1 Authority, Responsibility and Policy

1.1 Authority and Responsibility

1.1.1 Purchasing Manual

1.1.1.a Authority. The Purchasing Manual (PM) is authorized by Title 39, United States Code.

1.1.1.b Background

1. The United States Postal Service was established by the Postal Reorganization Act, Public Law 91-375 (codified at Title 39 of the United States Code) as an independent establishment within the executive branch whose purpose it is to bind the nation.

2. The Postal Service operates from its own revenues in providing its public service. Since it was established, it has faced rapidly increasing competition from both technology and businesses targeting market niches within the postal product line. Consequently, the Postal Service's ability to provide efficient, economical service is driven by market forces. Congress gave the Postal Service broad power to operate in the marketplace, excluding it from most federal laws and regulations concerning contracts, property, works, officers, employees, budgets, funding, and the establishment, adjudication, and judicial review of administrative procedures and determinations. While the Postal Service has adopted some federal purchasing practices to help achieve national priorities, it has also charted a more businesslike purchasing approach in order to operate more effectively in the marketplace. One element of its status as a public entity is reflected throughout these policies - its commitment to fairness in its business relationships with all suppliers.

3. The Postal Service has established the PM in order to purchase supplies and services that meet its competitive and business needs, thereby contributing to the basic Postal Service purpose of serving the people of the United States.

4. The policies and procedures established by the PM are intended to further the objectives expressed herein, but are not intended, and should not be construed, to create any right or benefit, substantive or procedural, enforceable by a party against the Postal Service or the United States, or their officers or employees, except to the extent expressly provided within the PM.

1.1.1.c Applicability. Except as noted in the PM, the PM applies to all purchasing activities. Additional guidance of both a general and commodity-specific nature is contained in:

1. Handbook P-1, General Purchasing Concepts and Practices.

2. Handbook P-2, Design and Construction Purchasing Practices.

3. Handbook PO-513, Mail Transportation Purchasing Handbook.

4. Each handbook is available on the World Wide Web at: http://www.usps.com/business.

1.1.2 Responsibility for Purchasing Policy

1.1.2.a Vice President, Purchasing and Materials. The Vice President (VP), Purchasing and Materials (P&M), is responsible for all purchasing policies and procedures. The VP has delegated that authority as follows:

1. Responsibility for policies and procedures unique to the acquisition, lease and disposal of real estate and to services related to those transactions has been delegated to the Vice President, Facilities (see 1.5.2.r for a definition of real estate and related services).

2. Responsibility for supplemental policies and procedural directives with respect to the requirement categories listed in Exhibit 4.5.2, Supplemental Policy and Procedural Authority, has been delegated to the positions described in that exhibit.

1.1.2.b Purchasing Policy Committee

The Purchasing Policy Committee (PPC) oversees the development of Postal Service purchasing policy. It reviews policy direction and evaluates proposed changes to the PM for the VP, P&M. The PPC meets at least annually.

1.1.2.c Membership. The permanent members of the PPC are:

1. The manager, Purchasing Policies and Programs (the Chair).

2. The senior counsel, Contract Protests and Policies.

3. The manager, Field Customer Support.

4. The manager, Headquarters Purchasing.

5. The manager, Major Facilities Purchasing.

6. The manager, National Mail Transportation Purchasing.

7. The manager, Supplier Development and Diversity.

8. The manager, Materials.

1.1.2.d Purchasing Policies and Programs. The staff of Purchasing Policies and Programs, P&M, prepares PM cases and other matters for the PPC's consideration.

1.2 Publication and Changes

1.2.1 Publication

1.2.1.a Issuance.The PM is issued and maintained by the VP, P&M, and is incorporated by reference in 39 CFR 601.

1.2.1.b Publication and Availability. The PM is published and available to users on the World Wide Web at http://www.usps.com/business.

1.2.2 Changes

1.2.2.a Proposed Changes. Anyone may propose changes to the PM. Proposed changes should be sent to the manager, Purchasing Policies and Programs and should address the following areas (supporting documentation should be included as necessary):

1. The text (chapter, part, etc.) in which the change is sought.

2. The proposed wording.

3. The rationale for the change.

4. Potential effects of the change in terms of cost and personnel.

5. Other documents or directives which will be affected by the proposed change.

6. Any other relevant information.

1.2.2.b Issuance. Changes to the PM are published in the Postal Bulletin and PM Transmittal Letters.

1.3 Deviations

1.3.1 General

1.3.1.a Conformance with PM requirements promotes consistency and integrity throughout Postal Service purchasing. There are circumstances, however, when departures from PM requirements are necessary or desirable. Deviations may be authorized in such circumstances.

1.3.1.b The following are examples of deviations requiring authorization:

1. Omitting or modifying any required PM provision or clause, supplementing a required PM provision or clause with another which modifies its substance or intent, or using a provision or clause that differs from a required PM clause covering the same subject. However, using PM provisions or clauses to replace selected text contained in Provisions 4-1, Standard Solicitation Provisions, and 4-2, Evaluation, and Clause 4-1, General Terms and Conditions, does not constitute a deviation and does not require authorization (see also 4.2.2.e and 4.2.7.d).

2. Using a clause that is inconsistent with the substance or intent of a PM clause covering the same subject, or inconsistent with the PM coverage of the subject, even when the PM clause is not required to be used verbatim.

3. Any procedure, method, or practice which is inconsistent with the PM and any variance from PM limitations on the use of clauses, procedures or types of contracts.

1.3.1.c The following are not deviations from the PM:

1. Clauses drafted specifically to meet unique requirements when not inconsistent with the substance or intent of a PM clause covering the same subject.

2. Procedures or instructions that are (a) developed to meet specific operational needs or the needs of specialized commodity areas and (b) approved by the VP, P&M.

3. Interim procedures or instructions to (a) test new purchasing techniques or methods, or (b) promote Postal Service efficiency.

1.3.2 Authorization of Deviations

1.3.2.a Request for Authorization. Deviations must be authorized in advance of their use. Contracting officers must forward a request through organizational levels to an individual authorized deviation approval authority (see 1.3.2.b). Each request must include:

1. Identification of the PM requirement from which deviation is sought.

2. A full description of the deviation and the period of time and circumstances under which it will be used.

3. An explanation of why the deviation is necessary or desirable.

4. Copies of any documents involved, such as forms, clauses, memoranda of negotiations, or correspondence.

1.3.2.b Approval

1. The VP, P&M, may approve any request for deviation regarding a single purchase or series of purchases.

2. Deviations concerning a single purchase of supplies, services, or equipment may be approved by the following:

(a) Manager, Materials.

(b) Manager, Headquarters Purchasing (this authority may be redelegated).

(c) Manager, Field Customer Support (this authority may be redelegated).

3. Deviations concerning a single purchase of facility design, construction and related services may be approved by the manager, Major Facilities Purchasing (this authority may be redelegated).

4. Deviations concerning a single purchase of mail transportation may be approved by the manager, National Mail Transportation Purchasing (this authority may be redelegated).

1.3.2.c Records. Approval officials must keep copies of all deviation approvals.

1.4 Purchasing Authority

1.4.1 Vice President, Purchasing and Materials

1.4.1.a General. The VP, P&M, has unlimited contracting authority. This authority includes the authority to award and administer contracts and to carry out all related responsibilities.

1.4.1.b Contracting Authority

1. General. The VP, P&M, has delegated contracting authority, including redelegation authority, throughout Postal Service purchasing organizations. An individual contracting officer's contracting and related authorities are enumerated in his or her letter of delegation (see 1.4.2).

2. Special Purchases. The VP, P&M, has delegated contracting authority for certain special requirements to other Postal Service officials. Some of these delegations are set out in Exhibit 4.5.2, Supplemental Policy and Procedural Authority.

3. Local Buying Authority. In the Administrative Support Manual (ASM) the VP, P&M, has delegated local buying authority to various positions throughout the Postal Service. Exhibit 1.4.1.b, Local Buying Authorities, shows these delegations by position. Local buying authority is defined in 1.5.2.i.

4. Required Approvals. If a proposed contract award or modification will exceed $10 million, the VP, P&M must give prior written approval to the individual purchase plan and the proposed contract award or modification (however, see 2.1.6.c.4 regarding noncompetitive purchases). In addition, see 6.9.1.b for information regarding prior VP approval of certain contract termination actions.

Exhibit 1.4.1.b

Local Buying Authorities

1.4.2 Contracting Officers

1.4.2.a General Responsibilities. Contracting officers have the authority to enter into, administer, and terminate contracts and to make related decisions. They are responsible for ensuring the performance of all actions necessary for efficient and effective purchasing, ensuring compliance with the terms of contracts, and with protecting the interests of the Postal Service in all of its contractual relationships. Operating under the general policies of the PM (and, when necessary, seeking and gaining approval for deviations to those policies), contracting officers have wide latitude to exercise sound business judgment based on the competitive and business needs of the Postal Service. In meeting these responsibilities, contracting officers are expected to consult and confer with their internal business partners and purchase teams (see 1.5.2.n for a definition of purchase teams). Lastly, contracting officers are also responsible for managing supplier relationships by overseeing the integrity and effectiveness of the purchasing process, ensuring that all suppliers are treated fairly and objectively, and maintaining effective communications with suppliers during contract performance.

1.4.2.b Funding Availability. Contracting officers must ensure that sufficient funding is available before taking a contractual action (such as a purchase, modification or termination) requiring additional funds.

1.4.2.c Delegations of Authority. Contracting authority is delegated to named individuals, rather than to positions, based on the individual's education, experience and training. Only individuals with this delegated authority may contractually bind the Postal Service. See Management Instruction AS-710-1999-2, Unauthorized Contractual Commitments. Information on the limits of contracting officers' authority must be readily available to the public and to Postal Service personnel.

1.4.2.d Actions Exceeding a Contracting Officer's Delegated Authority. A contracting officer may take a contractual action (a purchase, modification, or termination) exceeding his or her authority after receiving a written delegation of authority from a contracting officer delegated and authorized to redelegate the required authority. The delegation must be placed in the contract file. When determining the appropriate redelegation authority, contracting officers must consider the anticipated total dollar value of the action.

1.4.3 Contracting Officers' Representatives

A contracting officer may delegate certain responsibilities to individuals to act on behalf of the contracting officer. These individuals are referred to as contracting officers' representatives (see also 4.4.3, 6.1.1.b, and Management Instruction PM-610-2001-1, Contracting Officer's Representative Program).

1.4.4 Appointment and Selection

1.4.4.a Appointment Authority

1. Contracting officers are appointed by the VP, P&M, and by individuals delegated that authority by the VP. Appointees to the position of contracting officer levels I through IV must be career employees in good standing, and must meet the qualifications for the particular level (see 1.4.4.b.3).

2. Contracting officers must be appointed by letter and on Form 7378, Certificate of Appointment. The letter must state any limitations on the contracting officer's authority. Appointing officials must keep copies of all letters and certificates of appointment.

1.4.4.b Selection

1. General. Appointing officials must ensure that contracting officers are fully qualified by education, experience and training to solicit, negotiate, award and administer contracts on behalf of the Postal Service.

2. Contracting Officer Levels. Generally, contracting authorities are grouped by contracting officer level. There are four general levels of contracting officer:

(a) Level I contracting officers. Generally, these contracting officers are delegated up to $100,000 of contracting authority, and up to the maximum limit for orders placed against indefinite delivery contracts and ordering agreements.

(b) Level II contracting officers. Generally, these contracting officers are delegated up to $1 million of contracting authority, and up to the maximum limit for orders placed against indefinite delivery contracts and ordering agreements.

(c) Level III contracting officers. Generally, these contracting officers are delegated up to $10 million of contracting authority, and up to the maximum limit for orders placed against indefinite delivery contracts and ordering agreements.

(d) Level IV contracting officers. Level IV contracting officers are delegated unlimited contracting authority.

3. Qualifications. Appointment to a particular contracting officer level requires progressively more exacting qualifications. However, all individuals nominated to be contracting officers, with the exception of those individuals nominated and holding a certification described in (c) below must have baccalaureate degrees. The individual nominated must have earned at least 24 semester hours in subjects related to purchasing, such as accounting, business finance, commercial (business) law, economics, quantitative analysis, marketing, contracting or purchasing, organization, or management. The required 24 hours may have been earned during the individual's pursuit of a baccalaureate degree, or at any other time. In addition, the following qualifications apply to contracting officers appointed by the VP, P&M:

(a) Contracting Officer Level I:

(1) Experience: One year of experience performing substantive purchasing tasks.

(2) Education: The following professional certifications may serve as a substitute for the baccalaureate degree for level I contracting officers:

(i) Certified Professional Contract Manager from the National Contract Management Association.

(ii) Certified Purchasing Manager from the National Association of Purchasing Management.

(iii) Certified Public Purchasing Officer from the National Institute of Governmental Purchasing.

(3) Training: Satisfactory completion of the following purchasing courses:

(i) Fundamentals of Purchasing - Theory and Practice.

(ii) Commercial Purchasing.

(iii) And, if the contracting officer will be delegated purchasing authority for design and construction purchases: (1) Introduction to Facilities R&A Contracting and (2) Contract Administration, Pricing and Claims.

Note: Coursework and earned credits in subjects covering the same general topics taken at an accredited college or university may serve as a substitute for this training requirement.

(b) Contracting Officer Level II:

(1) Experience: Three years of current, progressively complex and responsible experience in performing competitive and noncompetitive purchasing (not including simplified purchasing). Generally, this experience must have been gained in intermediate level contracting positions.

(2) Training: Satisfactory completion of the following purchasing courses:

(i) All level I courses.

(ii) Negotiation Strategies.

(iii) Cost and Price Analysis.

(iv) Contract Administration.

(v) Advanced Purchasing.

(vi) Contract Law.

Note: Coursework and earned credits in subjects covering the same general topics taken at an accredited college or university may serve as a substitute for this training requirement.

(c) Contracting Officer Level III:

(1) Experience: Five years of current, progressively complex and responsible experience in soliciting, negotiating, awarding and administering competitive and noncompetitive purchasing actions. Ordinarily, this experience must have been in higher-level purchasing positions.

(2) Training: Satisfactory completion of the following courses:

(i) All level II courses.

(ii) Strategic Issues in Purchasing and Materials.

Note: Coursework and earned credits in subjects covering the same general topics taken at an accredited college or university may serve as a substitute for this training requirement.

(d) Contracting Officer Level IV. A Level IV contracting officer must hold one of the following positions:

(1) Manager, Headquarters Purchasing.

(2) Manager, National Mail Transportation Purchasing.

(3) Manager, Major Facilities Purchasing.

(4) Manager, Field Customer Support.

(5) Manager, Materials.

1.4.5 Waivers and Interim Appointments

1.4.5.a Waivers. Waivers to the qualification requirements may be requested for individuals who, due to their extraordinary experience or extraordinary circumstances, should be granted contracting officer authority. Requests must be submitted through organizational levels to the VP, P&M.

1.4.5.b Interim Appointments. Ordinarily, individuals will not be appointed as contracting officers if they do not meet the relevant qualification criteria. However, when necessary, appointing officials may grant an interim appointment to an individual who has not yet completed necessary training or education. No interim appointment may exceed one year, and no interim appointment may be granted to an individual more than once if the individual fails to complete the required training or education.

1.4.6 Continuing Professionalism

All contracting officer appointments, regardless of level, must be reviewed annually by the appointing official in order to ascertain that the contracting officer has maintained professional proficiency and otherwise remains qualified. Therefore, contracting officers must:

1. Attend 21 hours of formal purchasing training covering such areas as new requirements, techniques, or policies and procedures brought about by changes in statutes, regulations, business research or evaluations of postal purchasing practices.

2. Maintain their professionalism through (a) attendance at seminars, conferences, meetings or other professional activities and (b) performing coursework in contracting and purchasing commensurate with their CO level and responsibilities. The appointing official will determine whether a particular CO's efforts in these areas meet the professional development requirements.

3. Sustain and expand their knowledge of the purchasing field through reading professional literature.

1.4.7 Termination

Termination of a contracting officer appointment may be made by an appointing authority or by the VP, P&M. Terminations may be made for reasons such as reassignment, termination of employment, or unsatisfactory performance. The termination must indicate the effective date of termination. Termination of employment automatically terminates a contracting officer's appointment. Terminations may not be made retroactively.

1.5 Meaning of Words and Terms

1.5.1 General

The words and terms defined in this section have the meanings given in this section whenever they are used in the PM, unless the context clearly indicates a different meaning or a different definition is given for a particular section, part, solicitation provision or contract clause. Definitions are in alphabetical order.

1.5.2 Definitions

1.5.2.a Agreement. A set of pre-established terms and conditions negotiated between the Postal Service and a supplier which only becomes a contract when an order is placed and accepted by the supplier. A contract is always an agreement; but an agreement is not always a contract.

1.5.2.b Assigned Counsel. The person or persons assigned by the General Counsel to provide legal advice to a VP or contracting officer. In general, contracting advice to Headquarters purchasing offices is provided by the Corporate Law section of the Law Department, and advice to field purchasing offices is provided by the Law Department's Area Legal Offices.

1.5.2.c Change Order. A written order signed by the contracting officer directing the supplier to make changes that the Changes clause (see paragraph c of Clause 4-1) authorizes the contracting officer to make without the specific consent of the supplier.

1.5.2.d Contract. Any understanding that can be legally enforced, formed by two or more parties who promise to perform or to refrain from performing some act. For purposes of this manual, a contract exists when there is a bilateral agreement, a unilateral order (such as a purchase order) by the Postal Service that becomes effective upon performance by the other party, or a binding order under an agreement that did not in itself bind the parties.

1.5.2.e Contract Modification. A written alteration in the specifications, delivery point, rate of delivery, contract period, price, quantity or other provisions of an existing contract whether made unilaterally under a provision in the contract or bilaterally by mutual parties to the contract. It includes such bilateral actions as supplemental agreements, and such unilateral actions as change orders, administrative changes, notice of termination, and exercise of options.

1.5.2.f Contracting Officer. A person who has direct purchasing authority or has been delegated purchasing authority (see 1.4). The term includes an authorized representative of a contracting officer acting within the limits of the authority delegated by the contracting officer.

1.5.2.g Days. This means calendar days unless working days are specified.

1.5.2.h Includes. This means "includes but is not limited to."

1.5.2.i Local Buying Authority. The authority to locally buy and pay for day-to-day operational needs. Local buying authority may not be used for certain commodities; see ASM 72 for more information regarding local buying authority.

1.5.2.j May. This is permissive. "May not" and "no [person or thing] may" mean that the act described is prohibited.

1.5.2.k Must. This is imperative.

1.5.2.l Performance Evaluation Factors. A standard by which the worth of a proposal is judged. Solicitations must state the factors that will be applied in evaluating proposals. The terms performance evaluation factors and evaluation criteria are used interchangeably. There are two types of factors: proposal-specific and supplier-specific.

1.5.2.m Proposal. An offer that, if accepted, creates a contract. A proposal may be made in response to a solicitation, or may be unsolicited.

1.5.2.n Purchase Team. A group of Postal Service internal business partners with an interest in a specific purchase or series of purchases. In addition to other responsibilities, the contracting officer serves as the business leader of the purchase team, and directs and oversees the purchase team's efforts from purchase planning to contract closeout.

1.5.2.o Purchasing. All activities related to the purchase of supplies, services, equipment, design and construction and related services, and mail transportation, including planning, solicitation, source selection, contract award, and contract administration. It does not include activities related to the determination of requirements.

1.5.2.p Purchasing Office. An organizational element responsible for the purchase of supplies, services and equipment, facility design and construction and related services, or mail transportation.

1.5.2.q Quotation. A response to a request for quotation; it is informational in character, and, unlike a proposal, it is not an offer that can be accepted by the Postal Service to form a binding contract.

1.5.2.r Real Estate and Related Services. The term real estate includes the acquisition of real property (including improvements on real property), and any interests in real property, by easement, license, sale, lease, or exchange; the disposal of real property (including improvements on real property); and any interests in real property, by easement, license, sale, lease, exchange; and the development and redevelopment of real property under lease agreements, including acquisition, disposal, or development and redevelopment by contract or agreement with government entities at any level. Related services includes professional services, planning efforts, studies, and the like, in support of the acquisition, disposal, development and redevelopment of real estate (as defined above) including design/engineer, environmental, geo-technical, brokerage, legal, relocation, title, and similar services (other than services in connection with Postal Service-financed construction.

1.5.2.s Services. The performance of identifiable tasks.

1.5.2.t Should. This means desirable but not required.

1.5.2.u Supplemental Agreement. A contract modification that is mutually agreed to by the parties.

1.5.2.v Supplies. Property and rights or interest in property of any kind except real property.

1.5.2.w Vice President. When not otherwise specified, means the Vice President of Purchasing and Materials.

1.5.2.x Will. This signifies intent or obligation.

1.6 General Policies

1.6.1 Business Objectives and Practices

The primary goal of Postal Service purchasing is to support the Postal Service's business and competitive objectives. To meet this mandate, purchase teams, headed by the contracting officer, determine the most effective business practices for a given purchase. These business practices include such matters as whether a purchase should be made competitively or noncompetitively and whether suppliers should be prequalified. In making these determinations, purchase teams must consider the potential ramifications on other important business objectives, such as supplier diversity, supplier relations, and the Postal Service's obligation to be fair in, and accountable for, its actions.

1.6.2 Best Value

It is the policy of the Postal Service to award its contracts to the suppliers offering the best value to the Postal Service. What constitutes the best value will depend on the goods or services being purchased. When a purchase is made competitively, best value is determined by the comparative analysis of proposals in accordance with the evaluation factors in the solicitation, taking into consideration such matters as the Postal Service's business objectives, suppliers' past performance and capability, price and total cost of ownership, quality and risk (see, generally, 2.1.9). Ordinarily, a best value determination is made by the purchase team, subject to applicable review and approval.

1.6.3 Competition

1.6.3.a Generally, purchases valued at more than $10,000 should be made on the basis of adequate competition, although, in some cases, purchase teams may decide during purchase planning that the most effective business practice is to make the purchase noncompetitively (see 2.1.6). Adequate competition means the solicitation of a sufficient number of qualified suppliers to ensure that the required quality and quantity of goods and services is obtained when needed and that the price is fair and reasonable.

1.6.3.b Contracting officers, working with the purchase team, must determine that adequate competition has been obtained when competition is used. In making that determination, contracting officers must take into account both the Postal Service's business objectives and its commitment to identifying new suppliers and providing opportunities for them to join the Postal Service's supplier base.

1.6.3.c Competition among prequalified suppliers is sufficient to meet the adequate competition standard.

1.6.4 Contracts with Postal Service Employees and Their Immediate Families

1.6.4.a Except as provided in b and c below, contracts may not be awarded to Postal Service employees, their immediate families, or business organizations substantially owned or controlled by Postal Service employees or their immediate families. Postal Service employees means all postal officers and employees, whether in full-time, part-time, career or noncareer positions, including specifically persons in temporary positions such as postmaster replacements and rural carrier reliefs. Immediate family means spouse, minor child or children, and individuals related to an employee by blood who are residents of the employee's household.

1.6.4.b The prohibition against contracting with Postal Service employees and their immediate families may be waived (all waivers must be in writing), by the contracting officer for:

1. New real estate leases of interior space of 3,000 square feet or less.

2. Renewals of existing highway contract routes with immediate family members of a postal employee, subject to review and concurrence by the Associate Ethical Conduct Officer.

3. Cleaning service contracts with immediate family members of nonsupervisory employees.

4. The licensing of a patented invention that is the sole property of the employee.

1.6.4.c This prohibition does not apply to the lease of an individual employee's vehicle in connection with his or her employment, and renewals and extensions of leases of interior space of 3,000 square feet or less. When to do so is in the best interests of the Postal Service, contracting officers may renew or extend existing leases of over 3,000 square feet from Postal Service employees or their immediate families, or business organizations substantially owned or controlled by them, with the concurrence of the Associate Ethical Conduct Officer (see 39 CFR 447.31).

1.6.5 Release and Exchange of Information

1.6.5.a General. The Postal Service makes records, data, and information available to the public to the maximum extent consistent with the Postal Service's interest, the privacy rights of individuals, ownership of rights in the data requested (see Chapter 8), and the need to protect Postal Service and other confidential business information (including information relating to the Postal Service's commercial operations) from disclosure.

1.6.5.b Release. Records properly identified and requested by any member of the public must be made available in accordance with subchapter 35, Administrative Support Manual, and 39 CFR 265, implementing the Freedom of Information Act (FOIA) (6 U.S.C. 552), unless exempt from disclosure.

1.6.5.c Exchange. Subject to any restrictions on disclosure, the Postal Service exchanges information with other government agencies regarding the performance of suppliers.

1.6.6 Privacy Protection

1.6.6.a Policy. Whenever a supplier will be required to design, develop, or operate a system of records within the meaning of the Privacy Act (that is, any group of records under the control of the Postal Service, including mailing lists, from which information is retrieved by the name of an individual or by some personal identifier assigned to the individual, such as a Social Security number), the contract must require that the supplier and any subcontractors comply with the Privacy Act (5 U.S.C. 552a). As required by 1.6.6.b below, contracts must direct suppliers and subcontractors to comply with the Postal Service's policies protecting individual privacy and postal information and records (39 CFR 266-267), and the Postal Service's Internet Privacy Policy contained at www.usps.com.

1.6.6.b Clause 1-1, Privacy Protection. Clause 1-1, Privacy Protection, addresses privacy protections. It is incorporated by reference in Clause 4-2, Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders, and must be checked-off by the contracting officer and included in:

1. Contracts in which a supplier or subcontractor operates a Privacy Act system on the Postal Service's behalf.

2. Contracts in which a supplier or subcontractor will have access to any Postal Service customer data, including information or data regarding visitors to Postal Service Web sites.

3. Contracts in which a supplier or subcontractor will have access to customer or visitor data on a Postal Service Web site operated by the Postal Service or the supplier or subcontractor, or in which a supplier or subcontractor assists the Postal Service in establishing or administering a Web site.

4. Contracts in which a supplier or subcontractor designs or places a link or ad banner on a Postal Service Web site or any Web site on the Postal Service's behalf.

1.6.7 Advance Payments and Progress Payments

1.6.7.a Policy. Usually, the Postal Service pays for supplies and services after delivery or performance. However, for some purchases, sources may be unavailable or competition too limited without the availability of advance payments or progress payments.

1.6.7.b Advance Payments. Approval to make advance payments must be obtained as required by Management Instruction FM-610-96-1, Advance Payments.

1.6.7.c Progress Payments

1. If the dollar value of a prospective contract is within the contracting officer's delegated contracting authority, he or she may approve the use of progress payments for the particular contract. For contracts over $1,000,000 (excluding construction, architect/engineer and construction management contracts), progress payments must also be approved by the VP, Finance.

2. Before approving progress payments, the contracting officer must make a written determination establishing that:

(a) Progress payments are in the Postal Service's best interests.

(b) The supplier's accounting system and controls are adequate for proper administration of progress payments, or their adequacy will be ascertained before contract award.

(c) Monthly progress reports will be obtained from the supplier, showing progress of the work as related to progress payments made.

1.6.7.d Clauses. Any contract providing for advance payments must include Clause 1-2, Advance Payments. Any contract, other than a construction contract, providing for progress payments must include Clause 1-3, Progress Payments. (For construction contracts, see Clause B-48, Payment (Construction).)

1.6.7.e Partial Payment. See 6.4.1.b regarding partial payments to suppliers.

1.6.8 Conflicts of Interest

1.6.8.a Organizational Conflicts of Interest

1. An organizational conflict of interest exists when the nature of the work to be performed under a contract may give an offeror an unfair competitive advantage, or when an offeror has other interests that may impair its objectivity or ability to perform satisfactorily. Such conflicts are not limited to any particular type of purchase, but are more likely to occur in contracts involving:

(a) Professional services (see 4.5.3).

(b) Consultant services (see 4.5.3).

(c) Performance of or assistance in technical evaluations.

(d) Projects that are procured in separate phases, such as design and then construction or research and development and then production.

2. As part of purchasing planning (see 2.1) contracting officers, with the assistance of the purchase team, must attempt to identify potential conflicts of interest so that they may be avoided or mitigated. When a potential conflict is foreseen, the contracting officer should consult with assigned counsel and obtain the assistance of appropriate technical specialists to mitigate or avoid conflict. Such mitigation actions may include, but are not limited to, the development of solicitation provisions restricting competition to offerors not subject to a conflict of interest, or a contract clause limiting the supplier's eligibility for future contracts or subcontracts or other actions to mitigate or avoid an apparent conflict such as the adoption of measures to ensure as even a competition as possible, as may be in the interest of the Postal Service and the offerors. Any limit on future contracts must be for a reasonable period sufficient to avoid unfair competitive advantage or potential bias. See, for example, Clause 1-7, Organizational Conflict of Interest.

3. If it does not become apparent until proposals are received that participation by a particular offeror could lead to a conflict of interest and unfair competition, the offeror may be disqualified and its proposal rejected, or the contracting officer may take such other actions as deemed necessary in the interest of the Postal Service and the offerors to avoid or mitigate the situation, acting in the interest of the Postal Service, and in consultation with assigned counsel and appropriate technical specialists to ensure a fair competition.

4. If the contracting officer determines to mitigate a situation that could lead to a conflict or which appears to constitute a conflict of interest, such determination should be reduced to a written analysis of the course of action chosen. Such analysis should include a consideration of benefits and detriments to the Postal Service and the offerors and may consider information provided by offerors in response to the solicitation or obtained during negotiations.

5. The provisions of this section may be waived as to any procedure or rule by determining that its application in a particular situation would not be in the Postal Service's interest. Any such waiver should be in writing by the contracting officer and processed in accordance with 1.3.

1.6.8.b Participation by Members of Congress. The participation of members of Congress in contracts or agreements made on behalf of the United States (including the United States Postal Service) is prohibited by 41 U.S.C. section 22.

1.6.9 Standards of Conduct

Postal Service employees are held to the highest standard of conduct in the performance of their duties, and must conduct themselves so as to avoid even the appearance of any impropriety. All employees must adhere to the Standards of Ethical Conduct for Employees of the Executive Branch, 5 CFR 2635.

1.6.10 Gratuities or Gifts

1.6.10.a Postal Service employees, with limited exceptions, are prohibited from accepting gratuities or gifts from suppliers or persons seeking postal contracts or other business under detailed rules prescribed in 5 CFR 201-205.

1.6.10.b Clause 1-5, Gratuities or Gifts, which is incorporated by reference in Clause 4-2, Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders, provides for termination of the contract for default upon a finding by the Postal Service Board of Contract Appeals that a supplier, or the supplier's agent or representative, offered or gave a gratuity or gift to a Postal Service employee to obtain a contract or favorable treatment under a contract.

1.6.10.c Information or allegations concerning unlawful gratuities or gifts must promptly be referred to the Office of the Inspector General (OIG). If the OIG finds evidence that an unlawful gratuity or gift was offered or given, the contracting officer must determine whether debarment is appropriate (see 3.7), in addition to actions taken under a specific contract.

1.6.11 Supplier Clearances

1.6.11.a ASM 272.3 requires that all individuals performing services pursuant to Postal Service purchases (other than mail transportation contracts, see 4.4) who have access to occupied Postal Service facilities, and/or Postal Service information and resources, including Postal Service computer systems, must obtain clearance before being provided that access. In accordance with that regulation, the contracting officer and the purchase team determine, with the concurrence of the Inspection Service, when a clearance requirement exists.

1.6.11.b Include Provision 1-1, Supplier Clearance Requirements, in any service contract, other than a mail transportation contract, for which a supplier clearance requirement exists.

1.6.12 Strategic Alliances

Strategic alliances are contractual agreements used to promote marketing initiatives that benefit the Postal Service, enhancing postal business performance through increased revenues, reduced costs, or improved customer satisfaction. They result in partnerships that combine the core strengths, competitive advantages, or needs of the Postal Service with the attributes of other companies for mutual market advantage. Strategic alliances are not purchasing contracts, and may not be used to replace or supplement the purchasing methods prescribed in this PM, which does not apply to strategic alliances. Handbook F-66D, Other Investment-Related Policies and Procedures, contains further guidance on strategic alliances.

1.6.13 Domestic Preference

1.6.13.a Policy. Postal Service policy is to give preference to domestic-source products and materials when purchasing supplies and services. With respect to individual purchases or purchase categories, the Postmaster General may adopt more stringent standards for domestic manufacture when in the best interests of the Postal Service.

1.6.13.b Supplies

1. Applicability. These procedures apply to all purchases of supplies or services that involve the furnishing of supplies. Deviations may be authorized by the VP, Purchasing and Materials.

2. Definitions

(a) End products. Articles, materials and supplies to be purchased for Postal Service use.

(b) Components. Articles, materials and supplies directly incorporated in end products.

(c) Domestic-source end products. An unmanufactured end product mined or produced in the United States or an end product manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all of its components. The cost of components includes transportation costs to the place of incorporation into the end product and, in the case of components of foreign origin, duty (whether or not a duty-free entry certificate is issued). For purchases in excess of $25,000, Canadian end products are treated as domestic source end products. The articles and materials listed in 1.6.13.d are considered to have been mined, produced, or manufactured in the United States, regardless of their source in fact.

(d) Foreign end product. An end product other than a domestic-source end product.

(e) Domestic proposal. A proposed price for a domestic-source end product, including transportation to destination.

(f) Foreign proposal. A proposed price for a foreign end product, including transportation to destination and duty (whether or not a duty-free entry certificate is issued).

(g) Canadian end product. An article that is wholly the growth, product, or manufacture of Canada or, in the case of an article consisting in whole or in part of materials from another country, has been substantially transformed in Canada into a new and different article of commerce distinct from that from which it was transformed. For purposes of calculating the value of the end product, it includes the value of services (except transportation services) incidental to the article, provided that the value of the incidental services does not exceed the value of the article itself.

3. Requirement. Only domestic-source end products may be purchased, except when the VP, Purchasing and Materials, determines that:

(a) The articles, materials or supplies are of a class or kind not mined, produced or manufactured in the United States in sufficient and reasonable available commercial quantities of satisfactory quality (see 1.6.13.d); or

(b) Purchases of domestic-source end products would be inconsistent with the interest of the Postal Service, or that its cost would be unreasonable, as when the price comparison procedures described in 1.6.13.b.5 result in the purchase of a foreign end product.

4. Proposal Evaluation

(a) If performance evaluation factors will have a significant weight in proposal evaluation, domestic-source end products receive a preference in the case of closely ranked proposals, but no price comparison should be made.

(b) If award is to be based solely on price, each foreign price proposal must be adjusted for purposes of evaluation by adding to the foreign proposal (inclusive of duty) a factor of six percent of that proposal. If a tie results between a foreign proposal and a domestic proposal, the domestic proposal must be selected for award. When more than one line item is involved, the six percent evaluation factor is applied on an item-by-item basis, except that the factor may be applied to any group of items that the solicitation specifies will be awarded as a group.

5. Solicitation Provision. Provision 1-2, Domestic Source Certificate - Supplies, is incorporated by reference in Provision 4-3, Representations and Certifications, and must be checked-off by contracting officers when the solicitation calls for the purchase of supplies.

6. Clause. Clause 1-9, Preference for Domestic Supplies, is incorporated by reference in Clause 4-2, Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders, and must be checked-off by contracting officers when the contract calls for the purchase of supplies.

1.6.13.c Construction Materials

1. Applicability. The procedures in this part apply to all construction contracts. Deviations may be authorized by the VP, P&M.

2. Definitions

(a) Components. Articles, materials, and supplies incorporated directly into construction materials.

(b) Construction materials. Articles, materials, and supplies brought to the construction site for incorporation into the building or work.

(c) Domestic construction material. This means (1) an unmanufactured construction material mined or produced in the United States, or (2) a construction material manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. The cost of each component includes transportation costs to the place of incorporation into the construction material and any applicable duty (whether or not a duty-free entry certificate is issued). Components of foreign origin of the same class or kind as those listed in 1.6.13.d are treated as domestic.

(d) Foreign construction material. A construction material other than a domestic construction material.

3. Requirement. Only domestic construction materials may be used in construction, except:

(a) When the contracting officer determines that use of a particular domestic construction material would be impracticable, or that its cost would be unreasonable, under guidelines established by the VP, P&M, in the relevant handbook; or

(b) When the VP, P&M, determines that a construction material is not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of satisfactory quality (see 1.6.13.d).

4. Solicitation Provision. Provision 1-3, Domestic Source Certificate - Construction Materials, is incorporated by reference in Provision 4-3, and must be checked-off by contracting officers when the solicitation calls for the purchase of construction materials.

5. Clause. Clause 1-10, Preference for Domestic Construction Materials, is incorporated by reference in Clause 4-2, and must be checked-off by contracting officers when the contract calls for the purchase of construction materials.

1.6.13.d List of Excepted Articles and Materials

1. General. The VP, Purchasing and Materials, has determined that the articles and materials listed below are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of satisfactory quality, or that it would be inconsistent with the interest of the Postal Service to apply the domestic preference policy to these articles and materials. When incorporated into end products or construction materials manufactured in the United States, these items may be regarded as components of domestic origin for the purpose of determining the origin of the manufactured end products or construction materials:

Acetylene, black

Asbestos, amosite

Books/pamphlets/newspapers/magazines/periodicals: printed briefs and films not printed in the United States and for which domestic editions are not available

Cadmium, ores and flue dust

Calcium cyanamide

Chrome ore or chromite

Cobalt, in cathodes, rondelles, or other primary forms

Cork, wood or bark and waste

Cover glass, microscope slide

Diamonds, industrial, stones

Emetine, bulk

Ergot, crude

Fibers of the following types: agave, coir, jute, and palmyra

Graphite, natural

Hand sewing needles

Hyoscine, bulk

Leather, sheepskin, hair type

Mica

Nickel, primary, in ingots, pigs, shot, cathodes, or similar form; nickel oxide and nickel salts

Nitroguanidine (also known as picrite)

Petroleum, crude oil, finished products, and unfinished oils (see petroleum definitions in paragraph 3.(a)-(c) below)

Platinum and platinum group metals refined, as sponge, powder, ingots, or cast bars

Pyrethrum flowers

Quartz crystals

Quebracho

Radium salts

Rosettes

Rubber, crude and latex

Rutile

Wire glass

Woods of the following species: angelique, balsa, ekki, greenheart, lignum vitae, mahogany, and teak

2. Crude oil. Crude petroleum as produced at the wellhead and liquids (under atmospheric conditions) recovered from mixtures of hydrocarbons that existed in a vaporous phase in a reservoir and are not natural gas products.

3. Finished products. Any one or more of the following petroleum oils, or a mixture or combination of them to be used without further processing except blending by mechanical means:

(a) Liquefied gases - hydrocarbon gases recovered from natural gas or produced from petroleum refining and kept under pressure to maintain a liquid state at ambient temperatures.

(b) Gasoline - a refined petroleum distillate that, by its composition, is suitable for use as a carburetant in internal combustion engines.

(c) Jet fuel - a refined petroleum distillate used to fuel jet propulsion engines.

(d) Naphtha - a refined petroleum distillate falling within a distillation range overlapping the higher gasolines and lower kerosenes.

(e) Fuel oil - a liquid or liquefiable petroleum product burned for lighting or for the generation of heat or power and derived directly or indirectly from crude oil, such as kerosene, range oil, distillate fuel oils, gas oil, diesel fuel, topped crude oil, and residues.

(f) Lubricating oil - a refined petroleum distillate or specially treated petroleum residue used to lessen friction between surfaces.

(g) Residual fuel oil - a topped crude oil or viscous residuum that, as obtained in refining or after blending with other fuel oil, meets or is the equivalent of Military Specifications Mil-F-859.

(h) Asphalt - a solid or semisolid cementitious material that gradually liquefies when heated, in which the predominating constituents are bitumens, and that is obtained in refining crude oil.

(i) Natural gas products - liquids (under atmospheric conditions), including natural gasoline, that are recovered by a process of absorption, adsorption, compression, refrigeration, cycling, or a combination of such processes, from mixtures of hydrocarbons that existed in a vaporous phase in a reservoir and that, when recovered and without processing in a refinery, otherwise fall within any of the definitions of products contained in (b) through (e) above.

4. Unfinished oils. One or more of the petroleum oils listed in paragraph (b) above, or a mixture or combination of such oils, to be further processed other than by blending by mechanical means.

1.6.14 Contracts With Former Postal Service Officers, Executives, and Employees

1.6.14.a General. The Postal Service contracts with former officers, executives, and employees when their expertise is deemed important to furthering the business and competitive interests of the Postal Service. Whether these individuals are the subject of personal services contracts, or are key personnel, experts or consultants employed by a supplier, the following restrictions apply and these procedures must be followed.

1.6.14.b Contracts With Former Officers and Executives

1. Policy. It is Postal Service policy not to contract with former officers or Postal Service Executive Service (PCES) executives or entities with which such individuals have a substantial interest for five years after the date of their separation from the Postal Service (whether by retirement or otherwise) if the contract calls for substantially the same duties as they performed during their career with the Postal Service, as determined by the Vice President of Human Resources. Purchase teams must enforce this policy when purchasing professional/technical or consulting services (see 4.5.3 for definitions of these types of services), and include Provision 1-4, Prohibition Against Contracting with Former Officers or PCES Executives, in relevant solicitations, and Clause 1-11, Prohibition Against Contracting with Former Postal Service Officers or PCES Executives, in resulting contracts.

2. Exceptions. The Vice President of Human Resources may grant exceptions to this policy when he or she determines that doing so is in the best interest of the Postal Service. All such exceptions must be documented and included in the contract file.

1.6.14.c Contracts With Other Former Employees

1. Policy. The Postal Service may contract with former employees (other than former officers or PCES executives) or with suppliers proposing the use of former employees during contract performance when the former employee's expertise will further the success of the purchase and the business and competitive interests of the Postal Service. Contracts with former employees or with suppliers offering the services of former employees should not be confused with the employment of annuitants (see 1.6.14.c.2).

2. Reviews and Approvals

(a) All requests for contracts with former employees (non-officer or executive) must be forwarded by the purchasing organization to the manager of Corporate Personnel Management (CPM), for review and approval. The manager of CPM will decide whether the former employee should be hired as a retired annuitant (see Employee and Labor Relations Manual 323.33) or should be contracted with by the purchasing organization. When appropriate, the purchasing organization may award a personal services contract to the former employee (see 4.5.4).

(b) When a supplier proposes using a former employee, the manager of CPM will review the former employee's employment history and advise the purchase team as to whether the substitution of another individual is in the best interests of the Postal Service. If such substitution is the case, the contracting officer must advise the supplier to propose another individual to perform the duties called for. If, following contract award, the supplier proposes the use of a former employee, the same review and approval process is required before the former employee may begin work.

3. Provision and Clause. Purchase teams must consider this policy in light of the particular purchase, and the potential need for reviews and approvals, and as necessary, include Provision 1-5, Proposed Use of Former Postal Service Employees, in relevant solicitations, and Clause 1-12, Use of Former Postal Service Employees, in resulting contracts.

1.7 Anticompetitive Practices

1.7.1 General

An anticompetitive practice is any practice designed to eliminate competition or restrain trade. Such practices include collusion, follow-the-leader pricing, rotated low price proposals, sharing of business, identical prices, and any other device intended to deprive the Postal Service of the benefits of competition. These practices may violate federal antitrust laws and be subject to prosecution by the Attorney General. Proposals suspected of reflecting anticompetitive practices may be rejected.

1.7.2 Reports

Any suspected anticompetitive practice must be reported promptly through normal management channels to the VP, P&M (or the VP, Facilities, if the matter involves real estate). Identical prices are not reported automatically, but only if there is reason to suspect an anticompetitive practice. If the VP believes that there is reasonable evidence of violation of federal antitrust laws, the report must be forwarded to the Office of Inspector General (OIG). The OIG will refer the matter to the Attorney General for prosecution, if appropriate.

1.8 Contingent Fees

1.8.1 General

A supplier may not pay a fee to an agent contingent upon the agent's soliciting or obtaining the award of a contract. Such a fee arrangement is improper because it may lead to the attempted or actual exercise of improper influence. The prohibition does not apply to contingent fee arrangements between suppliers and bona fide employees or bona fide agencies employed by suppliers to secure business.

1.8.2 Clause

Clause 1-6, Contingent Fees, is incorporated by reference in Clause 4-2, Contract Terms and Conditions Required to Implement Policies, Statutes or Executive Orders, when checked-off by the contracting officer. Clause 1-6 is not to be used in:

1. Contracts for public utility services furnished by a public utility company when the utility company's rates for the services are subject to regulation by a federal, state, or other regulatory body and the public utility company is the sole source of supply.

2. Other contracts, individually or by class, as designated by the VP, P&M.

1.8.3 Bona Fide Employee or Agency

1.8.3.a Bona Fide Employee. For the purpose of Clause 1-6, this means an individual employed by the concern in good faith and over whom the concern has the right to exercise supervision and control as to time, place, and manner of performance of work.

1.8.3.b Bona Fide Agency. In determining whether an agency is a bona fide established commercial selling agency employed by the supplier for the purpose of securing business, the factors below must be considered:

1. The fee must be commensurate with the nature and extent of the services and not excessive compared with the fees customarily allowed in the trade for similar services related to commercial business. In evaluating reasonableness of the fee, services of the agent other than actual solicitation should be considered, such as technical, consultant, or managerial services, and assistance in obtaining personnel, facilities, equipment, materials, or subcontractors for the performance of the contract.

2. The agency should be an established concern, with knowledge of the products and the business of the concern represented and other qualifications necessary to sell the products or services on their merits, and there should ordinarily be a continuity of relationship between the supplier and the agency.

1.8.3.c Use of Improper Influence. No employee or agency is bona fide if the employee or agency seeks to obtain or claims to be able to obtain a contract through the use of improper influence.

1.8.4 Misrepresentation or Violation

In case of misrepresentation concerning contingent fees, or violation or breach of Clause 1-6, the VP, P&M, may take one or more of the following actions, or other action, as is appropriate:

1.8.4.a If the award has not been made, determine whether the proposal should be rejected.

1.8.4.b If award has been made, take action to enforce the clause, either annulling the contract without liability or recovering the amount of the fee involved.

1.8.4.c Consider suspension or debarment.

1.8.4.d Consider referring the matter to the Attorney General, through the same channels as in 1.7.2.

1.9 Administrative Matters

1.9.1 Electronic Commerce

1.9.1.a Policy. Whenever possible, and depending on whether the means are available, the Postal Service will seek to reengineer paper-driven processes with its suppliers in order to capture the benefits of conducting routine purchasing transactions by electronic commerce (EC). Electronic commerce is an approach to performing routine business transactions using existing information systems technology and will be used to:

1. Provide business opportunities for large and small businesses throughout the electronic marketplace.

2. Improve overall quality through better record keeping, fewer errors in data, and reduced processing time.

3. Reduce inventory by faster and more accurate filling of orders and assist just-in time inventory management.

4. Provide postal management with improved decision making tools through near real-time access to business information.

1.9.1.b Use. Electronic commerce includes the application of national and international standards, business practices, and various information system technologies. Representative aspects of EC include, but are not limited to, electronic data interchange (EDI), facsimile (FAX), the Internet, and remote bulletin boards. The Postal Service may, depending on the nature and scope of a particular purchase, limit competition to EDI-capable trading partners.