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Postal Service Supplying Principles

Authority and responsibility

The Vice President (VP), Supply Management (SM), is authorized to ensure that all Postal Service supplying activities further the business and competitive interests of the Postal Service. In doing so, the VP, SM, has both a fiduciary and a business responsibility to (1) maximize the financial position of the Postal Service and (2) to facilitate the business goals of internal clients. The VP, SM, defines the overall business strategies of the Postal Service's various supply chains, and, in concert with the Postal Service management involved in the supply chains, manages them to promote the Postal Service's overall business success. The VP, SM, is also responsible for the effectiveness of supply chain collaboration and planning - internally, and with the supplier community. Because supplier relationships are central to supply chain success, the VP, SM is responsible for source selection, defining supplier relationship strategies, ensuring that supplier relations are conducted in a fair, objective, and business-like manner, and addressing and resolving supplier relationship issues.

The Postal Reorganization Act provides purchasing authority to the Postmaster General, who has delegated all purchasing and related policy development authority to the VP, SM. In turn, the VP, SM, has delegated to individuals the authority to negotiate, award, modify, and terminate contracts, and, in some cases, the authority to redelegate these authorities. Individuals delegated any or all of these authorities must ensure that all of their contractual actions, including negotiations, contract awards, modifications, and terminations, are within the scope of their delegated authority before taking those actions.

The VP, SM, is also responsible for the effective management of Postal Service material throughout its life cycle and the flow of materials through supply chains, ensuring that the best business practices are employed in fulfilling this responsibility.

When required by these Supplying Principles or supplemental guidance, Contracting Officers must ensure that all required and appropriate reviews and approvals are obtained before taking a particular contractual action.

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Best Value

The Postal Service bases sourcing and material management decisions on best value. Best value is defined 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 relative to the Postal Service's needs. In the sourcing area, best value is generally achieved through competition, which brings market forces to bear and allows the direct comparison of proposals and life-cycle costs, although market conditions may dictate that a single- or sole-source strategy will be the best business approach. Purchase/SCM teams are empowered to pursue strategies and tactics that enable the Postal Service to achieve best value, and have broad flexibility in (1) deciding which elements of value will be sought by the Postal Service and expressed in solicitation evaluation factors and their weightings and, (2) determining the most effective SCM business practices (early supplier involvement, consolidating requirements, scope and method or market research, etc.) to employ.

Ethics and Social Responsibility

The Postal Service is committed to maintaining its standing as a responsible service organization, and understands that socially responsible behavior is good for business. This principle solidifies this element of corporate culture and enhances the trust factor in key business relationships.

Business Ethics

Postal Service supplying professionals will act with the highest standards of conduct, ethics and integrity. All Postal Service employees must adhere to the "Standards of Ethical Conduct for Employees of the Executive Branch", 5 CFR 2635 and the "Supplemental Standards of Ethical Conduct for Postal Employees" at 5 CFR Part 7001. In addition, Postal Service supplying activities are guided by the Institute of Supply Management's "Principles of Social Responsibility" available at http://www.ism.ws/ISMMembership/ Principles.cfm. The Postal Service will be fair, objective, and business-like in its dealings with the supplier community, ensuring that business decisions are driven by business considerations.

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Conflicts of Interest

The Postal Service will seek to minimize both personal and organizational conflicts of interest. Postal Service supplying professionals are prohibited from establishing and maintaining relationships of self-interest with any suppliers or potential suppliers. The Postal Service will attempt to avoid situations in which a supplier has an unfair competitive advantage or other interests that may impair the supplier's objectivity in dealing with the Postal Service or in its ability to perform satisfactorily on Postal Service contracts.


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 one year 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. The Vice President of Human Resources may grant exceptions to this policy when he or she determines that doing so is in the best interest of the Postal Service. Lastly, contracts with former employees (those who are not former Officers or executives), or with suppliers proposing the use of former Officers, executive or employees, are subject to the review and approval of the VP, Human Resources.

Environmental Responsibility

Promoting an environmentally responsible supply base furthers the Postal Service's business and competitive interests. Therefore, the Postal Service complies with applicable environmental laws and regulations and is committed to encouraging its supply chain partners to promote and enhance environmental responsibility in their conduct of postal business.

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People and Culture


To stay competitive in an increasingly complex and changing world, the Postal Service requires supplying personnel who are world-class professionals. A well-educated workforce with higher competencies to perform the business practices essential to successful supply chain management, including such things as strategic sourcing, demand management, and supplier relationship management, is a prerequisite to achieving the cost and operational efficiencies in the supply chain. Consistent with this need, only individuals possessing baccalaureate degrees from accredited colleges or universities will be considered for appointment as a Postal Service contracting officer (CO). Additionally, Supply Management will hire and promote individuals into management positions only if they have a baccalaureate or post-graduate degree from an accredited college or university. All supply management specialists must maintain professional proficiency and remain qualified for their positions.

Empowerment and Risk-taking

Postal Service supplying professionals are empowered to use their professional judgment and creativity to arrive at innovative methods of managing supply to create value for the Postal Service. Establishing what is prudent risk requires the effective analysis of a business situation and consideration of different business solutions followed by the adoption of actions that, while posing some risk of failure, offer the chance of significantly enhancing operational or financial performance. Postal Service supplying professionals are encouraged to take prudent risks to achieve these goals; when desired outcomes are not achieved, focus will be on lessons learned. Examples of prudent risk-taking include:

• Trying a new supplier to get an advantage on a critical program even though other qualified and experienced suppliers already exist.

Awarding a noncompetitive contract to gain an exceptional advantage that is unattainable through competition.

Forming a shared-savings or other innovative arrangement with a supplier.

• Taking a calculated risk on new technology that has good prospects of providing advantage to the enterprise in terms of capability, cost, time to market, etc.

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Performance Based Culture

The Postal Service's Transformation Plan stresses the importance of improving both individual and team performance through breakthrough productivity initiatives and aligning recognition for individuals and teams to their performance. Supply Management professionals will work with clients on an annual basis to agree upon the goals they are committed to achieving. These goals will be aligned with Supply Management's, the client's and the Postal Service's goals; goals will also be the basis for metrics used to assess and reward the performance of Supply Management professionals and will be results-oriented, specific, measurable, and achievable.

Planning and Strategies

Best Practices

Postal Service supplying professionals will strive to meet the Postal Service's financial goals by adopting proven supply management tools and techniques. The Postal Service has adopted continuous improvement as a strategic business imperative, and is committed to continually analyzing and improving its supplying practices to enhance its competitiveness, efficiency and effectiveness. Postal Service supplying professionals will use a variety of means, including benchmarking and other market research, participation in professional organizations, etc., to ensure that the best business practices are being used in the Postal Service's supplying operations.

Strategic Planning

Early, detailed, cross-functional strategic planning is an essential component in meeting supply chain goals. Obtaining cross-functional involvement ensures a more holistic view of the purchase and enables Supply Management to better meet Postal Service and client goals. Strategic sourcing is an important element in increasing the potential for achieving best value and reducing transactional costs. Therefore, each Category Management Center (CMC) and Purchasing Service Center (PSC) team is required to develop and maintain a written supply strategy (including advice from applicable clients) for each major spend category for which they are responsible. The strategy will focus on planned objectives, as well as the tactics and resources necessary to achieve client satisfaction and business success in the supply category in the coming year. At a minimum, category strategies will be reviewed annually by appropriate management levels within Supply Management.

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Market Research

The Postal Service relies on market research as a best practice supplying tool in order to enhance strategic thinking, research, analysis, and decision-making and to sharpen its competitive advantages. All Supply Management portfolios must perform and regularly update their market research in a cross-functional and collaborative manner. Research will focus on areas including, but not limited to: current and projected availability of products or services; the extent of competition in the market; the range of product or service performance characteristics; future industry, technology, and macro-economic trends; price trends and current market prices; supply base assessment; and types of available distribution and management systems.


Early forecasting is a key component of supply chain management (SCM); it can be a valuable mechanism for bringing the supply and demand for goods into convergence, and for reducing inventory levels and associated costs.

Effective communication throughout the supply chain is essential to successful forecasting. Therefore, Supply Management and clients will work together to forecast future demand to the best of the organizations' ability and to communicate this information throughout the supply chain to optimize performance. Forecasts for core goods and services, those critical to the Postal Service's business success, will receive priority focus. Similarly, forecasts and changes to forecasts should be shared with suppliers, who are also encouraged to share Postal Service demand forecasts with their suppliers. Sharing relevant business information ensures that the Postal Service and its suppliers can work together more effectively and efficiently.

Leveraging Spend

The Postal Service recognizes the power of leveraging spend across the enterprise through centralized procurement in facilitation of the achievement of best value. Therefore, unless there are compelling business reasons to do otherwise, all spend categories are centralized in order to maximize financial benefits by reducing total cost, including transaction costs, and improving quality and performance.

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Demand Management and Product Standardization

Category Management Centers must continually work with their clients to reduce both the types and quantities of goods and services that they purchase in order to reduce costs on existing and future contracts. The Postal Service recognizes that product standardization is a powerful means to achieve best value when dealing with suppliers. By driving product standardization, the Postal Service will be able to negotiate better pricing, reduce overhead costs, and focus on developing relationships with strategic suppliers. Each Category Management Center (CMC) is responsible for identifying candidates for product standardization within its commodity category.

Statutory and Regulatory Requirements

In conducting its supply management activities, the Postal Service complies with its statutory obligations and its obligations under the purchasing regulations contained in the Code of Federal Regulations (CFR).

Supplier Relations

Suppliers are essential and valued business partners of the Postal Service, and the Postal Service is committed to treating its suppliers in a fair, objective, and business-like manner. Relations between the Postal Service and its suppliers will be strong, mutually beneficial, and based upon sound business practices, respect and trust, with both parties working toward a common goal.

Within the relationship, both parties - Postal Service supplying professionals and suppliers - are expected to act ethically, keep commitments, ensure the delivery of high-quality goods and services, and focus on continuous improvement of products, processes, and costs and prices. The Postal Service will manage supplier relationships based on the potential impact the supplier's performance will have on the Postal Service's operational and financial position.

Supplier Base

The Postal Service is committed to having a world-class supply base. Therefore, the Postal Service will continuously measure, analyze, and enhance supplier performance relative to contractual requirements and the best practices of world-class supply organizations.

Postal Service supplying professionals will seek out methods to optimize its supplier base in line with the specific characteristics of the market, the good or service being supplied, and the goals of the Postal Service. In many cases, optimizing the supply base will include efforts to consolidate purchases among a smaller group of more capable and strategic suppliers to reduce costs (including transaction costs) and to improve quality and performance.

The Postal Service also understands that a diverse supplier base is important from both a performance and business standpoint. Therefore, through promotion, outreach efforts, and other means, the Postal Service will strive, as a strategic business initiative, to establish and maintain a strong, competitive supplier base that reflects the diversity of the supplier community. Additionally, Postal Service suppliers are expected to use small, minority, and woman-owned businesses as subcontractors to the maximum extent consistent with effective contract performance.

The Postal Service is an establishment of the U.S. government whose customer base is comprised mainly of American citizens and businesses. The Postal Service understands its interest in promoting American industry and a free market economy in countries with which the United States has entered into trade agreements. Therefore, as a matter of both business relations and effectiveness, and subject to the limitations set-out in the implementing practice, proposals considered for selection and (1) offering domestic end products or (2) proposals offering end products produced in designated World Trade Organization Government Procurement Agreement (WTO GPA) and Free Trade Agreement (FTA) countries are given preference by the Postal Service when they compete with proposals of relatively equal value containing end products from non-designated WTO GPA and FTA countries.

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Teaming and Communications

Members of the Postal Service's unified supply chain, from the supplier's supplier to the end customer, will work in an integrated and collaborative manner to maximize the efficiency and effectiveness of the flow of goods, services, and information. This collaboration will include communication and feedback, knowledge-sharing, supply and demand planning and management, product and service design, make vs. buy decisions, production and scheduling, order fulfillment, warehousing, inventory control and distribution, and disposal.

The Postal Service will explore innovative teaming, supplier-managed inventory, strategic alliance, value-engineering, shared-savings, and other non-traditional contracting arrangements with suppliers.

The Postal Service will provide offerors notification of and rationale for contract awards; debriefings will be available if requested. In order to attract and retain quality suppliers, develop true strategic relationships, and spur communication of innovative solutions without the fear of suppliers' capabilities and ideas becoming known to competitors, the Postal Service will protect proprietary business information to the extent required by law and good business practice. In turn, when requested by the Postal Service, suppliers are expected to provide current, complete, and accurate cost or pricing data or any other information to ensure reasonable pricing.

Lastly, in order to maintain effective performance and Postal Service-supplier communication, contractual disagreements will be addressed by both parties at the Contracting Officer or appropriate management level; if disagreements are not resolved at this level, they may be pursued with the Postal Service's Supplier Ombudsman.


Electronic commerce with suppliers is a major enabler of transactional cost reductions and of moving the Postal Service toward SCM excellence. It is the goal of the Postal Service to have an integrated electronic business solution for all supply processes. This extends to the entire supply chain, including communications and document exchanges between clients, Supply Management, suppliers, and other Postal Service supplying stakeholders. The Postal Service will attempt to automate the supply chain process - particularly from order placement to disposal - as much as possible.

Inherent in this principle is an expectation that Postal Service suppliers will become capable of conducting business electronically. New suppliers will be enabled by electronic requirements, purchase order, and invoice and payment processes, when an electronic business solution is available. Additionally, commitments with existing suppliers using requirements, purchase order, and invoice and payment processes will be transacted using an electronic communications method whenever possible.

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