CHANGES IN USPS PURCHASING GUIDELINES

The following article was written by David Hendel, attorney with the Virginia-based law firm of Wickwire Gavin, which is a PostCom member. It is a summary of the changes in the Postal Service's Interim Internal Purchasing Guidelines. Hendel can be reached via Wickwire Gavin, PC, 8100 Boone Blvd, Ste. 700, Vienna, VA 22182; or by calling 703-790-8750.

Taking the place of the USPS Purchasing Manual, the Postal Service issued the Interim Internal Purchasing Guidelines, which became effective on May 19, 2005. Similar to what the pirate king advised his captive in the movie "Pirates of the Caribbean," USPS's new set of purchasing rules "is more a set of what you'd call 'guidelines' than actual rules."

And the Guidelines make this point in several places. The Guidelines state that they are "not binding," "for internal use only," and "do not create any right… enforceable against the Postal Service." In my view, a court will not treat the Guidelines like the unenforceable Pirate Code. The Guidelines represent the purchasing policies of the Postal Service and thus should be as binding on the agency as if they were issued as regulations. (You can find a copy on USPS's website at www.usps.com/cpim/manuals/pm/pm.htm.)

In comparing the Guidelines to the most recent version of the Purchasing Manual, the similarity is striking. Whole sections remain exactly the same as before. So, we are not looking at a brand new set of rules, but just some very limited changes to what we had before.

Business-Like Rather Than Fair

The primary change between the Purchasing Manual (PM) and the Guidelines is that the Postal Service has deleted all statements in the PM that required the agency to treat suppliers "fairly." For example, under PM 1.6.1, the Postal Service had stated an "obligation to be fair in…its actions." Instead of stating an obligation to be "fair" in its actions, the Guidelines change this to an obligation to be "business-like" in its actions.
Similarly, PM 3.1.1 stated that USPS must "ensure that all suppliers are treated fairly." In the new Guidelines, however, that has been replaced with a statement that contracting officers must ensure that "business and competitive objectives are met or exceeded." The Guidelines removed language in PM 3.5.2.e.3 that ensured "all suppliers are treated fairly and objectively" during the prequalification process; removed the language in PM 4.2.2.k.1 that required that procurement information be "disseminated fairly"; removed the language in PM 4.2.5.c.3(c) that stated "all suppliers must be treated fairly" during discussions; and removed language in PM 6.4.5.d.4 that required USPS to "act fairly" in withholding progress payments.
What USPS is telling suppliers is that you will get nowhere by complaining to the Postal Service about procurement practices that are "unfair." Instead, you should frame any complaints you have on the basis of depriving the agency from getting the best value. Thus, if you have any disagreements concerning the purchasing process, and you employ USPS's new process for resolving such disagreements, please don't waste your time complaining about unfair conduct.

Extra Evaluation Credit

When USPS is soliciting proposals for new work, extra evaluation credit may now be available for suppliers who propose "more effective technical solutions" than set out in the Postal Service's solicitation. (Guidelines, 2.1.7.b.3.) Extra credit for such outside-the-box thinking, however, is only available if the solicitation specifically states that extra credit will be awarded in such cases.

Termination on Notice

The Postal Service typically has three types of contract termination clauses: (1) Termination for Default - based on the contractor's failure to perform; (2) Termination for Convenience - taken for USPS's convenience and allowing the contractor to recover termination costs; and (3) Termination on Notice - a no cost termination after advance notice is given. The Guidelines state that in some cases, a Termination on Notice clause may be substituted for a Termination for Convenience clause. The major difference between these clauses is that under a Termination on Notice clause, the Postal Service is not liable to the contractor for any early termination costs. Thus, we may see more instances where USPS uses a Termination on Notice clause instead of a liability-creating Termination for Convenience clause. The Guidelines state, however, that a Termination on Notice clause is only appropriate in cases where termination claims would not otherwise be likely.

Summary

While there are many USPS statements about eliminating inflexibilities and incorporating new commercial purchasing practices, this is the sum total of the substantive changes between the former Purchasing Manual and the new Purchasing Guidelines. The major regulatory change - replacing the internal bid protest process with an Ombudsman process - changes how complaints over the purchasing process are handled, but does not change how purchases are conducted. Thus, no purchasing "inflexibilities" have been identified or eliminated, and no new commercial purchasing techniques have been added. The primary change so far is USPS telling suppliers, in essence, "We don't have to follow our own rules - or be fair."