3 Supplier Relations

3.1 Policy

3.1.1 General

It is the policy of the Postal Service to establish strong, mutually beneficial relations with its suppliers in order to meet its business and competitive objectives. Postal Service purchases are intended to foster partnerships with suppliers in which both parties work toward a common goal. The nature of the partnership is determined by the potential impact of the supplier's performance on the Postal Service's competitive and financial position, and therefore some partnerships are closer and more interdependent than others. The type of partnership will also determine other aspects of the relationship, such as communications, purchasing method, performance incentives, and rewards for exceptional quality. All suppliers, however, are valued business partners of the Postal Service, and contracting officers must manage supplier relations to ensure their effectiveness and integrity and ensure that all suppliers are treated fairly.

3.1.2 Supply Chain Management

The Postal Service uses the supply chain management business philosophy and associated business practices to further its business and competitive objectives. In general terms, the supply chain is a series of business organizations working together to create and provide value to customers. Supply chain management is the analysis and adjustment of the purchasing process and supply stream as required to meet customer demand and lower overall costs.

3.2 Supplier Diversity

3.2.1 Policy

3.2.1.a General. It is the policy of the Postal Service to establish and maintain a strong, competitive supplier base that reflects the diversity of the American supplier community. The Postal Service focuses on the entire business community for quality supplies and services that meet or exceed operational needs. Small, minority, and woman-owned businesses are therefore an important part of the Postal Service's supplier base.

3.2.1.b Supplier Diversity. Supplier diversity is the proactive business process that seeks to provide suppliers with equal access to purchasing opportunities. It promotes supplier participation reflective of the American supplier community and encourages economic development. Effective supplier diversity ensures that no suppliers are excluded from competition on the basis of race, color, religion, sex, age or national origin.

3.2.1.c Contracting Officers. Contracting officers must manage supplier diversity as a strategic business initiative vital to the success of the Postal Service. Contracting officers must ensure that:

1. The supplier base reflects the diversity of the American supplier community, and

2. The Postal Service is taking full advantage of the entrepreneurial spirit, capabilities, competitive pricing, new processes and products, and innovations offered by small, minority, and woman-owned businesses.

3.2.1.d Definitions

1. Small business. A business, including an affiliate (see 3.7.1.b.6), that is independently owned and operated, is not dominant in producing or performing the supplies or services being purchased, and has no more than 500 employees, unless a different size standard has been established by the Small Business Administration (see 13 CFR 121, particularly for different size standards for airline, railroad, and construction companies). For subcontracts of $50,000 or less, a subcontractor having no more than 500 employees qualifies as a small business without regard to other factors.

2. Affiliates. Businesses connected by the fact that one controls or has the power to control the other, or a third party controls or has the power to control both. Factors such as common ownership, common management, and contractual relationships must be considered. Franchise agreements are not considered evidence of affiliation if the franchisee has a right to profit in proportion to its ownership and bears the risk of loss or failure.

3. Dominant. Being a controlling or major influence in a market in which a number of businesses are primarily engaged. Factors such as business volume; number of employees; financial resources; competitiveness; ownership or control of materials, processes, patents, and license agreements; facilities; sales territory; and nature of the business must be considered.

4. Minority business. A minority business is a concern that is at least 51 percent owned by, and whose management and daily business operations are controlled by, one or more members of a socially and economically disadvantaged minority group, namely U.S. citizens who are Black Americans, Hispanic Americans, Native Americans, or Asian Americans. (Native Americans are American Indians, Eskimos, Aleuts, and Native Hawaiians. Asian Americans are U.S. citizens whose origins are Japanese, Chinese, Filipino, Vietnamese, Korean, Samoan, Laotian, Kampuchea (Cambodian), Taiwanese, in the U.S. Trust Territories of the Pacific Islands or in the Indian subcontinent.)

5. Woman-owned business. A concern at least 51 percent of which is owned by a woman (or women) who is a U.S. citizen, controls the firm by exercising the power to make policy decisions, and operates the business by being actively involved in day-to-day management.

6. Number of employees. Average employment (including domestic and foreign affiliates), based on the number of people employed (whether full-time, part-time, or temporary), during each pay period of the preceding 12 months, or, if the business has been in existence less than 12 months, during each pay period of its existence.

3.2.2 Sourcing

3.2.2.a Definition. Sourcing is the process of identifying and assessing the qualifications, capabilities, and performance of suppliers. There are two types of sourcing. The first is performed to locate suppliers for a specific purchase. The second, presourcing, is performed to locate suppliers for anticipated purchases. Sourcing should not be confused with prequalification (see 3.5.2), which is a process whereby a supplier's ability to meet specific Postal Service requirements is evaluated.

3.2.2.b Responsibilities

1. Purchase Teams. Purchase teams must ensure that any market research undertaken for a specific purchase provides for fair and equal treatment of all potential suppliers.

2. Contracting Officers. The contracting officer brings to the purchase team knowledge of a diverse supplier base. This knowledge requires continuous, proactive market research by all contracting officers and purchasing organizations to create a strong supplier base that will promote the spirit and intent of this section, chapter, and manual.

3.2.2.c Assistance. Purchase teams should contact Supplier Development and Diversity (Purchasing and Materials) for sourcing assistance. The Small Business Administration and the Department of Commerce's Minority Business Development Agency and affiliated Regional Minority Purchasing Councils can also help in identifying small, minority, and woman-owned businesses for a specific purchase, and can provide information on their qualifications and capabilities.

3.2.3 Subcontracting with Small, Minority, and Woman-owned Businesses

3.2.3.a General. So that the Postal Service may fully realize the benefit of a supplier base that reflects the diversity of the American supplier community, suppliers are encouraged to use small, minority, and woman-owned businesses as subcontractors to the maximum extent consistent with effective contract performance.

3.2.3.b Reports. Each supplier awarded a contract valued at $500,000 or more must submit calendar-quarter reports (purchase teams may require more frequent submittals) on its subcontracting activity for that contract. Three types of reporting methods may be used: (1) reports showing direct subcontract awards awarded under the Postal Service contract; (2) reports showing subcontracting activity that is allocable to the Postal Service contract using generally accepted accounting practices; or (3) reports that are a combination of the two. During discussions (see 4.2.5.c), the purchase team and the supplier must negotiate and agree to which type of report will be used.

3.2.3.c Subcontracting Plans. Plans which specifically address subcontracting with small, minority, and woman-owned businesses are required for all contracts valued at $1 million or more. Unless formally waived by the contracting officer for urgent and compelling business reasons, or for the reasons addressed in 3.2.3.d.1.(b), suppliers must submit the plans with their proposals, and plans must be agreed to before award of the contract (small businesses are exempt from this requirement). Provision 3-1, Notice of Small, Minority, and Woman-owned Business Subcontracting Requirements, which discusses the plan requirement and exempts small businesses from the requirement, is incorporated by reference in Provision 4-1, Standard Solicitation Provisions, and must be checked-off by contracting officers for all solicitations for contracts estimated to value $1 million or more, except when an indefinite-delivery contract or ordering agreement will be used and the purchase team determines that requiring a plan would not be feasible.

3.2.3.d Contract Clauses

1. Contracts Valued at $1 million or More. Except for the instances listed below, all contracts valued at $1 million or more must include Clause 3-1, Small, Minority, and Woman-owned Business Subcontracting Requirements. This clause 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 as appropriate. Clause 3-1 requires that the supplier prepare a contract-specific plan for subcontracting and reporting on such subcontracting activity, and that the plan be agreed to by the Postal Service prior to contract award. The clause is not included under the following circumstances:

(a) When the contract is awarded to a small business;

(b) When the contract is an indefinite delivery contract or ordering agreement and the purchase team determines that requiring a plan would be impractical or unworkable.

2. Contracts Valued at $500,000 or More. All contracts expected to be valued at $500,000 ($250,000 for design and construction contracts) or more must include Clause 3-2, Participation of Small, Minority, and Woman-owned Businesses. The clause is incorporated by reference in Clause 4-2, and must be checked-off by contracting officers as appropriate. Clause 3-2 requires that suppliers report their subcontracting activity by calendar-quarter. The report must be one of the types discussed in 3.2.3.b.

3.2.3.e Purchasing Organization Reports. Each purchasing organization must collect, compile, and report by calendar quarter on the number of suppliers submitting reports and the number and dollar value of subcontracts and purchase orders placed by Postal Service suppliers with small, minority, and woman-owned businesses. Summary reports must be forwarded to Purchasing and Materials' Supplier Development and Diversity organization.

3.2.4 Classification Codes

Purchases made from small, minority, and woman-owned businesses must be coded by socioeconomic classification. The codes shown in Exhibit 3.2.4 are used to identify contracts and orders by socioeconomic classification.

Exhibit 3.2.4

Socioeconomic Classification Codes

3.3 Mandatory Sources

3.3.1 Policy

If the following sources can meet Postal Service requirements, they must be considered before purchasing certain commodities.

3.3.2 Existing Assets

Existing assets are supplies, equipment, or services already within the Postal Service or available under a current contract. Before purchasing new supplies or services, purchase teams should always consider:

1. Reulitilization of surplus materials, when economically practical;

2. Supplies within existing inventories; and

3. Orders against existing contracts.

3.3.3 Workshops for People Who Are Blind or Severely Disabled

3.3.3.a General. The Javits-Wagner-O'Day Act (41 U.S.C. 46-48) requires that the Postal Service and other federal agencies purchase certain supplies and services from qualified workshops which employ people who are blind or severely disabled. The Committee for Purchase from People Who Are Blind or Severely Disabled determines which supplies and services must be purchased and their price.

3.3.3.b Procurement Lists. Supplies and services provided by people who are blind or severely disabled are listed in the Committee's Procurement List. This is published annually in the Federal Register, and additions and deletions are published as they occur. The list is available at the Committee's Web site (www.jwod.gov) or may be obtained by submitting General Services Administration (GSA) Form 457, Federal Publications Mailing List Application, to:

GSA CENTRALIZED MAILING LISTS SERVICE
PO BOX 6477
FORT WORTH TX 76115-0077

3.3.3.c Ordering

1. General. Except as stated in 3.3.3.c.2, supplies and services must be ordered from the central nonprofit agency designated on the Procurement List, or from the workshops concerned.

2. Exceptions. Supplies and services contained on the Procurement List may not be purchased from commercial sources unless authorized by the agency or the Committee for Purchase from People Who Are Blind or Severely Disabled. The Committee will grant an exception when the agency cannot meet the requirement within the period specified, and commercial sources can. It may also grant an exception when the quantity involved is insufficient for economic production by the workshop. If a purchase exception is granted because of required delivery dates, orderers must initiate the purchase within 15 days, unless additional time is allowed by the agency. Orderers must send a copy of the solicitation to the agency.

3. Compliance with Orders. If a workshop fails to comply with the terms of an order, and the problem cannot be resolved with the workshop, the order must be canceled. Quality-related problems that cannot be resolved with the workshop must be referred to the agency. When an order is canceled, the agency must be notified and requested to reallocate the order if practicable. If reallocation is not practicable, a purchase exception will be given by the agency.

3.3.4 People Who Are Blind or State Licensing Agencies for the Blind

People who are blind and licensed under the provisions of the Randolph-Sheppard Act (20 U.S.C. 107 et seq.) or by a state licensing agency must be given priority for the operation of food vending services in Postal Service facilities. See Handbooks AS-707H, Contracting for Food Services, and EL-602, Food Service Operations.

3.3.5 Defense Energy Support Center

Under an interagency agreement with the Defense Energy Support Center (DESC), Postal Service facilities whose fuel requirement is 20,000 gallons or more per product at any given location must purchase fuel (gasoline, gasohol, diesel fuel, heating and kerosene) from DESC suppliers. See Administrative Support Manual (ASM) 543 and 544.

3.4 Government Sources

3.4.1 General

Various government sources can meet Postal Service requirements. Contracting officers should therefore consider the following sources when the quality, delivery terms and prices offered are competitive with those offered in the commercial marketplace.

3.4.2 Federal Prison Industries, Inc. (UNICOR)

3.4.2.a Policy

1. The Postal Service uses Federal Prison Industries, Inc. (UNICOR) as a source of supply for:

(a) Mailbag requirements exceeding the capacity of the Mail Equipment Shops; and

(b) May obtain other products and services available from FPI.

2. Price and delivery terms must be reasonable compared with those available in the commercial marketplace (as determined by market research or other means not involving obtaining competitive proposals).

3.4.2.b Ordering. Supplies and services available from FPI are listed in its Schedule of Products brochure. This brochure and individual product and service catalogs (which provide detailed ordering instructions) are available at FPI's Web site (www.unicor.gov) and are available from:

UNICOR CORPORATE DIVISION
FEDERAL PRISONS INDUSTRIES INC
320 FIRST ST NW
WASHINGTON DC 20534-0001

3.4.3 General Services Administration

3.4.3.a General. The General Services Administration (GSA) offers a wide variety of potential sources. Among these sources are:

1. GSA Supply System. GSA depots stock supplies commonly used by government agencies, as described in the GSA Supply Catalog and the GSA Stores Stock Catalog. These catalogs may be ordered using GSA Form 457, Publications Mailing List Application.

2. Federal Supply Schedules

(a) General. Federal Supply Schedules (FSS) are summaries of ordering contracts negotiated by GSA's Federal Supply Service. They include Single-Award, Multiple-Award and New Item Introductory schedules. GSA's terms and conditions, rather than those used by the Postal Service, apply to orders placed against FSSs.

(b) Information. The "FSS Program" section of the GSA Supply Catalog lists the supplies and services available on the Schedules. Copies of the Schedules and GSA's Federal Supply Schedule Program Guide may be accessed at www.fss.gsa.gov, or may be ordered by sending GSA Form 457 to:

GSA CENTRALIZED MAILING LIST SERVICE
DENVER FEDERAL CENTER BLDG 41
DENVER CO 80225-0001

3. Information Technology. Information technology is available under GSA programs and contracts. See 4.5.5.d.2.

3.4.4 Defense Logistics Agency

Supplies available from the Defense Logistics Agency (DLA) are described in the Federal Supply Catalog for Civil Agencies, published by DLA and available from:

COMMANDER
DEFENSE LOGISTICS SERVICE CENTER (DLSC-APPP)
BATTLE CREEK MI 49016-3412

3.4.5 Veterans Administration

The Veterans Administration makes medical supplies and equipment available to designated Postal Service installations. See Handbook AS-701, Material Management, for ordering instructions.

3.4.6 Government Printing Office

Printing may be purchased from the Government Printing Office (GPO). See ASM 370.

3.5 Commercial Suppliers

3.5.1 Policy

Except for those commodities available from the mandatory sources listed in 3.3, it is Postal Service policy to purchase its requirements from commercial suppliers using business practices and terms and conditions customary to the commercial marketplace or from the government sources listed in 3.4.

3.5.2 Prequalification

3.5.2.a Policy. In order to enhance competition and ensure quality performance, it is Postal Service policy to prequalify suppliers. In addition to improving competition and performance, prequalification can also shorten cycle time and strengthen relations between the Postal Service and its suppliers. Contracting officers should consider prequalifying suppliers whenever appropriate.

3.5.2.b General

1. Prequalified suppliers are firms or individuals whose record of performance in the marketplace (commercial or governmental or both) has demonstrated their ability to perform to consistently high standards of quality and reliability.

2. Prequalification opportunities must be publicized in accordance with 3.5.2.e and 3.5.3. However, particular purchases or series of purchases competed solely among prequalified suppliers (see 3.5.2.b.3) need not be publicized, although purchase teams may do so if in the business or competitive interests of the Postal Service.

3. Purchase teams may limit competition solely to prequalified suppliers. Such decisions must be based on the business rationale for the particular purchase (or series of purchases) and its relationship to the business and competitive needs of the Postal Service. These decisions are matters of the purchase team's judgment, as are those determining whether to prequalify suppliers and what means to use. In addition, when in the business interests of the Postal Service, purchase teams may also consider adding suppliers to previously established lists when capable suppliers which did not participate in the prequalification process are identified. Before being placed on the list, such suppliers must be evaluated in the same manner used to establish the original list, but the prequalification process need not be readvertised.

4. When using prequalification, supplier-specific performance evaluation factors (past performance and supplier capability; see 2.1.9), are evaluated in order to decide which suppliers to include on the prequalified list. The supplier should be evaluated in the same manner as for any other purchase (see 2.1.9).

3.5.2.c Use. Prequalification may be used in either of two ways: (1) on an ongoing basis for commercially available goods or services purchased routinely; or (2) for an individual purchase or series of purchases.

3.5.2.d Determining the Prequalification Method

1. Any number of methods may be used to prequalify suppliers. When deciding on the method to be used (which should take place during the purchase planning phase), purchase teams must consider the particular purchase and the business and competitive needs of the Postal Service, and tailor the prequalification method to these considerations.

2. Determining the method should be based on:

(a) The particular purchase (or series of purchases) and its relationship to the business and competitive needs of the Postal Service.

(b) The dollar value or sensitivity of the purchase.

(c) The complexity of the item being purchased.

(d) The delivery schedule.

3.5.2.e Determining the Prequalified Suppliers

1. Publicizing. In addition to the publicizing requirements discussed in 3.5.3, purchase teams should use their market awareness to ensure that qualified suppliers are made aware of prequalification opportunities. Based on the state of the marketplace, announcements regarding prequalification opportunities should be made through whatever media are deemed most appropriate and effective. In addition, purchase teams must ensure that market research includes specific efforts to identify small, minority, and woman-owned businesses capable of meeting prequalification criteria and that these firms are encouraged to seek inclusion on prequalified lists. This effort must be outlined in any individual purchase plan (see 2.1.5.b) that contemplates the use of prequalified suppliers. Purchase teams must also ensure that suppliers' subcontracting plans are consistent with 3.2 when they will be considered in prequalification criteria.

2. Time Limits. The length of time in which the prequalification list will be in effect must be established and provided to suppliers before suppliers are selected for the list. Limits will depend on the particular purchase and the business and competitive needs of the Postal Service (although lists must be reassessed periodically; see 3.5.2.f.1), but in all cases must be reasonable in relation to standard commercial practices.

3. Selecting Suppliers

(a) After the evaluation team (see 2.1.8) has reviewed and analyzed the supplier-specific information (see 2.1.9.c), suppliers are placed on the prequalified list. All qualified suppliers need not be placed on the prequalified list if the purchase team determines (1) that a smaller group will provide adequate competition or (2) that some suppliers are considerably more qualified than others, thereby precluding purchase opportunities for the less qualified. During this process, the contracting officer, as business leader of the purchase team, must ensure:

(1) That all suppliers are treated fairly and objectively.

(2) That the inclusion or exclusion of a particular supplier is based on business reasons alone, and that it is judged solely on the predetermined prequalification method.

(3) That enough suppliers are placed on the list to ensure adequate competition for subsequent purchases.

(4) That any sensitive business information provided by a supplier is sufficiently protected from disclosure.

4. Notification. All suppliers who responded to the prequalification announcement must be notified of whether they were included or excluded from the prequalification list. Suppliers who have not been selected for the list must be provided the rationale so that they may better prepare for future prequalification opportunities.

3.5.2.f Maintaining Prequalified Lists

1. Reassessment. Periodically, purchase teams should reassess the suppliers included on a prequalified list in order to ensure that they remain qualified and reliable. Purchase teams should also consider whether new suppliers should be included on the list. Such opportunities must be publicized in accordance with 3.5.3, and interested suppliers are subjected to the same prequalification methods used to originally establish the list.

2. Removal. Purchase teams may decide to remove a supplier from a prequalified list, but only when the action is based on sound business reasons. The supplier must be informed of the removal and provided an explanation for the decision.

3.5.2.g Requests for Prequalified Lists. Subject to the restrictions of 1.6.5 and ASM 350, prequalification lists may be provided to parties seeking them, including businesses seeking subcontract opportunities.

3.5.2.h Competition. Purchase teams must ensure that purchases are competed among a sufficient number of prequalified suppliers to ensure adequate competition. The teams have broad discretion in determining when competition is adequate, but must make this determination based on the nature of the purchase, the marketplace, and the business and competitive needs of the Postal Service. All relevant purchases need not be competed among all suppliers included on a prequalified list, but all such suppliers must be treated fairly, and periodically given the opportunity to compete for purchases. Purchase teams must exercise sound business judgment when determining which prequalified suppliers will compete for a particular purchase, and must make a written determination that the suppliers selected to compete provide adequate competition.

3.5.3 Publicizing Purchase Opportunities and Contract Awards

3.5.3.a Policy

1. Purchase Opportunities

(a) All competitive purchase opportunities valued at over $100,000, including prequalification opportunities, must be publicized unless (1) precluded by emergency, (2) suppliers have been prequalified (see 3.5.2.e.1), (3) an advance notice of services sought was previously published as a part of purchase planning (see 3.5.3.b.3), or (4) the purchase will be of commercially available goods or services, in which case the publicizing threshold is $1 million.

(b) At the discretion of the purchase team, noncompetitive purchase opportunities of any value may be publicized when it is determined that such publicizing would improve the effectiveness of market research.

2. Contract Awards

(a) To promote competition in subcontracting, the Postal Service announces contract awards, competitive or noncompetitive, having significant subcontract opportunities. Such awards must be publicized in the Governmentwide Point of Entry (GPE; see 3.5.3.b.1). Although a matter of judgment, these are normally awards valued over $500,000 with individual subcontract opportunities over $50,000. Announcements of contract awards may also be made available for publication to newspapers, trade journals and magazines.

(b) Other awards may be publicized, when in the judgment of the purchase team, such announcement would benefit future competition.

(c) All noncompetitive contract awards valued at more than $1 million must be publicized in the GPE, and other media as appropriate, upon award.

3.5.3.b Methods

1. Governmentwide Point of Entry. Except for purchases of mail transportation (see 4.4.4.d), solicitations must be synopsized in the GPE. The GPE, successor to the Commerce Business Daily, is the single point where most government purchasing opportunities and contract awards can be accessed electronically by the public. The GPE is accessed via the Internet at http://www.fedbizopps.gov. This publicizing must occur as early in the purchasing process as possible, but not later than the date of issuing the solicitation.

2. Other Media. In addition to the GPE, purchase opportunities may be publicized via other electronic media, or in newspapers or trade journals, depending on three factors: (a) the purchase team's knowledge of the marketplace, (b) the business and competitive needs of the Postal Service, and (c) whether, following contract award, there will be significant subcontracting opportunities. Purchase teams should also consider publicizing in media that target diverse suppliers (see also Handbook P-1, General Purchasing Concepts and Practices).

3. Presolicitation Notices. Purchase teams wishing to identify suppliers may do so by issuing a presolicitation notice (also called a "sources sought" notice). The notice should (a) describe the upcoming Postal Service requirement and any applicable qualification requirements, (b) announce any planned presolicitation conferences, and (c) specify a date by which the notice must be returned to ensure inclusion on the solicitation mailing list.

3.5.4 Unsolicited Proposals

3.5.4.a Definition. Unsolicited proposals are offers to sell to the Postal Service the rights to ideas, concepts, products, processes or technology. They are considered unsolicited because they are not submitted in response to a solicitation or request for proposals.

3.5.4.b Unsolicited Proposal Program. The Unsolicited Proposal Program (UPP) provides companies and entrepreneurs the opportunity to submit new technologies or ideas to improve postal operations.

3.5.4.c Procedural Information. Information concerning submittal and review of unsolicited proposals is contained in Publication 131, The Postal Service Unsolicited Proposal Program, available for review at: http://www.usps.com/business.

3.5.4.d Acceptance. If an unsolicited proposal is found acceptable, and a noncompetitive purchase can be justified under one of the scenarios at 2.1.6 (for example, because the supplier is a single source, or because a compelling business interest justifies the use of the noncompetitive process), the contracting officer negotiates a contract with the proposer.

3.6 Protests

3.6.1 Applicability

This section applies to all protests against Postal Service contracting procedures and awards, including special categories of contracts described in other chapters of this manual. The General Accounting Office (Comptroller General) does not have jurisdiction to consider protests arising out of Postal Service contracting practices.

3.6.2 Definitions

3.6.2.a Interested Party. An actual or prospective offeror whose direct economic interest would be affected by the award of a contract or by the failure to award a contract.

3.6.2.b Protest. A written objection by any interested party concerning the terms of a solicitation, the award or proposed award of a contract, or any other action relating to the solicitation or award of a contract.

3.6.2.c General Counsel. The Senior Counsel, Contract Protests and Policies, has been designated as the General Counsel's representative to consider and decide protests and to take any other action that this section requires to be done by the General Counsel.

3.6.2.d Days. Calendar days. However, any time period will run until a day which is not a Saturday, Sunday, or legal holiday.

3.6.3 Submission

3.6.3.a A protest must be in writing and delivered to the contracting officer or the General Counsel. It must identify the solicitation or contract protested, and, preferably, the name of the contracting officer and the office responsible for it. The protest must set forth a detailed statement of its legal and factual grounds, including copies of relevant documents, all information establishing that the protester is an interested party, and establishing the timeliness of the protest. Mere statement of intent to protest is not a protest.

3.6.3.b An initial protest sent both to the contracting officer and to the General Counsel will be considered to have been addressed to the primary addressee. For example, a protest addressed to the contracting officer which indicates that a copy is being furnished to the General Counsel is for consideration by the contracting officer under 3.6.6 below. If the primary addressee cannot be determined, the protest will be considered to be intended for the General Counsel, and will be handled under 3.6.7 below.

3.6.4 Timeliness

3.6.4.a The Postal Service intends to complete its purchasing actions in a timely fashion while ensuring fair treatment to firms and individuals. A protester must submit any protest in a manner that will ensure its timely receipt. Protests received by the contracting officer or the General Counsel after the time limits prescribed by this section 3.6.4 will not be considered.

3.6.4.b Protests based upon alleged improprieties in a solicitation that are apparent before the date set for the receipt of initial proposals must be received before the time set for the receipt of proposals.

3.6.4.c Protests of alleged improprieties which do not exist in the initial solicitation but which are subsequently incorporated into the solicitation must be protested not later than the next closing time for receipt of proposals following the incorporation.

3.6.4.d In all cases other than those covered by b and c above, protests by a protester that has received a debriefing shall be received not later than 10 days after the debriefing. In all other cases, the protest shall be received not later than 10 days after the basis of protest is known or should have been known, whichever is earlier. No protest other than one by a protester that has received a timely requested debriefing (see 4.2.9.a) will be considered if received more than 15 days after award of the contract in question.

3.6.4.e If the contracting officer finds a protest submitted initially to the contracting officer to be obviously without merit, any subsequent protest to the General Counsel received within 5 days of the protester's actual or constructive knowledge of initial adverse action by the contracting officer will be considered if the initial protest was received in accordance with the time limits in paragraphs b through d above.

3.6.5 Contract Award

3.6.5.a When a timely protest has been received by either the contracting officer or the General Counsel before contract award, award may not be made until the matter has been resolved, unless the VP, P&M, after consulting with counsel, determines that urgent and compelling circumstances which significantly affect interests of the Postal Service will not permit waiting for the decision. When authorized to make an award before a protest is resolved, the contracting officer must, at the time of or before the award, give notification of the award to the protester, any other commenting parties, and, if the protest is before the General Counsel, the General Counsel.

3.6.5.b When a protest received after award is eligible for consideration under this section 3.6, the contracting officer must immediately furnish to the contractor a notice of the protest and the basis for it. The contracting officer, with the advice of assigned counsel, must determine whether it would be in the interest of the Postal Service to allow the contractor to proceed, seek a mutual agreement with the contractor to suspend performance on a no-cost basis, issue a unilateral stop-work order, or take other appropriate action.

3.6.6 Protests Received by Contracting Officers

3.6.6.a Contracting officers must consider all timely protests received, except any that are being considered by the General Counsel in accordance with 3.6.3.b. The protester must be notified in writing of the contracting officer's decision.

3.6.6.b A contracting officer's decision on a protest must be issued within 10 days after receipt of the protest. If a contracting officer determines that a protest is obviously meritorious, the contracting officer may take such action as is appropriate.

3.6.6.c

1. The contracting officer, if unable to conclude that a protest is obviously meritorious, may, within 10 days after its receipt:

(a) Refer the protest to the General Counsel for resolution in accordance with 3.6.7 below; or

(b) With the concurrence of assigned counsel, determine that the protest is obviously without merit and advise the protester in writing accordingly.

2. The receipt of any protest is an occasion for the contracting officer to consider seriously the correctness of the purchasing action involved in the protest, with respect not only to the matters raised by the protester, but also with respect to other matters apparent from the contract file. Contracting officers must fully and fairly consider all protests received from the standpoint of the protester as well as from the standpoint of the Postal Service. That a protest may be subject to dismissal or denial on procedural or other grounds which do not involve its merits does not relieve the contracting officer of the responsibility of documenting the bases for purchasing actions, including those that are the subject of the protest.

3.6.7 Protests Received by the General Counsel

3.6.7.a Promptly after receiving a protest, the General Counsel notifies the contracting officer of its receipt and, unless a copy has been furnished, sends the contracting officer a copy of the protest together with any accompanying documents other than those already in the contract file. Additional statements or documents received by the General Counsel in the course of the protest are furnished to the contracting officer unless it appears that the contracting officer previously has been furnished them. The General Counsel's notification may identify issues apparently raised by the protest, matters presented by the protest which particularly require the contracting officer's response, and regulatory provisions or protest decisions possibly relevant to the protest.

3.6.7.b Within 7 days after referring a protest to the General Counsel or receipt of notification that a protest has been received by the General Counsel, the contracting officer must:

1. In the case of a protest against the terms of a solicitation, notify the known prospective offerors that a protest has been received and provide them with a copy of it; and,

2. In case of any other protest, notify the offerors that might be affected that the protest has been received and provide them with a copy of it (see also d.1, below).

3.6.7.c The notices to the offerors must state that they may, if they wish, participate in the protest, submitting their opinions and relevant information on the protest if, within 5 days of receipt of the notice, they advise the General Counsel (with a copy to the contracting officer) of their intention to do so. Upon advice that an offeror intends to participate in a protest, the contracting officer must provide it with the contracting officer's statement on the protest and the documents necessary to the statement's understanding.

3.6.7.d Material submitted by a protester, any other party, or the contracting officer will not be withheld from any other party in the protest except as provided herein:

1. A protester or any other party may redact from the circulation copies of its submissions trade secrets, confidential information, and other information for which a privilege is claimed, provided that the redacted copy is furnished contemporaneously with or no later than 1 day after its unredacted submission. If, because of such a claim or for other reasons, copies of a protester's unredacted submission cannot be furnished to affected offerors, the redacted version may be furnished instead.

2. The contracting officer shall redact privileged material (including supplier-selection sensitive material and other information the release of which could result in a competitive advantage to a supplier or suppliers) from the copies of the contracting officer's statement and the documents accompanying it furnished to the protester or to other parties (see e and g, below). Redacted and unredacted versions shall be furnished to the General Counsel simultaneously.

3. The General Counsel may require the contracting officer, a protester, or any other party to justify their redactions. In the case of the contracting officer's submissions, if, in the General Counsel's judgment, the redactions are insufficiently justified, the General Counsel may disallow the redactions and direct the distribution of the documents without the unjustified redactions. When a protester or party is unable adequately to justify challenged redactions, the General Counsel may give the redacted submission appropriately diminished weight.

4. The General Counsel will review in camera all information submitted under a claim of privilege.

3.6.7.e Within 30 days of referring a protest to or receiving the initial notification of a protest from the General Counsel, the contracting officer must send the General Counsel a report that includes:

1. The contracting officer's statement of the circumstances relevant to the protest, including specific responses to each allegation in the protest and the contracting officer's findings, determinations, and conclusions; and

2. Copies (unless the General Counsel has specifically requested the originals) of any documents relevant to the protest, including any of the following that may be applicable:

(a) The solicitation (including the specification or its relevant parts);

(b) The proposal submitted by the protester and the proposal against which the protest is directed;

(c) The evaluation of proposals; and

(d) Any other documents, statements, or materials necessary to determine whether the protest is valid.

3. In a case in which the protester has requested specific documents, the contracting officer shall provide to all parties and the General Counsel a list of those documents or portions of documents that have been furnished to the protester or included as information accompanying the contracting officer's statement, and those documents which the contracting officer intends to withhold from the protester and the reason for the proposed withholding.

3.6.7.f The contracting officer should seek the assistance of assigned counsel in preparing the statement and report.

3.6.7.g Concurrent with furnishing the report to the General Counsel, the contracting officer must furnish a copy of the statement (e.1., above) and copies of any other documentation contained in the report necessary to a full and clear understanding of the issues to the protester and any party who has indicated a desire to comment on the protest. When the protester or the party indicates that it is represented by counsel, a copy of the statement must be provided to that counsel. The contracting officer must include in the material furnished to the General Counsel a statement that this distribution has been made and must identify the parties to which the statement and its related documents have been sent.

3.6.7.h The protester or any participant may submit comments on the contracting officer's statement. Such comments will be considered timely if received within 10 days of the commenter's receipt of the statement. Any rebuttal to any such comments a protester, other participant, or the contracting officer may care to make will be considered if received within 10 days after the party's receipt of the comments to which the rebuttal is directed. The failure of a party to comply with these time limits may result in resolution of the protest without consideration of the untimely comments.

3.6.7.i When it is necessary to obtain a clear understanding of the protest, the General Counsel may request or permit the submission of additional statements by the parties. The contracting officer and other participating parties shall not submit statements in addition to those allowed by h, above, and j, below, unless they have been specifically requested by the General Counsel or permission has been granted by the General Counsel. Contracting officers must respond to the General Counsel's requests within 10 days and must distribute copies of such responses in the manner indicated in paragraph g above.

3.6.7.j The protester, any other party, or the contracting officer may request a conference with the General Counsel in connection with any protest under consideration by the General Counsel. The requests must be received within the time allowed for commenting on the contracting officer's statement. When more than one conference is requested, they will be held separately. The requester of a conference must provide a submission for the record summarizing the substance of its comments in the course of the conference, which must be received within 5 days after the conference.

3.6.7.k If the time for acceptance of proposals might expire before a protest will be resolved by the General Counsel, the contracting officer should request an extension of the time for acceptance of proposals from each offeror whose proposal may be eligible for acceptance.

3.6.7.l The General Counsel has established a goal of 21 days after receipt of all information submitted by all parties and the conclusion of all conferences for issuing a decision on a protest.

3.6.7.m The General Counsel's decision on a protest disposes of the matter. Copies of the General Counsel's decision must be furnished to the contracting officer, the protester, and any other participant in the protest. A file of all protest decisions is maintained in the Postal Service Library, and decisions from 1987 to the present are available on the Internet at http://www.usps.com/lawdept/protestdecisions/.

3.6.7.n The protester, any participant that submitted comments on the protest, or the contracting officer may request reconsideration of a protest decision. The request for reconsideration must contain a detailed statement of the factual and legal grounds upon which reversal or modification is deemed warranted, specifying any errors of law made or information not considered. A request for reconsideration of a decision must be received by the General Counsel not later than 10 days after the basis for reconsideration is known or should have been known, whichever is earlier, but in no case more than 20 days after the issuance of the protest decision.

3.6.7.o The General Counsel may decline to decide any protest when the matter involved is the subject of litigation in any court of competent jurisdiction or has been decided on the merits in such a court. The foregoing does not apply when the court requests, expects, or otherwise expresses interest in the General Counsel's decision.

3.6.7.p Notwithstanding any other provision of this section, when a protest is clearly without legal merit or is not reviewable by the General Counsel under these procedures, the General Counsel may summarily deny or dismiss a protest without a report from the contracting officer. When the propriety of summary denial or dismissal becomes clear only after information is provided by the contracting officer or otherwise obtained by the General Counsel, the protest may be denied or dismissed at that time.

3.7 Debarment, Suspension, and Ineligibility3.7.1

3.7.1 General

Purchasing offices may not solicit proposals from, award contracts to, or consent to subcontracts with debarred, suspended, or ineligible suppliers.

3.7.1.a Definitions

1. General Counsel. This includes the General Counsel's authorized representative.

2. Judicial Officer. This includes the acting Judicial Officer.

3. Debarment. An exclusion by the Postal Service from contracting and subcontracting for a reasonable, specified period of time commensurate with the seriousness of the offense or failure, or the inadequacy of performance.

4. Suspension. A disqualification by the Postal Service from contracting and subcontracting for a temporary period because a supplier is suspected upon adequate evidence of engaging in criminal, fraudulent, or other seriously improper conduct.

5. Ineligible. An exclusion from contracting and subcontracting by an entity other than the Postal Service under statutes, Executive Orders, or regulations, such as the Davis-Bacon Act and its related statutes and implementing regulations, the Service Contract Act, the Equal Employment Opportunity Acts and Executive Orders, the Walsh-Healey Public Contracts Act, or the Environmental Protection Acts and Executive Orders, to which the Postal Service is subject or has adopted as a matter of policy.

6. Affiliates. Businesses, organizations, or individuals connected by the fact that one controls or has the power to control the other, or a third party controls or has the power to control both. Factors such as common ownership, common management, and contractual relationships must be considered. Franchise agreements are not considered evidence of affiliation if the franchisee has a right to profit in proportion to its ownership and bears the risk of loss or failure.

3.7.1.b Lists

1. The VP, P&M, establishes, maintains, and distributes to purchasing offices a consolidated list of suppliers debarred or suspended by the Postal Service.

2. The General Services Administration (GSA) compiles and maintains a consolidated list of all parties debarred, suspended, proposed for debarment or declared ineligible by Federal agencies or the General Accounting Office. GSA revises and distributes the list posted on the Internet daily, and publishes a hardcopy list monthly. The Internet copy is available at http://epls.arnet.gov.

3. The VP, P&M, receives, through Purchasing Policies and Programs, copies of debarment notices (see 3.7.1.g) suspension notices (see 3.7.1.k) and Judicial Officer decisions (see Appendix D, section 957.21) and any order removing a debarment or suspension. The VP, P&M, also furnishes GSA notice of any debarment or suspension by the Postal Service and any changes in the status of suppliers, including any of their affiliates, on the Postal Service list.

3.7.1.c Treatment of Suppliers on Postal Service List

1. Contracting officers must review the Postal Service and GSA lists before making a contract award.

2. Debarred or suspended suppliers on the Postal Service list are excluded from receiving contracts, and contracting officers may not solicit proposals or quotations from, award contracts to, or (when the contract provides for such consent) consent to subcontracts with such suppliers, unless the VP, P&M, determines in writing that there is a compelling reason for such action in the interest of the Postal Service.

3. The treatment of suppliers listed as having been declared ineligible on the basis of statutory or other regulatory procedures on the GSA list is related to the basis of ineligibility as reflected in codes assigned by GSA to each case. The VP, P&M, maintains a summary table describing the Postal Service treatment associated with each GSA code. (The table is available on the Internet at http://blue.usps.gov/purchase/root/profbuy.htm.) Suppliers included on the GSA list which have been assigned codes for which the table describes the treatment as "ineligible" are excluded from receiving contracts and, if applicable, subcontracts under the conditions and for the period set forth on the GSA list. Suppliers included on the GSA list assigned codes for which the table provides other guidance (for example, the preparation of a written justification of award) are considered pursuant to that guidance. When so indicated on the table, contracting officers must obtain additional information from the entity responsible for establishing the supplier's ineligibility.

4. To the extent permitted by law, the VP, P&M, after consultation with assigned counsel, may direct a treatment other than described by the table upon a written determination that there is a compelling reason for such action in the interest of the Postal Service.

5. The debarment, suspension, or ineligibility of a supplier does not of itself affect the rights and obligations of the parties to any existing contract. However, except for service changes under mail transportation contracts, the contracting officer may not add new work to the contract by supplemental agreement or by exercise of an option unless the VP, P&M, makes a determination as required under subparagraph c.2 above.

3.7.1.d Causes for Debarment. The VP, P&M, is authorized, with the concurrence of the General Counsel, to debar a supplier, including any of its affiliates, in accordance with procedures in this part for causes such as the following:

1. Conviction for commission of a criminal offense incidental to obtaining or attempting to obtain contracts or subcontracts, or in the performance of a contract or subcontract.

2. Conviction under the Federal antitrust statutes arising out of the submission of bids or proposals.

3. Violations of a Postal Service contract so serious as to justify debarment action, such as:

(a) Willful failure to perform a Postal Service contract in accordance with the specifications or within the time limit provided in the contract;

(b) A record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more Postal Service contracts occurring within a reasonable period of time preceding the determination to debar, except that failure to perform or unsatisfactory performance caused by acts beyond the control of the supplier may not be considered a basis for debarment;

(c) Violation of a contractual provision against contingent fees; or

(d) Acceptance of a contingent fee paid in violation of a contractual provision against contingent fees.

4. Any other cause of such serious and compelling nature, affecting responsibility as a supplier, as may be determined by the Postal Service to warrant debarment.

5. Debarment by another Executive agency or department.

3.7.1.e Conditions for Debarment

1. The existence of any of the causes in paragraph e above does not necessarily require that a supplier be debarred. The decision to debar is within the discretion of the VP and must be made in the best interest of the Postal Service. All mitigating factors may be considered in determining the seriousness of the offense, failure, or inadequacy of performance, and in deciding whether debarment is warranted.

2. The existence of any of the causes in subparagraph d.1 or d.2 above must be established by criminal conviction in a court of competent jurisdiction. If appeal taken from such conviction results in a reversal of the conviction, the debarment must be removed upon the request of the supplier unless other causes for debarment exist.

3. The existence of any of the causes in subparagraph d.3 or d.4 above must be established by evidence that the Postal Service determines to be clear and convincing.

4. The criminal, fraudulent, or seriously improper conduct of an individual may be imputed to the firm with which he or she is or has been connected when a grave impropriety was accomplished within the course of his or her official duty or was effected by him or her with the knowledge or approval of the firm. Likewise, when a firm is involved in criminal, fraudulent, or seriously improper conduct, any person involved in the commission of the grave impropriety may be debarred.

5. Debarment for the cause set forth in subparagraph d.5 above (debarment by another agency) requires that one of the causes for debarment set forth in subparagraphs d.1 through d.4 above was the basis for debarment by the original debarring agency.

3.7.1.f Period of Debarment

1. When statutes, Executive orders, or controlling regulations of other agencies provide a specific period of debarment, they are controlling. In other cases, debarment by the Postal Service must be for a reasonable, definite, stated period of time, commensurate with the seriousness of the offense or the failure or inadequacy of performance. Generally, a period of debarment may not exceed 3 years. When debarment for an additional period is deemed necessary, notice of the proposed additional debarment must be furnished to the supplier as in the case of original debarment.

2. Except as precluded by statute, Executive order, or controlling regulations of another agency, debarment may be removed or the period may be reduced by the VP, P&M, upon submission of an application by the debarred supplier. The application must be supported by documentary evidence setting forth appropriate grounds for the granting of relief, such as newly discovered material evidence, reversal of a conviction, bona fide change of ownership or management, or the elimination of the causes for which debarment was imposed. The VP, P&M, may, as a matter of discretion, deny any application for removal of debarment or for reduction of its period or may refer the application to the Judicial Officer for hearing and final Postal Service determination. In any case in which a debarment is removed or the debarment period is reduced, the VP, P&M, must transmit to the Judicial Officer, for filing, a notice and statement of the reasons for the removal of the debarment or the reduction of the period of debarment.

3.7.1.g Procedural Requirements for Debarment

1. The VP, P&M, must initiate a debarment proceeding by sending to the supplier a written notice of proposed debarment. The notice must be served by sending it to the last known address of the supplier by certified mail, return receipt requested. A copy of the notice must be furnished to the Office of Inspector General. The notice must state:

(a) That debarment is being considered;

(b) The reasons for the proposed debarment;

(c) The period of debarment and the proposed effective date;

(d) That the debarment will not become effective until after a hearing, if a hearing is requested within 20 days following the receipt of the notice of the proposed debarment; and

(e) That any request for a hearing is to be accompanied by a statement setting forth the grounds upon which the proposed debarment will be contested, and that if no hearing is requested, the action of the VP, P&M, becomes the final Postal Service determination.

2. A supplier served with a notice of proposed debarment may request a hearing by addressing a request to the Judicial Officer through the VP, P&M. The hearing will be governed by rules of procedure promulgated by the Judicial Officer and set forth in Appendix D. Except as provided in subparagraph g.3 below, the Judicial Officer must hear the matter and determine on the basis of the record whether the proposed debarment action should be sustained. The decision of the Judicial Officer is the final Postal Service decision. The VP, P&M, is represented by the General Counsel.

3. When the VP, P&M, proposes to debar a supplier already debarred by another government agency for a term concurrent with such debarment, the debarment proceedings before the Postal Service may be based entirely upon the record of facts obtained from the other agency or upon such facts and additional facts. In such cases the facts obtained from the other agency must be considered as established, but the party to be debarred must have an opportunity to present information to the Judicial Officer and to explain why debarment by the Postal Service should not be imposed.

3.7.1.h Causes for Suspension. The VP, P&M, may, when the interests of the Postal Service require, and with the concurrence of the General Counsel, suspend any supplier, including any of its affiliates:

1. Upon adequate evidence of indictment or conviction for:

(a) Commission of fraud or a criminal offense incidental to obtaining, attempting to obtain, or performing a government contract;

(b) Violation of the Federal antitrust statutes arising out of the submission of bids and proposals; and

(c) Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, receipt of stolen property, or any other offense indicating a lack of business integrity or business honesty that seriously and directly affects present responsibility as a supplier.

2. For other cause of such serious and compelling nature, affecting responsibility as a supplier, as may be determined by the VP, P&M, to warrant suspension. A pending hearing for debarment may be such a cause.

3.7.1.i Conditions for Suspension

1. A suspension invoked by another government agency may be the basis for the imposition of a concurrent suspension by the VP, P&M.

2. Any suspended supplier that believes its suspension has not been in accordance with these rules, or with applicable laws and regulations, may appeal to the Judicial Officer for a review of the suspension. No fact alleged in an indictment or established in a judgment of conviction that is the basis for a suspension may be disputed in the suspension review proceeding. The Judicial Officer's ruling must be based on considerations of the entire record, including facts not available to the VP at the time of the initial suspension decision. Nothing in this subparagraph precludes the VP from terminating or modifying a suspension at any time.

3.7.1.j Period of Suspension. Except as provided in this paragraph, no suspension may exceed 6 months in duration. A suspension, if not automatically extended during the pendency of a debarment proceeding or prospective action as provided in this paragraph, may be extended for not more than one additional 6-month period upon the VP's written determination of the reason and necessity for the extension. Notice of any extension of suspension must be served upon the supplier in the manner set forth in 3.7.1.k. In no event may a suspension plus its extension exceed 12 months unless a debarment proceeding or a prosecutive action is pending, in which case the initial suspension continues, subject to review in accordance with 3.7.1.i.2 above, until the debarment proceeding or prosecutive action has been completed. The termination of a suspension, however, may not prejudice a debarment proceeding that was pending or that may be brought for the same reasons that led to the suspension. "Prosecutive action" includes criminal prosecutions, civil fraud, and false claims actions, and administrative complaints issued under the Program Fraud Civil Remedies Act, 31 U.S.C. sections 3801-3812.

3.7.1.k Procedural Requirements for Suspension

1. The VP, P&M, must cause a notice of the suspension to be served upon the supplier to be suspended. The notice must be sent by certified mail, return receipt requested, within 10 days after its effective date. A copy of the notice must be furnished to the Inspection Service. The notice must state that:

(a) The suspension is based:

(1) On information that the supplier has committed irregularities of a serious nature in business dealings with the Postal Service; or

(2) On irregularities that seriously reflect upon the propriety of further dealings of the supplier with the Postal Service (the irregularities must be described in general terms without disclosing the Postal Service's evidence).

(b) The suspension is for a temporary period pending the completion of an investigation and such other proceedings as may follow; and

(c) Proposals will not be solicited from the supplier and, if received, will not be considered for award, unless it is determined by the Postal Service to be in its interest to do so.

2. Answers to all inquiries concerning the suspension of any supplier must be coordinated by the VP, P&M, with the General Counsel or must be made by the General Counsel. When a matter has been referred to the Department of Justice, the Postal Service will not furnish in answer to inquiries any more information than is contained in the notice until the Department of Justice has agreed to the furnishing of additional information.

3.7.1.l Restrictions on Suspended Suppliers. Suspended suppliers are subject during the period of suspension to the restrictions, conditions, and penalties set forth in paragraphs a and d above.

3.7.1.m Rules of Practice. The Postal Service Rules of Practice in Proceedings Relative to Debarment and Suspension from Contracting are set forth in Appendix D.