The Postal Service recently issued a revised version of its purchasing policy manual, called the Supplying Principles and Practices (SPP). The changes adopt recommendations made by the USPS Office of Inspector General (OIG) in two high-level reviews conducted in 2010. The revisions add new procedures and requirements applicable to noncompetitive procurements, and establish an internal Competition Advocate. For more details, read on.

Competition Advocate

Perhaps the most significant change in the January 2011 edition of the SPP is the creation of a new officer known as the "Competition Advocate." The Competition Advocate is Doug Glair, who is also the manager of SCM Strategies and reports directly to the Vice President for Supply Management. The Competition Advocate is generally responsible for promoting competition throughout the purchasing process. The Competition Advocate is charged with "challenging barriers to the competition of Postal Service requirements." All noncompetitive procurement requests valued at $1 million or more must be approved by the Competition Advocate. In addition, the Competition Advocate is to produce an annual report on noncompetitive purchase activity, which is to be distributed both internally at USPS and publicly.

Noncompetitive Procurement Request

Another direct result of the OIG's investigation of Robert Bernstock, former USPS President of Mailing and Shipping Services, is the creation of a new internal procedure for initiating a noncompetitive procurement. Once it has been preliminarily recommended that a purchase be made noncompetitively, the requesting organization must submit a Noncompetitive Procurement Request (NPR) to the contracting officer. If the estimated cost of the procurement exceeds $250,000, the NPR must be approved by the responsible USPS Vice President.

The NPR is then reviewed by the contracting officer. If the purchase is valued at $1 million or more, the contracting officer must forward a copy of the NPR to the Competition Advocate. In reviewing Noncompetitive Procurement Requests (NPRs), the Competition Advocate will consider the following questions:

  • Is the NPR based on sound business reasons?
  • Is the NPR justified under one of the four "business scenarios" for noncompetitive procurements?
  • Are the solicitation's specifications or statement of work unduly restrictive?
  • Does the NPR negatively impact USPS's commitment to supplier diversity?
  • What plans for future competition of the requirement are realistic and achievable?

After the Competition Advocate reviews the NPR along these lines, it goes back to the contracting officer. The contracting officer then continues to process the NPR based on these recommendations and his or her own findings. The contracting officer must also include in the file a written evaluation of the proposed supplier's past performance and supplier capability. The contacting officer must document his or her approval of the NPR if the action is within his or her delegated authority or, if not, forward to higher level authority.

If there is a disagreement between procurement and requiring activity personnel as to whether noncompetitive purchasing is appropriate, the parties must collaborate and allow the requesting authority to provide additional or new information which may bear on the matter. The Competition Advocate may assist these internal groups with their deliberations.

NPRs valued at up to $10 million must be approved by the appropriate portfolio manager (Facilities, Mail Equipment, Services, Supplies, and Transportation). Portfolio managers, however, may delegate authority to team leaders and managers for NPRs at or below $250,000 in value. NPRs valued at $10 million or more must be approved by the Vice President for Supply Management, as must any NPR for professional, technical, or consultant services valued at $1 million or more. All noncompetitive contract awards valued at $1 million or more must be publicized (typically, at fedbizopps.gov).

Conflicts of Interest

The SPP adds a new section, 7-15, entitled "Conflicts of Interest." This section makes clear that postal employees are prohibited from participating officially in any matter in which the employee (or the employee's spouse, child, general partner, or prospective employer) has a financial interest. A postal employee who identifies any such conflict of interest must immediately disqualify him/herself from further involvement and contact the agency's ethics counsel. The employee may have no further involvement unless he or she receives written approval by ethics counsel.

In addition, postal employees must avoid taking any action that could lead to an appearance that the employee has lost his/her ability to remain impartial in performing his/her official duties. Any postal employee involved in a contracting activity must disclose any personal or business relationship the employee has with any third-party that may have a direct or indirect interest in the contract matter at hand.

Similarly, whenever a postal employee is selected to participate in a proposal evaluation team, that employee is required to complete a Conflict of Interest Certification and Non Disclosure Agreement. In addition, when non-Postal Service employees are members of the proposal evaluation team, the contracting officer must take steps to safeguard against or mitigate any conflicts of interest presented by that person's involvement.

Out of Scope Change Orders

The SPP amends section 5-8.8, describing the issuance of Change Orders, to note that unilateral changes are only permitted if they are within the general scope of the contract. Whether or not a change is within scope depends upon the context of the specific contract, but generally a change is within scope if it does not change the nature of the goods and services required by the original contract.

If a proposed change is outside the scope of the contract, the SPP now advises that it should not be issued as a change order, but should be treated as a new purchase or a noncompetitive purchase and processed accordingly. Contracting officers and approving officials should closely monitor the number and types of modifications made to a particular contract to ensure these actions continue to obtain the best value and further the agency's business and competitive interests.

Applicability to HCR Contractors

The new SPP procedures for noncompetitive procurements do not apply to the renewal of Highway Contract Route (HCR) contracts. HCR renewals might at first appear to be non-competitive purchases, because they involve the negotiation of a contract with only a single party. However, there are some important differences. First, renewals arise only after an HCR contract has initially been competitively awarded. So competition was indeed held at some point in the process. Renewals can thus be seen as the extension of a competitively-awarded contract justified on the basis of superior performance, which is one of the four SPP stated grounds for approving a non-competitive procurement.

Second, renewals are closer to a contractual right of first refusal than a brand new non-competitively awarded contract. The terms and conditions applicable to HCR contracts provide that HCR contracts may be renewed, and there is even a prescribed process for appealing non-renewal decisions to a higher level authority.

Third, statutory authority exists for the renewal of mail transportation contracts. Statutory authority pertaining to Postal Service contracting is quite scarce, because the Postal Service is exempt from many (but not all) federal procurement laws. So any actual statutory authority addressing renewals should be given great weight. Section 5005(b)(2) of Title 39 of the United States Code provides that mail transportation contracts "may be renewed." There is no such language concerning the procurement of other types of supplies or services.