On rightful rejection or justifiable revocation of acceptance, the Postal Service has a security interest in supplies delivered under the contract for any payments and expenses reasonably incurred in inspection, receipt, transportation, care, and custody (in other words, they can be used to secure payment to cover those incurred costs).
When supplies or services are still required after termination for default, the CO may repurchase the same or similar supplies or services against the supplier’s account as soon as practicable. The repurchase price must be reasonable considering the quality and time requirements. Whenever practicable, the CO should make the decision to repurchase before issuing a termination notice.
The CO may repurchase a larger quantity than the quantity terminated for default when needed, but the defaulting supplier may be charged for no more than the terminated quantity (including any variations in quantity permitted by the terminated contract). If the repurchase is for a quantity no larger than the terminated quantity, the CO may use any terms and purchase methods appropriate for the repurchase, following normal approval or deviation procedures. If the repurchase is for a larger quantity than the terminated quantity, the entire quantity must be treated as a new purchase. If the repurchase price is higher than the price of the terminated supplies or services, the CO must, after final payment on the repurchase contract, demand the excess amount from the supplier, in writing, taking into account any increases or decreases in cost due to transportation charges, discounts, and other factors.
