3 Supplier Relations - USPSSupplier Relations 3.2.1.a Contents Issue 3, December 25, 2003, 71 Updated With Revisions Through October 1, 2004 3 Supplier Relations 3.1 Policy 3.1.1 General

3.2.1.aSupplier Relations

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71Issue 3, December 25, 2003,Updated With Revisions Through October 1, 2004

3 Supplier Relations

3.1 Policy

3.1.1 GeneralIt is the policy of the Postal Service to establish strong, mutually beneficialrelations with its suppliers in order to meet its business and competitiveobjectives. Postal Service purchases are intended to foster partnerships withsuppliers in which both parties work toward a common goal. The nature of thepartnership is determined by the potential impact of the supplier’s performance onthe Postal Service’s competitive and financial position, and therefore somepartnerships are closer and more interdependent than others. The type ofpartnership will also determine other aspects of the relationship, such ascommunications, purchasing method, performance incentives, and rewards forexceptional quality. All suppliers, however, are valued business partners of thePostal Service, and contracting officers must manage supplier relations to ensuretheir effectiveness and integrity and ensure that all suppliers are treated fairly.

3.1.2 Supply Chain ManagementThe Postal Service uses the supply chain management business philosophy andassociated business practices to further its business and competitive objectives.In general terms, the supply chain is a series of business organizations workingtogether to create and provide value to customers. Supply chain management isthe analysis and adjustment of the purchasing process and supply stream asrequired to meet customer demand and lower overall costs.

3.2 Supplier Diversity

3.2.1 Policy3.2.1.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 Americansupplier community. The Postal Service focuses on the entire businesscommunity for quality supplies and services that meet or exceed operationalneeds. Small, minority, and woman-owned businesses are therefore animportant part of the Postal Service’s supplier base.

3.2.1.b Purchasing Manual

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Issue 3, December 25, 200372Updated With Revisions Through October 1, 2004

3.2.1.b Supplier Diversity. Supplier diversity is the proactive business process thatseeks to provide suppliers with equal access to purchasing opportunities. Itpromotes supplier participation reflective of the American supplier communityand encourages economic development. Effective supplier diversity ensuresthat 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 astrategic 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 suppliercommunity, and

2. The Postal Service is taking full advantage of the entrepreneurial spirit,capabilities, competitive pricing, new processes and products, andinnovations 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.a.1), that isindependently owned and operated, is not dominant in producing orperforming the supplies or services being purchased, and has no morethan 500 employees, unless a different size standard has beenestablished by the Small Business Administration (see 13 CFR 121,particularly for different size standards for airline, railroad, andconstruction companies). For subcontracts of $50,000 or less, asubcontractor having no more than 500 employees qualifies as a smallbusiness without regard to other factors.

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

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

4. Minority business. A minority business is a concern that is at least 51percent owned by, and whose management and daily businessoperations are controlled by, one or more members of a socially andeconomically disadvantaged minority group, namely U.S. citizens whoare Black Americans, Hispanic Americans, Native Americans, orAsian Americans. (Native Americans are American Indians, Eskimos,Aleuts, and Native Hawaiians. Asian Americans are U.S. citizenswhose 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.)


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

6. Number of employees. Average employment (including domestic andforeign affiliates), based on the number of people employed (whetherfull-time, part-time, or temporary), during each pay period of thepreceding 12 months, or, if the business has been in existence lessthan 12 months, during each pay period of its existence.

3.2.2 Sourcing3.2.2.a Definition. Sourcing is the process of identifying and assessing the

qualifications, capabilities, and performance of suppliers. There are two typesof sourcing. The first is performed to locate suppliers for a specific purchase.The second, presourcing, is performed to locate suppliers for anticipatedpurchases. Sourcing should not be confused with prequalification (see 3.5.2),which is a process whereby a supplier’s ability to meet specific Postal Servicerequirements is evaluated.

3.2.2.b Responsibilities

1. Purchase Teams. Purchase teams must ensure that any marketresearch undertaken for a specific purchase provides for fair and equaltreatment of all potential suppliers.

2. Contracting Officers. The contracting officer brings to the purchaseteam knowledge of a diverse supplier base. This knowledge requirescontinuous, proactive market research by all contracting officers andpurchasing organizations to create a strong supplier base that willpromote the spirit and intent of this section, chapter, and manual.

3.2.2.c Assistance. Purchase teams should contact Supply Chain ManagementStrategies for sourcing assistance. The Small Business Administration andthe Department of Commerce’s Minority Business Development Agency andaffiliated Regional Minority Purchasing Councils can also help in identifyingsmall, minority, and woman-owned businesses for a specific purchase, andcan provide information on their qualifications and capabilities.

3.2.3 Subcontracting with Small, Minority, andWoman-owned Businesses

3.2.3.a General. So that the Postal Service may fully realize the benefit of a supplierbase that reflects the diversity of the American supplier community, suppliersare encouraged to use small, minority, and woman-owned businesses assubcontractors to the maximum extent consistent with effective contractperformance.


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

3.2.3.c Subcontracting Plans. Plans which specifically address subcontracting withsmall, minority, and woman-owned businesses are required for all contractsvalued at $1 million or more. Unless formally waived by the contracting officerfor urgent and compelling business reasons, or for the reasons addressed in3.2.3.d.1.(b), suppliers must submit the plans with their proposals, and plansmust be agreed to before award of the contract (small businesses are exemptfrom this requirement). Provision 3-1, Notice of Small, Minority, andWoman-owned Business Subcontracting Requirements, which discusses theplan requirement and exempts small businesses from the requirement, isincorporated by reference in Provision 4-1, Standard Solicitation Provisions,and must be checked-off by contracting officers for all solicitations forcontracts estimated to value $1 million or more, except when anindefinite-delivery contract or ordering agreement will be used and thepurchase 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 listedbelow, all contracts valued at $1 million or more must include Clause3-1, Small, Minority, and Woman-owned Business SubcontractingRequirements. This clause is incorporated by reference in Clause 4-2,Terms and Conditions Required to Implement Policies, Statutes, orExecutive Orders, and must be checked-off by contracting officers asappropriate. Clause 3-1 requires that the supplier prepare acontract-specific plan for subcontracting and reporting on suchsubcontracting activity, and that the plan be agreed to by the PostalService prior to contract award. The clause is not included under thefollowing circumstances:

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

(b) When the contract is an indefinite delivery contract or orderingagreement and the purchase team determines that requiring aplan would be impractical or unworkable.

2. Contracts Valued at $500,000 or More. All contracts expected to bevalued at $500,000 ($250,000 for design and construction contracts) ormore must include Clause 3-2, Participation of Small, Minority, andWoman-owned Businesses. The clause is incorporated by reference inClause 4-2, and must be checked-off by contracting officers asappropriate. Clause 3-2 requires that suppliers report theirsubcontracting activity by calendar-quarter. The report must be one ofthe types discussed in 3.2.3.b.

Exhibit 3.2.4Supplier Relations

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3.2.3.e Purchasing Organization Reports. Each purchasing organization mustcollect, compile, and report by calendar quarter on the number of supplierssubmitting reports and the number and dollar value of subcontracts andpurchase orders placed by Postal Service suppliers with small, minority, andwoman-owned businesses. Summary reports must be forwarded toPurchasing and Materials’ Supplier Development and Diversity organization.

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

Exhibit 3.2.4Socioeconomic Classification CodesÁÁÁÁÁÁÁÁ

CODEÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

CLASSIFICATIONÁÁÁÁÁÁÁÁ

AÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Small businessÁÁÁÁÁÁÁÁ

BÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Small minority-ownedÁÁÁÁÁÁÁÁ

B1ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

---Black AmericanÁÁÁÁÁÁÁÁ


---Hispanic AmericanÁÁÁÁÁÁÁÁ


---Native AmericanÁÁÁÁÁÁÁÁ


---Asian AmericanÁÁÁÁÁÁÁÁ

CÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Small woman-ownedÁÁÁÁÁÁÁÁ

EÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Small, minority woman-ownedÁÁÁÁÁÁÁÁE1

ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Black AmericanÁÁÁÁ

ÁÁÁÁE2ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Hispanic AmericanÁÁÁÁ

ÁÁÁÁE3ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Native AmericanÁÁÁÁ

ÁÁÁÁE4ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Asian AmericanÁÁÁÁ

ÁÁÁÁIÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁLarge businessÁÁÁÁ

ÁÁÁÁJÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁLarge minority-ownedÁÁÁÁ

ÁÁÁÁJ1ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Black AmericanÁÁÁÁ

ÁÁÁÁJ2ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Hispanic AmericanÁÁÁÁ

ÁÁÁÁJ3ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Native AmericanÁÁÁÁ

ÁÁÁÁJ4ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Asian AmericanÁÁÁÁ

ÁÁÁÁKÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁLarge, woman-ownedÁÁÁÁ

ÁÁÁÁLÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁLarge minority woman ownedÁÁÁÁ

ÁÁÁÁL1ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ---Black AmericanÁÁÁÁ

ÁÁÁÁÁÁÁÁ

L2ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

---Hispanic American

ÁÁÁÁÁÁÁÁ

L3 ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

---Native American

ÁÁÁÁÁÁÁÁ

L4 ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

---Asian American

ÁÁÁÁÁÁÁÁ

S ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Nonprofit, Educational, other Gov’t & Utilities

ÁÁÁÁÁÁÁÁ

T ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

NIB & NISH

ÁÁÁÁÁÁÁÁ

W ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Federal Prison Industries - UNICOR

ÁÁÁÁÁÁÁÁ

Z ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ

Foreign Supplier

3.3 Purchasing Manual

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3.3 Mandatory Sources

3.3.1 PolicyIf the following sources can meet Postal Service requirements, they must beconsidered before purchasing certain commodities.

3.3.2 Existing AssetsExisting assets are supplies, equipment, or services already within the PostalService or available under a current contract. Before purchasing newsupplies 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 SeverelyDisabled

3.3.3.a General. The Javits-Wagner-O’Day Act (41 U.S.C. 46-48) requires that thePostal Service and other federal agencies purchase certain supplies andservices from qualified workshops which employ people who are blind orseverely disabled. The Committee for Purchase from People Who Are Blindor Severely Disabled determines which supplies and services must bepurchased and their price.

3.3.3.b Procurement Lists. Supplies and services provided by people who are blind orseverely disabled are listed in the Committee’s Procurement List. Additions anddeletions are published in the Federal Register as they occur. The list isavailable at the Committee’s Web site (www.jwod.gov) or may be obtained bysubmitting General Services Administration (GSA) Form 457, FederalPublications Mailing List Application, to:

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

3.3.3.c Ordering

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

2. Exceptions. Supplies and services contained on the Procurement Listmay not be purchased from commercial sources unless authorized bythe agency or the Committee for Purchase from People Who Are Blindor Severely Disabled. The Committee will grant an exception when theagency cannot meet the requirement within the period specified, andcommercial sources can. It may also grant an exception whenthe quantity involved is insufficient for economic production by theworkshop. If a purchase exception is granted because of required


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delivery dates, orderers must initiate the purchase within 15 days,unless additional time is allowed by the agency. Orderers must send acopy of the solicitation to the agency.

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

3.3.4 People Who Are Blind or State Licensing Agenciesfor the BlindPeople who are blind and licensed under the provisions of theRandolph-Sheppard Act (20 U.S.C. 107 et seq.) or by a state licensingagency must be given priority for the operation of food vending services inPostal Service facilities. See Handbooks AS-707H, Contracting for FoodServices, and EL-602, Food Service Operations.

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

3.4 Government Sources

3.4.1 GeneralVarious government sources can meet Postal Service requirements.Contracting officers should therefore consider the following sources whenthe quality, delivery terms and prices offered are competitive with thoseoffered 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 asource of supply for:

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

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


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

3.4.2.b Ordering. Supplies and services available from FPI are listed in its Scheduleof Products brochure. This brochure and individual product and servicecatalogs (which provide detailed ordering instructions) are available at FPI’sWeb site (www.unicor.gov) and are available from:

UNICOR CORPORATE DIVISIONFEDERAL PRISONS INDUSTRIES INC320 FIRST ST NWWASHINGTON DC 20534-0001

3.4.3 General Services Administration3.4.3.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 bygovernment agencies, as described in the GSA Supply Catalog and theGSA Stores Stock Catalog. These catalogs may be ordered using GSAForm 457, Publications Mailing List Application.

2. Federal Supply Schedules

(a) General. Federal Supply Schedules (FSS) are summaries ofordering contracts negotiated by GSA’s Federal Supply Service.They include Single-Award, Multiple-Award and New ItemIntroductory schedules. GSA’s terms and conditions, rather thanthose used by the Postal Service, apply to orders placed againstFSSs.

(b) Information. The “FSS Program” section of the GSA SupplyCatalog lists the supplies and services available on theSchedules. Copies of the Schedules and GSA’s Federal SupplySchedule Program Guide may be accessed at www.fss.gsa.gov,or may be ordered by sending GSA Form 457 to:

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

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

3.4.4 Defense Logistics AgencySupplies available from the Defense Logistics Agency (DLA) are described inthe Federal Supply Catalog for Civil Agencies, published by DLA andavailable from:

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

3.5.2.bSupplier Relations

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3.4.5 Department of Veterans AffairsThe Department of Veterans Affairs makes medical supplies and equipmentavailable to designated Postal Service installations. See Handbook AS-701,Material Management, for ordering instructions.

3.4.6 Government Printing OfficePrinting may be purchased from the Government Printing Office (GPO). SeeASM 370.

3.5 Commercial Suppliers

3.5.1 PolicyExcept for those commodities available from the mandatory sourceslisted in 3.3, it is Postal Service policy to purchase its requirements fromcommercial suppliers using business practices and terms and conditionscustomary to the commercial marketplace or from the government sourceslisted in 3.4.

3.5.2 Prequalification3.5.2.a Policy. In order to enhance competition and ensure quality performance, it is

Postal Service policy to prequalify suppliers. In addition to improving competitionand performance, prequalification can also shorten cycle time and strengthenrelations between the Postal Service and its suppliers. Contracting officersshould consider prequalifying suppliers whenever appropriate.

3.5.2.b General

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

2. Prequalification opportunities must be publicized in accordance with3.5.2.e and 3.5.3. However, particular purchases or series of purchasescompeted solely among prequalified suppliers (see 3.5.2.b.3) need notbe publicized, although purchase teams may do so if in the business orcompetitive 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 theparticular purchase (or series of purchases) and its relationship to thebusiness and competitive needs of the Postal Service. These decisionsare matters of the purchase team’s judgment, as are those determiningwhether to prequalify suppliers and what means to use. In addition,when in the business interests of the Postal Service, purchase teamsmay also consider adding suppliers to previously established lists whencapable suppliers which did not participate in the prequalification

3.5.2.c Purchasing Manual

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process are identified. Before being placed on the list, such suppliersmust be evaluated in the same manner used to establish the originallist, but the prequalification process need not be readvertised.

4. When using prequalification, supplier-specific performance evaluationfactors (past performance and supplier capability; see 2.1.9), areevaluated in order to decide which suppliers to include on theprequalified list. The supplier should be evaluated in the same manneras 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 ongoingbasis 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. Whendeciding on the method to be used (which should take place during thepurchase planning phase), purchase teams must consider theparticular purchase and the business and competitive needs of thePostal Service, and tailor the prequalification method to theseconsiderations.

2. Determining the method should be based on:

(a) The particular purchase (or series of purchases) and itsrelationship to the business and competitive needs of the PostalService.

(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 in3.5.3, purchase teams should use their market awareness to ensurethat qualified suppliers are made aware of prequalificationopportunities. Based on the state of the marketplace, announcementsregarding prequalification opportunities should be made throughwhatever media are deemed most appropriate and effective. Inaddition, purchase teams must ensure that market research includesspecific efforts to identify small, minority, and woman-ownedbusinesses capable of meeting prequalification criteria and that thesefirms are encouraged to seek inclusion on prequalified lists. This effortmust be outlined in any individual purchase plan (see 2.1.5.b) thatcontemplates the use of prequalified suppliers. Purchase teams mustalso ensure that suppliers’ subcontracting plans are consistent with 3.2when they will be considered in prequalification criteria.

2. Time Limits. The length of time in which the prequalification list will bein effect must be established and provided to suppliers before suppliersare selected for the list. Limits will depend on the particular purchaseand the business and competitive needs of the Postal Service (although

3.5.2.hSupplier Relations

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lists must be reassessed periodically; see 3.5.2.f.1), but in all casesmust be reasonable in relation to standard commercial practices.

3. Selecting Suppliers

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

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

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

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

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

4. Notification. All suppliers who responded to the prequalificationannouncement must be notified of whether they were included orexcluded from the prequalification list. Suppliers who have not beenselected for the list must be provided the rationale so that they maybetter prepare for future prequalification opportunities.

3.5.2.f Maintaining Prequalified Lists

1. Reassessment. Periodically, purchase teams should reassess thesuppliers included on a prequalified list in order to ensure that theyremain qualified and reliable. Purchase teams should also considerwhether new suppliers should be included on the list. Suchopportunities must be publicized in accordance with 3.5.3, andinterested suppliers are subjected to the same prequalification methodsused to originally establish the list.

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

3.5.2.g Requests for Prequalified Lists. Subject to the restrictions of 1.6.5 andHandbook AS-353, prequalification lists may be provided to parties seekingthem, including businesses seeking subcontract opportunities.

3.5.2.h Competition. Purchase teams must ensure that purchases are competedamong a sufficient number of prequalified suppliers to ensure adequatecompetition. The teams have broad discretion in determining whencompetition is adequate, but must make this determination based on thenature of the purchase, the marketplace, and the business and competitiveneeds of the Postal Service. All relevant purchases need not be competed

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among all suppliers included on a prequalified list, but all such suppliers mustbe treated fairly, and periodically given the opportunity to compete forpurchases. Purchase teams must exercise sound business judgment whendetermining which prequalified suppliers will compete for a particularpurchase, and must make a written determination that the suppliers selectedto compete provide adequate competition.

3.5.3 Publicizing Purchase Opportunities and ContractAwards

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 waspreviously published as a part of purchase planning (see 3.5.3.b.3),or (4) the purchase will be of commercially available goods orservices, in which case the publicizing threshold is $1 million.

(b) At the discretion of the purchase team, noncompetitive purchaseopportunities of any value may be publicized when it isdetermined that such publicizing would improve the effectivenessof market research.

2. Contract Awards

(a) To promote competition in subcontracting, the Postal Serviceannounces contract awards, competitive or noncompetitive,having significant subcontract opportunities. Such awards mustbe publicized in the Governmentwide Point of Entry (GPE; see3.5.3.b.1). Although a matter of judgment, these are normallyawards valued over $500,000 with individual subcontractopportunities over $50,000. Announcements of contract awardsmay also be made available for publication to newspapers, tradejournals and magazines.

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

(c) All noncompetitive contract awards valued at more than $1 millionmust 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 mailtransportation (see 4.4.4.d), solicitations must be synopsized in theGPE. The GPE, successor to the Commerce Business Daily, is thesingle point where most government purchasing opportunities andcontract awards can be accessed electronically by the public. The GPEis accessed via the Internet at http://www.fedbizopps.gov. This

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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 bepublicized via other electronic media, or in newspapers or tradejournals, depending on three factors: (a) the purchase team’sknowledge of the marketplace, (b) the business and competitive needsof the Postal Service, and (c) whether, following contract award, therewill be significant subcontracting opportunities. Purchase teams shouldalso consider publicizing in media that target diverse suppliers (seealso Handbook P-1, General Purchasing Concepts and Practices).

3. Presolicitation Notices. Purchase teams wishing to identify suppliersmay do so by issuing a presolicitation notice (also called a “sourcessought” notice). The notice should (a) describe the upcoming PostalService requirement and any applicable qualification requirements, (b)announce any planned presolicitation conferences, and (c) specify adate by which the notice must be returned to ensure inclusion on thesolicitation mailing list.

3.5.4 Unsolicited Proposals3.5.4.a Definition. Unsolicited proposals are offers to sell to the Postal Service the

rights to ideas, concepts, products, processes or technology. They areconsidered unsolicited because they are not submitted in response to asolicitation or request for proposals.

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

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

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


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3.6 Protests

3.6.1 ApplicabilityThis section applies to all protests against Postal Service contractingprocedures and awards, including special categories of contracts describedin other chapters of this manual. The General Accounting Office (ComptrollerGeneral) does not have jurisdiction to consider protests arising out of PostalService contracting practices.

3.6.2 Definitions3.6.2.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 toaward a contract.

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

3.6.2.c General Counsel. The Senior Counsel, Contract Protests and Policies, hasbeen designated as the General Counsel’s representative to consider anddecide protests and to take any other action that this section requires to bedone by the General Counsel.

3.6.2.d Days. Calendar days. However, any time period will run until a day which isnot a Saturday, Sunday, or legal holiday.

3.6.3 Submission3.6.3.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 factualgrounds, including copies of relevant documents, all information establishingthat the protester is an interested party, and establishing the timeliness of theprotest. 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 GeneralCounsel will be considered to have been addressed to the primaryaddressee. For example, a protest addressed to the contracting officer whichindicates that a copy is being furnished to the General Counsel is forconsideration by the contracting officer under 3.6.6 below. If the primaryaddressee cannot be determined, the protest will be considered to beintended for the General Counsel, and will be handled under 3.6.7 below.

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3.6.4 Timeliness3.6.4.a The Postal Service intends to complete its purchasing actions in a timely

fashion while ensuring fair treatment to firms and individuals. A protestermust submit any protest in a manner that will ensure its timely receipt.Protests received by the contracting officer or the General Counsel afterthe 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 apparentbefore the date set for the receipt of initial proposals must be received beforethe time set for the receipt of proposals.

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

3.6.4.d In all cases other than those covered by b and c above, protests by aprotester that has received a debriefing shall be received not later than10 days after the debriefing. In all other cases, the protest shall be receivednot later than 10 days after the basis of protest is known or should have beenknown, whichever is earlier. No protest other than one by a protester that hasreceived a timely requested debriefing (see 4.2.9.a) will be considered ifreceived 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 contractingofficer to be obviously without merit, any subsequent protest to the GeneralCounsel received within 5 days of the protester’s actual or constructiveknowledge of initial adverse action by the contracting officer will beconsidered if the initial protest was received in accordance with the timelimits in paragraphs b through d above.

3.6.5 Contract Award3.6.5.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 thematter has been resolved, unless the VP, SM, after consulting with counsel,determines that urgent and compelling circumstances which significantlyaffect interests of the Postal Service will not permit waiting for the decision.When authorized to make an award before a protest is resolved, thecontracting officer must, at the time of or before the award, give notification ofthe award to the protester, any other commenting parties, and, if the protestis before the General Counsel, the General Counsel.

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

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3.6.6 Protests Received by Contracting Officers3.6.6.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 afterreceipt of the protest. If a contracting officer determines that a protest is obviouslymeritorious, 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 obviouslymeritorious, may, within 10 days after its receipt:

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

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

2. The receipt of any protest is an occasion for the contracting officer toconsider seriously the correctness of the purchasing action involved inthe 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 receivedfrom the standpoint of the protester as well as from the standpoint ofthe Postal Service. That a protest may be subject to dismissal or denialon procedural or other grounds which do not involve its merits does notrelieve the contracting officer of the responsibility of documenting thebases for purchasing actions, including those that are the subject of theprotest.

3.6.7 Protests Received by the General Counsel3.6.7.a Promptly after receiving a protest, the General Counsel notifies the

contracting officer of its receipt and, unless a copy has been furnished, sendsthe contracting officer a copy of the protest together with any accompanyingdocuments other than those already in the contract file. Additional statementsor documents received by the General Counsel in the course of the protestare furnished to the contracting officer unless it appears that the contractingofficer previously has been furnished them. The General Counsel’snotification may identify issues apparently raised by the protest, matterspresented by the protest which particularly require the contracting officer’sresponse, and regulatory provisions or protest decisions possibly relevant tothe protest.

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

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

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2. In case of any other protest, notify the offerors that might be affectedthat 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, participatein the protest, submitting their opinions and relevant information on theprotest if, within 5 days of receipt of the notice, they advise the GeneralCounsel (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 contractingofficer must provide it with the contracting officer’s statement on the protestand the documents necessary to the statement’s understanding.

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

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

2. The contracting officer shall redact privileged material (includingsupplier-selection sensitive material and other information the releaseof which could result in a competitive advantage to a supplier orsuppliers) from the copies of the contracting officer’s statement andthe documents accompanying it furnished to the protester or to otherparties (see e and g, below). Redacted and unredacted versions shallbe furnished to the General Counsel simultaneously.

3. The General Counsel may require the contracting officer, a protester, orany other party to justify their redactions. In the case of the contractingofficer’s submissions, if, in the General Counsel’s judgment, theredactions are insufficiently justified, the General Counsel may disallowthe redactions and direct the distribution of the documents without theunjustified redactions. When a protester or party is unable adequatelyto justify challenged redactions, the General Counsel may give theredacted submission appropriately diminished weight.

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

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

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

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

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

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

(c) The evaluation of proposals; and

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

3. In a case in which the protester has requested specific documents, thecontracting officer shall provide to all parties and the General Counsela list of those documents or portions of documents that have beenfurnished to the protester or included as information accompanying thecontracting officer’s statement, and those documents which thecontracting officer intends to withhold from the protester and the reasonfor the proposed withholding.

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

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

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

3.6.7.i When it is necessary to obtain a clear understanding of the protest, theGeneral Counsel may request or permit the submission of additionalstatements by the parties. The contracting officer and other participatingparties shall not submit statements in addition to those allowed by h,above, and j, below, unless they have been specifically requested by theGeneral Counsel or permission has been granted by the General Counsel.Contracting officers must respond to the General Counsel’s requests within10 days and must distribute copies of such responses in the mannerindicated in paragraph g above.

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3.6.7.j The protester, any other party, or the contracting officer may request aconference with the General Counsel in connection with any protest underconsideration by the General Counsel. The requests must be received withinthe 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 recordsummarizing 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 beresolved by the General Counsel, the contracting officer should request anextension of the time for acceptance of proposals from each offeror whoseproposal may be eligible for acceptance.

3.6.7.l The General Counsel has established a goal of 21 days after receipt of allinformation submitted by all parties and the conclusion of all conferences forissuing 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 thecontracting officer, the protester, and any other participant in the protest. Afile of all protest decisions is maintained in the Postal Service Library, anddecisions from 1987 to the present are available on the Internet athttp://www.usps.com/lawdept/protestdecisions/.

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

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

3.6.7.p Notwithstanding any other provision of this section, when a protest is clearlywithout legal merit or is not reviewable by the General Counsel under theseprocedures, the General Counsel may summarily deny or dismiss a protestwithout a report from the contracting officer. When the propriety of summarydenial or dismissal becomes clear only after information is provided by thecontracting officer or otherwise obtained by the General Counsel, the protestmay be denied or dismissed at that time.


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3.7 Supplier Debarment, Suspension, and Ineligibility

3.7.1 PolicyWhen merited, the Postal Service may exclude suppliers from the purchasingprocess under the procedures contained herein. In such cases, contractingofficers may not solicit proposals from, award contracts to, or consent tosubcontracts with suppliers so excluded.

3.7.1.a Definitions

1. Affiliates. Businesses, organizations, or individuals connected by thefact that one controls or has the power to control the other, or a thirdparty controls or has the power to control both. Factors such ascommon ownership, common management, and contractualrelationships must be considered. Franchise agreements are notconsidered evidence of affiliation if the franchisee has a right to profit inproportion to its ownership and bears the risk of loss or failure.

2. Debarment. An exclusion from contracting and subcontracting for areasonable, specified period of time commensurate with theseriousness of the offense or failure, or the inadequacy of performance.

3. General Counsel. This includes the General Counsel’s authorizedrepresentative.

4. Indictment. Indictment for a criminal offense. Any information or otherfiling by competent authority charging a criminal offense is given thesame effect as an indictment.

5. Ineligible. An exclusion from contracting and subcontracting based onaction by an entity other than the Postal Service under statutes,Executive Orders, or regulations, such as the Davis Bacon Act and itsrelated statutes and implementing regulations, the Service ContractAct, the Equal Employment Opportunity Act and Executive Orders, theWalsh-Healy Public Contracts Act, or the Environmental Protection Actand Executive Orders, to which the Postal Service is subject or which ithas adopted as a matter of policy.

6. Judicial Officer. This includes the acting Judicial Officer.

7. Supplier. For the purposes of Section 3.7, a supplier is any individualor other legal entity that:

(a) Directly or indirectly (e.g., through an affiliate), submits offers foror is awarded, or reasonably may be expected to submit offers foror be awarded, a Postal Service contract, including a contract forcarriage under Postal Service or commercial bills of lading, or asubcontract under a Postal Service contract; or

(b) Conducts business, or reasonably may be expected to conductbusiness, with the Postal Service as an agent or representative ofanother supplier.

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3.7.1.b Establishment and Maintenance of Lists

1. The VP, SM, establishes, maintains, and distributes a consolidated listof suppliers debarred, suspended, or proposed for debarment by thePostal Service to purchasing offices.

2. The General Services Administration (GSA) compiles and maintains aconsolidated list of all parties debarred, suspended, proposed fordebarment or declared ineligible by Federal agencies or the GeneralAccounting Office. GSA revises the list and posts it on the Internetdaily, and publishes a hardcopy list monthly. The Internet copy isavailable at http://epls.arnet.gov.

3. The VP, SM, furnishes GSA notice of Postal Service debarments,suspensions, and proposed debarments and any changes in the statusof suppliers, including any of their affiliates, on the Postal Service list.

3.7.1.c Treatment of Suppliers on Postal Service and GSA Lists

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

2. Suppliers on the Postal Service list identified as debarred, suspended,or proposed for debarment are excluded from receiving contracts, andcontracting officers may not solicit proposals or quotations from, awardcontracts to, or (when the contract provides for such consent) consentto subcontracts with such suppliers, unless the VP, SM, or designee,after consultation with the General Counsel, has approved such action.Suppliers debarred, suspended, or proposed for debarment are alsoexcluded from conducting business with the Postal Service as agents ofother contractors.

3. Suppliers on the GSA list are assigned a code by GSA which is relatedto the basis of their ineligibility. The VP, SM, maintains a tabledescribing the Postal Service treatment associated with each code.Suppliers on the GSA list who appear under a GSA code for which thetreatment identified on the Postal Service table is “ineligible” areexcluded from receiving contracts, and contracting officers may notsolicit proposals or quotations from, award contracts to, or (when thecontract provides for such consent) consent to subcontracts with suchsuppliers, unless the VP, SM, or designee, after consultation with theGeneral Counsel, has approved such action.

4. Suppliers included on the GSA list assigned codes for which the PostalService table provides other guidance are considered according to thatguidance. When so indicated on the table, contracting officers mustobtain additional information from the entity responsible for thesupplier’s inclusion on the list.

5. The debarment, suspension or ineligibility of a supplier does not of itselfaffect its rights and obligations under any existing contract with thePostal Service. However, the VP, SM, may direct the termination ofdefault of any contracts with a supplier which has been debarred,suspended, or made ineligible, after appropriate business and legalreview establishes the propriety of such action. In addition, except forservice changes under mail transportation contracts, contracting

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officers may not without the approval of the VP, SM, or designee addnew work to the contract(s) of a debarred, suspended, or ineligiblesupplier by supplemental agreement or exercise of an option.

3.7.1.d Causes for Debarment

1. The VP, SM, may, with the concurrence of the General Counsel, debara supplier, including any of its affiliates, for causes such as thefollowing:

(a) Conviction for commission of a criminal offense incidental toobtaining or attempting to obtain contracts or subcontracts, or inthe performance of a contract or subcontract.

(b) Conviction under the Federal antitrust statutes arising out of thesubmission of bids or proposals.

(c) Commission of embezzlement, theft, forgery, bribery, falsificationor destruction of records, making false statements, tax evasion,or receiving stolen property;

(d) Violations of a Postal Service contract so serious as to justifydebarment, such as:

(1) Willful failure to perform a Postal Service contract inaccordance with the specifications or within the time limitprovided in the contract;

(2) A record of failure to perform or of unsatisfactoryperformance in accordance with the terms of one or morePostal Service contracts occurring within a reasonableperiod of time preceding the determination to debar, exceptthat failure to perform or unsatisfactory performance causedby acts beyond the control of the supplier may not beconsidered a basis for debarment;

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

(4) Acceptance of a contingent fee paid in violation of acontractual provision against contingent fees.

(e) Any other cause of such serious and compelling nature thatdebarment is warranted.

2. The existence of any of the causes in subparagraph (a) or (b) must beestablished by criminal conviction in a court of competent jurisdiction. Ifappeal taken from such conviction results in a reversal of theconviction, the debarment should be removed upon the request of thesupplier unless other causes for debarment exist.

3. The existence of any of the causes in subparagraphs (c), (d), or (e) isestablished by a preponderance of the evidence.

4. The criminal, fraudulent, or seriously improper conduct of an individualmay be imputed to the firm with which he or she is or has beenconnected when a grave impropriety was accomplished within thecourse of his or her official duty or was effected by him or her with theknowledge, approval, or acquiescence of the firm. Likewise, when afirm is involved in criminal, fraudulent, or seriously improper conduct,

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any person who participated in, knew of, or had reason to know of thegrave impropriety may be debarred in addition to the firm.

5. The fraudulent, criminal, or other seriously improper conduct of onesupplier participating in a joint venture or similar arrangement may beimputed to other participating suppliers if the conduct occurred for or onbehalf of the joint venture or similar arrangement, or with theknowledge, approval, or acquiescence of these suppliers. Acceptanceof the benefits derived from the conduct shall be evidence of suchknowledge, approval, or acquiescence.

3.7.1.e Mitigating Factors

The existence of any of the causes in 3.7.1.d does not necessarily requirethat a supplier be debarred. The decision to debar is within the discretion ofthe VP, SM, and must be made in the best interest of the Postal Service. TheVP, SM, should consider the following in determining the seriousness of theoffense, failure, or inadequacy of performance, and in deciding whetherdebarment is warranted:

1. Whether the supplier had effective standards of conduct and internalcontrol systems in place at the time of the activity which constitutescause for debarment or had adopted such procedures prior to anyPostal Service investigation of the activity cited as a cause fordebarment.

2. Whether the supplier brought the activity cited as a cause fordebarment to the attention of the Postal Service in a timely manner.

3. Whether the supplier has fully investigated the circumstancessurrounding the cause for debarment and, if so, made the result of theinvestigation available to the debarring official.

4. Whether the supplier cooperated fully with the Postal Service during theinvestigation and any court or administrative action.

5. Whether the supplier has paid or has agreed to pay all criminal, civil,and administrative liability for the improper activity, including anyinvestigative or administrative costs incurred by the Postal Service, andhas made or agreed to make full restitution.

6. Whether the supplier has taken appropriate disciplinary action againstthe individuals responsible for the activity which constitutes cause fordebarment.

7. Whether the supplier has implemented or agreed to implementremedial measures, including any identified by the Postal Service.

8. Whether the supplier has instituted or agreed to institute new or revisedreview and control procedures and ethics training programs.

9. Whether the supplier has had adequate time to eliminate thecircumstances within the supplier’s organization that led to the causefor debarment.

10. Whether the supplier’s management recognizes and understands theseriousness of the misconduct giving rise to the cause for debarmentand has implemented programs to prevent recurrence.

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The existence or nonexistence of any mitigating factors or remedialmeasures such as those above is not necessarily determinative of whether asupplier should or should not be debarred. Therefore, if a cause fordebarment exists, the supplier has the burden of demonstrating, to thesatisfaction of the debarring official, that debarment is not warranted ornecessary.

3.7.1.f Period of Debarment

1. When statutes, executive orders, or controlling regulations of otheragencies provide a specific period of debarment, that period applies. Inother cases, debarment by the Postal Service must be for areasonable, definite, stated period of time, commensurate with theseriousness of the offense or the failure or inadequacy of performance.Generally, a period of debarment should not exceed three years. Whendebarment for an additional period is deemed necessary, notice of theproposed additional debarment must be furnished to the supplier as inthe case of original debarment.

2. Except as precluded by statute, executive order, or controllingregulations of another agency, debarment may be removed or theperiod may be reduced by the VP, SM, when requested by the debarredsupplier, and when the request is supported by a reasonablejustification, such as newly discovered material evidence, reversal of aconviction, bona fide change of ownership or management, or theelimination of the causes for which debarment was imposed. The VP,SM, may, at his or her discretion, deny any request or refer it to theJudicial Officer for a hearing and findings of fact which the VP, SM, willconsider when deciding the matter. When a debarment is removed orthe debarment period is reduced, the VP, SM, must state in writing thereasons for the removal of the debarment or the reduction of the periodof debarment.

3.7.1.g Procedural Requirements for Debarment

1. The VP, SM, initiates a debarment proceeding by sending the supplier awritten notice of proposed debarment. The notice must be served bysending it to the last known address of the supplier by certified mail,return receipt requested. A copy of the notice must be furnished to theOffice 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; and

(d) That, within 30 days of receipt of the notice, the supplier maysubmit, in person, in writing, or through a representative,information and argument in opposition to the proposeddebarment, including any additional information which may raisequestions regarding the material facts.

2. If the proposed debarment is based on a conviction or civil judgment,and there are no questions regarding the material facts, the VP, SM,decides whether debarment is merited based on the information in the

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record, including any information received from the supplier. Thesedecisions will be made based on a preponderance of the evidence. Ifthere are questions regarding material facts, the VP, SM, may (1) seekadditional information from the supplier and other parties, or (2) requestthe Judicial Officer to hold fact-finding hearings on the matter. Suchhearings are governed by rules of procedure promulgated by theJudicial Officer and set forth in Appendix D. The VP, SM, may rejectany findings, in whole or in part, when they are deemed arbitrary orcapricious or clearly erroneous.

3.7.1.h Causes for Suspension

The suspending official may, when the interest of the Postal Service requires,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 thesubmission of bids and proposals; and

(c) Commission of embezzlement, theft, forgery, bribery, falsificationor destruction of records, receipt of stolen property, or any otheroffense indicating a lack of business integrity or business honestythat seriously and directly affects present capability as a supplier.

2. Any other cause of such serious and compelling nature that suspensionis warranted.

3.7.1.i Period of Suspension

Period of Suspension. Except as provided in this paragraph, no suspensionmay exceed 6 months in duration. A suspension, if not automaticallyextended during the pendency of a debarment proceeding or prospectiveaction as provided in this paragraph, may be extended for not more than oneadditional 6-month period upon the VP, SM’s written determination of thereason and necessity for the extension. Notice of any extension ofsuspension must be served upon the supplier in the manner set forth in3.7.1.j. In no event may a suspension plus its extension exceed 12 monthsunless a debarment proceeding or a prosecutive action is pending, in whichcase the initial suspension continues, subject to review in accordance with3.7.1.h.2 above, until the debarment proceeding or prosecutive action hasbeen completed. The termination of a suspension, however, may notprejudice a debarment proceeding that was pending or that may be broughtfor the same reasons that led to the suspension. “Prosecutive action”includes criminal prosecutions, civil fraud, and false claims actions, andadministrative complaints issued under the Program Fraud Civil RemediesAct, 31 U.S.C. sections 3801-3812.

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3.7.1.j Procedural Requirements for Suspension

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

(a) The suspension is:

(1) Based on information that the supplier has committedirregularities of a serious nature in business dealings withthe Postal Service; or

(2) Based on irregularities that seriously reflect upon thepropriety of further dealings of the supplier with the PostalService (the irregularities must be described in generalterms without disclosing the Postal Service’s evidence); and

(3) Is for a temporary period pending the completion of aninvestigation and such other proceedings as may follow; andContents

(4) Proposals will not be solicited from the supplier and, ifreceived, will not be considered for award, unless it isdetermined by the Postal Service to be in its interest to do so.

2. Answers to all inquiries concerning the suspension of any supplier mustbe coordinated by the VP, SM, with the General Counsel or must bemade by the General Counsel. When a matter has been referred to theDepartment of Justice, the Postal Service will not furnish in answer toinquiries any more information than is contained in the notice until theDepartment of Justice has agreed to the furnishing of additionalinformation.

3.7.1.k Restrictions on Suspended Suppliers. Suspended suppliers are subjectduring the period of suspension to the restrictions, conditions, and penaltiesset forth in paragraphs 3.7.1.a and 3.7.1.d above.

3.7.1.l Rules of Practice. The Postal Service Rules of Practice in ProceedingsRelative to Debarment and Suspension from Contracting are set forth inAppendix D.

3.7.1.m Solicitation Provision

1. The Certification Regarding Debarment, Proposed Debarment, andOther Matters (paragraph e. of Provision 4-3, Representation andCertifications), must be completed by offerors in all solicitation citationswhen the contract value is expected to exceed $100,000.

2. When an offeror, in compliance with paragraph e. of Provision 4-1indicates an indictment, charge, civil judgment, conviction, suspension,debarment, proposed debarment, ineligibility, or default of a contract, asspecified therein, the contracting officer must:

(a) Request such additional information from the offeror as thecontracting officer deems necessary in order to make adetermination of the offeror’s capability (but see 3.7.1.c); and

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(b) In the event of a circumstance not otherwise automaticallydisqualifying as set out in this part 3.7 (such as a non-Federaldebarment, an indictment, charge, conviction, or civil judgment),prior to proceeding with award, the contracting officer must notifythe VP, SM, of the specifics of the circumstances, and the basison which it is proposed that the award proceed.

3. Offerors who do not furnish the certification or such information as maybe required by the contracting officer will be given an opportunity toremedy the deficiency. Failure to furnish the certification or suchinformation may affect the consideration of the offeror’s capability.

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Documents

3 Supplier Relations - USPSSupplier Relations 3.2.1.a Contents Issue 3, December 25, 2003, 71 Updated With Revisions Through October 1, 2004 3 Supplier Relations 3.1 Policy 3.1.1 General