Interim Internal Purchasing Guidelines > 4 Purchasing > 4.5 Special Categories of Purchases

4.5 Special Categories of Purchases

4.5.1 General

Certain Postal Service purchases must by nature receive distinctive treatment, and therefore are purchased to some extent differently from those contained elsewhere in these guidelines. This section identifies those types of purchases, and addresses some of them in detail, providing guidance supplementing that contained elsewhere in these guidelines, and this, in turn, may be supplemented by other such issuances as discussed in 4.5.2.

4.5.2 Supplemental Policies and Procedures

Under delegations issued by the VP, SM, these policies and procedures are originated and developed by individuals within the organizations housing the distinct requirement. Exhibit 4.5.2, Supplemental Policy and Procedural Authority, shows, by requirement category, the Postal Service policy-originating officials delegated this authority, subject to the review and approval of the approving official identified in the exhibit.

Exhibit 4.5.2
Supplemental Policy and Procedural Authority

4.5.3 Professional/Technical and Consultant Services

4.5.3.a General. The Postal Service contracts for professional/technical and consultant services when doing so makes good business sense in light of available personnel resources. For example, short-term expertise may be necessary to assist in the development of new customer service programs or to manage spikes in operational workload. In other cases, long-term contracts for these services may prove more fiscally and technically beneficial than the use of career employees. When contemplating contracting for these services, and for personal services (see 4.5.4), purchase teams must consider the financial commitment and potential return on investment. For certain requirements, such as those affecting craft positions and duties, additional reviews and approvals are required; these include meeting legal and labor agreement obligations set forth in Federal regulations and labor agreements. In these cases, purchase teams must consult with Strategic Initiatives at Headquarters. In addition, reviews and approvals are required for contracts with former Postal Service officers, executives, and employees, regardless of whether these individuals are contracted with directly or are employed or proposed to be employed by a supplier (see 1.6.14).

4.5.3.b Conflicts of Interest. When purchasing professional/technical or consultant services, purchase teams must pay particular attention to the potential for organizational conflicts of interest, and consider using Clause 1-7, Organizational Conflict of Interest, or a similar clause in the contract (see 1.6.8).

4.5.3.c Professional and Technical Services

1. Definitions. Generally, professional services are those performed by individuals or firms of recognized status, such as accounting, engineering, law, and the sciences. Technical services are provided by individuals or firms who are expert in a given field, such as information technology, training, writing and editing, purchasing, marketing and demographics, and other such areas. These services may be used to: (a) provide needed expertise on an individual or group basis; (b) to supplement the career workforce as required by workload; and (c) to provide turn-key services in support of postal operations.

2. Licenses. When prequalifying or purchasing professional services for which individuals are normally required to be licensed (such as medical, legal, accounting, and architecture), licenses must be required as a prerequisite to prequalification or contract award. Acceptable licenses may be limited to those issued by a particular state or entity, but only when local expertise is necessary to successful performance.

3. Required Clauses. All contracts for professional/technical services must include the following clauses:

(a) Clause 4-4, Nondisclosure (Professional Services). The clause may be modified with the approval of the policy-originating official designated in Exhibit 4.5.2 and assigned counsel.

(b) Clause 4-5, Inspection of Professional Services. The clause provides for inspection of the supplier's work product and acceptance of only those products that meet reasonable professional standards. The clause is to be used in lieu of, not in addition to, the standard inspection clauses prescribed in 2.2.

(c) Clause 4-7, Records Ownership. The clause gives the Postal Service ownership of contract files, including copies of all supplier work papers. While this clause is mandatory for professional service contracts, purchase teams have to decide whether to include it or not in technical services contracts, depending on the nature of the service.

4. Other Clauses. Depending on the particular purchase, the following clauses should be included in contracts for professional/technical services:

(a) Clause 4-6, Invoices (Professional Services). This clause is included in all non-fixed-price contracts for professional/technical services. The clause requires presentation of invoices showing who performed the services, the hours and partial hours of service provided each day, and the services provided each hour or partial hour. Suppliers may be allowed to set minimum charges for partial hours or days.

(b) Clause 4-8, Key Personnel. This clause requires use of the key personnel identified in the supplier's proposal, unless the contracting officer approves substitution, and provides for contract termination for failure to comply.

(c) Clause 1-1, Privacy Protection, must be included as applicable. See 1.6.6.

4.5.3.d Consultant Services

1. Definition. Consultant services are services provided by expert individuals or firms possessing exceptional qualifications in a particular technical or professional field. They are used to enhance the understanding of complex issues and to provide new insights into alternate solutions to, or make recommendations on, business or decision-making functions of a postal organization. Consultants neither involve themselves in the day-to-day operations of Postal Service organizations except for study purposes, nor work under the immediate direction and control of Postal Service employees. Usually, consultant service suppliers provide reports or analyses as the deliverable upon completion of their contractual duties.

2. Use. Consultant services are used to enhance the understanding of complex issues and to provide new insights into alternate solutions to, or recommendations on, business or decision-making functions of a postal organization.

4.5.4 Personal Services Contracts

4.5.4.a Definition. A personal services contract is a contract with an individual under the terms of which the individual will: (1) work under the direct supervision of postal personnel; (2) work on postal premises and use postal equipment; and (3) perform duties similar in nature to those of postal employees. A personal services contract may create the appearance of an employee-employer relationship, and may result in additional costs, such as tax withholding. For this reason, purchase teams should strive to use contracting vehicles other than personal services contracts, but, when deemed appropriate, they may be used, subject to the reviews and approvals described in 1.6.14.

4.5.4.b Use. Personal services contracts may be awarded for professional/technical services but may not be awarded for consultant services.

4.5.4.c Contracts. All personal services contracts should be written to ensure that the Postal Service does not incur unnecessary costs or liabilities. Purchase teams should work with assigned counsel to ensure that the interests of the Postal service are protected in areas such as taxes, unemployment liability, etc.

4.5.5 Information Technology

4.5.5.a Definitions

1. Computer. Defined in 8.3.1.

2. Computer software. Defined in 8.3.1.

3. Hardware. Computers and peripheral machines.

4. Information technology (IT). Encompasses all types and categories of computer, networking, and telecommunications systems (where voice and/or data may be transmitted by cable, telephone, or wireless), and all associated hardware, firmware, software, and services. This includes emerging technologies that collect and transmit information such as wireless handheld data collection devices, information kiosks, electronic commerce services, distance learning systems, World Wide Web sites, multimedia, and office equipment such as fax machines and copiers. IT also includes information technology and any equipment or interconnected system or subsystem of equipment that is used in the creation, conversion, or duplication of data or information. IT does not include any equipment that contains embedded technology that is used as an integral part of the product but the principal function of which is not the acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information. For example, HVAC (heating, ventilation, and air conditioning) equipment, such as thermostats or temperature control devices and medical equipment where information technology is integral to its operation is not IT.

5. System life cost. All costs associated with acquiring, operating, and maintaining an information system, including conversion, environmental (such as heating, ventilation, air conditioning), training, and support service costs from the date the system is acquired until it is no longer needed for Postal Service use.

6. Information Security. The protection afforded to information and information resources to protect the integrity, confidentiality, and availability of Postal Service information and the interests of the Postal Service, suppliers, and the public. Security measures, including personnel security, physical and environmental security, application security, hardware and software security, and network and communications security, may be applied to IT resources.

7. Undue burden. A significant difficulty or expense.

4.5.5.b General

1. Technical Standards. Even small-dollar information technology purchases may involve questions of system compatibility, expansion potential, and other complex issues. The Postal Service's Information Technology organization researches, tests, and evaluates information systems and components to ensure quality and intersystem communication capability. Therefore, it is the policy of the Postal Service to acquire information technology in accordance with the technical standards established by Information Technology and concurred in by the VP, SM.

2. Accessibility

(a) General. Section 508 of the Rehabilitation Act Amendments of 1998 requires the Postal Service to ensure that information technology (IT) purchased by the Postal Service allows employees with disabilities and individuals with disabilities who are members of the public to have access to and use of information and data that is comparable to the access and use of information and data by employees and members of the public who do not have disabilities, unless doing so would impose an undue burden (see below).

3. Applicability

(a) General. Unless an exception applies, purchases of IT must meet the applicable accessibility standards at 36 CFR part 1194. Exception determinations are required prior to contract award, except for indefinite delivery contracts and the other circumstances discussed in 4.5.5.b.3(c).

(b) Indefinite Delivery Contracts. Exception determinations are not required prior to award of indefinite delivery contracts, except for requirements that are to be satisfied by initial award. Contracting officers who award indefinite delivery contracts must indicate to requiring and ordering activities which IT the supplier indicates as compliant and where full details of compliance can be found (e.g., the supplier's or other exact Web site location). Before task or delivery orders are issued, requiring and ordering activities must ensure IT meets the applicable accessibility standards at 39 CFR part 1194, unless an exception applies. Accordingly, indefinite delivery contracts may include noncompliant IT items; however, any task or delivery order issued for noncompliant items must meet an applicable exception.

(c) Nonapplication. The accessibility standards at 36 CFR part 1194 do not apply to:

(1) Taking delivery for items ordered prior to June 21, 2001;

(2) (2) Within-scope modifications of contracts awarded before June 21, 2001;

(3) Exercising unilateral options for contracts awarded before June 21, 2001; or

(4) Multiyear contracts awarded before June 21, 2001.

(d) Exceptions

(1) General. The requirements of Section 508 of the Rehabilitation Act as amended do not apply to IT that:

(i) Is acquired by a supplier incidental to a contract.

(ii) Is located in spaces frequented only by service personnel for maintenance, repair, or occasional monitoring of equipment.

(iii) Is being acquired as IT that is available in the commercial marketplace, and the IT meets all the accessibility standards that can be met within time to meet the Postal Service's delivery requirements.

(iv) Would impose an undue burden on the Postal Service.

(e) Basis. In determining whether compliance with all or part of the accessibility standards in 36 CFR part 1194 would be an undue burden, the Postal Service must consider the difficulty or expense of compliance.

4. Documentation

(a) Undue Burden. The requiring or ordering activity must document in writing the basis for an undue burden decision and provide the documentation to the contracting officer for inclusion in the contract file.

(b) Commercial Items. When acquiring commercial items, the requiring or ordering activity must document in writing, for provision to the contracting officer for inclusion in the contract file, the extent to which commercial items fail to meet specific accessibility standards and a description of the market research performed to establish the extent of the commercial IT's noncompliance.

5. Information Technology Guidance

(a) Technical Standards. Information Technology periodically issues standards, policies, and general guidance by means of management instructions, handbooks, and technical bulletins, in order to supplement guidance in terms of updated standards and policy interpretations. The core technical standards which guide information technology purchases are contained in Handbook AS-820, Postal Computing Environment. To ensure compliance with these standards, Provision 4-7, Postal Computing Environment, must be included in all information technology solicitations and resultant contracts.

(b) Technical Appraisals. Information Technology conducts market research and technical appraisals of the information technology marketplace and potential suppliers. Information Technology conducts technical appraisals of potential suppliers at various points during the purchasing process, particularly during the presolicitation phase. The objective is to proactively ensure seamless integration into the Postal Service's computing environment. Suppliers interested in having their products or services appraised by Information Technology must submit a request to that organization. Additionally, contracting officers should encourage requirements organizations to seek a similar review by Information Technology of their current and future requirements. Lastly, prequalification of suppliers should be considered for all information technology purchases (see 3.5.2).

6. Security Considerations. Purchase teams must ensure that specifications or statements of work for IT purchases address the security aspects of the Business Impact Assessment (BIA). The BIA is the first step in the information security assurance process and is discussed in Handbook AS-805, Information Security. Handbook AS-805H, Information Security for Information Technology Contracts, contains additional information security guidelines for purchase teams to consider when drafting specifications or statements of work.

4.5.5.c Technological Substitutions and Enhancements

1. General. Due to the rapid changes in technology, it may be advisable to provide for such changes in Postal Service contracts (a) to conform to commercial market conditions so suppliers are not forced to maintain continued production of obsolete goods, and (b) to enable internal customers the flexibility to upgrade their respective infrastructures along the lines of currently available technology.

2. Substitution of Information Technology Equipment. When it is likely that market forces will change so rapidly that a supplier may be forced to maintain production lines of outdated technology in order to meet the requirements of a Postal Service contract, information technology contracts should include Clause 4-16, Substitution of Information Technology Equipment, to ensure that the supplier has the opportunity to focus its production capabilities on the latest product offerings; simultaneously the Postal Service benefits by receiving the latest equivalent products from the supplier at no additional cost.

3. Technology Enhancement. Contracts should include Clause 4-17, Technology Enhancement, when requirements organizations wish to have the latest technology available. This clause requires suppliers to propose state-of-the-art products regardless of whether or not current offerings are in production. The proposed offerings may or may not be equivalent in price to the offerings under contract, but the capabilities (such as performance capacity) must meet or exceed contract requirements. In these cases, the contracting officer, representing the purchase team, conducts a cost/capability analysis to ensure that price per unit of capability is consistent with the original contract's prices. If the offerings far exceed the Postal Service's needs, the Postal Service may decline to accept the proposal.

4.5.5.d Sources

1. Postal Service Sources. See 3.3.2.

2. General Services Administration (GSA) Sources

(a) GSA provides multiple-award schedule contracts (MASCs) through the Information Technology Schedule 70. This schedule covers purchase, leasing, maintenance, repair services, and repair/spare parts for commercially available information technology, and also covers software and related training, electronic commerce and information technology-related professional services. These schedule contracts do not contain maximum order limitations and are available at www.fss.gsa.gov/pub/schedules, or from:

GSA/FSS
INFORMATION TECHNOLOGY ACQUISITION CENTER
WASHINGTON DC 20406-0001

(b) In addition to MASCs, GSA maintains national requirements contracts and area contracts. Current schedules for teleprocessing services may be obtained from:

GSA TELECOMMUNICATIONS PROCUREMENT
DIVISION (KET)
18TH AND F STREETS NW
WASHINGTON DC 20405-0001

3. Commercial Sources. Commercially available information technology may be purchased, if it meets the requirements of Handbook AS-820.

4.5.5.e Solicitation Provisions

1. Provision 4-4, Demonstrability, must be included in solicitations for commercial hardware or software when a system test using Postal Service test data is required.

2. Provision 4-5, Functional Demonstration, must be included in solicitations for commercial hardware or software when a functional demonstration of one or more products is required.

3. Provision 4-6, System Integrity, must be included in contracts for third-party software installed on all computer systems in the possession of the Postal Service, with the exception of personal computers.

4. Provision 4-7, Postal Computing Environment, must be included in solicitations for commercial hardware or software so as to ensure that standard solutions emerge from the solicitation to the greatest degree possible. This provision also requires the identification of nonstandard solutions by prospective offerors to the contracting officer.

4.5.5.f Clauses

1. Clause 4-9, Inspection and Acceptance - Systems, must be included in contracts for computers with a unit price greater than $50,000. This clause is to be used in lieu of, not in addition to, the inspection clauses prescribed in 2.2. If a computer contract covers other supplies or services also, one of the standard inspection clauses prescribed in 2.2 must be included for the other supplies or services.

2. Clause 4-10, Liquidated Damages - Industrial Supply or Service Items Not Ready for Use, filled in appropriately, must be included in systems contracts when the use of this clause is justified as prescribed by 2.2.

3. Clause 4-11, Use of Hardware or Software Monitors, must be included in contracts whenever monitors will be attached to a computer system.

4. Clause 4-12, Site Preparation, must be included in contracts whenever the Postal Service must specially prepare a site for installation of an information system.

5. Clause 4-13, Software License Warranty and Indemnification, must be included in contracts whenever software is procured by license from the contractor.

6. Clause 4-14, Software Development Warranty, must be included in contracts for customized software.

7. Clause 4-15, Warranty Exclusion and Limitation of Damages, must be included in all contracts for information systems.

8. Clause 4-16, Substitution of Information Technology Equipment, must be included in solicitations and contracts for information technology in which the supplier will be afforded the opportunity to replace the product line(s) being purchased with equivalent items that are newer technology provided the pricing is equal to or less than the items being replaced.

9. Clause 4-17, Technology Enhancement, must be included in all solicitations and contracts which require the supplier to propose newer, more effective, and more economical products on a continuous basis that the Postal Service may incorporate to keep pace with changing technological environments.

10. Clause 4-18, Information Technology Accessibility Standards, must be included in all information technology contracts (see 4.5.5.b.2).

11. Clause 1-1, Privacy Protection, must be included as applicable. See 1.6.6.

4.5.6 Research and Development

4.5.6.a Definitions

1. Applied research. A study concentrated on limited areas and directed toward specific practical ends.

2. Basic research. A systematic, intensive study directed toward fuller scientific knowledge or understanding and prompted primarily by the desire to pursue knowledge for its own sake rather than for any immediate practical application.

3. Research announcement. A general announcement of the Postal Service's research interests, including criteria for selecting proposals and soliciting participation of offerors capable of satisfying the Postal Service's needs.

4. Development. Reduction to a useful form - such as a material, device, system, or method - of the findings and understandings derived from research. It includes the design and testing of prototypes and new processes to achieve specific functional requirements and characteristics.

5. Educational institution. Any corporation, foundation, trust, or state or local government entity operated primarily as an institution of higher learning that offers a course of general studies leading to the granting of academic degrees.

6. Engineering. The effort to refine the materials, devices, systems, methods, prototypes, and processes derived from research and development in order to apply them to specific uses and technologies.

7. Nonprofit organization. Any corporation, foundation, trust, or other entity that is operated for scientific, educational, or medical purposes and is not organized for profit. No private shareholder or individual may profit from such a corporation's net earnings.

4.5.6.b General

1. It is the policy of the Postal Service to encourage firms and entrepreneurs in solving technological problems and advancing postal technology.

2. When in the interest of the Postal Service, appropriate incentives may be provided to the industrial community to develop new products or equipment through its own resources.

3. The use of educational institutions and nonprofit organizations as contractors is encouraged, when appropriate, to further scientific and technological advancements that will modernize and streamline postal operations. University research organizations should be considered a primary source for basic research; they should also be solicited, whenever feasible, for applied research requirements.

4. Contracts for research, engineering, and development may be entered into with individuals under the same general terms and conditions governing contracting with business organizations. When contracting with individuals, prices or pay rates must be determined on a case-by-case basis, taking into account the importance of the contract, the individual's status and professional reputation, and the prices or rate paid previously for similar work. Postal Service or federal pay rates are not an appropriate guide.

4.5.6.c Prequalification

1. Due to the highly specialized nature of research and development, potential suppliers should always be prequalified before issuing solicitations (see 3.5.2).

2. In addition to past performance and capability, the following evaluation factors should be used when evaluating proposals:

(a) Understanding of the statement of work, as shown by the scientific, technical, or analytical approach proposed;

(b) Competence and experience of proposed professional personnel;

(c) Innovative ideas pertinent to the requirement;

(d) Availability and planned use of facilities;

(e) Willingness to devote resources to the proposed work; and

(f) Proposed management and organizational structure.

4.5.6.d Solicitations

1. Types. When the solicitation format prescribed in Appendix A is not suitable and use of a short form research contract (see 4.5.6.e) is not authorized, the contracting officer may use individually addressed letters, circulars, or notices, provided that they contain the terms, conditions, and other provisions required by these guidelines.

2. Research Announcements

(a) The Postal Service uses research announcements with peer or scientific review for the purchase of basic and applied R&D. Research announcements may be used to fulfill requirements for scientific study and experimentation directed toward advancing the state of the art or increasing knowledge or understanding, as well as R&D focused on a specific system or hardware solution.

(b) Contracting officers may use the research announcement technique (see 4.5.6.e.2) when meaningful proposals with varying technical/scientific approaches can be reasonably anticipated. In addition to the standard information required in a solicitation, the research announcement, together with any supporting documents, must describe the Postal Service's research interest, either for an individual program requirement or for broadly defined areas of interest covering the full range of requirements. Notice of availability of the research announcement may be made in scientific, technical, or engineering periodicals.

4.5.6.e Contract Type

1. Indefinite Delivery Contracts. Generally, indefinite delivery contracts should be used for R&D services (see 2.4.6).

2. Short Form Research Contracts (SFRCs)

(a) Use. The following procedures should be used for procurement of basic or applied research when a research announcement is used to publicize the R&D requirement, or a noncompetitive contract will be awarded.

(b) Solicitation

(1) The contracting officer must solicit sources in accordance with 4.5.6.d, using a short form research contract format, which states a research problem and requires offerors to propose a statement of the work to be done.

(2) (2) The solicitation must require that the statement of work include a breakdown showing the amount of effort to be devoted to the contract by each principal investigator and any associate.

(3) The solicitation must require that proposals describe any property to be furnished by the Postal Service or acquired by the contractor for performance of the work. Offerors must state the estimated or known cost of each item; items costing less than $1,000 may be grouped by category. When facilities are to be acquired using contract funds, offerors must explain why that is necessary. All descriptions must be sufficiently detailed to enable the contracting officer to determine whether the property should be furnished by the Postal Service or whether the contractor should be authorized to acquire it.

(4) The solicitation must include the applicable solicitation provisions (see Appendix A).

3. Contract Award

(a) When a proposal is acceptable, either as submitted initially or as revised in writing by the offeror, a contract may be awarded by written acceptance of the proposal.

(b) When acceptance of an entire proposal is not advantageous to the Postal Service, the contracting officer may accept parts of the proposal either by attachment or incorporation by reference.

(c) Options to extend the research effort beyond the initially proposed program may be included in the contract. The cost and period of performance for such options must be separately identified.

(d) If incrementally funded, the contract must specify the total estimated cost for the full term of the research program, both funded and unfunded, and the amount of funds currently obligated. Clause 2-32, Limitation of Funds, must be included in the contract.

(e) SFRCs awarded to institutions and organizations authorized to receive advance payments (see Management Instruction FM-610-96-1, Advance Payments) must be clearly marked "Advance Payment Authorized."

4.5.6.f Limitations on Subcontracting. R&D contractors are selected for their scientific and technological expertise. Therefore, they may not subcontract work without the prior written consent of the contracting officer. In negotiating the contract, the contracting officer must ascertain any plans to subcontract any portion of the work.

4.5.6.g Educational Institutions and Nonprofit Organizations

In addition to the cost principles in 5.2.9 and 5.2.10, R&D contracts with educational institutions and nonprofit organizations are subject, as a matter of Postal Service policy, to the requirements of OMB Circular No. A-110, Administrative Requirements.

4.5.6.h Organizational Conflict of Interest

Organizational conflicts of interest (see 1.6.8) can occur when applied research follows basic research, when development follows applied research, when production follows R&D, or when a study is followed by another study of similar scope or emphasis. Contracting officers must take care to prevent actual or apparent organizational conflicts of interest in these situations. If it appears that an organizational conflict of interest might arise, the contracting officer must include Clause 1-7, Organizational Conflict of Interest, in the solicitation and include it or a negotiated alternative in the resulting contract.

4.5.7 Utility Services

4.5.7.a Definitions

1. Utility services. Refers primarily to electricity, gas, water, steam, sewerage, and regulated telecommunications services available to the general public and performed by governmental agencies or by private companies ordinarily subject to regulation. Other services, such as trash removal, may also be considered utility services when performed by governmental agencies or by private companies subject to regulation.

2. Connection charge. A payment for facilities that are needed in order to make connection with a point of supply and that are installed and owned by the utility supplier.

3. Termination liability. An obligation to pay a portion of the cost of connecting facilities with a point of supply installed and owned by the utility supplier, if the Postal Service terminates the contract before its term expires. The initial amount of the obligation is not more than the agreed cost of connecting the facility, less net salvage when material costs are included. This amount decreases under an amortization formula stated in the contract, until it ultimately reaches zero.

4.5.7.b General

1. Orders Under GSA Contracts. Utility services should be obtained under available GSA areawide contracts, unless they can be obtained more efficiently or at a lower cost under Postal Service contract.

2. Postal Service Contracts

(a) Forms

(1) The terms and conditions under which utility suppliers will agree to furnish services vary from area to area. Flexibility in the use of contract forms and provisions is therefore necessary.

(2) If a utility supplier refuses to execute a formal contract with the Postal Service, the contracting officer may purchase the utility services in accordance with (c) below, provided that a definite refusal is received in writing from a corporate officer of the supplier.

(3) When a utility supplier refuses to execute a contract, the services may be obtained by purchase order or by use of the utility supplier's commercial forms and clauses. When the utility supplier's commercial forms and clauses are used, the contracting officer must delete any language contrary to federal law and Postal Service regulation.

(b) Clauses. The clauses prescribed in this manual must be included in all Postal Service utility contracts, unless the utility supplier objects to their inclusion and the procedures outlined in 4.5.7.b.2(a) above are followed.

(c) Applicable Rules and Procedures. When a federal, state, or local governmental agency has issued regulations or established procedures affecting cost allowability, pricing, rates, and other matters, it is Postal Service policy, as a matter of comity rather than law, to comply with those regulations or procedures, subject to judicial appeal. When no regulations or procedures of a regulatory agency are applicable, Postal Service rules and the general practices of the utilities industry must be followed.

(d) Taxes

(1) Utility contracts do not contain any of the tax clauses prescribed in 7.3.4, and utility invoices often identify taxes as separate line items. Postal Service exemption from such taxes, if any, must be determined on a case-by-case basis.

(2) Questions on tax charges must be referred to assigned counsel.

(3) Charges indicated as taxes on utility bills must be paid until assigned counsel advises that payment is not necessary. Refunds may be claimed for amounts improperly paid.

(e) Connection Charges

(1) A connection charge may be paid only when reasonable attempts to negotiate the contract without the charge have failed.

(2) When some obligation is necessary to secure the required facilities, a termination liability is ordinarily to be preferred over a connection charge.

(3) When the supplier's rules and procedures require payment of an unrefundable fee for connection, in addition to or in lieu of a connection charge, the contracting officer may pay the fee.

(f) Applicability of Construction Standards. Ordinarily, the work performed by a utility in installing connecting facilities is not considered construction work for purposes of the policies in 9.4. However, such work may be considered construction if the contract also calls for other construction work, such as installation of utility distribution lines and equipment within a facility. When such additional work is required, a construction contract (see 4.4) should be used.

4.5.8 Structured Contracts and Controlled Contracts

4.5.8.a Definitions and Examples

1. Structured contract and structured contracting. A contract and its associated solicitation, award, and administration process using special procedures, solicitation provisions, and clauses, under the authority of 4.5.8.b.

2. Controlled contract and controlled contracting. A contract and its associated solicitation, award, and administration process for which authority is restricted and special procedures, forms, solicitation provisions, and clauses are used, under the authority of 4.5.8.b. Controlled contracts are used in such areas as law enforcement, international postal agreements, and revenue production.

4.5.8.b Guidelines

1. Policy-originating officials may, with the approval of the manager, Supply Management Infrastructure, establish structured contract guidelines for any category of contracts under their authority as described in Exhibit 4.5.2.

2. The manager, Supply Management Infrastructure, may designate any category of contract as controlled.