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Supplying Principles and Practices > USPS Supplying Practices Process Step 2: Evaluate Sources > Determine Extent of Competition
Determine Extent of Competition
The goal of Postal Service supplying activities is the achievement of best
value for the Postal Service, and sourcing and material management
decisions are made on this basis. Best value is defined in the Best Value
Supplying Principle as "the outcome that provides the optimal combination of
elements such as lowest total cost of ownership, technology, innovation and
efficiency, assurance of supply, and quality consistent with the Postal
Service's needs and market strategy." In the sourcing area, best value is
generally achieved through competition because competition brings market
forces to bear and helps Purchase/SCM teams compare the relative value of
proposals and prices.
Market surveillance is the continuous process of updating market research. It
includes activities designed to keep supply chain professionals abreast of
current technology, product development, and innovative services when
buying is anticipated. Market surveillance is relied on to provide a sense of
the products and services available in the market and their characteristics
and capabilities. Market surveillance is performed by focusing on industry
trends, technological change, and economic conditions. Attending
conferences or trade shows also provides the opportunity to become familiar
with the marketplace, products, pricing, and companies that are new to the
industry. Awareness of the competitive landscape through market
surveillance gives the Postal Service the information necessary to maximize
the opportunity for competition, thus increasing the likelihood of achieving
best value.
Competitive purchases should be made on the basis of adequate competition
whenever feasible. Adequate competition means the solicitation of a sufficient
number of the best qualified suppliers to ensure that the required quality and
quantity of goods and services are obtained when needed and that the price
is fair and reasonable. Competition allows the Purchase/SCM Team to
compare the relative value of proposals and prices to determine the best
value for the Postal Service.
In some circumstances, Postal Service business and competitive objectives
may be met most effectively through a noncompetitive purchase. The
following five scenarios discuss the instances when it is appropriate to use
the noncompetitive method:
• Sole Source - only one supplier exists capable of satisfying a
requirement
• Single Source - selection of a strategic source from a number of
possible sources to fulfill all Postal Service requirements for a
particular class of goods or services
• Compelling business interests - a specific supplier or source can
meet Postal Service needs quickly and efficiently, and the
benefits of doing so outweigh those that may be realized through
competition, as when the need is so urgent that the competitive
method cannot add value
• Industry structure or practice - the industry producing or
supplying the required goods or services is structured in a
manner that renders competition ineffective (e.g., when
purchasing goods or services that are regulated, such as utilities,
or when purchasing from nonprofit or educational institutions that
do not compete in the market place)
• Superior Performance - a supplier's superior performance and
its contributions to the Postal Service's business and competitive
objectives merit award of a particular purchase (e.g., extending
the term or expanding the scope of a contract when a supplier
has performed at such a high level that the extension or
expansion is well deserved, or when a supplier's superior
performance has made such performance beneficial to Postal
Service operations).
Switching costs should also be considered. More information on switching
costs and the associated risks can be found in the Perform Switching Cost
Analysis topic of the Develop Sourcing Strategy task of Process Step 2:
Evaluate Sources.
The Vice President, Supply Management (VP, SM) must review and approve
all noncompetitive purchases valued at more than $10 million. The VP, SM
has delegated noncompetitive review and approval authority for contracts up
to and including $10 million, by letter of delegation, to portfolio managers.
These individuals may, consistent with those delegations, redelegate, by
letter of delegation, some of that authority to subordinate managers and
Contracting Officers. If the estimated value of the noncompetitive purchase is
expected to exceed $10 million, the VP, SM must give prior review and
approval of either the purchase plan or proposed contract award.
If the estimated value of the noncompetitive purchase is expected to exceed
$250,000, the Vice President of the organization requesting the purchase
must endorse the request.
Additional information on sole sourcing and other sourcing strategies can be
found in the Develop and Finalize Sourcing Strategy topic of the Develop
Sourcing Strategy task of Process Step 2: Evaluate Sources.
Develop and Finalize Sourcing Strategy topic, Develop Sourcing Strategy
task, Process Step 2: Evaluate Sources
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