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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

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

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.

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Noncompetitive Purchases

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.

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Other Topics Considered

Develop and Finalize Sourcing Strategy topic, Develop Sourcing Strategy task, Process Step 2: Evaluate Sources

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