Step 1

Cook bacon until crisp. Crumble bacon and set aside.

Step 2

Dice unpeeled red potatoes into 1/2-inch cubes.

Step 3

Place potatoes in a large Dutch oven, cover with water, and bring to a boil. Let boil for 10 minutes or until 3/4 cooked.

Step 4

In a separate large Dutch oven, combine melted butter and flour, mixing until smooth.

Step 5

Place over low heat and gradually add half-and-half, stirring constantly. Continue to stir until smooth and the liquid begins to thicken.

Step 6

Add Velveeta and stir well.

Step 7

Drain potatoes and add to cream mixture.

Step 8

Stir in pepper, garlic powder, and hot pepper sauce. Cover and cook over low heat for 30 minutes, stirring occasionally.

Step 9

Place soup into individual serving bowls and top with crumbled bacon, shredded cheese, chives, and parsley.