
volume sales replacement remedy” in regard to the 1996
significant expansion decisions. See (Br. of Amicus Curiae

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39In any even t, the Co alition requested that the district court grant
“any other such relief as necessary to establish a status quo in Federal
Office Furniture sales and ensure that FPI no longer engages in illegal
practices.” (J.A., 1411.)
Correctional Vendors Ass’n Supporting Appellee and
Dismissal at 5). Indeed, the complaint requested: (1) a
declaration that the 1996 significant expansion decisions
violated the organic statute and the APA; and (2) an
injunction rescinding those decisions. Amicus contends that
because the sales authorized by the 1996 significant
expansion have been completed, any proposed recission of
such sales is beyond this court’s authority. See (Br. of
Amicus Curiae Correctional Vendors Ass’n Supporting
Appellee and Dismissal at 17) (“Rescinding already
accomplished expansions and consummated sales is not
feasible.”) (Citation omitted).
While it is beyond cavil that the Coalition initially
requested a recission of the 1996 significant expansion
decisions, the manner of relief requested before the district
court, while relevant, is not determinative in examining
whether the claim is moot on appeal.39 Rather, the
dispositive issue is whether this court possesses the authority
to award any effectual relief. Church of Scientology, 506
U.S. at 12. The foregoing analysis reveals that the court has
the authority to order a “roll-back” or “capping” of
UNICOR’s production. We may draw on this remedy in the
event the Board unlawfully authorized the 1996 significant
expansions that, in turn, impacted UNICOR’s current
production levels. Accordingly, the Coalition’s claim
challenging the 1996 significant expansion presents a
justiciable case or controversy.
42 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
The potential mootness of the claim challenging the
retroactive authorization
Our conclusions as to the justiciable nature of the
unauthorized significant expansion and 1996 significant
expansion claims apply with equal force to the claim
challenging the Board’s retroactive authorization. Simply, in
the event we determine that the Board lacked the authority to
retroactively authorize a significant expansion occurring in
1991-1992, the inescapable conclusion is that UNICOR
engaged in unauthorized significant expansions during those
years. The potential remedy for the Board’s unlawful conduct
would be the “equitable sales volume replacement remedy”
suitable for all other unauthorized significant expansions
during the 1991-1995 period. Therefore, the Coalition’s
claim challenging the retroactive authorization is not moot.
2. Issue Exhaustion
Notwithstanding the existence of justiciable cases or
controversies, the defendants assert that the administrative
waiver doctrine bars judicial review of the unauthorized
significant expansion and the retroactive authorization claims.
The administrative waiver doctrine, commonly referred to as
issue exhaustion, provides that it is inappropriate for courts
reviewing agency decisions to consider arguments not raised
before the administrative agency involved. See United States
v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952)
(“Simple fairness . . . requires as a general rule that courts
should not topple over administrative decisions unless the
administrative body not only has erred but has erred against
objection made at the time appropriate under its practice.”);
see also Michigan Dep’t of Envtl. Quality v. Browner, 230
F.3d 181, 183 n.1 (6th Cir. 2000) (concluding that issues not
raised during the agency’s notice and comment period were
waived for purposes of appellate review); Cellnet
Communications, Inc. v. FCC, 149 F.3d 429, 442 (6th Cir.
1998) (ruling that the plaintiff’s claim for judicial review was

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barred because it had not followed the Environmental
Protection Agency’s administrative review procedures).
Courts decline to consider issues not raised before an agency
because to do otherwise would “deprive the [agency] of an
opportunity to consider the matter, make its ruling, and state
the reasons for its action.” Unemployment Comp. Comm’n v.
Aragon, 329 U.S. 143, 155 (1946).
The district court determined that the Coalition waived the
unauthorized significant expansion and the retroactive
authorization claims because it did not raise these challenges
during the hearings before the Board. The district court
opined:
Procedural objections like those Plaintiffs bring in this
case are precisely the type of issues appropriately raised
before the Board during its comment period, and thus
subject to waiver if not raised.
The Board of FPI provided an opportunity for Plaintiffs
and other interested parties to raise the issue of
procedural violations during three separate meetings of
the Board during 1996. Plaintiffs were not only aware of
the proceedings, but were aware of the issues to be raised
at the hearings, and fully participated in the hearings.
154 F. Supp. 2d at 1147 (citations omitted).
Notably, the district court did not rely on Sims v. Apfel, 530
U.S. 103 (2000), where the Supreme Court set forth the
contours of the issue exhaustion doctrine. The Court
specifically confronted a scenario where the Social Security
Administration (“SSA”) denied the petitioner’s claims for
benefits, and the petitioner sought review before the Social
Security Appeals Council (“Appeals Council”). See Sims,
530 U.S. at 105. The Appeals Council denied review, and the
petitioner filed suit in district court, which rejected all of the
petitioner’s claims. See Sims, 530 U.S. at 105-06. The
44 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
United States Court of Appeals for the Fifth Circuit thereafter
declined to address arguments that the petitioner had not
raised in her request for review by the Appeals Council. See
200 F.3d 229, 230 (5th Cir. 1998). The Supreme Court
reversed, holding that the inquisitorial nature of the Social
Security proceedings precluded the application of an issue
exhaustion requirement. See Sims, 530 U.S. at 112.
In reaching its decision, the Court identified three scenarios
giving rise to issue exhaustion. First, the Court observed that
issue exhaustion requirements are “largely creatures of
statute,” and determined that a party’s failure to comply with
a statutorily-imposed issue exhaustion requirement precluded
the assertion of federal jurisdiction. Sims, 530 U.S. at 107
(citing Woelke & Romero Framing, Inc. v. NLRB, 456 U.S.
645 (1982)). The Court alternatively observed that an
agency’s regulations may impose the issue exhaustion
requirement. See Sims, 530 U.S. at 108. “And when
regulations do so, courts reviewing agency action regularly
ensure against the bypassing of that requirement by refusing
to consider unexhausted issues.” Id.
The Court went on to recognize a third scenario -- a
judicially-imposed issue exhaustion requirement – which it
analogized “to the rule that appellate courts will not consider
arguments not raised before trial courts.” Sims, 530 U.S. at
108-09. The Court reasoned that the degree to which such an
analogy applies depends on whether the particular
administrative proceeding is similar to traditional litigation --
that is, whether the proceeding before the administrative
agency is sufficiently “adversarial,” as opposed to
“inquisitorial.” Sims, 530 U.S. at 109-110 (“[T]he desirability
of a court imposing a requirement of issue exhaustion
depends on the degree to which the analogy to normal
adversarial litigation applies in a particular administrative
proceeding.”) (Citations omitted). Therefore, where no
statutory or regulatory requirement exists, a judicially-
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40The Court unanimously agreed in the aspects of Justice T homas’s
majo rity decision delineating the issue exhaustion doctrine. See Sims, 530
U.S. at 115-16 (Breyer, J., dissenting) (“[The ma jority] points out that the
ordinary waiver rule as applied to administrative agencies ‘is an analogy
to the rule that appellate court will not consider arguments not raised
before trial courts.’ And the plurality argues that the agency proceedings
here at issue, unlike those before trial courts, are not adversarial
proceedings. Although I agree with both propositions, I do not see how
they lead to the plurality’s conclusions.”) (Citations omitted). The Court
reached different conclusions in the application of the d octrine to Social
Security proceedings at issue. Com pare Sims, 530 U.S. at 113
(O’Connor, J., concurring) (“I write separately because, in my view, the
agency’s failure to notify claimants of an issue exhaustion requirement in
this context is a sufficient basis for our decision.”) with 530 U.S. at 118-
19 (Breyer, J., dissenting) (“The Social Security Ad ministratio n says that
it does not apply its waiver rule where the claimant is not represented.
And I ca nnot say it is ‘arbitrary capricious, or an ab use of discretion,’ to
app ly the waiver rule when a claimant was represented before the App eals
Council, as was petitioner, by an attorney.”) (Citations om itted).
extent to which the particular administrative proceeding is
analogous to “normal adversarial litigation.” Sims, 530 U.S.
at 109.
In considering whether the district court properly imposed
an issue exhaustion requirement in the case sub judice, we
initially observe that such a requirement exists in neither
UNICOR’s organic statute nor its regulations. Accordingly,
this court must determine whether the significant expansion
hearings before the Board were sufficiently adversarial as to
warrant the imposition of an issue exhaustion requirement.
While no court has addressed the precise issue at bar, we
observe that the Sims plurality40 found several factors
relevant in determining that the Social Security proceedings
possessed an inquisitorial character. The plurality gave great
weight to the responsibility vested in the Administrative Law
Judge (“ALJ”) and the Appeals Council -- rather than the
claimant -- for investigating the facts and developing
arguments both for and against granting benefits. See Sims,
46 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
41This fact led Justice O’Connor to conclude that the Ap peals
Council discouraged parties from providing reasons and proceeded
without them. See Sims, 530 U.S. at 113-14 (O ’Connor, J., concurring).
530 U.S. at 111 (citing Richardson v. Perales, 402 U.S. 389,
400-01(1971)). The plurality further emphasized that no
representative went before the ALJ on behalf of the Social
Security Commissioner to oppose the claim for benefits, and
there was “no indication that the Commissioner oppose[d]
claimants before the Appeals Council.” Id. The plurality also
noted that the agency’s regulations expressly directed the
Appeals Council to conduct the review process “in an
informal and non-adversarial manner.” Id. (citing 20 C.F.R.
§ 404.900(b)). Indeed, the parties were permitted, but were
not required, to file briefs with the Appeals Council. See
Sims, 530 U.S. at 113-14 (O’Connor, J., concurring) (citing
20 C.F.R. § 404.975). The form on which the claimant
requested review of her case provided only three lines for the
claimant to state the details of her request for review. See
Sims, 530 U.S. at 112 (citing 20 C.F.R. § 422.205(a)). An
accompanying notice stated that the form should only take ten
minutes for the claimant to complete.41 Id. Finally, the
Appeals Council possessed the authority to review any new
material evidence outside of the record promulgated by the
parties, and its plenary power vested it with authority to
review cases without the applicant’s approval. See Sims, 530
U.S. at 111 (citing 20 C.F.R. § 404.976(a)). The co-existence
of the foregoing factors – the broad investigatory authority
vested to the decision-maker, the unilateral nature of the
proceedings, and the express informality of the administrative
process -- led the plurality to conclude that “[T]he general
rule of issue exhaustion makes little sense in this particular
context.” See Sims, 530 U.S. at 112 (quotation and citation
omitted).
In contrast, this court has identified, albeit in a different
context, the relevant factors when considering whether a

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42The “Notice to Appear” provided notice to the non-citizen of the
charges asserted and was served in acco rdance w ith applicable rules. See
Detroit Free Press, 303 F.3d at 698 (citatio ns om itted).
proceeding is sufficiently adversarial. In Detroit Free Press
v. Ashcroft, 303 F.3d 681 (6th Cir. 2002), a panel of this court
held that “[a] deportation proceeding, although
administrative, is an adversarial, adjudicative process.”
Detroit Free Press, 303 F.3d at 696. The panel emphasized
that “[c]onsistent with the adversarial nature of judicial
proceedings, a deportation proceeding is commenced with a
‘Notice to Appear,’ a charging document or complaint-like
pleading which vests jurisdiction with the immigration
court.”42 Detroit Free Press, 303 F.3d at 698 (citations
omitted). Additionally, an evidentiary standard governed the
deportation proceedings (i.e., the government was required to
prove its allegations by clear and convincing evidence), and
the agency’s decision was to be predicated on “reasonable,
substantial, and probative evidence.” See Detroit Free Press,
303 F.3d at 698 (citations omitted). Furthermore, all
interested parties had the right to appear and be heard during
the deportation proceedings, and the presiding immigration
judge maintained an impartial role. See Detroit Free Press,
303 F.3d at 698-99 (citations omitted).
Similarly, the United States Court of Appeals for the Fifth
Circuit placed similar emphasis on procedural elements in
determining that proceedings before the Health and Human
Services Departmental Appeals Board (“DAB”) were of a
sufficient adversarial character to require exhaustion of issues.
See Delta Found., Inc. v. United States, 303 F.3d 551, 561-62
(5th Cir. 2002). In reaching its conclusion, the Fifth Circuit
found four factors relevant: (1) the aggrieved party and the
agency’s representative appeared before the DAB; (2) each
party participated in developing an appeal file; (3) each party
could make oral presentations, submit briefs, and cross-
examine witnesses; and (4) each party was afforded leave to
48 Coalition for Gov’t Procurement, et al.
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No. 01-2231
submit post-hearing briefs. See Delta Found., 303 F.3d at
561 (citations omitted). The court concluded, “[U]nlike the
SSA proceedings in which the Appeals Council itself, and not
the claimant, ha[d] the responsibility for identifying the
claims and developing arguments, the parties appear before
the DAB as adversaries, charged with presenting their
arguments and supporting witnesses and effectively
discrediting opposing parties through cross-examination.”
See Delta Found., 303 F.3d at 561-62.
With these principles in mind, we find that the Board’s
significant expansion hearings do not give rise to an issue
exhaustion requirement. As with the proceedings before the
Appeals Council, the rules governing the significant
expansion hearings vest full fact-finding authority with the
Board. For example, the rules provide:
The record before the Board is limited to the market
study, comments and materials submitted in response to
the market study (including the trade association’s
comments), corporate management recommendations,
and material submitted by commenters in response to
corporate management’s recommendations. No new
documentation or arguments from commenters will be
received or heard at the presentation that have not been
submitted in compliance with these rules, unless
permitted by the Board.
. . . .
The Board members may direct questions to a
commenter to elicit further information, and may request
that additional material be provided for the record.
(J.A., 176-77, 431-432, 664-65.) The Board has explained its
fact-finding role as follows:

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49
The process is that upon hearing your [private
industry’s] information here, we’ll take everything that
you have to say. If there is something that is not clear, if
there’s a comment which you make that doesn’t jive with
the record as we know it, or is new information that we
are hearing for the first time, then what we will do
following this hearing is to ask [UNICOR] to provide us
more information or go outside [UNICOR] to gather
information ourselves.
(J.A., 577.)
Furthermore, the Board has the exclusive authority to
solicit information and question the “commenters.” In the
words of the Board’s chairman during the Office Case Goods
hearing, “[This] is not a process that is a give-and -take where
you ask questions of the board and we’re in a position to
respond. What we basically do here is listen to your
presentation and then consider that material, plus all the
material that is on the record, and make a decision.” (J.A.,
803.) The broad discretion vested in the Board is of particular
import in that UNICOR does not present any proposal to the
Board during the hearings. The significant expansion
hearings are limited to presentations made by “commenters,”
not including the agency, and there lacks any cross-
examination, counter-arguments, or any type of discussion
that reasonably can be defined as “adversarial.” Therefore,
the significant expansion hearings bear the hallmarks of
inquisitorial proceedings in that the Board dominates the fact-
finding process and the agency is not present during the
proceedings. Consequently, the Board’s significant
expansion hearings are not adversarial and do not warrant a
judicially-imposed issue exhaustion requirement.
Accordingly, the district court erred in determining that the
Coalition waived judicial review of the unauthorized
significant expansion and the retroactive authorization claims.
50 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
43The defendant raised the laches defense in the ir Answer and fully
briefed the issue on summary judgment. See (J.A., 160, 940-47). The
district court did no t address the issue given its finding with respect to
issue exhaustion. See 154 F. Supp. 2d at 1151. W e may consider,
however, this issue as p art of our de novo review. See Abercrombie &
Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc., 280 F.3d 61 9, 629 (6th Cir.
200 2).
3. Laches
The defendants nevertheless assert that the equitable
doctrine of laches precludes judicial review of the Coalition’s
significant expansion claims.43
“Laches is the ‘negligent and unintentional failure to
protect one’s rights.’” Nartron Corp. v. STMicroelectronics,
305 F.3d 397, 408 (6th Cir. 2002) (quoting Elvis Presley
Enter., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir.
1991)). “Laches consists of two elements: (1) unreasonable
delay in asserting one’s rights; and (2) a resulting prejudice to
the defending party.” Brown-Graves Co. v. Central States,
Southeast & Southwest Areas Pension Fund, 206 F.3d 680,
684 (6th Cir. 2000).
With respect to the first element, there is a strong
presumption that a plaintiff’s delay in bringing suit is
reasonable as long as the analogous statute of limitations has
not lapsed. See Herman Miller, Inc. v. Palazzetti Imp. & Ex.,
Inc., 270 F.3d 298, 321 (6th Cir. 2001) (citing Tandy Corp. v.
Malone & Hyde, Inc., 769 F.2d 362, 365-66 (6th Cir. 1985)).
“Only rarely should laches bar a case before the analogous
statute has run.” Tandy Corp., 769 F.2d at 366.
It is undisputed that the six-year statute of limitations for
bringing civil actions against the United States governs this
action. See 28 U.S.C. § 2401(a) (“Every civil action
commenced against the United States shall be barred unless
the complaint is filed within six years after the right of action

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44The defendants argued before the district court that claims arising
before November 24, 1993 were barred as a matter of law. See (J.A.,
945 ). The defendants have abandoned the argum ent on appeal.
first accrues.”). It is further undisputed that the statute of
limitations commenced upon the Board’s issuance of the 1996
significant expansion decisions.44 Accordingly, the earliest
date upon which the limitations period expired was February
6, 2002 -- six years following the issuance of the Board’s
system furniture significant expansion decision.
The Coalition filed its complaint well within the limitations
period; therefore, a strong presumption arises that the claims
were filed within a reasonable time. In an attempt to
overcome this presumption, the defendants direct the court to
the close ties between CGP and QMFA during the litigation
challenging the D & Q furniture significant expansion. The
defendants emphasize that CGP partially incurred the expense
of the QFMA litigation. See (Br. of the Defs.- Appellees at
41-42); (J.A., 1004). Apparently, the defendants suggest that
CGP had a concomitant obligation to file an action at the time
of the QFMA litigation challenging the significant
expansions of Office Furniture.
Even considering CGP’s role, if any, in the QFMA
litigation, the defendants fail to overcome the strong
presumption of reasonable delay. See, e.g., (J.A., 1004). The
defendants fail to acknowledge that several Coalition
members, including Knoll, did not manufacture D & Q
furniture and were unaware of the QFMA litigation. See
(J.A., 1585 ¶¶ 9, 12,15). Of greater pertinence, the Coalition
contends that it was the factual information produced through
the QFMA litigation that alerted it that UNICOR’s
purportedly unlawful activities extended to Office Furniture.
Accordingly, the Coalition cannot be said to have
unreasonably delayed in filing suit as it was unaware of
UNICOR’s potentially unlawful activities in regard to Office
52 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
Furniture production. The defendants’ laches defense
therefore fails as a matter of law.
B. The Coalition’s Unauthorized Significant
Expansion Claims
Having traversed the jurisdictional and procedural
hinterlands, we arrive at the substantive allegations presented
in the unauthorized significant expansion claims. The
Coalition alleges that “From 1991-1995, [UNICOR]
repeatedly violated its statute by significantly expanding
Office Furniture production without prior Board review and
approval.” See (Br. of Pls.-Appellants at 12). It further
alleges that UNICOR “[R]epeatedly violated the Guidelines
by failing to undertake the required data collection internal
analysis.” See (Br. of Pls.-Appellants at 12).
As a threshold matter, we note that UNICOR cannot escape
liability by asserting that the Guidelines establish a higher
standard than that imposed by Congress in section 4122. It is
a fundamental tenet of administrative law that “an executive
agency must be rigorously held to the standards by which it
professes its action to be judged.” Vitarelli v. Seaton, 359
U.S. 535, 546 (1959) (Frankfurter, J., concurring in part and
dissenting in part). Thus, “it is incumbent upon agencies to
follow their own procedures . . . even where the internal
procedures are possibly more rigorous than otherwise would
be required.” Morton v. Ruiz, 415 U.S. 199, 235 (1974)
(citations omitted); see also Vitarelli, 359 U.S. at 546-47
(Frankfurter, J., concurring in part and dissenting in part)
(“[I]f [agency action] is based on a defined procedure, even
though generous beyond the requirements that bind such
agency, that procedure must be scrupulously observed . . . .
He that takes the procedural sword shall perish with that
sword.”).
The unauthorized significant expansion claims arise from
UNICOR’s purported violations of the Guidelines.

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Specifically, the Coalition avers that UNICOR violated the
Guidelines on eighty-two occasions throughout 1991-1995.
See (J.A., 1422). However, the record reveals that the vast
majority of these violations are the cumulative and annual
effects of ten core violations. We consider the core violations
seriatim.
1. The purported core violations occurring in
UNICOR’s systems furniture production
during 1991-1995
The Coalition contends that two core violations occurred
during UNICOR’s production of systems furniture from
1991-1995. The first violation occurred in 1991 when the
Board authorized the start-up of a new systems furniture
factory to be located at FCI Schuykill without performing the
requisite market share analysis. See (J.A., 912-13).
UNICOR concedes that it was required to perform the
market share analysis. See (J.A., 1100 ¶ 25, 1266-67, 1492
¶¶ 77-78, 1643 ¶¶ 77-78). UNICOR asserts, however, that it
was not required to initiate the CARP because a subsequent
review of market share revealed an allowable increase from
10.8% in 1991 to 11.60% in 1992. See (J.A., 926, 1100 ¶¶
18, 20).
The plain text of the APA supports UNICOR’s position.
The APA instructs reviewing courts to take “due account . . .
of the rule of prejudicial error.” 5 U.S.C. § 706. “[T]his
court applies a prejudicial error rule to APA cases, such that
a mistake that has no bearing on the ultimate decision or
causes no prejudice shall not be the basis for reversing an
agency’s determination.” Slater, 120 F.3d at 637 (citation
omitted). The rule eliminates the necessity of remand
following judicial review when the error that the agency has
made was not prejudicial and did not impinge on fundamental
rights. See N.Y. Pub. Interest Research Group v. Whitman,
321 F.3d 316, 333 (2d Cir. 2003). It “requires the party
54 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
asserting error to demonstrate prejudice from the error.” Air
Canada v. Dep’t of Trans., 148 F.3d 1142, 1156 (D.C. Cir.
1998).
The Coalition is unable to demonstrate prejudice arising
from the opening of the systems furniture factory at FCI
Schuykill. Simply, had UNICOR conducted the market share
analysis in 1991 (when the Board authorized the opening of
the Schuykill factory), UNICOR would have discovered an
increase within the allowable market share from 10.8% to
11.6%. See (J.A., 926, 1099 ¶¶ 18, 20). UNICOR therefore
was not required to initiate the CARP and no discernible
prejudice was sustained by the Coalition as a result of
UNICOR’s violation of the Guidelines.
We need not draw on the prejudicial error rule in
addressing the second purported core violation arising from
UNICOR’s production of systems furniture. Similar to the
claim challenging the opening of the Schuykill factory, the
Coalition alleges that the Board’s 1994 authorization of a new
systems furniture factory at FCC Coleman violated the
Guidelines because UNICOR neither conducted the market
share analysis nor initiated the CARP.
The district court rejected this claim, concluding:
It is true that FPI’s increase in market share from 9.6%
[in 1994] to 14.3% [in 1995] was over the [G]uidelines
limit, even taking into account the prior years’ market
shares. The trigger prong, however, is not satisfied.
Plaintiffs rely upon the fact that FPI was planning on
increased capacity in a new factory at the Federal
Corrections Facility in Coleman to satisfy the trigger
requirement. That factory was not activated until
February of 1996. No offsetting reduction in capacity,
therefore, was necessary in FY 1994, and consequently
the trigger prong was not met. When the Coleman
factory was activated, FPI was under the increased

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45Notwithstanding its holding in regard to issue exhaustion, the
district court went on to consider the substantive allegations of the
unauthorized significant expansion claims. See 154 F. Supp. 2d at 1147-
51.
46UNICOR’s FY 1994 Operating Plan indicated an expected
June,1995 “Activation Date” for the systems furniture factory at FCC
Coleman. See (J.A., 902-03). The 1995 Operating Plan indicated a
Decemb er, 1995 Activation D ate. See (J.A., 905-11). The Systems
Impact Study discussed in detail the transfer of equipment from the
Duluth systems furniture factory to the new factory at FCC Coleman, to
be opened in 1 996 . See (J.A., 225).
production levels approved by the Board on February 6,
1996. Therefore, there was no unauthorized increase in
systems furniture.
154 F. Supp. 2d at 1148.45
The record supports the district court’s well-reasoned
conclusion. While UNICOR initially intended to commence
production at FCC Coleman in June, 1995, it continually
delayed opening the factory until 1996.46 As indicated supra,
the Systems Impact Study included the activation of FCC
Coleman among the proposals ultimately approved by the
Board. See (J.A., 225). As the 1995 Systems Furniture
Expansion disclosed the planned activation of FCC Coleman,
UNICOR opened the Coleman factory in accordance with the
Guidelines and section 4122.
2. The purported core violations occurring in
UNICOR’s office seating furniture
production during 1991-1995
A similar fate befalls the four core violations occurring
within UNICOR’s office seating furniture production during
1991-1995. The Coalition alleges that UNICOR failed to
conduct the requisite market share analysis: (1) when the
56 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
47UNICOR ceased production at the Texarkana factory and reduced
production at its factories in Bastrop, Marianna and T hree R ivers. See
(J.A., 512).
48The Bastrop and Florence factories produced approximately $3
million in aggregates sales in 1993 and approximately $1 2 million in
aggregate sales in 199 4. See (J.A., 512). UNICOR decreased production
in 1993 at its Allenwood, La Tuna, Sheridan, Tallahassee and Three
Rivers office seating factories by an aggregated $ 4.9 million in sa les. See
(J.A., 512). UNICOR continued to decrease production at those five
factories in 199 4, as we ll as decreased production at its Ashland,
Marianna, and Texarkana factories, for a com bined decrease of $14
million in sales. See (J.A., 512).
Board authorized an increase in employment levels from 888
employees in 1992 to 983 employees in 1993; (2) when the
Board authorized the activation of new factories at FCI
Seagoville and FCI Three Rivers in 1991; (3) when the Board
authorized the activation of new factories at FCI Bastrop and
FCI Florence in 1993; and (4) when the D & Q furniture
factory at USP Leavenworth manufactured a special order of
office seating furniture in 1995.
The district court correctly rejected these claims, again
relying on its analysis that in each instance the Coalition had
failed to demonstrate that each tier of the Guidelines had been
triggered. See 154 F. Supp. 2d at 1148-49.
For example, UNICOR offset the $44,545 in 1995 sales at
the Leavenworth factory with a corresponding decrease of
$1.8 million in sales at four factories.47 Therefore, the first
tier of the Guidelines was not triggered in 1995. UNICOR
also offset the opening of office seating factories at FCI
Bastrop and FCI Florence in 1993 with decreases in
production at five factories.48 Notwithstanding this
diminished capacity, UNICOR actually increased its sales in
1993 by $48,788 from the previous year. However,
UNICOR’s operating plan for 1993 estimated a $14 million

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49In any event, UNICOR actually decreased by 110 the number of
employees employed in the production o f office seating during 19 93. See
(J.A., 1 106 ¶ 77).
decrease from 1992 sales. Because the Guidelines required
UNICOR to review only “proposed production increases,”
UNICOR was not required to perform the market share
analysis. See (J.A., 1646 ¶ 108). Similarly, despite
UNICOR’s planned increase in inmate employment from 888
employees in 1992 to 983 employees in 1993, see (J.A., 900,
1497 ¶ 108, 1646 ¶ 108), UNICOR was not required to
conduct the market share analysis because of the planned
decrease in its 1993 production.49 Therefore, the opening of
the new factories and the increases in employment in 1993
did not trigger the first tier Guidelines. Thus, UNICOR was
not required to conduct a market share analysis.
UNICOR’s activation of new factories at FCI Seagoville
and FCI Three Rivers in 1991, furthermore, did not result in
prejudice to the Coalition. As with the authorization of the
Schuykill systems furniture factory in 1991, the activation of
the Seagonville and Three Rivers office seating factories did
not cause UNICOR to exceed its allowable market share. As
discussed in the Office Seating Impact Study, UNICOR
estimated it having a 8.86% market share in 1991 – a planned
decrease from its 10.06% market share in 1990. See (J.A.,
514). While UNICOR’s actual market share increased from
13.99% in 1990 to 14.6% in 1991, see (J.A., 1500 ¶¶ 124-25,
1649 ¶¶ 124-25), this actual increase fell within the allowable
market share. Accordingly, UNICOR was not required to
initiate the CARP.
58 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
3. The purported core violation occurring in
UNICOR’s office case goods furniture
production during 1991-1995
The seventh alleged core violation arose during UNICOR’s
production of office case goods during 1991-1992. During
this period, the number of inmates employed in the
production of office case goods increased from 1,066 in 1991
to 1,358 in 1992. See (J.A., 774, 1110 ¶¶ 117, 120).
Meanwhile, UNICOR’s share of the federal market increased
from 12.9% to 15.2%. See (J.A., 1504 ¶ 147, 1651 ¶ 147).
Faced with this apparent unauthorized significant
expansion, the district court concluded:
The office case goods increase in FY 1992 was not a
significant increase. Between FY 1991 and 1992 there
was an inmate employment increase of over 10% (the
trigger), and an increase in market share of 2.3%. These
increases would normally be considered a significant
increase. Plaintiffs fail to consider, however, that the
[G]uidelines also require that “the prior three years of
production will be reviewed, to ensure that usual and/or
abnormal fluctuations are taken into account and
normalized.” Inmate employment was 1,243 in 1990,
1,066 in 1991, and 1,358 in 1992. By 1995, inmate
employment was 1,462. Taking the prior years into
account, the Court finds that the spike in 1992 in inmate
employment was a result of a low point of employment
in 1991 rather than a significant increase by itself.
154 F. Supp. 2d at 1148-49 (citation omitted).
The Coalition does not specifically challenge the district
court’s conclusion on appeal, and we find the reasoning of the
district court well-supported by the facts and law.
Accordingly, no violation occurred with respect to

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UNICOR’s production of office case good furniture from
1991-1995.
4. The core violation arising from UNICOR’s
failure “to undertake the required data
collection internal analysis.”
The Coalition attempts to salvage the unauthorized
significant expansion claims by relying on UNICOR’s failure
to collect data regarding plant size and equipment capacity
throughout 1991-1995. UNICOR concedes that it did not
collect information regarding plant size and equipment
capacity as required by the Guidelines. It nevertheless asserts
that the deficient data collection did not result in any
prejudice to the Coalition.
While we do not readily concur in an agency’s failure to
adhere to its own promulgated procedures, the limited facts of
this case compel the conclusion that there is a lack of any
prejudice suffered by the Coalition as a result of UNICOR’s
omissions. The Coalition has not presented any supporting
evidence from which an inference can be drawn that either
plant size or equipment capacity increased beyond the ten
percent threshold in any given year. We acknowledge that the
Guidelines place an affirmative duty on UNICOR to produce
such evidence and that the agency should bear the
consequences of not generating the requisite data. However,
we cannot turn a blind eye to the uncontroverted and
overwhelming evidence in the record demonstrating that the
Coalition did not sustain any prejudice as a result of
UNICOR’s violations.
For example, the White Paper examined UNICOR’s failure
to monitor plant size and equipment capacity and presented
several conclusions indicating that UNICOR did not expand
these inputs of production beyond the ten percent threshold.
Indeed, the White Paper concluded that “[T]he amount of
production space [] decreased by over 40%,” (J.A., 1335), and
60 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
50The White Paper indicated: “[I]n most instances, the factories
produced other lines in addition to D & Q. As a result, the same
production space used to manufacture D & Q furniture was also used to
produce FP I’s Centurion office furniture line or FPI’s metal racking and
shelving, depending on the factory.” (J.A., 1335.)
“[f]or the most part, [UNICOR] ha[d] made minimal
purchases of additional production equipment,” (J.A., 1338).
While it is recognized that the White Paper examined
UNICOR’s production of D & Q furniture, rather than Office
Furniture, the conclusions remain pertinent because a
significant number of factories that produced D & Q furniture
also produced Office Furniture.50
The record further demonstrates that prejudice did not
result from UNICOR’s failure to track plant size and
equipment capacity. Specifically, the foregoing analysis
reveals that, in this case, the Coalition suffered prejudice only
where plant size or equipment capacity exceeded a ten percent
increase and UNICOR’s market share increased beyond the
allowable threshold. The Coalition’s claims necessarily are
limited to the four occasions during 1991-1995 where
UNICOR’s market share increased beyond the allowable
limits: (1) the 1995 increase in systems furniture production
from a 9.6% market share in 1994 to a 14.3% share in 1995;
(2) the 1992 increase in office seating production from a
14.6% market share in 1991 to a 18.5% share in 1992; (3) the
1993 increase in office seating production from the 18.5%
market share in 1992 to a 20.5% share in 1993; and (4) the
1992 increase in office case goods production from a 12.9%
market share in 1991 to a 15.2% share in 1992.
However, these four increases in Office Furniture
production are attributable to identifiable factors other than
increases in plant size or equipment capacity. For instance,
the parties acknowledge that the 1992 increases in office
seating and office case goods production derive from

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51Inmate employment in office seating production increased from
739 employees in 1991 to a high of 888 during 1992. See (J.A., 1105-06
17 74,77). Additionally, the “spike” in the number of inmates producing
office case good s was the result of abnormally low levels of employment
in 1991. See 154 F. Supp. 2d at 1148-49.
52The federal systems market declined from a record high of $452.2
million in 199 3 to $ 433 .6 in 19 94. See (J.A., 208). Meanwhile,
UN ICO R’s production decreased from $52,601,756 in sales in 1993 to
$41 ,424 ,737 in 199 4. See (J.A., 1100 1126 , 28).
dramatic increases in inmate employment during that year.51
Similarly, the 1995 market share increase in systems furniture
was the result of a decrease in the size of the federal market
and a dramatic drop in production in 1994.52 Consequently,
UNICOR’s systems furniture production was at abnormally
depressed levels in 1994, which in turn, exacerbated the data
for 1995. With respect to the 1993 increases in office seating,
assuming arguendo that an inference could be gleaned from
the record that equipment capacity or plant size increased by
ten percent or more during that year, as discussed supra, the
planned decrease in production rendered the Guidelines
inapplicable.
The lack of any evidence proffered by the Coalition, the
direct evidence found in the White Paper showing that neither
equipment capacity nor plant size increased from 1991-1995,
and the uncontroverted evidence demonstrating that increases
in UNICOR’s production were caused by other factors, all
compel the finding that the Coalition suffered no prejudice as
a result of UNICOR’s failure to collect data regarding plant
and equipment capacity. Thus, the unauthorized significant
expansion claims fail as a matter of law.
62 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
C. The Claim Challenging the Retroactive
Authorization
The claim challenging the Board’s retroactive authorization
parallels the foregoing claims in that the Coalition asserts that
UNICOR significantly expanded its production of office
seating furniture in 1991 and 1992 without initiating the
CARP (the ninth and tenth core violations). The Coalition
goes on to assert that the Board lacked the authority to
retroactively authorize these purported significant expansions.
Addressing the first issue – whether UNICOR significantly
expanded its production of office seating furniture in 1991
and 1992 – the foregoing analysis reveals that the 1991
expansion was not significant under the Guidelines. While
inmate employment increased more than ten percent,
UNICOR estimated it having a 8.86% market share in 1991
– a planned decrease from its 10.06% market share in 1990.
See (J.A., 514). UNICOR’s actual market share increased
from 13.99% in 1990 to 14.6% in 1991. See (J.A., 1500
¶¶ 124-25, 1649 ¶¶ 124-25). This actual increase also fell
within the allowable market share. Accordingly, UNICOR
was not required to initiate the CARP prior to expanding its
production of office seating in 1991.
UNICOR did concede in the Office Seating Impact Study
that it significantly expanded its production of office seating
furniture in 1992. See (J.A., 476-77). The issue before the
Court, therefore, is whether the Board possessed the authority
to retroactively authorize the 1992 significant expansion.
Our analysis is governed by the familiar standards
established in Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984). Under Chevron,
we first determine “whether Congress has directly spoken to
the precise question at issue,” id. at 842; if it has not, we
enquire “whether the agency’s answer is based on a
permissible construction of the statute,” id. at 843.

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53W e pause to no te that the p rejud icial erro r rule of the APA is
inapp licable to UNICOR and the Board’s violation of section 412 2. As
the United States Co urt of Appe als for the Seco nd C ircuit recen tly
observed, “The rule of prejud icial erro r informs our review of an agency’s
adherence to its statute and regulations; it has never b een used to
introduce discretion into actions mad e mandatory by C ongress.”
Whitman, 321 F.3d at 334.
54As discussed during our analysis of the mootness question supra,
the Coalition requested the equitable volume sales replacement remedy
and declaratory relief in relation to the retroactive authorization claims.
W ith respect to declaratory relief, it is acknowledged that UNICO R and
the Board violated section 4122 by not initiating the CARP prior to the
1992 significant expansion in office seating. However, for the reasons
discussed supra, the request for declaratory relief is moot. We further
conclude that the retroactive authorization claim does not fall within the
well-defined “capable of repetition, yet evading review” exception to the
mootness doctrine. See Suster v. M arshall, 149 F.3d 523, 527 (6th Cir.
1998). This exception applies where “(1) the challenged action [is] in its
duration too short to be fully litigated prior to cessation or expiration, and
(2) there [is] a reasonable expectation that the same com plaining party
[will] be subject to the same action again.” Spencer v. Kemna, 523 U.S.
1, 17 (1998) (quotation omitted). Retroactive decision-making
The plain text of the organic statute is unequivocally
prospective in nature. For instance, section 4122 requires the
initiation of the CARP “[b]efore the board of directors makes
a final decision.” 18 U.S.C. § 4122(b)(4). Furthermore, the
section repeatedly refers to “plans” and “proposals” for
significant expansions. 18 U.S.C. § 4122(b)(4)(B), (C). A
construction of the statute that allows for retroactive
authorization renders nugatory these multiple provisions
delineating the prospective application of the CARP. Thus,
it is with little hesitation that we determine that the Board
lacks the authority to retroactively authorize prior significant
expansions.53
As a remedy for the unlawful significant expansion, the
Coalition urges this court to adopt the approach utilized in
QFMA.54 As discussed supra, the district court in that case
64 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
necessarily is too short in d uration “to be fully litigated prior to
cessation.” Id. However, the underlying facts of this appeal do not
support the conclusion that the C oalition will likely be subject to this
same action again. Our analysis focuses, therefore, on the equitable
volum e sale replace ment remedy.
remanded the matter to the Board “with directions that the
Board must illicit [sic] comments with respect to the increases
in FY 1991 to 1995 . . . make specific findings as to whether
FPI obtained more than a reasonable share of the market . . .
and ascertain what percent of the share was unreasonable.”
See QFMA, at 25.
It is well-settled that when an agency makes an error of law
in its administrative proceedings, a reviewing court should
remand the case to the agency so that the agency may take
further action consistent with the correct legal standards. See
South Prairie Constr. Co. v. Local No. 627, Int’l Union of
Operating Eng’rs, 425 U.S. 800, 806 (1976) (per curiam).
However, an exception to this general rule exists where it is
“crystal-clear [that the] Board error renders a remand an
unnecessary formality.” NLRB v. Food Store Employees
Union, 417 U.S. 1, 8 (1974).
A critical distinction exists between QFMA and the case at
bar that renders a remand “an unnecessary formality.” In
QFMA, the district court emphasized that the Board had not
provided prior notice of its intent to retroactively authorize
the significant expansions in D & Q furniture production. See
QFMA, at 17 (“[I]t appears . . . that the 1996 notice,
comment, and approval by the Board solicited information
and comments on future production levels, not the prior
production levels.”). This lack of notice led the district court
to conclude:
[T]o the extent the [d]efendants rely on the White
Paper and the March 1996 decision in support of their
earlier decisions, these documents are nothing more than

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post hoc rationalizations for their earlier decisions . . .
The difficulty with relying on post hoc decisions is that
it ignores the fact that the agency may not have made the
same decision had it received timely comments . . .
Furthermore, as noted above, it is not clear from the
record whether [p]laintiff was notified in 1995-1996 that
the Board, in 1996, would be considering the past
violations, and would entertain comments regarding the
past violations. In the absence of evidence supporting
the decision at the time it was made, the court must
conclude that the decision was issued without observance
of proper procedures, and therefore violated the APA.
QFMA, at 18 (citations and footnote omitted).
In contrast, it is uncontroverted in the instant case that
UNICOR disclosed the 1992 (as well as the purported 1991)
significant expansions and publically requested the Board for
retroactive authorization. The private sector responded by
providing comments to UNICOR and testimony to the Board
that expressly recognized UNICOR’s request for retroactive
authorization. See (J.A., 544, 562, 588, 1107 ¶¶ 99-100).
Relying on this notice, the court below reasoned:
This [c]ourt adopts the reasoning of [QFMA] but
comes to a different finding in the present case because
the record indicates that Plaintiffs were given adequate
notice that the Board would consider approving the past
significant increases in office seating production. The
office seating impact study made available to the public
in advance of the Board’s 1996 decision clearly
identified the expansion problems experience in 1991
and 1992 with office seating. For both 1991 and 1992,
the report states that increases in production should have
triggered “an analysis of market share”to determine the
necessity of initiating the guidelines process.
. . . .
66 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
Plaintiffs had proper notice of the Board’s intent to
consider retroactive approval of the significant increases
in office seating production, as well as an opportunity to
comment at that administrative hearing. Therefore the
Board was within its authority to consider and decided
the issue and in so doing did not violate the
Administrative Procedures Act.
154 F. Supp. 2d at 1150-51 (citations omitted).
While we disagree with the district court’s conclusion that
the “Board was within its authority” to retroactively authorize
the 1992 significant expansion for the reasons previously
discussed, the notice provided to the Coalition, as well as the
manner in which the Board authorized the prior significant
expansion, weigh strongly against remanding this matter to
the Board. Were we to remand the matter in accordance with
QFMA, we would likely do so with instructions to “illicit [sic]
comments” with respect to the 1992 significant expansions,
“to make specific findings as to whether [UNICOR] obtained
more than a reasonable share of the market” during 1992, and
to “ascertain what percent of the share was unreasonable.”
See QFMA, at 25. However, the Board has complied with
these potential instructions. The Office Seating Impact Study
solicited comments, the private sector responded, and the
Board engaged in an analysis of the relevant factors
concluding, “[B]ased on market performance since 1991 the
industry has not been adversely affected, and that UNICOR’s
market share is reasonable. The Board therefore approves
FPI’s request to ratify its sales levels achieved, subsequent to
and as a result of its expanded capacity during 1991 and
1992.” (J.A. 656.) Hence, it is “crystal-clear” that a remand
to the Board would do little more than duplicate processes
already undertaken. Food Store Employees Union, 417 U.S.
at 8.
Moreover, the facts of the instant appeal preclude our
awarding of the equitable sales volume replacement remedy.

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55W e clarify that the Coalition did not waive its request for relief by
failing to present such evidence to the Bo ard. The omission o f such
evidence in 1 996 , however, is relevant to the issue as to whether there is
sufficient evidence for us to award the equitable volumes sales
replacement rem edy.
The Coalition has not provided any evidence to support its
purported $450 million in lost sales. It follows that the
Coalition has not presented any evidence addressing only
those sales lost as a result of the 1992 significant expansion
in office seating. Furthermore, a remand to the district court
for a damages hearing would likely confound, rather than
clarify the matter, in light of the Coalition’s failure to present
any evidence of “injury” during the office seating furniture
expansion hearings. The Coalition did not present any
evidence of lost sales during the 1996 expansion hearings.55
The Coalition likewise has not presented any verifiable
evidence of lost sales during these proceedings. Therefore, it
would be an impermissible exercise in speculation for this
court to order the requested relief.
Accordingly, we determine that the Board lacked the
authority to retroactively authorize UNICOR’s 1992
significant expansions of office seating furniture production.
We further determine that a remand to the board is
unnecessary. Moreover, the Coalition has not advanced
sufficient evidence demonstrating an entitlement to its
equitable volume sales replacement remedy.
D. The Claim Challenging the Board’s 1996
Expansion Decisions
The Coalitions relies on three factors allegedly
demonstrating the “arbitrary and capricious” nature of the
Board’s 1996 expansion decisions:
First, the Board failed to consider the fundamental
question of whether FPI’s previously expanded Office
68 Coalition for Gov’t Procurement, et al.
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No. 01-2231
Furniture production complied with its Guidelines and
was appropriate. Second, the determinations that FPI’s
seating and case goods production did not take an
unreasonable share of the Federal markets for these
products were based on a flawed and inaccurate market
share methodology. Third, the decisions followed
improper ex parte communications to which the private
sector had no opportunity to address or rebut.
See (Br. of Pls.-Appellants at 53-54).
The APA establishes a scheme of “reasoned
decisionmaking.” Motor Vehicle Mfrs. Ass’n of United
States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 52
(1983). “Not only must an agency’s decreed result be within
the scope of its lawful authority, but the process by which it
reaches that result must be logical and rational.” Allentown
Mack Sales and Service, Inc. v. National Labor Relations Bd.,
522 U.S. 359, 374 (1998).
An agency’s decision will be set aside “only if it is
arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with the law.” Slater, 120 F.3d at 632
(citations omitted). This arbitrary or capricious standard is
the least demanding review of an administrative action. See
Davis v. Kentucky Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th
Cir. 1989). It requires the party challenging the agency’s
action to “show that the action had no rational basis or that it
involved a clear and prejudicial violation of applicable
statutes or regulations.” McDonald Welding v. Webb, 829
F.2d 593, 595 (6th Cir. 1987). If there is any evidence to
support the agency’s decision, the agency’s determination is
not arbitrary or capricious. See Oakland County Bd. of
Com’'rs v. U.S. Dep’t of Labor, 853 F.2d 439, 442 (6th Cir.
1998).
However, deferential judicial review under the APA does
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evidentiary basis for its findings. To the contrary, the APA
reinforces this obligation. See, e.g., Motor Vehicle
Manufacturers Ass’n, 463 U.S. at 43 (“[T]he agency must
examine the relevant data and articulate a satisfactory
explanation for its action including a rational connection
between the facts found and the choice made.”) (quotation
omitted); Securities & Exchange Comm’n v. Chenery Corp.,
318 U.S. 80, 94 (1943) (“The orderly function of the process
of review requires that the grounds upon which the
administrative agency acted are clearly disclosed and
adequately sustained.”).
The Coalition’s three challenges to the 1996 expansion
decisions fall short of demonstrating arbitrary and capricious
decision-making on the part of the Board. As a threshold
matter, the Coalition’s claim that the Board failed to consider
UNICOR’s past production levels is factually inaccurate. As
the district court correctly determined:
Plaintiffs also argue that the Board’s decision on future
increases failed to consider whether the then current
production levels during 1996 were even legal. The
record does not support Plaintiffs’ contention. The
Board itself recognized that certain increases had
occurred without prior Board approval, and carefully
considered those increases and the context in which they
occurred before deciding that those increases did not
violate FPI’s governing statutes . . . Here, it is impossible
to conclude from the evidence that the Board failed
“entirely” to consider the problem of whether past
increases exceeded the mandate of FPI because it
specifically addressed those increases in its 1996 hearing.
154 F.Supp. 2d 1150-51.
Additionally, the Coalition’s assault on the methodology
utilized by the Board in calculating the federal market ignores
several key facts. During the period in question, there were
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No. 01-2231
two sources of data relating to the size of the federal market:
(1) the General Services Administration Federal Supply
Schedules (“FSS”); and (2) the Federal Procurement Data
Center (“FPDC”). The FSS provided data for all federal
government purchases except those relating to the Department
of Defense, the United States Postal Service, the legislative
and judiciary branches, credit card purchases and special
orders. The FPDC maintained similar data, except that it did
not account for purchases less than $25,000.
UNICOR utilized the FSS in the Final Systems Impact
Study’s calculation of the federal market, noting “It is
difficult to determine the exact amount of Federal systems
furniture buys from private vendors not captured by the
[FSS].” (J.A., 294.) The Coalition does not challenge
UNICOR’s use of the FSS. Rather, the Coalition objects to
UNICOR’s use of the FPDC data in the impact studies
relating to office seating and office case good furniture.
Specifically, the Coalition alleges that UNICOR made several
adjustments to account for the sales not captured by the FPDC
data that, in turn, exaggerated the size of the federal market.
The Coalition fails to acknowledge that UNICOR ceased its
use of the FSS data because representatives from GSA would
not verify the accuracy of the data. See (J.A., 1296, 1512
¶ 189, 1654 ¶ 190, 1684 ¶ 189). The Coalition further fails to
acknowledge that the Board recognized the potential for
difficulties in calculating the federal market and convened a
panel of independent experts to review its methodology as
part of the office case goods decision. See (J.A., 892-93).
The independent panel of experts – the Methodology Review
Panel – approved of UNICOR’s methodology. See (J.A.,
918) (“It is the consensus of the Methodology Review Panel
that the basic methodology used by FPI to estimate Federal
procurements is reasonable.”).
Consequently, the Coalition’s challenge to the methodology
utilized by UNICOR to determine the size of the federal

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market does not suggest that evidence is lacking to support
the Board’s decision. Rather, it is a disagreement between the
parties as to the ideal manner in which to calculate data that
is not otherwise readily obtainable. In such circumstances,
principles of deference to agency decision-making require
that we uphold the approach utilized by the Board. See
Marsh v. Oregon Natural Resources Council, 490 U.S. 360,
378 (1989) (holding that “an agency must have discretion to
rely on the reasonable opinions of its own qualified experts
even if, as an original matter, a court might find contrary
views more persuasive.”).
In a final attempt to demonstrate the arbitrary and
capricious nature of the 1996 expansion decisions, the
Coalition alleges that the Board engaged in ex parte
communications with UNICOR’s staff prior to, and
immediately following, the expansion hearings. UNICOR
readily admits that the Board requested information from
UNICOR’s staff that extended beyond that provided in the
comprehensive impact studies, and that the Board directed the
staff to memorialize the Board’s final significant expansion
decisions in writing. UNICOR contends, however, that this
interaction between it and the Board was consistent with the
organic statute.
UNICOR and the Board’s interpretation of section 4122 as
permitting ex parte communications is entitled to deference
to the extent that its is reasonable. See Washington State
Dept. of Social and Health Servs. v. Guardianship Estate of
Keffeler, 537 U.S. 371, 385 (2003) (holding that cogent
“administrative interpretations . . . not [the] products of
formal rulemaking . . .warrant respect”); Christensen v.
Harris County, 529 U.S. 576, 587 (2000) (“Interpretations
such as those in . . . policy statements, agency manuals, and
enforcement guidelines, all of which lack the force of law --
do not warrant Chevron-style deference.”); accord, United
States v. Mead Corp., 533 U.S. 218, 234 (2001). We
“normally accord particular deference to an agency
72 Coalition for Gov’t Procurement, et al.
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No. 01-2231
56Before the district court, the Coalition relied on 5 U.S.C. 557(d)(1)
as the basis for its ex pa rte argum ent. Section 557(d)(1) is a broad
provision that pro hibits any ex pa rte comm unications relevant to the
merits of an agency proceeding between “any member of the body
comprising the agency” or any agency employee who “is or may
reaso nably be expected to be involved in the decisional process” and any
“interested person outside the agency.” 5 U.S.C. § 557 (d)(1 )(A)-(B ). The
purpo se of the ex pa rte communications prohibition is to ensure that
“agency decisions required to be made on a public record are not
interpretation of ‘longstanding’ duration,” Barnhart v.
Walton, 535 U.S. 212, 220 (2002) (quoting North Haven Bd.
of Ed. v. Bell, 456 U.S. 512, 522, n. 12 (1982)), recognizing
that the agency’s practices rest on “‘a body of experience and
informed judgment to which courts and litigants may properly
resort for guidance,’” Bragdon v. Abbott, 524 U.S. 624, 642
(1998) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 139-
140 (1944)).
It is reasonable to construe the organic statute as
encouraging communications between the Board and
UNICOR. Section 4121 provides: “‘Federal Prison
Industries’, a government corporation of the District of
Columbia, shall be administered by a board of six directors,
appointed by the President to serve at the will of the President
without compensation.” 18 U.S.C. § 4121. “Administer” is
“[t]o manage or conduct . . . [or] to take charge of a business.”
BLACK’S LAW DICTIONARY44 (6th Ed. 1990). While the
organic statute subsequently segregates the duties of
UNICOR and the Board, section 4121 demonstrates the inter-
relationship between the entities. Simply, the Board could
not “take charge” of UNICOR without engaging in
communications with its staff.
Furthermore, the Coalition’s assertion that section 4122,
and more specifically the CARP, prescribe the exclusive
process in which the Board and UNICOR may communicate
is wholly devoid of merit.56 The statute provides no such

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influenced by private, off-the-record co mmunications from those
perso nally interested in the outcome.” Raz Inland Navigation Co. v.
Interstate Commerce Co mm ’n, 625 F.2d 258, 260 (9th Cir. 1980)
(quotation omitted). However, it applies to only co mmunicatio n with
persons “outside of the agency”; therefore , it is patently inapplicable to
the case at bar.
limiting language. Rather, the text of the organic statute
compels the conclusion that Congress envisioned close
interaction between the Board and UNICOR’s staff.
Moreover, Congress established the Board as one serving
“without compensation” and without staff. It therefore is
reasonable to construe the statute as authorizing
communications, even ex parte communications, between the
Board and UNICOR’s staff.
We cannot find that the Board’s 1996 expansion decisions
were “arbitrary capricious or otherwise not in accordance with
law.” Slater, 120 F.3d at 632 (citations omitted). Indeed, we
find the administrative record lengthy, detailed, and
demonstrative of careful evaluation on the part of Board.
Contrary to the assertions advanced by the Coalition, the
Board did not passively authorize UNICOR’s significant
expansion requests. The Board demonstrated a willingness to
authorize lower expansions than that requested when the
evidence adduced required such reductions. Furthermore,
when the Coalition challenged UNICOR’s data (i.e. in the
office case goods context), the Board convened a panel to
evaluate the data and agreed to alter its decision if further
information came to light. Thus, the Coalition’s claim
challenging the 1996 significant expansions decision fails as
a matter of law. Accordingly, the Court therefore cannot hold
that the Board’s decisions were arbitrary and capricious.
74 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
V. THE JUST COMPENSATION CLAUSE CLAIM
The Coalition “constitutionalizes” its unauthorized
significant expansion claims by asserting that UNICOR’s
increased production during 1991-1995 constituted a “taking”
pursuant to the Just Compensation Clause of the Fifth
Amendment to the United States Constitution. The Just
Compensation Clause does not prohibit the public taking of
private property, but only taking “without just compensation.”
U.S. CONST. amend. V. The aim of the Clause is to prevent
the government “from forcing some people alone to bear
public burdens which, in all fairness and justice, should be
borne by the public as a whole.” Armstrong v. United States,
364 U.S. 40, 49 (1960). A party challenging governmental
action as an unconstitutional taking bears a substantial
burden. See Eastern Enter.v. Apfel, 524 U.S. 498, 523
(1998)(citation omitted).
A. Jurisdiction
As a threshold matter, UNICOR raises sovereign immunity
as a bar to the Coalition’s takings claim. Long-standing
authority suggests that a suit against UNICOR is essentially
a suit against the United States. See Galvan v. Fed. Prison
Indus.,199 F.3d 461, 463-64 (D.C. Cir. 1999); Sprouse v. Fed.
Prison Indus., 480 F.2d 1, 4-5 (5th Cir. 1973). On the basis
of this authority, UNICOR asserts that it generally is immune
from suit unless it otherwise consents to be sued. See United
States v. Sherwood, 312 U.S. 584, 586 (1941).
The Coalition alleges that the APA expressly waives
UNICOR’s purported sovereign immunity. The APA’s
waiver of sovereign immunity applies to “an action in a court
of the United States seeking relief other than money
damages.” 5 U.S.C. § 702. In addition, the APA provides
that judicial review of agency action is available only “if there
is no other adequate remedy in a court.” 5 U.S.C. § 704.

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57An exception to the “presumption of Tucker Act availability”
exists where the challenged regulation requires a “direct transfer of funds
mandated by the Government.” Eastern Enter., 524 U.S. at 521. In such
an instance, the aggrieved party may seek immed iate equitable relief in
the district court. Id.
UNICOR contends that the APA’s waiver is inapplicable to
the case at bar because the Coalition’s claim for $450 million
in lost sales is monetary in nature. UNICOR further contends
that jurisdiction over this case properly rests in the Court of
Federal Claims.
The Tucker Act, 28 U.S.C. § 1491(a)(1), vests the Court of
Federal Claims with exclusive jurisdiction to render judgment
upon any claim against the United States for money damages
exceeding $10,000 that “is founded either upon the
Constitution, or any Act of Congress or any regulation of an
executive department, or upon any express or implied contract
with the United States, or for liquidated or unliquidated
damages in cases not sounding in tort.” Id. It is well-
established that “[r]egardless of the nature of relief sought,
the availability of the Tucker Act remedy renders premature
any takings claim in federal district court.”57 Eastern Enter.,
524 U.S. at 521 (quotation omitted). Thus, a claim for just
compensation asserted against the United States must be
brought to the Federal Court of Claims in the first instance,
unless Congress has otherwise withdrawn the Tucker Act
grant of jurisdiction. See Eastern Enter., 524 U.S. at 520; see
also United States v. Causby, 328 U.S. 256, 267 (1946) (“[I]f
there is a taking, the claim ‘is founded upon the Constitution’
within the meaning of the Tucker Act.”). Consequently, we
initially must consider whether the Tucker Act’s monetary
remedy is available to the Coalition.
In Core Concepts of Fl. v. United States, 327 F.3d 1331
(Fed. Cir. 2003), the Court of Appeals for the Federal Circuit
affirmed the dismissal of a Tucker Act suit brought against
76 Coalition for Gov’t Procurement, et al.
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58The NAF I is triggered by the fact that judgments rendered by the
Court of Federal Claims “shall be paid out of any general appropriation.”
28 U.S.C. § 2517.
[The Court of Federal Claims’]Tucker Act jurisdiction may not
be invoked with respect to transactions that “involve agencies
where the statutory authority for the ac tivities [in suit]
specifically limited liability or expenditures to non appropriated
funds.” In other words, the existence of the court’s jurisdiction
under the Tucker Act m ust be confined to cases in which
appropriated funds can be obligated.
Furash & Co. v. United States, 46 Fed. Cl. 518, 520 (2000), aff’d, 252
F.3d 1336 (Fed. Cir. 2001) (quoting L’Enfant Plaza Prop., Inc. v. United
States, 668 F.2d 121 1, 12 12 (Cl. Ct. 1 982 ).
UNICOR in the Court of Federal Claims on jurisdictional
grounds. Id. at 1335. Applying the non-appropriated funds
doctrine (“NAFI”),58 the court examined UNICOR’s organic
statute and determined:
[UNICOR] does not operate with appropriated funds. It
is a self-sufficient corporation whose funds are derived
primarily from its product sales, and it receives no
congressional appropriations . . . . [UNICOR] repaid its
initial funding soon after its inception in 1934 and has
never received any appropriations from Congress since
that time.
. . . .
In light of [UNICOR’s] enabling legislation and
legislative history, we conclude that Congress has clearly
expressed its intention that [UNICOR’s] funds are to be
segregated from the general federal revenues, thereby
providing a “firm indication” that it intended to absolve
appropriated funds from liability for [UNICOR’s]
actions. Accordingly, we agree with the Court of Federal
Claims’ conclusion that [UNICOR] is a NAFI for which

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the United States is not financially answerable in that
court.
Id. at 1335, 1337. The NAFI exception therefore precludes
the Coalition from asserting Tucker Act claims against
UNICOR in the Court of Federal Claims. Moreover, there is
a substantial question as to whether a suit against UNICOR is
essentially a suit against the United States for sovereign
immunity purposes, as funds from the federal treasury are not
implicated in the event a judgment is rendered against
UNICOR. See Aaron v. United States, 51 Fed. Cl. 690, 694
n.2 (Fed. Cl. 2002) (“Both courts held that the suits
essentially were against the United States and that the United
States had not, insofar as relevant there, waived sovereign
immunity. The issue in those decisions was not the one
resolved here [the NAFI] . . . we view the relevant language
as dicta, and, in any event believe it to be inaccurate.”) (citing
Sprouse, 480 F.2d 1 and Galvan, 199 F.3d at 463); see also
Zhen Hua-Gao v. Jenifer, 185 F.3d 548, 554 (6th Cir. 1999)
(“The general rule is that a suit is against the sovereign if the
judgment sought would expend itself on the public treasury
or domain, or interfere with the public administration, or if
the effect of the judgment would be to restrain the
Government from acting, or to compel it to act.”).
We decline to resolve the conflicting authority as to
whether UNICOR is entitled to sovereign immunity. It is
sufficient for our purposes here that the Coalition could not
advance its claim in the Court of Federal Claims.
Furthermore, we do not concur in UNICOR’s
characterization of the relief sought by the Coalition. We
acknowledge that a party cannot circumvent the Tucker Act
“by suing solely for declaratory or injunctive relief in a case
where such relief is tantamount to a judgment for money
damages.” Veda v.United States Dep’t of the Air Force, 111
F.3d 37, 39 (6th Cir. 1997). Where the complaining party’s
78 Coalition for Gov’t Procurement, et al.
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“prime objective” is simply to obtain money from the federal
government, the case belongs in federal claims court. Id.
However, as we repeatedly have stated supra, the Coalition
seeks equitable, rather than monetary, relief in the form of a
roll-back, capping, or future adjustment of UNICOR’s
production. Notwithstanding the patently equitable nature of
the requested relief, UNICOR attempts to characterize this
relief as seeking money from the U.S. Treasury. Specifically,
UNICOR argues that in the event this court were to order the
equitable volume sales replacement remedy, federal agencies
and departments would be compelled to purchase Office
Furniture from the private sector. Such purchases, UNICOR
argues, necessarily draw on the federal treasury.
This court has rejected a similar argument, reasoning, “‘The
fact that a judicial remedy may require one party to pay
money damages to another is not sufficient reason to
characterize the relief as ‘money damages’.’” Veda, 111 F.3d
at 40 (quoting Bowen v. Mass., 487 U.S. 879, 893 (1988)).
We likewise decline to construe the requested relief as
seeking monetary damages; therefore, the district court
properly asserted its jurisdiction over the Coalition’s takings
claim.
B. Regulatory Takings
The United States Court of Appeals for the Federal Circuit,
which has extensive expertise in federal-takings law in light
of its specialized jurisdiction, has developed a two-part test
“to evaluate claims that a governmental action constitutes a
taking of private property without just compensation.”
Maritrans Inc. v. United States, 342 F.3d 1344, 1352 (Fed.
Cir. 2003) (citing M & J Coal Co. v. United States, 47 F.3d
1148, 1153-54 (Fed Cir. 1995)). First, the court must
examine whether the claimant has established a cognizable
“property interest” for the purposes of the Just Compensation
Clause. Id.; accord, Raceway Park, Inc. v. Ohio, 356 F.3d

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677 (6th Cir. 2004) (“[T]here is no taking if there is no private
property in the first place.”). Secondly, where a cognizable
property interest is implicated, the court must consider
whether a taking occurred. Id.
With respect to the first step, the Constitution neither
creates nor defines the scope of property interests
compensable under the Just Compensation Clause. See Bd. of
Regents of State Colleges. v. Roth, 408 U.S. 564, 577 (1972).
Rather, “existing rules and understandings” and “background
principles” derived from an independent source, such as state,
federal, or common law, define the dimensions of the
requisite property rights for purposes of establishing a
cognizable taking. Lucas v. S. C. Coastal Council, 505 U.S.
1003, 1030 (1992).
The Coalition asserts that UNICOR’s “unauthorized
expansions diminished Plaintiffs’ collective property right in
the competitive Federal Government Office Furniture
market.” (Br. of Pls.-Appellants at 61.) Federal government
procurements of Office Furniture are governed by UNICOR’s
organic statute and the Federal Acquisition Regulations
(“FAR”), 48 C.F.R. §§ 8.000 - 9905.506 (2003). Several
provisions of the FAR mandate that federal agencies and
departments purchase products from UNICOR. See, e.g., 48
C.F.R. § 8.002(a)(1)(iii) (2003) (“[A]gencies shall satisfy
requirements for supplies or services from . . . Federal Prison
Industries, Inc.”); 48 C.F.R. § 8.602(a) (“Agencies shall
purchase required supplies . . . made in Federal Penal and
Correctional Institutions . . . .”). Additionally, section 4124(a)
requires “Federal departments and agencies and all other
Government institutions of the United States [to] purchase at
not to exceed current market prices, such products”
manufactured by UNICOR “as meet their requirements and
may be available.” 18 U.S.C. § 4124(a). Indeed, UNICOR
is a “mandatory source of supply”of Office Furniture for
federal agencies and departments. See (Br. of Pls. -
Appellants at 5, 9); (Br. of Defs. - Appellees at 4).
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59If UNICO R denies the request, the agency or department may
appeal the decision through UN ICO R’s O mbu dsman. See 48 C.F.R.
§ 8.605; (J.A., 165). In the event this appeal is denied, the federal agency
or department may appeal to decision to the dispute resolution board
pursuant to sectio n 4124(b). See also 48 C.F.R. § 8.605 (c); (J.A., 165).
However, as discussed throughout this opinion, several
provisions of UNICOR’s organic statute ensure that
UNICOR’s operation do not “undu[ly] burden” a single
private industry, 18 U.S.C. § 4122(b)(1), nor “capture more
than a reasonable share of the [federal] market,” 18 U.S.C. §
4122(b)(2). Furthermore, federal agencies and departments
may request waiver approval from UNICOR to purchase
products other than UNICOR items in the event they deem
that their specific product and, or reasonable delivery
requirements cannot be met. See 48 C.F.R. § 8.605. Where
UNICOR grants the waiver request, the federal agency or
department may purchase the product from a private sector
manufacturer through GSA’s FSS program, or undertake a
competitive process governed by federal procurement laws.59
See generally 10 U.S.C. §§ 2302-2332; 41 U.S.C. §§ 5-707.
Relying on these provisions, the Coalition asserts: “Federal
law and regulations including the Competition in Contracting
Act and the Federal Acquisition Regulations establish that
private sector Office Furniture manufacturers have the right
to compete for Federal Office Furniture procurements. [The
Coalition is] listed on the GSA schedule as approved to sell
Office Furniture to the Federal government . . . .” (Br. of Pls.-
Appellants at 61.)
It is well-settled that “[t]he possibility of obtaining work
from a listing in the [FSS] schedule has real business value,
even if there [is] no guarantee of obtaining a certain amount
of work.” See ACE-Fed.Reporters, Inc. v. Barram, 226 F.3d
1329, 1331 (Fed. Cir. 2000); see also Locke v. United States,
283 F.2d 521, 523 (Ct. Cl. 1960) (“We cannot believe that in
this instance plaintiff bargained merely to have his name

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printed in the supply schedule. It appears more important that
being in the schedule created a reasonable probability that
business would be obtained.”). Therefore, in this context, the
Coalition has a property right in competing for Office
Furniture sales to federal agencies. This property right is
limited, however, to those sales not captured by UNICOR’s
mandatory preference either through the limitations present in
UNICOR’s organic statute, or those sales expressly waived by
UNICOR.
Having established the Coalition’s property right, the
second tier of review requires an examination as to whether
UNICOR’s activities constituted a compensable taking.
While compensable takings generally occur as a result of a
physical invasion or confiscation, where “a regulation goes
too far it will be recognized as a taking.” Pa. Coal Co. v.
Mahon, 260 U.S. 393, 415 (1922). “Real property, tangible
property, and intangible property, all may be the subject of
takings claims.” Maritrans Inc., 342 F.3d at 1352 (citing
Lucas, 505 U.S. at 1015; Andrus v. Allard, 444 U.S. 51, 65
(1984); and Ruckelshaus v. Monsanto Co., 467 U.S. 986,
1003-04 (1984)).
Regulatory takings law incorporates both a “categorical
taking,” where a regulation deprives property of all value, and
a “non-categorical” taking, where property is deprived of
some, but not all of its economic value, as a result of
government regulation. See Anderson v. Charter Township
of Ypsilanti, 266 F.3d 487, 493 (6th Cir. 2001) (citing Lucas,
505 U.S. at 1019 n.8). “In the categorical-taking case, once
it is proven that a regulation has deprived the land of all
economic value, compensation is automatically required
under the Fifth Amendment.” Anderson 266 F.3d at 493
(citing Lucas, 505 U.S. at 1015).
Where, as here, the party alleges the presence of a non-
categorical taking, the court employs an “ad hoc, factual
inquiry,” into three significant factors: (1) the economic
82 Coalition for Gov’t Procurement, et al.
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No. 01-2231
impact of the regulation on the claimant; (2) the extent to
which the regulation has interfered with distinct investment-
backed expectations; and (3) the character of the
governmental action. Raceway Park, Inc., 356 F.3d at 677
(citing Connolly v. Pension Benefit Gty. Corp., 475 U.S. 211,
224 (1986)); see also Pa. Central Transp. Co. v. City of New
York, 438 U.S. 104, 124 (1978).
The United States Court of Appeals for the District of
Columbia Circuit has explained the Penn Central factors in
detail:
The meaning of the three factors identified in Penn
Central has been amplified by the Court, both in Penn
Central and in later cases. The regulation’s economic
effect upon the claimant may be measured in several
different ways. See Hodel v. Irving, 481 U.S. 704, 714
(1987) (looking to the market value of a property);
Keystone Bituminous Coal Ass’n v. DeBenedictis, 480
U.S. 470, 495-96 (1987) (looking to whether the
regulation makes property owner’s coal operation
“commercially impracticable”); Andrus, 444 U.S. at 66
(looking to the possibility of other economic use besides
sale, which was prohibited by the challenged regulation);
Penn Central Transp. Co., 438 U.S. at 136 (focusing on
the ability to earn a reasonable rate of return). A
reasonable investment-backed expectation “must be
more than a ‘unilateral expectation or an abstract need.’”
Ruckelshaus, 467 U.S. at 1005-06 (1984) (quoting
Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.
155, 161(1980)). Claimants cannot establish a takings
claim “simply by showing that they have been denied the
ability to exploit a property interest that they heretofore
had believed was available for development.” Penn
Central Transp. Co., 438 U.S. at 130. And the character
of the governmental action depends both on whether the
government has legitimized a physical occupation of the
property, see Loretto v. Teleprompter Manhattan CATV

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Corp., 458 U.S. 419, 434-35 (1982), and whether the
regulation has a legitimate public purpose, see Keystone
Bituminous Coal Ass’n, 480 U.S. at 485. Finally, under
all three of these factors, the effect of the regulation must
be measured on the “parcel as a whole.” See Penn
Central Transp. Co., 438 U.S. at 130-31.
Dist. Intown Prop. Ltd. P’ship v. D.C., 198 F.3d 874, 879
(D.C. Cir. 1999) (internal citations modified).
When viewed through the lens of Penn Central, a myriad
of deficiencies in the Coalition’s takings claim come into
focus. While the Coalition has asserted that UNICOR’s
production during 1991-1995 resulted in $450 million in lost
sales, it has failed to provide any supporting evidence for this
assertion. In addition, it is axiomatic that the Coalition’s
investment-backed expectations are limited by UNICOR’s
exercise of its mandatory source of supply. As the Coalition
acknowledges:
While it may change from year to year, there is a fixed
amount of Office Furniture that the Federal Government
will purchase at any given time. Within this fixed market
of Federal Office Furniture procurements is FPI’s
mandatory source preferences. Regardless of how much
Office Furniture Defendant FPI produces in Federal
penal and correction institutions, the Federal Government
must buy every stick of it before it can purchase Office
Furniture made by the [Coalition].
(J.A., 1456.) This acknowledgment crystalizes the deficiency
of the Coalition’s takings claim. The Coalition continued:
Concerned about the impact this regime could have on
private manufacturers . . . Congress amended FPI’s
statute to ensure that it does not take more than a
reasonable share of the Federal Office Furniture market
84 Coalition for Gov’t Procurement, et al.
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No. 01-2231
without giving the affected private sector vendors who
sell to the Federal government certain due process rights.
(J.A., 1456.) Beyond recognizing that its reasonable
investment-backed expectation is dependent on UNICOR’s
production of Office Furniture for any given year, the
Coalition further recognizes the legitimacy of UNICOR’s
conduct – the production of Office Furniture for the purposes
of employing inmates. Indeed, the lone dispute concerning
UNICOR’s conduct during 1991-1995 is that UNICOR did
not initiate the CARP prior to expanding production. Such
claims sound in due process, rather than takings law. The
Coalition concedes such by stating:
Count 7 . . . alleges that by significantly increasing its
production of Office Furniture from FY 1990-1995,
without undertaking the statutorily required due process
procedures outlined in their organic statute, FPI’s illegal
expansion of Office Furniture Production, FPI
effectuated a regulatory taking in violation of the due
process clause of the Fifth Amendment to the United
States Constitution.
(J.A. 1457) (internal errors in original).
We therefore agree that summary judgment was properly
awarded to UNICOR with respect to the takings claim
because the Coalition has failed to establish the three Penn
Central factors: (1) that it lost $450 million in sales as a result
of UNICOR’s increased production; (2) that it had any strong
investment backed expectations in light of UNICOR’s
mandatory source of supply; and (3) that its interests
prevailed over of the legitimate interests of the federal
government in employing federal inmates.

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VI. THE PASS-THROUGH FURNITURE CLAIM
Prior to oral argument, UNICOR filed notice with the court
indicating that the Board “adopted a resolution directing that
[UNICOR] cease using the ‘pass-through’ practice.” (Letter
from Assistant U.S. Attorney Charles R. Gross, filed Nov. 18,
2002.) The notice asserted that as UNICOR had “voluntarily
ceased use of the [pass-through] practice,” the issue was
moot. Id.
During oral argument, counsel for the Coalition agreed that
the “pass-through” furniture claim was moot, but requested
that the court vacate the district court’s decision in that
regard.
Whether any opinion should be vacated on the basis of
mootness is an equitable question. See U.S. Bancorp Mortg.
Co. v. Bonner Mall P’ship, 513 U.S. 18, 26 (1994). When a
civil case becomes moot pending appellate adjudication, “the
established practice . . . in the federal system . . . is to reverse
or vacate the judgment below and remand with a direction to
dismiss.” United States v. Munsingwear, Inc., 340 U.S. 36,
39 (1950). Vacatur “clears the path for future relitigation” by
eliminating a judgment the appellant could not oppose on
direct review. Id. at 40. “Vacatur is in order when mootness
occurs through happenstance -- circumstances not attributable
to the parties -- or, relevant here, the ‘unilateral action of the
party who prevailed in the lower court.’” Arizonans for
Offical English v. Ariz., 520 U.S. 43, 71-72 (quoting U.S.
Bancorp Mortgage Co., 513 U.S. at 23). “[W]here mootness
results from settlement, however, the losing party has
voluntarily forfeited his right legal remedy by the ordinary
processes of appeal or certiorari, thereby surrendering his
claim to the equitable remedy of vacatur.” U.S. Bancorp
Mortgage Co., 513 U.S. at 25.
Based upon this authority and the unilateral action of the
Board, this claim has become moot. We therefore remand the
86 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
matter to the district court with instruction to vacate its award
of summary judgment on Count XIII of the complaint
addressing UNICOR’s “pass-through” furniture practice.
VII. UNICOR’S ENFORCEMENT OF ITS
MANDATORY SOURCE
The Coalition’s final claim challenges UNICOR’s practice
of selling Office Furniture directly to private sector
contractors employed on federal projects. In such instances,
the private sector contractor has entered into a contract to
construct a federal facility that includes the installation of
Office Furniture. Occasionally, the private sector contractor
will attempt to procure the Office Furniture from a private
manufacturer instead of UNICOR. When UNICOR becomes
aware of the scenario, it attempts to enforce its mandatory
source of supply in three ways: (1) provide the federal agency
or department with a waiver; (2) provide the Office Furniture
directly to the federal agency or department that, in turn, will
provide it to the private sector contractor; or (3) sell the
furniture directly to the private sector contractor for
installation within the federal facility. See (Br. of Defs.-
Appellees at 8); (J.A., 1217-19, 1226b-h). The Coalition
alleges that this third option violates UNICOR’s express
prohibition against selling goods “to the public in competition
with private enterprise.” 18 U.S.C. § 4122 (a).
1. Standing
The district court held that the Coalition lacked standing to
challenge UNICOR’s practice because the Coalition “must
show an actual or threatened harm beyond an imagined
possibility of harm in order to have standing. Here, none of
the Plaintiffs [were] able to allege any kind of personal
injury-in-fact.” 154 F. Supp. 2d at 1155.
Failure to establish standing is a jurisdictional defect. See
Lewis v. Casey, 518 U.S. 343, 349 n.1 (1996). To satisfy the

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requirements of Article III standing, “a plaintiff must,
generally speaking, demonstrate that he has suffered ‘injury
in fact,’ that the injury is ‘fairly traceable’ to the actions of the
defendants, and that the injury will likely be redressed by a
favorable decision.” Bennett v. Spear, 520 U.S. 154, 162
(1997) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61 (1992)).
In the instant matter, the district court failed to give
appropriate consideration to the affidavit provided by Knoll’s
Vice President for Government Sales. See (J.A., 1583-88).
The affidavit demonstrated four identifiable occasions where
Knoll had been requested by general contractors employed in
the construction of federal facilities to submit proposals for
the sale of Office Furniture; it had incurred substantial
expense in preparing its proposals; UNICOR subsequently
enforced its mandatory source of supply on the general
contractor; and the general contractor ultimately purchased
Office Furniture from UNICOR, rather than Knoll. See (J.A.,
1586-88). On at least one occasion, the general contractor
“advised Knoll, Inc. that [it] would have ordered systems
furniture from Knoll, Inc. had they not been forced to procure
systems furniture from [UNICOR].” (J.A., 1587).
Accordingly, Knoll had standing to challenge UNICOR’s
practice.
2. Mootness
Prior to oral argument, UNICOR filed another notice with
the court, this time indicating that Congress had enacted
legislation, Pub. L. No. 107-314, 116 Stat. 2458 (2002), that
mooted the Coalition’s claim. See (Letter from Assistant U.S.
Attorney Charles R. Gross, filed Feb. 3, 2003.) The notice
indicated that the legislation provided that private sector
contractors employed on projects for the Department of
Defense (“DOD”)were “permitted, but [] not required, to
purchase products or services from UNICOR.” Id.
88 Coalition for Gov’t Procurement, et al.
v. Federal Prison Industries, Inc., et al.
No. 01-2231
During oral argument, counsel for the Coalition disagreed
that the claim was moot, alleging that its claim extended
beyond the DOD context.
We agree. It is undisputed that UNICOR enforces its
mandatory source of supply on all private sector contractors
employed on federal projects where the agency has not
received a waiver. A plain reading of the newly enacted
legislation, as well as the implementing regulations,
demonstrate that they limit UNICOR’s practice solely in the
context of DOD projects. See Defense Federal Acquisition
Regulation Supplement; Competition Requirements for
Purchases From a Required Source, 68 F.R. 64559 (Nov. 14,
2003). Consequently, the claim is not moot.
3. UNICOR’s Practice
As UNICOR enforces its mandatory source of supply on an
ad hoc basis, see (J.A., 1225), we afford a pale of deference
to its statutory and regulatory interpretations only to the
extent they are reasonable. See Washington State Dept. of
Social and Health Servs., 537 U.S. at 385. Notwithstanding
the district court’s conclusion as to standing, it went on to
find UNICOR’s practice reasonable, opining
Congress has declared that federal agencies are
required to purchase FPI products unless they procure a
waiver from FPI. As Defendants and common sense
demonstrate, the actual purchaser is not the contractor,
but the federal agency for whom the contractor is
constructing a facility. To allow a federal agency to
escape the legal requirement of obtaining a waiver or
purchasing furniture from FPI simply by purchasing
furniture produced in the private sector using a
subcontractor as a middle-man would subvert the will of
Congress. Moreover, when FPI engages in this practice,
it is not selling goods to the private sector because title
for those goods passes directly to the federal agency for

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whom the facility is being constructed. Therefore, FPI’s
practice of requiring private contractors to purchase FPI
furniture as part of a turn-key facility construction does
not violate FPI's governing statutes.
154 F. Supp. 2d at 1155-56.
The district court’s straightforward response to the issue at
bar is directly on target. The plain language of section
4122(a) prohibits sales “to the public,” but only “in
competition with private enterprise.” 18 U.S.C. § 4122 (a).
As discussed in the context of the Coalition’s takings claim,
the public competes for the federal Office Furniture market
only to the extent UNICOR is not a mandatory source of
supply. Therefore, a sale to a private sector contractor as a
means to enforce its statutory and regulatory mandatory
source of supply for federal agencies and departments
necessarily falls within UNICOR’s authority. As the district
court definitively stated, “common sense” demonstrates that
the actual purchaser in this context is the federal agency or
department.
The Court recognizes the potential for abuse with
UNICOR’s practice, although no actual improprieties have
been demonstrated in case sub judice. The Coalition’s
remedy rests not with the courts, but with the legislature.
VIII. CONCLUSION
For the foregoing reasons, we AFFIRM the order of the
district court, except those provisions concerning Count VIII
of the complaint (the “Pass-Through Furniture” claim). With
respect to Count VIII, we REMAND the matter to the district
court with instructions to VACATE its decision consistent
with our Opinion.

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