order or payment. The system was enhanced to include several new features, such as an electronic invoicing and certification for utilities and telecommunications products and services. During the next few years, 10 to 12 additional catalogs per year will be added to eBuy, along with numerous utility and telecommunications suppliers capable of electronically invoicing the Postal Service. These benefits occur at every stage of the purchase and certification process and substantially lower operating costs and improve administrative efficiencies.

     A major goal for Supply Management is to become an industry leading strategic esourcing organization. Consistent with the best commercial business practices, the Postal Service began piloting desktop reverse auction software during 2003. As a result, esourcing spending increased by $4.7 million. Cumulative desktop and full-source reverse auctions spending was $914.1 million. Under the Supply Management Five-Year Strategic Plan, it is imperative that the Postal Service adopt a Web-based SCM e-procurement application tool set to reduce costs. During 2003, Supply Management began developing a progressive strategy to help move it toward SCM excellence. An umbrella strategy, based on a best-in-class modular systems acquisition and implementation approach, was developed to enable expanded maturity of SCM e-procurement application functionality.

     During 2003, the Postal Service began two policy-related initiatives which promise enhanced business effectiveness in its buying and supplying policies and practices. The first of these, called "purchasing deregulation" is focused on taking full advantage of the freedom provided Postal Service purchasing in the Postal Reorganization Act. The second initiative will combine the Postal Service's buying and supplying policies and practices in order to further institutionalize proven supply chain management business practices throughout the Postal Service.

Traditionally, the Postal Service's purchasing regulations have been contained in the Purchasing Manual (and its predecessors) and have had the force and effect of law. Under purchasing deregulation, the Postal Service plans to replace more than 300 pages of these regulations with a brief, simplified set of regulations. These will facilitate the institutionalization of the SCM business philosophy and practices; be easily understood; focus on purchasing goods and services of good quality at fair prices; and provide an expedited and inexpensive means of resolving business disagreements. This change, from a set of regulation-based policies to one based on the commercial best practices of the private sector, will provide the business flexibility necessary to be successful in a highly competitive environment. Purchasing deregulation should be fully implemented by the end of 2004.

     In 2002, the Postal Service's Supply Management organization was completely restructured. Similar changes to the organization's business practices are underway. This effort seeks to combine the policies and procedures of purchasing with those of material management operations. The goal is to institute a seamless buying/supplying process by developing and publishing supply management business practices that integrate the two disciplines in a coherent and effective whole. At the same time, all current business practices are being benchmarked against those of best-in-class private sector companies. The final result will be a fully modernized set of the best SCM practices and a business model that will help build on SCM achievements. The Postal Service plans to publish the new policies and business practices during 2004.

     In 2003, a new series of air contracts, called the Commercial Air 2003 (CAIR-03), was awarded to replace the previous Air Carriers System Rate (ASYS) contracts. The number of suppliers was reduced from more than 50 to 18 and, for the first time, scanning technology will be used to track the performance