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 Section 2-9, Perform Switching-Cost Analysis.
The 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 COs. 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 VP of the organization requesting the purchase must endorse the request.
Additional information on sole sourcing and other sourcing strategies can be found in Section 2-20, Develop and Finalize Sourcing Strategy.
