For the purpose of this section, a subcontract is any agreement, other than an employer-employee agreement or a temporary agreement for labor by an owner-operator as described below, between a party that has contracted with the Postal Service to transport mail and a third party, in which the third party agrees to provide all or part of the contract service or goods or services that support performance of the prime contract. An employer-employee agreement is one under which the employee is subject to the continuing authority of the mail transportation supplier to supervise and direct the manner of work performance of the employee. Such an employer-employee agreement is also characterized by, expressly or implied, the employer’s responsibility to pay compensation directly to the employee and to withhold taxes and amounts for social security benefits from the employee’s compensation for the work performed under the agreement. If an owner-operator, because of illness or temporary equipment failure, is required to obtain labor from another in order to continue performance of the service as required by the contract, that transaction is not a subcontract within the meaning of this section.
Section 2-39, Subcontracting with SMWOBs, is applicable to subcontracts under this section.
All subcontracts that require the subcontractor to handle, deliver, or otherwise to have access to the mail must be approved by the CO, except that a supplier may, without approval of the CO, subcontract the whole or part of a contract or irregular mail movements such as plant loads with one or more owner-operators who provide and drive their own vehicles.
Execution by a supplier of a subcontract for the performance of contract service and its approval by the Postal Service does not release the supplier from its contractual obligations, nor from liability for damages.
Whenever the purchase/SCM team determines that a supplier has breached the contract by subcontracting the whole or part of the contract contrary to the requirements of these Guidelines, the CO may terminate the contract for default.
Subcontractors performing contract service must meet the same capability and qualification requirements as the prime supplier.
If a whole contract is subcontracted, the subcontract must be for the full remainder of the contract term, and the subcontractor’s initial rate of pay must be the same as the supplier’s unless there is a change in operations costs resulting from a service change or from the enactment of a statute or ordinance or the adoption of lawful regulations by any federal, state, or local agency.
When a subcontract is terminated, the prime supplier may be required to take charge of the route. A subcontract to provide contract service may be terminated at the subcontractor’s request only with the prior approval of the CO, which will be given only for good cause. Subcontracts for contract service are automatically terminated by death of the subcontractor or abandonment of the service by the subcontractor.
When a subcontractor performing contract service fails to comply with the terms of a contract, the CO notifies the prime supplier of the subcontractor’s irregularities. The CO may require removal of the subcontractor for failure to perform and that the prime supplier resume route operations, or exercise any other remedies provided by the contracts with the prime supplier.
Other Surface Contracts and Air Contracts — For other surface and air contracts whose terms permit subcontracting, the supplier must give the CO advance notice of its intent to subcontract. The supplier may enter into a subcontract unless notice of disapproval is received from the CO within 30 days of the date the notice was given.
