This Issue 2 of the Postal Service Purchasing Manual (PM) contains a
number of significant PM changes, grouped into two categories: Major Policy
Changes, which are discussed immediately below, and Other Significant
Changes, which are grouped and discussed by PM Chapter. The major
changes are centered on the Postal Service's continuing efforts (1) to reflect
the best practices of the private and public sectors, (2) to streamline the
purchasing process and ensure it concentrates on furthering the business
and competitive interests of the Postal Service, and (3) to provide a policy
structure that furthers the Postal Service's use of supply chain management
business practices. This PM Issue 2 also contains all changes published in
the Postal Bulletin since January 31, 1997, which are still in effect.
Supply Chain Management. Supply chain management is a business
philosophy that concentrates on analyzing the purchasing process and the
supply stream in order to increase customer satisfaction and lower overall
cost. It involves a number of business practices, including close coordination
between end-users, buyers and suppliers, long-term contracts, and ongoing
analysis and improvement of operating and administrative processes. With
the issuance of PM Issue 1, the Postal Service began to make many of these
practices a central part of its purchasing policies; that foundation has been
built upon and is reflected throughout this Issue 2 (many of the relevant
changes are discussed in Other Significant Changes, below). The supply
chain management philosophy and its importance to Postal Service
purchasing is discussed in a new section 3.1.2. Additionally, new text has
been added to section 3.1.1 addressing the fact that some Postal
Service-supplier relationships are closer and more interdependent than
others, based upon the impact the relationship has or may have on the Postal
Service's business and competitive interests.
Establishment of Standard Solicitation Provisions and Clauses. PM
Issue 1 established a single, streamlined purchasing process modeled on
private sector business practices while maintaining the Postal Service's
commitment to the accountability and fairness expected of a public institution.
To further this continuing objective, PM Issue 2 establishes basic solicitation
provisions and contract clauses that may be modified, added to or
supplemented as required by the particular purchase. These provisions
(Provisions 4-1, Standard Solicitation Provisions, 4-2, Evaluation, and 4-3,
Representation and Certifications) and clauses (Clauses 4-1, General Terms
and Conditions and 4-2, Contract Terms and Conditions Required to
Implement Policies, Statutes, or Executive Orders) are based on and replace
the commercial-purchasing provisions and clauses in PM Issue 1. With their
establishment as the basic contractual documentation, the need for a specific
commercial purchasing process has been obviated. The new provisions and
clauses are contained in Appendices A, Solicitations, and B, Contract
Clauses, and their use is discussed in the appendices and in 4.2.2.e,
Solicitation Provisions, and 4.2.7, Contract Clauses.
Prescriptions for Use of Provisions and Clauses. The provisions and
clauses noted above incorporate by reference a number of other provisions
and clauses that are: (1) required by Postal Service policy (such as the
Postal Service's preference for domestic supplies or construction materials);
(2) required by law (such as the Service Contract Act and the Davis-Bacon
Act); or applicable by Executive Order (such as Equal Employment
Opportunity). In some cases, these incorporations are included in the basic
provision or clause, and in others they are incorporated when checked-off by
the contracting officer in light of the particular purchase. This modular
approach to solicitation and contract formation ensures that contractual
documentation remains simple and streamlined while also ensuring that the
Postal Service continues to meet its policy, legislative, and other mandates.
At the same time, provisions and clauses that address other aspects of the
purchasing process, such as contract type, have been left available to
contracting officers to use when their terms and conditions match the needs
of the particular purchase. This means that there are a number of subjects in
the basic provisions and clauses that may be replaced by more effective
terms and conditions, and that the provision and clause prescriptions
throughout PM Issue 2 allow contracting officers to make such additions and
replacements as they feel necessary. Contracting officers have also been
given the discretion to modify, add to or supplement provisions and clauses
as they see fit, subject to review of assigned counsel.
Purchase Method. A new section 2.1.6, Purchase Method, has been
included in PM Issue 2. This section addresses the responsibility of the
purchase team to decide during purchase planning and as part of the
individual purchase plan whether a purchase should be made competitively
or noncompetitively. This section spells-out under what business scenarios
the noncompetitive method may best meet the Postal Service's business and
competitive interests, and also requires the purchase team to prepare a
business case documenting the rationale for the decision. This section also
delineates review and approval thresholds for the business case and the
purchase. A new section 1.6.1, Business Objectives and Practices, discusses
in general how these objectives and practices fit into overall organizational
strategy, and there have been ancillary changes in sections 1.6.2, Best Value,
and 1.6.3, Competition. PM Issue 1 section 3.5.5, Noncompetitive Purchases,
has been deleted.
Publicizing. PM section 3.5.3, Publicizing Purchasing Opportunities, has
been retitled Publicizing Purchase Opportunities and Contract Awards. This
part has been revised to: (1) maintain the $1 million publicizing threshold for
commercially available goods and services; (2) provide purchase teams the
discretion to publicize noncompetitive purchase opportunities when the team
determines that such publicizing would improve market research, while at the
same time changing the mandatory publicizing threshold for noncompetitive
awards from $500,000 to $1 million; (3) encourage purchase teams to
publicize other noncompetitive awards (generally over $500,000) when it
feels the award holds significant subcontracting opportunities; and (4)
encourage the team to publicize other awards when it feels such an
announcement would benefit future competition. In addition, previous
references to the Commerce Business Daily (CBD) throughout the PM have
been replaced by the term "Governmentwide point of entry (GPE)" which has
replaced the CBD as the means of publicizing purchase opportunities and
contract awards.
Publication and Availability of the Purchasing Manual. With the
publication of PM Issue 2, the printing and distribution of hard copies of the
PM will cease. The PM will be available to the public at the Postal Service's
Web site (www.usps.com) and to Postal Service readers at both
www.usps.com and www.usps.gov. Revisions will be published as needed in
the Postal Bulletin and these will be rolled into the electronic version at least
every six months.
Appendix A, Solicitations. Appendix A has been revised to reflect the
establishment of the basic solicitation provisions discussed above and to
address their use. Several provisions included in PM Issue 1 have been
deleted due to the subject matter being covered in the new standard
provisions or because they were inconsistent with the Postal Service's
continuing efforts to streamline purchasing policies and procedures.
Appendix B, Contract Clauses. Appendix B has been revised to reflect the
establishment of the basic contract clauses discussed above and to address
their use. Several clauses included in PM Issue 1 have been deleted due to
the subject matter being covered in the new general clauses or because they
were inconsistent with the Postal Service's continuing efforts to streamline
purchasing policies and procedures. Commodity-specific clauses used in
design and construction, and mail transportation contracts are listed as they
were in PM Issue 1.
Appendix C, Contract Format. Appendix C, Forms and Formats, of PM
Issue 1, has been replaced by a new Appendix C, Contract Format. This
appendix describes the four-part contract format used in Postal Service
purchasing.
Chapter 1, Authority, Responsibility, and Policy
1.1.1.c, Applicability (Purchasing Manual), has been revised to reference
new Handbooks P-1, General Purchasing Concepts and Practices, P-2,
Design and Construction Purchasing Practices, and to provide the Web site
where they may be accessed.
1.1.2.b, Purchasing Policy Committee (Responsibility for Purchasing
Policy), has been revised to state that the PPC evaluates proposed changes
to the PM for the vice president, Purchasing and Materials.
1.1.2.c, Membership, has been revised to add the manager, Supplier
Development and Diversity (Purchasing and Materials), and the manager,
Materials, to the PPC and to remove the managers, Facilities Program
Management, and Supplier Diversity, (Diversity Development).
1.2, Publication and Changes, has been revised as discussed in Major
Policy Changes above.
1.3.1.b.1 (Deviations) has been revised to state that replacing text contained
in Provisions 4-1, Standard Solicitation Provisions and 4-2, Evaluation, and
Clause 4-1, General Terms and Conditions, with another PM provision or
clause does not constitute a deviation and does not require review and
approval. As a result of this change, previous 1.3.1.b.2 has been deleted.
1.3.2.c, Records (Authorization of Deviations), has been revised to require
approval officials to retain copies of approved deviations.
1.4.1.b.4, Required Approvals (Contracting Authority - Vice President,
Purchasing and Materials), has been revised to clarify that the subject
approvals are the responsibility of the vice president, Purchasing and
Materials.
1.4.2, Contracting Officers, has been revised and reorganized for clarity.
1.4.3, Contracting Officer's Representatives, has been revised to
reference Management Instruction PM-610-2001-1, Contracting Officer's
Representative Program.
1.4.4.b.3(d), Training (Selection), has been revised to state that Level I
design and construction contracting officers are required to complete the
training courses on Contract Administration, Pricing and Claims, and
Introduction to Facilities R&A Contracting.
1.6.1, Business Objectives and Practices, is a new section and has been
added as a general statement addressing the primary goal of Postal Service
purchasing and the business practices used to further that goal. 1.6.2, Best
Value, and 1.6.3, Competition, have been revised to reinforce the new
policy discussed in Major Policy Changes above.
1.6.5, Release and Exchange of Information, and 1.6.6, Privacy
Protection, have been revised as was discussed in Postal Bulletin 22063
(11/15/01). As a result of these changes, Clause 1-1, Privacy Protection,
has been revised and retitled, Clause 1-7, Nondisclosure of Address
Information, has been deleted, and ancillary changes have been made to
subparagraphs 4.5.3.c.4 and 4.5.5.f.
1.6.7.c.1, Progress Payments, has been revised to exclude the required
approval of the vice president, Finance, when the contract is for
architect/engineer and construction management services.
1.6.13, Domestic Preference, replaces previous part 1.7.12, Buy American
Policy. The new title is intended to reflect the voluntary aspect of the Postal
Service's policy in this area. The titles of the related provisions and clauses
have also been changed to reflect the new term.
1.6.13.b.2(c), Domestic End Products, and 1.6.13.b.2(g), Canadian End
Products (previous 1.7.13.b.2.(c) and 1.7.13.b.(g)) have been revised as
was discussed in Postal Bulletin 22021 (4/6/00).
1.6.14, Contracts with Former Postal Service Officers, Executives, and
Employees, is a new section that replaces previous 1.7.13. This revision was
previously discussed in Postal Bulletin 22061 (10/18/01), and resulted in
related changes to 4.5.3, Professional/Technical and Consultant
Services, and a new section 4.5.4, Personal Services Contracts. Lastly,
this change also resulted in a new Provision 1-5, Proposed Use of Former
Postal Service Employees, and a new Clause 1-12, Use of Former Postal
Service Employees.
Previous 1.7.14, Year 2000 Compliance, has been deleted as have Clauses
1-12, Year 2000 Warranty - Commercial Items, and 1-13, Year 2000
Warranty - Noncommercial Items.
Previous 1.9.4, Supplier's Statement of Contingent Fees, has been
deleted, as has Provision 1-2, Contingent Fee Representation, as was
discussed in Postal Bulletin 21991 (2/11/99). Contingent fees are now
addressed in subchapter 1.8.
Chapter 2, Purchase Planning
2.1.1, The Importance of Purchase Planning, is a new section discussing
the central role purchase planning plays in a successful purchase, and the
factors that go into effective planning.
2.1.3.a (Purchase Planning) has been revised to further discuss the role of
the contracting officer as leader of the purchase team.
2.1.3.b 2(b) (Responsibilities) has been revised to state that the purchasing
organization is responsible for gathering and analyzing spend and demand
data in order to identify opportunities for strategic sourcing and consolidated
purchases. 2.1.3.b.3 is a new subparagraph describing the expertise the
materials organization can bring to a purchase team.
2.1.4.a, Importance (Market Research), has been revised to add commodity
or industry trends as an important element of successful market research.
2.1.5.b, Elements (Individual Purchase Plans), has been revised to include
a statement that effective plans should address the total cost of ownership of
the purchase (subparagraph 2.1.5.b.6) and to require that individual purchase
plans contain a written description of the purchase method to be used
(subparagraph 2.1.5.b.14). See Major Policy Changes above.
2.1.6, Purchase Method, is a new part discussing the manner in which a
purchase will be conducted, specifically, whether the purchase will be made
competitively or noncompetitively. This part discusses when either method is
appropriate, and describes the various business scenarios under which a
noncompetitive purchase is most appropriate and the business case required
when the noncompetitive method is used. See Major Policy Changes above.
2.1.7.b.5 (Developing Strategies) has been revised to state that, depending
on the particular purchase, it is a good business practice to develop supplier
selection strategies that invite new and emerging suppliers to compete for
Postal Service purchases.
2.1.9.c.2, Past Performance, has been revised to remove supply chain
management as a subfactor of past performance and to address it as a more
general aspect of past performance as a whole.
2.1.9.c.3, Suppler Capability: Subparagraph 2.1.9.c.3(b)(4), has been
revised to require that suppliers have a sound quality control program that
complies with solicitation requirements in order to be deemed capable.
Subparagraph 2.1.9.c.3(b)(7) has been revised to state that the fact that a
supplier is suspended, debarred or otherwise declared ineligible, bars award
without regard to the weight assigned to capability as an evaluation factor.
Subparagraph 2.1.9.c.3(c)(1) has been revised to state that the Postal
Service's list of debarred and suspended suppliers, and GSA's consolidated
list of debarred, suspended or declared ineligible suppliers are sources of
information for determining that a supplier is capable. Subparagraph
2.1.9.c.3(d) has been revised to include workforce, subcontractors and other
resources to be used in contract performance as appropriate subjects of a
preaward survey, and Subparagraph 2.1.9.c.3(e) has been revised to
require that preaward survey results must be in writing.
2.1.10, Performance Evaluation and Cost/Price Factors, is a new section
combining text from previous sections 2.1.7 and 2.1.8.
2.2.1.a Policy (Quality Requirements) has been revised to clarify that the
supplier is responsible for providing supplies or services conforming with the
requirements of the purchase and for providing reasonable assurance that
requirements are met, and that the purchase team is responsible for
determining the necessary quality requirements.
2.2.1.b, Quality Assurance Requirements, has been revised to state that
the supplier is responsible in most cases for performing necessary inspection
and testing and that the Postal Service may opt to perform these functions.
2.2.2.a, Uses (First Article Approval), has been revised for clarity.
2.2.3.b, Delayed Acceptance (Acceptance), has been revised for clarity.
2.2.5.f, FOB Points (Delivery or Performance Schedule), has been revised
for clarity.
2.2.5.h, Using Mail, has been revised to state that contracting officers should
consult with a material management specialist when the weight of a
consolidated mailing to a single destination exceeds 300 pounds.
2.2.5.i, Packing and Packaging, is a new paragraph stating that, generally,
suppliers are expected to use standard packing and packaging practices, but
that the purchase team may require more stringent standards when needed.
2.2.10.d, Noncompetitive Purchases (Value Engineering), has been
revised to state the conditions under which a contracting officer may
negotiate a noncompetitive contract or contract modification incorporating a
change proposal.
2.4.6.e, Ordering (Indefinite Delivery Contracts), and 2.4.6, Provisions,
have been revised as was discussed In Postal Bulletin 22037 (11/16/00).
2.4.7.b, Limitations (Ordering Agreements), has been revised to require
the periodic - rather than annual - review of ordering agreements
extending more than one year.
Chapter 3, Supplier Relations
3.1.1, General (Policy), has been revised to address the fact that the nature
of the partnership between the Postal Service and a given supplier will
depend on the potential impact of the supplier's performance on the Postal
Service's competitive and financial position. See Major Policy Changes
above.
3.1.2, Supply Chain Management, is a new part discussing the Postal
Service's use of this business philosophy. See Major Policy Changes above.
3.2.2a, Definition (Sourcing), has been revised to provide a clearer
definition of this business practice.
3.2.2.c, Assistance (Sourcing), has been revised to direct purchase teams
to Supplier Development and Diversity (Purchasing and Materials), when
they need sourcing assistance.
3.2.3, Subcontracting with Small, Minority, and Woman-owned
Businesses, has been revised as was discussed in Postal Bulletin 21992
(2/25/99). Since then, 3.2.3.d.1, Contracts Valued at $1 Million or More,
has been revised in subparagraph b to state that Clause 3-1, Small, Minority,
and Woman-owned Business Subcontracting Requirements, need not be
included in subject contracts when the contract is an indefinite delivery
contract or ordering agreement and the purchase team has determined that
requiring a subcontracting plan would not be feasible. In addition, 3.2.3.d.2,
Contracts Valued at $500,000 or More, has been revised to require the
inclusion of Clause 3-2, Participation of Small, Minority, and Woman-owned
Businesses, in design and construction contracts valued at $250,000 or
more.
3.3.2, Existing Assets, has been revised to redefine this term, and to
illustrate when they should be considered in lieu of new purchases.
3.3.5, Defense Energy Support Center, has been revised to provide the
new name of this organization (previously called the Defense Fuel Supply
Center).
3.5.1, Policy (Commercial Suppliers), has been revised to emphasize that,
except for commodities available from mandatory sources, it is Postal Service
policy to purchase goods and services from commercial suppliers using the
business practices and terms and conditions customary to the commercial
marketplace, or to purchase goods and services from the nonmandatory
government sources in 3.4.
3.5.2.a, Policy (Prequalification), has been revised for clarity.
3.5.2.b.3 (General) has been revised as was discussed in Postal Bulletin
21972 (5/21/98).
3.5.2.b.4 (General) has been revised to state that during the prequalification
process suppliers should be evaluated in the same manner as for any other
purchase.
3.5.3, Publicizing Purchasing Opportunities and Contract Awards, is
new and replaces PM Issue 1, 3.5.3, Publicizing Purchase Opportunities. See
Major Policy Changes above.
3.5.4, Unsolicited Proposals, has been revised to direct readers to
Publication 131, The Postal Service Unsolicited Proposal Program, for
information regarding the submission and processing of unsolicited
proposals.
3.7, Debarment, Suspension, and Ineligibility, has been revised to: (1)
provide a new definition of "Ineligible Suppliers"; (2) discuss the handling of
the Postal Service's and the General Services Administration's lists of
debarred and suspended suppliers; (3) require contracting officers to review
the Postal Service's and GSA's lists before making a contract award; and (4)
discuss the treatment of suppliers on the Postal Service's list.
Chapter 4, Purchasing
4.1, Policy, has been revised to discuss in general the purchasing process
and the basic terms and conditions used in Postal Service purchases.
4.2.2.b, Types (Solicitations), has been revised to discuss the use of written
and oral solicitations and to state that the use of Form 8203,
Order/Solicitation/Offer/Award, or equivalent, should be used as the request
for proposal and subsequent award.
4.2.2.e, Solicitation Provisions, has been revised as discussed in Major
Policy Changes above.
4.2.2.g, Availability of Solicitations, has been revised to state that requests
for copies of solicitations may be denied once a reasonable number of copies
have been distributed to the solicited suppliers and others who have
requested them.
4.2.6.a (Contract Award) has been revised to state that contract award is
made by the execution of a contract by both parties or by written acceptance
of or performance against a purchase order.
4.2.7, Contract Clauses, is a new part discussing the new basic clauses
(4-1, General Terms and Conditions, and 4-2, Contract Terms and Conditions
Required to Implement Policies, Statutes, or Executive Orders) and their use.
See Major Policy Changes above.
4.5.5.a.5, Information Technology (Definitions), has been revised and a
new subparagraph 4.5.5.a.7, Undue Burden, has been added as was
discussed in Postal Bulletin 22052 (6/14/01). Paragraph 4.5.5.b.2 has been
revised as was also discussed in that edition of the Postal Bulletin. Lastly, a
new Clause 4-18, Information Technology Accessibility Standards, has
been added to Appendix B, Contract Clauses.
4.5.5.d.2, General Services Administration (Sources - Information
Technology), has been revised to provide new addresses, including an
Internet address, for information regarding GSA contracts for information
technology.
Previous subparagraph 4.6.5.b.3, Year 2000 Compliance, has been deleted.
Chapter 5, Contract Pricing
5.2.5.a.13 (Unallowable Costs) is a new subparagraph and has been added
to delineate a new category of unallowable costs: legal costs related to a
defense against a Postal Service claim or appeal and legal costs related to
the prosecution of a claim or appeal against the Postal Service.
Chapter 6, Contract Administration
6.1.1.b, Contracting Officer's Representatives, has been revised to
specifically describe what sort of authorities may be delegated to a
contracting officer's representative (COR), what must be contained in the
COR's appointment letter, and to reference Management Instruction
PM-610-2001-1, Contracting Officer's Representative Program.
6.2.1.b.12 (Postaward Orientation) has been deleted in order to reinforce
that commercially accepted accounting procedures should be used.
6.2.3.b.2, Other Contracts (Using Suppliers to Monitor Performance),
has been revised to allow third parties to perform acceptance in addition to
other contract administration responsibilities.
6.2.6.c, Clause (Bankruptcy), has been deleted, as has Clause 6-1,
Bankruptcy, as part of the overall effort to reflect common commercial terms
and conditions in Postal Service contracts.
6.3.2.b, Responsibility (Acceptance), has been revised to remove the
reference to "another postal employee" and replace it with "other party."
6.3.3, Receiving Reports (Quality Assurance), has been revised as
discussed in Postal Bulletin 22016 (1/27/00).
Chapter 7, Bonds, Insurance, and Taxes
7.1.2.a.5, Amount (Performance and Payment Bonds for Construction
Contracts), has been revised as was discussed in Postal Bulletin 22033
(9/21/00).
7.2.2.c, Automobile Liability Insurance, has been revised to set a new
minimum limit of $100,000 per accident for property damage.
Chapter 8, Patents and Data Rights
No significant changes have been made in this Chapter.
Chapter 9, Labor Policies
9.2.1, Convict Labor (Policy), has been revised to state that the Postal
Service may purchase supplies from firms employing persons on parole or
probation under the terms of Executive Order 11755, December 29, 1973, as
amended.
9.7.3, Preaward Compliance Reviews, has been revised as discussed in
Postal Bulletin 21963 (1/15/98), as have Provision 9-4, Preaward Equal
Opportunity Compliance Review, and Clause 9-9, Equal Opportunity
Preaward Compliance of Subcontracts.
9.10.1, Requirement (Veterans), has been revised to reference the Veterans
Employment Opportunities Act of 1999.
Appendix A, Solicitations
This appendix has been revised as discussed in Major Policy Changes
above.
Individual Provisions
Provision 1-5, Proposed Use of Former Employees, is a new provision as
discussed above.
Appendix B, Contract Clauses
This appendix has been revised as discussed in Major Policy Changes
above.
Individual Clauses
Clause 1-1, Privacy Protection, is a new clause as discussed above.
Clause 1-12, Use of Former Postal Service Employees, is a new clause as
discussed above.
Clause 7-4, Insurance, has also been revised to establish new minimum
liability coverage for automobile insurance.
Appendix C, Contract Format
This appendix has been changed as discussed in Major Policy Changes
above.
Appendix D, Rules of Practice in Proceedings Relative to Debarment
and Suspension from Contracting
No changes have been made to this appendix.
Appendix E, Rules of Practice Before the Postal Service Board of
Contract Appeals
No changes have been made to this appendix.
Appendix F, Index
(This appendix will be revised to reflect the changes throughout PM Issue 2.)
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