Competitively awarded regular and temporary mail transportation contracts may be renewed by the mutual agreement of the Postal Service and the supplier. Clause B-78, Renewal, must be included in contracts that are considered for renewal. Regular or temporary highway and inland water contracts that have been wholly subcontracted less than 6 months before their expiration date (except those subcontracted by an immediate family member of a deceased or incompetent supplier) may not be renewed. Wholly subcontracted contracts that have been in effect for greater than 6 months are eligible for renewal and may be renewed by mutual agreement between the Postal Service and the subcontractor; when this happens, the subcontractor becomes the prime Supplier under the renewal contract. Emergency contracts may not be renewed.
There are two types of contract renewals: (1) renewals of regular and temporary contracts; and (2) short-term contract renewals (see below). The renewal term of a regular contract is determined by the purchase⁄SCM team and must be based on operational requirements, market conditions, and any other relevant business factors; decisions to renew a contract for a period longer than the original term must be reviewed and approved by the next-higher level of contracting authority. The renewal term of a temporary contract may not exceed 2 years.
The service provided at the beginning of the renewal term must be the same as that existing at the end of the previous contract term.
Renewals involve the following procedures:
- Establishing Requirements. Before entering into discussions for the renewal of a contract, the Purchase⁄SCM Team must determine the need to be met by the renewal contract and a reasonable rate for the service.
- Determining Satisfactory Service. Contracts should not be renewed with suppliers who are currently providing less than satisfactory service. Faults in service which do not rise to the level of deficiencies thereby justifying termination for default may be sufficient to support a determination not to renew.
- Negotiating Service and Price. Having determined that a contract is appropriate for renewal, the Contracting Officer with the assistance of the Purchase⁄SCM Team enters into discussions with the Supplier on the terms of the renewal contract. Before agreeing to the final terms, the Purchase⁄SCM Team must determine that renewal offers the best value and most advantageous alternative to the Postal Service, price and other factors considered. For the purpose of this determination, “other factors” may include the benefits of continuity of service and the potential costs of disruption arising out of resolicitation.
If agreement is reached on the renewal terms, the existing contract is modified to reflect any adjustments in service, terms and conditions, and rates. If a contract will not be renewed, or terms for renewal cannot be agreed upon in whole or in part, any continuing service requirement may be resolicited.
The determinations made throughout the renewal process must be thoroughly documented in the contract renewal file.
Pending full renewal in accordance with the guidelines above, an expiring contract that is eligible for renewal may be renewed for short terms of up to 1 year by mutual agreement of the parties. When the full renewal is approved, the short-term renewal may be converted into a full-term renewal to cover the full remaining term of the contract. Examples of circumstances under which a short-term renewal may be appropriate include:
