1 Authority, Responsibility and Policy

1.6 General Policies

1.6.1 Business Objectives and Practices

The primary goal of Postal Service purchasing is to support the Postal Service's business and competitive objectives. To meet this mandate, purchase teams, headed by the contracting officer, determine the most effective business practices for a given purchase. These business practices include such matters as whether a purchase should be made competitively or noncompetitively and whether suppliers should be prequalified. In making these determinations, purchase teams must consider the potential ramifications on other important business objectives, such as supplier diversity, supplier relations, and the Postal Service's obligation to be business-like in, and accountable for, its actions.

1.6.2 Best Value

The Postal Service awards its contracts to the suppliers offering the best value to the Postal Service. What constitutes the best value will depend on the goods or services being purchased. When a purchase is made competitively, best value is determined by the comparative analysis of the value contained in a proposal, taking into consideration such matters as the Postal Service's business objectives, suppliers' past performance and capability, price and total cost of ownership, quality and risk (see, generally, 2.1.9). Ordinarily, a best value determination is made by the purchase team, subject to applicable review and approval.

1.6.3 Competition

1.6.3.a Generally, purchases valued at more than $10,000 should be made on the basis of adequate competition, although, in some cases, purchase teams may decide during purchase planning that the most effective business practice is to make the purchase noncompetitively (see 2.1.6). Adequate competition means the solicitation of a sufficient number of qualified suppliers to ensure that the required quality and quantity of goods and services is obtained when needed and that the price is fair and reasonable.

1.6.3.b Contracting officers, working with the purchase team, must determine that adequate competition has been obtained when competition is used. In making that determination, contracting officers must take into account both the Postal Service's business objectives and its commitment to identifying new suppliers and providing opportunities for them to join the Postal Service's supplier base.

1.6.3.c Competition among prequalified suppliers is sufficient to meet the adequate competition standard.

1.6.4 Contracts with Postal Service Employees and Their Immediate Families

1.6.4.a Except as provided in b and c below, contracts may not be awarded to Postal Service employees, their immediate families, or business organizations substantially owned or controlled by Postal Service employees or their immediate families. Postal Service employees means all postal officers and employees, whether in full-time, part-time, career or noncareer positions, including specifically persons in temporary positions such as postmaster replacements and rural carrier reliefs. Immediate family means spouse, minor child or children, and individuals related to an employee by blood who are residents of the employee's household.

1.6.4.b The prohibition against contracting with Postal Service employees and their immediate families may be waived (all waivers must be in writing), by the contracting officer for:

1. New real estate leases of interior space of 3,000 square feet or less.

2. Renewals of existing highway contract routes with immediate family members of a postal employee, subject to review and concurrence by the Associate Ethical Conduct Officer.

3. Cleaning service contracts with immediate family members of nonsupervisory employees.

4. The licensing of a patented invention that is the sole property of the employee.

1.6.4.c This prohibition does not apply to the lease of an individual employee's vehicle in connection with his or her employment, and renewals and extensions of leases of interior space of 3,000 square feet or less. When to do so is in the best interests of the Postal Service, contracting officers may renew or extend existing leases of over 3,000 square feet from Postal Service employees or their immediate families, or business organizations substantially owned or controlled by them, with the concurrence of the Associate Ethical Conduct Officer (see 39 CFR 447.31).

1.6.5 Release and Exchange of Information

1.6.5.a General. The Postal Service makes records, data, and information available to the public to the maximum extent consistent with the Postal Service's interest, the privacy rights of customers, employees, and other individuals, ownership of rights in the data requested (see Chapter 8), and the need to protect Postal Service and other confidential business information (including information relating to the Postal Service's commercial operations) from disclosure.

1.6.5.b Release. Records properly identified and requested by any member of the public must be made available, to the extent not exempt from disclosure, in accordance with Handbook AS-353, Guide to Privacy and the Freedom of Information Act, and implementing regulations in 39 CFR 265.

1.6.5.c Exchange. Subject to any restrictions on disclosure, the Postal Service exchanges information with other government agencies regarding the performance of suppliers.

1.6.6 Privacy Protection

1.6.6.a General. When required by 1.6.6.b below, contracts direct suppliers and subcontractors to comply with Postal Service requirements protecting the privacy of customer, employee, and other individual's information, as well as postal information and records. These requirements include the Privacy Act of 1974 (5 USC 552a), implementing regulations at 39 CFR 266-267, and the privacy policy at www.usps.com/common/docs/privpol.htm.

1.6.6.b Clause 1-1, Privacy Protection. Clause 1-1, Privacy Protection, must be included in:

1. Contracts in which a supplier or subcontractor operates a Privacy Act system of records on the Postal Service's behalf;

2. Contracts in which a supplier or subcontractor will have access to any Postal Service customer information, including address information;

3. Contracts in which a supplier or subcontractor assists the Postal Service in establishing or administering a customer Web site, or places links or ad banners on a Postal Service Web site or any Web site on the Postal Service's behalf; and

4. Contracts in which a supplier or subcontractor assists the Postal Service to conduct a marketing e-mail campaign.

1.6.7 Advance Payments and Progress Payments

1.6.7.a General. Usually, the Postal Service pays for supplies and services after delivery or performance. However, for some purchases, sources may be unavailable or competition too limited without the availability of advance payments or progress payments.

1.6.7.b Advance Payments. Approval to make advance payments must be obtained as required by Management Instruction FM-610-2003-1, Advance Payments.

1.6.7.c Progress Payments

1. If the dollar value of a prospective contract is within the contracting officer's delegated contracting authority, he or she may approve the use of progress payments for the particular contract. For contracts over $1,000,000 (excluding construction, architect/engineer and construction management contracts), progress payments must also be approved by the VP, Finance.

2. Before approving progress payments, the contracting officer must make a written determination establishing that:

(a) Progress payments are in the Postal Service's best interests.

(b) The supplier's accounting system and controls are adequate for proper administration of progress payments, or their adequacy will be ascertained before contract award.

(c) Monthly progress reports will be obtained from the supplier, showing progress of the work as related to progress payments made.

1.6.7.d Clauses. Any contract providing for advance payments must include Clause 1-2, Advance Payments. Any contract, other than a construction contract, providing for progress payments must include Clause 1-3, Progress Payments. (For construction contracts, see Clause B-48, Payment (Construction).)

1.6.7.e Partial Payment. See 6.4.1.b regarding partial payments to suppliers.

1.6.8 Conflicts of Interest

1.6.8.a Organizational Conflicts of Interest

1. An organizational conflict of interest exists when the nature of the work to be performed under a contract may give an offeror an unfair competitive advantage, or when an offeror has other interests that may impair its objectivity or ability to perform satisfactorily. Such conflicts are not limited to any particular type of purchase, but are more likely to occur in contracts involving:

(a) Professional services (see 4.5.3).

(b) Consultant services (see 4.5.3).

(d) Projects that are procured in separate phases, such as design and then construction or research and development and then production.

2. As part of purchasing planning (see 2.1) contracting officers, with the assistance of the purchase team, must attempt to identify potential conflicts of interest so that they may be avoided or mitigated. When a potential conflict is foreseen, the contracting officer should consult with assigned counsel and obtain the assistance of appropriate technical specialists to mitigate or avoid conflict. Such mitigation actions may include, but are not limited to, the development of solicitation provisions restricting competition to offerors not subject to a conflict of interest, or a contract clause limiting the supplier's eligibility for future contracts or subcontracts or other actions to mitigate or avoid an apparent conflict such as the adoption of measures to ensure as even a competition as possible, as may be in the interest of the Postal Service and the offerors. Any limit on future contracts must be for a reasonable period sufficient to avoid unfair competitive advantage or potential bias. See, for example, Clause 1-7, Organizational Conflict of Interest.

3. If it does not become apparent until proposals are received that participation by a particular offeror could lead to a conflict of interest and unfair competition, the offeror may be disqualified and its proposal rejected, or the contracting officer may take such other actions as deemed necessary in the interest of the Postal Service and the offerors to avoid or mitigate the situation, acting in the interest of the Postal Service, and in consultation with assigned counsel and appropriate technical specialists to ensure a fair competition.

4. If the contracting officer determines to mitigate a situation that could lead to a conflict or which appears to constitute a conflict of interest, such determination should be reduced to a written analysis of the course of action chosen. Such analysis should include a consideration of benefits and detriments to the Postal Service and the offerors and may consider information provided by offerors in response to the solicitation or obtained during negotiations.

5. The provisions of this section may be waived as to any procedure or rule by determining that its application in a particular situation would not be in the Postal Service's interest. Any such waiver should be in writing by the contracting officer and processed in accordance with 1.3.

1.6.8.b Participation by Members of Congress. The participation of members of Congress in contracts or agreements made on behalf of the United States (including the United States Postal Service) is prohibited by 41 USC. section 22.

1.6.9 Standards of Conduct

Postal Service employees are held to the highest standard of conduct in the performance of their duties, and must conduct themselves so as to avoid even the appearance of any impropriety. All employees must adhere to the Standards of Ethical Conduct for Employees of the Executive Branch, 5 CFR 2635.

1.6.10 Gratuities or Gifts

1.6.10.a Postal Service employees, with limited exceptions, are prohibited from accepting gratuities or gifts from suppliers or persons seeking postal contracts or other business under detailed rules prescribed in 5 CFR 201-205.

1.6.10.b Clause 1-5, Gratuities or Gifts, which is incorporated by reference in Clause 4-2, Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders, provides for termination of the contract for default upon a finding by the Postal Service Board of Contract Appeals that a supplier, or the supplier's agent or representative, offered or gave a gratuity or gift to a Postal Service employee to obtain a contract or favorable treatment under a contract.

1.6.10.c Information or allegations concerning unlawful gratuities or gifts must promptly be referred to the Office of the Inspector General (OIG). If the OIG finds evidence that an unlawful gratuity or gift was offered or given, the contracting officer must determine whether debarment is appropriate (see 3.7.1.d), in addition to actions taken under a specific contract.

1.6.11 Supplier Clearances

1.6.11.a ASM 272.3 requires that all individuals performing services pursuant to Postal Service purchases (other than mail transportation contracts, see 4.4) who have access to occupied Postal Service facilities, and/or Postal Service information and resources, including Postal Service computer systems, must obtain clearance before being provided that access. In accordance with that regulation, the contracting officer and the purchase team determine, with the concurrence of the Inspection Service, when a clearance requirement exists.

1.6.11.b Include Provision 1-1, Supplier Clearance Requirements, in any service contract, other than a mail transportation contract, for which a supplier clearance requirement exists.

1.6.12 Strategic Alliances

Strategic alliances are contractual agreements used to promote marketing initiatives that benefit the Postal Service, enhancing postal business performance through increased revenues, reduced costs, or improved customer satisfaction. They result in partnerships that combine the core strengths, competitive advantages, or needs of the Postal Service with the attributes of other companies for mutual market advantage. Strategic alliances are not purchasing contracts, and may not be used to replace or supplement the purchasing methods prescribed in these guidelines, which do not apply to strategic alliances. Handbook F-66D, Other Investment-Related Policies and Procedures, contains further guidance on strategic alliances.

1.6.13 Domestic Preference

1.6.13.a General. The Postal Service gives preference to domestic-source products and materials when purchasing supplies and services. With respect to individual purchases or purchase categories, the Postmaster General may adopt more stringent standards for domestic manufacture when in the best interests of the Postal Service.

1.6.13.b Supplies

1. Applicability. These procedures apply to all purchases of supplies or services that involve the furnishing of supplies. Deviations may be authorized by the VP, Supply Management.

2. Definitions

(a) End products. Articles, materials and supplies to be purchased for Postal Service use.

(b) Components. Articles, materials and supplies directly incorporated in end products.

(c) Domestic-source end products. An unmanufactured end product mined or produced in the United States or an end product manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all of its components. The cost of components includes transportation costs to the place of incorporation into the end product and, in the case of components of foreign origin, duty (whether or not a duty-free entry certificate is issued). For purchases in excess of $25,000, Canadian end products are treated as domestic source end products. The articles and materials listed in 1.6.13.d are considered to have been mined, produced, or manufactured in the United States, regardless of their source in fact.

(d) Foreign end product. An end product other than a domestic-source end product.

(e) Domestic proposal. A proposed price for a domestic-source end product, including transportation to destination.

(f) Foreign proposal. A proposed price for a foreign end product, including transportation to destination and duty (whether or not a duty-free entry certificate is issued).

(g) Canadian end product. An article that is wholly the growth, product, or manufacture of Canada or, in the case of an article consisting in whole or in part of materials from another country, has been substantially transformed in Canada into a new and different article of commerce distinct from that from which it was transformed. For purposes of calculating the value of the end product, it includes the value of services (except transportation services) incidental to the article, provided that the value of the incidental services does not exceed the value of the article itself.

3. Requirement. Only domestic-source end products may be purchased, except when the VP, Supply Management, determines that:

(a) The articles, materials or supplies are of a class or kind not mined, produced or manufactured in the United States in sufficient and reasonable available commercial quantities of satisfactory quality (see 1.6.13.d); or

(b) Purchases of domestic-source end products would be inconsistent with the interest of the Postal Service, or that its cost would be unreasonable, as when the price comparison procedures described in 1.6.13.b.5 result in the purchase of a foreign end product.

4. Proposal Evaluation

(a) If performance evaluation factors will have a significant weight in proposal evaluation, domestic-source end products receive a preference in the case of closely ranked proposals, but no price comparison should be made.

(b) If award is to be based solely on price, each foreign price proposal must be adjusted for purposes of evaluation by adding to the foreign proposal (inclusive of duty) a factor of six percent of that proposal. If a tie results between a foreign proposal and a domestic proposal, the domestic proposal must be selected for award. When more than one line item is involved, the six percent evaluation factor is applied on an item-by-item basis, except that the factor may be applied to any group of items that the solicitation specifies will be awarded as a group.

5. Solicitation Provision. Provision 1-2, Domestic Source Certificate - Supplies, is incorporated by reference in Provision 4-3, Representations and Certifications, and must be checked-off by contracting officers when the solicitation calls for the purchase of supplies.

6. Clause. Clause 1-94-2, Preference for Domestic Supplies, is incorporated by reference in Clause 4-2, Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders, and must be checked-off by contracting officers when the contract calls for the purchase of supplies.

1.6.13.c Construction Materials

1. Applicability. The procedures in this part apply to all construction contracts. Deviations may be authorized by the VP, Supply Management.

2. Definitions

(a) Components. Articles, materials, and supplies incorporated directly into construction materials.

(b) Construction materials. Articles, materials, and supplies brought to the construction site for incorporation into the building or work.

(c) Domestic construction material. This means (1) an unmanufactured construction material mined or produced in the United States, or (2) a construction material manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. The cost of each component includes transportation costs to the place of incorporation into the construction material and any applicable duty (whether or not a duty-free entry certificate is issued). Components of foreign origin of the same class or kind as those listed in 1.6.13.d are treated as domestic.

(d) Foreign construction material. A construction material other than a domestic construction material.

3. Requirement. Only domestic construction materials may be used in construction, except:

(a) When the contracting officer determines that use of a particular domestic construction material would be impracticable, or that its cost would be unreasonable, under guidelines established by the VP, Supply Management, in the relevant handbook; or

(b) When the VP, SM, determines that a construction material is not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of satisfactory quality (see 1.6.13.d).

4. Solicitation Provision. Provision 1-3, Domestic Source Certificate - Construction Materials, is incorporated by reference in Provision 4-3, and must be checked-off by contracting officers when the solicitation calls for the purchase of construction materials.

5. Clause. Clause 1-10, Preference for Domestic Construction Materials, is incorporated by reference in Clause 4-2, and must be checked off by contracting officers when the contract calls for the purchase of construction materials.

1.6.13.d List of Excepted Articles and Materials

1. General. The VP, Supply Management, has determined that the articles and materials listed below are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of satisfactory quality, or that it would be inconsistent with the interest of the Postal Service to apply the domestic preference policy to these articles and materials. When incorporated into end products or construction materials manufactured in the United States, these items may be regarded as components of domestic origin for the purpose of determining the origin of the manufactured end products or construction materials:

Acetylene, black.

Agar, bulk.

Anise.

Antimony, as metal or oxide.

Asbestos, amosite, chrysotile, and crocidolite.

Bamboo shoots.

Bananas.

Bauxite.

Beef, corned, canned.

Beef extract.

Bephenium hydroxynapthoate.

Bismuth.

Books, trade, text, technical, or scientific; newspapers; pamphlets; magazines; periodicals; printed briefs and films; not printed in the United States and for which domestic editions are not available.

Brazil nuts, unroasted.

Cadmium, ores and flue dust.

Calcium cyanamide.

Capers.

Cashew nuts.

Castor beans and castor oil.

Chalk, English.

Chestnuts.

Chicle.

Chrome ore or chromite.

Cinchona bark.

Cobalt, in cathodes, rondelles, or other primary ore and metal forms.

Cocoa beans.

Coconut and coconut meat, unsweetened, in shredded, desiccated, or similarly prepared form.

Coffee, raw or green bean.

Colchicine alkaloid, raw.

Copra.

Cork, wood or bark and waste.

Cover glass, microscope slide.

Crane rail (85-pound per foot).

Cryolite, natural.

Dammar gum.

Diamonds, industrial, stones and abrasives.

Emetine, bulk.

Ergot, crude.

Erythrityl tetranitrate.

Fair linen, altar.

Fibers of the following types: abaca, abace, agave, coir, flax, jute, jute burlaps, palmyra, and sisal.

Goat and kidskins.

Goat hair canvas.

Grapefruit sections, canned.

Graphite, natural, crystalline, crucible grade.

Hand file sets (Swiss pattern).

Handsewing needles.

Hemp yarn.

Hog bristles for brushes.

Leather, sheepskin, hair type.

Lavender oil.

Manganese.

Menthol, natural bulk.

Mica.

Microprocessor chips (brought onto a government construction site as separate units for incorporation into building systems during construction or repair and alteration of real property).

Modacrylic fur ruff.

Nickel, primary, in ingots, pigs, shots, cathodes, or similar forms; nickel oxide and nickel salts.

Nitroguanidine (also known as picrite).

Nux vomica, crude.

Oiticica oil.

Olive oil.

Olives (green), pitted or unpitted, or stuffed, in bulk.

Opium, crude.

Oranges, mandarin, canned.

Petroleum, crude oil, unfinished oils, and finished products.

Pine needle oil.

Platinum and related group metals, refined, as sponge, powder, ingots, or cast bars.

Rabbit fur felt.

Radium salts, source and special nuclear materials.

Rosettes.

Rubber, crude and latex.

Silk, raw and unmanufactured.

Spare and replacement parts for equipment of foreign manufacture, and for which domestic parts are not available.

Spices and herbs, in bulk.

Sugars, raw.

Swords and scabbards.

Talc, block, steatite.

Tantalum.

Tapioca flour and cassava.

Tartar, crude; tartaric acid and cream of tartar in bulk.

Tea in bulk.

Thread, metallic (gold).

Thyme oil.

Tin in bars, blocks, and pigs.

Triprolidine hydrochloride.

Woods; logs, veneer, and lumber of the following species: Alaskan yellow cedar, angelique, balsa, ekki, greenheart, lignum vitae, mahogany, and teak.

Yarn, 50 Denier rayon.

1.6.14 Contracts With Former Postal Service Officers, Executives, and Employees

1.6.14.a General. Under certain conditions, the Postal Service contracts with former officers, executives, and employees when their expertise is deemed important to furthering the business and competitive interests of the Postal Service. Whether these individuals are the subject of personal services contracts, or are key personnel, expert, or consultants employed by a supplier, the following restrictions apply and these procedures must be followed.

1.6.14.b Contracts With Former Officers and Executives

1. General. The Postal Service does not contract with former officers or Postal Service Executive Service (PCES) executives or entities with which such individuals have a substantial interest for five years after the date of their separation from the Postal Service (whether by retirement or otherwise) if the contract calls for substantially the same duties as they performed during their career with the Postal Service, as determined by the Vice President of Human Resources. Purchase teams must ensure that this prohibition is followed when purchasing professional/technical or consulting services (see 4.5.3 for definitions of these types of services), and include Provision 1-4, Prohibition Against Contracting with Former Officers or PCES Executives, in relevant solicitations, and Clause 1-11, Prohibition Against Contracting with Former Postal Service Officers or PCES Executives, in resulting contracts.

2. Exceptions. The Vice President of Human Resources may grant exceptions to this prohibition when he or she determines that doing so is in the best interest of the Postal Service. All such exceptions must be documented and included in the contract file.

1.6.14.c Contracts With Other Former Employees

1. General. The Postal Service may contract with former employees (other than former officers or PCES executives) or with suppliers proposing the use of former employees during contract performance when the former employee's expertise will further the success of the purchase and the business and competitive interests of the Postal Service. Contracts with former employees or with suppliers offering the services of former employees should not be confused with the employment of annuitants (see 1.6.14.c.2).

2. Reviews and Approvals

(a) All requests for contracts with former employees (non-officer or executive) must be forwarded by the purchasing organization to the manager of Corporate Personnel Management (CPM), for review and approval. The manager of CPM will decide whether the former employee should be hired as a retired annuitant (see Employee and Labor Relations Manual 323.33) or should be contracted with by the purchasing organization. When appropriate, the purchasing organization may award a personal services contract to the former employee (see 4.5.4).

(b) When a supplier proposes using a former employee, the manager of CPM will review the former employee's employment history and advise the purchase team as to whether the substitution of another individual is in the best interests of the Postal Service. If such substitution is the case, the contracting officer must advise the supplier to propose another individual to perform the duties called for. If, following contract award, the supplier proposes the use of a former employee, the same review and approval process is required before the former employee may begin work.

3. Provision and Clause. Purchase teams must consider this policy in light of the particular purchase, and the potential need for reviews and approvals, and as necessary, include Provision 1-5, Proposed Use of Former Postal Service Employees, in relevant solicitations, and
Clause 1-12, Use of Former Postal Service Employees, in resulting contracts.

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