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 in the decision whether to compete or not. More information on switching costs and the associated risks can be found in section 2-9, Perform Switching-Cost Analysis.
Additional information on sole sourcing and other sourcing strategies can be found in section 2-20, Develop and Finalize Sourcing Strategy.
All purchase plans for noncompetitive purchases valued at $1 million or more must be reviewed and approved as discussed in section 2-41, Obtain Selected Reviews and Approvals. The purchase plan must include the business case for the noncompetitive purchase (see Management Instruction SP-2007-1, Noncompetitive Purchases, which sets out the required format for the business case), and, additionally, should address pertinent business matters not addressed in the business case. Purchase plans for noncompetitive purchases should be reviewed when the purchase/SCM team has completed the business case and has resolved any outstanding issues. See section 2-41 for information regarding review and approval authorities.
Proposed noncompetitive contract awards must be reviewed and approved depending on the dollar value. See section 2-41 for more information.
As discussed in MI SP-2007-1, all requests for noncompetitive purchases valued at more than $250,000 must be endorsed by the Vice President of the organization requesting the noncompetitive purchase.
