BOP Program Statement 8060.05 § 3

To participate in gainsharing, a factory must have an approved Operating Plan.

a. Determining the Award Pool. If FPI’s corporate net earnings for a given fiscal year meet or

exceed 80% of the Operating Plan’s corporate net income goal, there will be gainsharing for that

fiscal year. The amount of the award pool is 10 percent of all corporate net earnings for that

fiscal year. The staff award pool equals 65 percent and the inmate award pool equals 35 percent

of the total award pool.

Regardless of any further adjustments to earnings, the award pool calculation is considered final

once the qualifying entities have been notified of the individual award amounts.

If corporate net earnings do not meet or exceed 80% of the corporate net income goal listed

in the Operating Plan, there will not be an award pool and no gainsharing award will be

distributed.

b. Business Group Criteria for Factories. Each business group has established specific

operational objectives to be evaluated annually for award participation. These objectives should

demonstrate performance improvement. All operational objectives must be met in order to

obtain credit toward award distribution. The General Managers will inform their factories of the

criteria at the start of each fiscal year.

(1) Manufacturing Factories

(a) Customer Satisfaction. This objective has two components: on-time delivery percentage

and customer return costs. On-time delivery performance is calculated as the number of orders

delivered on time divided by total orders shipped. The minimum on-time delivery percentage

needed to be eligible for gainsharing will be determined by the General Manager prior to the

beginning of the fiscal year. To be eligible for gainsharing, factories must also have customer

return costs that are below 2% of sales revenue.

(b) Annual Overhead. Actual total overhead expense, expressed as a percentage of invoiced

shipments, compared to the total Operating Plan budgeted overhead expense, expressed as a

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percentage of budgeted invoiced shipments. The percentage needed to be eligible for

gainsharing will be determined by the General Manager prior to the beginning of the fiscal year.

(c) Annual Inventory Value. Annual average inventory expressed as a percentage of actual

sales for the year compared to planned average inventory as a percentage of planned annual

sales. If a factory maintains approved safety stock not included in the Operating Plan, the value

may be deducted to determine the inventory value. The percentage needed to be eligible for

gainsharing will be determined by the General Manager prior to the beginning of the fiscal year.

(2) Recycling Factories

(a) Annual Overhead. Actual total overhead expense, in dollars, as a percentage of the total

overhead budget established in the annual Operating Plan. The percentage needed to be eligible

for gainsharing will be determined by the General Manager prior to the beginning of the fiscal

year.

(b) Sales Revenue Generated Per Inmate. The amount needed to be eligible for gainsharing

will be determined by the General Manager prior to the beginning of the fiscal year.

(3) Services Factories. Due to the varied nature of services factories, criteria have been

developed by service or product group:

(a) Print and Sign. These factories have the same criteria as the manufacturing factories

(Section 3.b.(1)).

(b) Data (Patents/RTIS)

■ Annual Overhead. Actual total overhead expense, expressed as a percentage of sales,

compared to the total Operating Plan budgeted overhead expense, expressed as a percentage

of budgeted sales. The percentage needed to be eligible for gainsharing will be determined

by the General Manager prior to the beginning of the fiscal year.

■ Quality. Improve acceptable quality standards by 1% or have 11.5 or fewer errors per

100,000 keystrokes using quality performance tracking measures already in place.

Acceptable quality standards will be reviewed annually by the General Manager.

(c) Call Centers

■ Annual Overhead. Actual total overhead expense, expressed as a percentage of sales,

compared to the total Operating Plan budgeted overhead expense, expressed as a percentage

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of budgeted sales. The percentage needed to be eligible for gainsharing will be determined

by the General Manager prior to the beginning of the fiscal year.

■ Productivity. Improvement to scheduled phone time versus actual time on dialer in

accordance with customer requirements – percentage of improvement will be established

annually by the General Manager.

(d) Distribution

■ Annual Overhead. Actual total overhead expense, expressed as a percentage of sales,

compared to the total Operating Plan budgeted overhead expense, expressed as a percentage

of budgeted sales. The percentage needed to be eligible for gainsharing will be determined

by the General Manager prior to the beginning of the fiscal year.

■ On-Time Delivery. Percentage of on-time delivery needed to be eligible for gainsharing

will be determined by the General Manager prior to the beginning of the fiscal year.

(e) Laundries

■ Annual Overhead. Actual total overhead expense, expressed as a percentage of sales,

compared to the total Operating Plan budgeted overhead expense, expressed as a percentage

of budgeted sales. The percentage needed to be eligible for gainsharing will be determined

by the General Manager prior to the beginning of the fiscal year.

■ On-Time Delivery. Percentage of on-time delivery needed to be eligible for gainsharing

will be determined by the General Manager prior to the beginning of the fiscal year.

c. Business Group and FMB Support Staff (i.e., Operations Managers, Business Managers,

and Field Accountants). The business group and Financial Management Branch (FMB)

support staff award amount is calculated based on the qualified factory as a percentage of total

factories in the business group. For example, a business group has 10 factories with five

factories meeting the criteria. The business group and factory support staff would receive 50%

of the staff award amount.

d. Corporate Business Group and Support Groups. The corporate objectives are listed

below. Both corporate objectives must be met in order to obtain credit toward award

distribution.

(1) Group General and Administrative Overhead. Actual total overhead expense must not

exceed budgeted Operating Plan overhead.

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(2) Development and execution of cost savings initiative that will result in overall cost

savings to the corporation and that are not already captured in the Operating Plan. The

percentage of savings needed to be eligible for gainsharing will be determined by the Assistant

Director/Chief Executive Officer of FPI prior to the start of the fiscal year.

e. Determining Factory Award Total. The value per share is determined by the sum of

qualifying factory staff and corporate staff and inmates, as determined by FMB in conjunction

with the approved Operating Plan. FMB will take the following steps to compute each total

award:

■ Compute the award pools for staff and inmates for each eligible factory and corporate group.

■ Compute share value of support staff with proportional shares (hub staff).

■ If applicable, compute award pools for staff members outside FPI who have clearly and

significantly contributed to the success of the factory (e.g., Rear Gate Officer or correctional

services staff working in FPI).

Example: There are two factories at a location. Factory A is eligible for gainsharing and has 15

staff and 168 inmates who work in the factory. This factory absorbs 70 percent of support

expenses at the location per the annual Distribution of Manufacturing General Expense. There

are nine staff and 28 inmate support positions. The total shares for Factory A would be:

Factory Staff 15

Support Staff (9 x 70%) 6.3

21.3 staff shares

Factory Inmates 168

Support Inmates (28 x 70%) 19.6

187.6 inmate shares