Performance standards establish the performance level required by the Postal Service. Correspondingly, the target measure establishes a maximum allowable error rate or variation from the standard.These measures tie supplier payment to performance. Failure to perform within this target results in a contract price reduction. Examples of standards include quality of work, productivity, and cost-efficiency. The purchase/SCM team should ensure that each standard is necessary, carefully chosen, and not unduly burdensome. For example, in a requirement for airline services, the performance standard might be “arrival within 15 minutes of an agreed-upon time.” The target performance measure might be 10 percent; the airline can be more than 15 minutes late no more than 10 percent of the time. Indicators and performance measures will be customized based on the nature of the purchase.
