B. E-BUSINESS

eBuy provides a Web-based strategic ordering tool via automation of streamlined SCM workflow processes. More than 70 thousand postal requisitioners and approval managers have access to eBuy. They regularly make requests, obtain approvals, and receive advanced shipping notices for online e-catalog supplies. The eBuy system also enables supplier collaboration via e-mail messages and uses online electronic invoicing, invoice certification, and payment processes. During 2005 eBuy processed $503 million worth of e-catalog requisitions. eBuy is also used for requisitioning off-catalog supplies and services to capture spend data used to identify cost reduction opportunities, develop commodity strategies, and capture all requisition information. eBuy performs invoice certification for paperless invoices from utility companies and telecommunications suppliers.

In 2005 the Postal Service implemented the Web-based Contract Authoring and Management System (CAMS), a best-in-class commercial off-the-shelf product, to replace the previous system. CAMS provides strategic solutions and promotes e-collaboration across SCM business processes from contract purchasing planning, demand management, and e-sourcing to contract generation and administration, supplier rating, and spend analysis. CAMS also contains internal audit controls and eliminates paper by interfacing with eBuy.

The Postal Service strives to become an industry-leading strategic e-sourcing organization. Consistent with best-in-class commercial business practices, the Postal Service has increased its usage rate of the desktop reverse auction software tool. As a result of using several full- and self-service e-sourcing tools, the Postal Service conducted nearly 975 reverse auctions in 2005, accounting for an estimated contract amount of nearly $580 million which saved the Postal Service $69.5 million.

C. PURCHASING REFORM

The Postal Service is implementing purchasing reform to gain new effectiveness in its buying and supplying activities. Supply chain management business practices are being institutionalized throughout the Postal Service under a new policies integration initiative that combines buying and supplying practices.

The Postal Service replaced its old purchasing regulations with new regulations that are more business-like, streamlined, and focused on obtaining best value. The new regulations are easily understood, focus on purchasing quality goods and services at fair prices, and provide an expedited and inexpensive means of resolving business disagreements. The new regulations were published in the April 19, 2005, Federal Register, and became effective May 19, 2005. They provide the flexibility necessary to be successful in a highly competitive environment. The accompanying Interim Internal Purchasing Guidelines became effective on the same date and are available on usps.com.

D. SECURITY- AND ENVIRONMENTAL-RELATED PURCHASES

In the last quarter of 2005, Hurricanes Katrina and Rita wreaked devastation on the people and infrastructure of the Gulf States, including extensive damage to Postal Service facilities, equipment, and delivery capabilities. The Postal Service provided a rapid and effective response to these crises by making emergency purchases to ensure deliveries to an estimated 700 thousand customers. The Postal Service purchased supplies and services that included carrier casing equipment, Post Office box modules and locks, cluster box units, satellite and cell phones, carrier route vehicles, change-of-address kits, lighting, and fuel for generators and vehicles. Heavy duty vehicles were rented. Strong partnerships with freight carriers enabled the Postal Service to deliver emergency meals, water, and ice to postal employees at affected facilities. Supplies inventories were redistributed to damaged facilities and change-of-address kits were distributed to hundreds of thousands of evacuees from the disaster areas.

E. MAJOR PURCHASES

The Postal Service awarded contracts of $118 million for tractors and $23 million for spotters. These initiatives resulted in cost avoidance of more than $6 million. A contract was awarded for nearly $61 million for 3,100 left-hand drive alternative fuel minivans and 10 clean diesel vehicles.

A contract extension for $28 million was awarded to a key supplier for its Real Application Clusters software which allows different postal computer systems to communicate seamlessly with each other.

A contract for $60 million was awarded for computer data storage as part of electronic information back-up, disaster recovery, and business continuity efforts. The Postal Service managed the supplier transition efforts for telecommunication services under the Universal Computing Connectivity initiative awarded to a key supplier for a minimum 6-year period with a $200 million minimum spend. The transition will be completed over 2 years.

A contract was awarded for $23 million for the purchase of 8,500 high security collection box units for high-crime areas. These boxes have proven to be secure and are a major deterrent to mail theft.

The Postal Service awarded a Design-Build contract with a guaranteed maximum price of $48.7 million to design and construct a new 428,951 square foot building on an existing purchased site in South Portland, ME. The contract amount includes more than $4 million in mechanization to process mail within the facility.