[Federal Register: August 19, 2004 (Volume 69, Number 160)]
[Rules and Regulations]
[Page 51364-51368]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19au04-5]
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POSTAL SERVICE
39 CFR Part 601
Issue 3 of the Purchasing Manual; Incorporation by Reference
AGENCY: Postal Service.
ACTION: Final rule.
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SUMMARY: The Postal Service announces the publication of Issue 3 of the
Postal Service Purchasing Manual. Issue 3 supersedes previous editions
of the Purchasing Manual, and is incorporated by reference in the Code
of Federal Regulations.
EFFECTIVE DATE: This final rule is effective on August 19, 2004. The
incorporation by reference of the Purchasing Manual, Issue 3 is
approved by the Director of the Federal Register as of August 19, 2004.
FOR FURTHER INFORMATION CONTACT: Michael J. Harris (202) 268-5653.
SUPPLEMENTARY INFORMATION: Issue 1 of the Purchasing Manual was issued
on January 31, 1997, as the successor to former USPS Publication 41,
the U.S.
[[Page 51365]]
Postal Service Procurement Manual. At that time, purchasing
organizations were advised that, pending the updating of contract-
writing systems, the purchasing organizations could determine, subject
to specific limitations, when and to what extent they may adopt its
policies and procedures. The Purchasing Manual then became fully
effective on January 27, 2000.
Subsequently, updated editions of the Purchasing Manual were issued
on January 31, 2002 (Issue 2), and December 25, 2003 (Issue 3). Pending
the updating of purchasing support systems for consistency with the new
policies contained in Issue 3, purchasing organizations were advised
that they might adopt the policies and procedures contained in Issue 3
immediately, or might continue to follow the policies and procedures
contained in Issue 2. If a purchasing organization adopted Issue 3
policies and procedures for any category or categories of purchases, it
would be required to use those policies and procedures consistently for
that category or categories, and not revert to previous policies and
procedures. Contracting officers were required to ensure that
solicitations and other purchasing documents made prospective offerors
fully aware of the authority (Issue 3 or Issue 2, as revised through
April 18, 2002) pursuant to which an individual purchase was made.
Particular care was required that previous versions of provisions and
clauses were not used in purchases made under the policies and
procedures of Issue 3, and vice versa. To date, the Postal Service has
not formally transitioned from PM Issue 2 to PM Issue 3 primarily
because of problems in updating purchasing support systems for
consistency with the new policies contained in Issue 3. The end of this
transition period will be announced in the Federal Register.
The Purchasing Manual is published and available to all users on
the World Wide Web at http://www.usps.com/business, and contains the
Postal Service's purchasing policy.
It will be noted that on March 24, 2004 (69 FR 13786), the Postal
Service published a proposed rule in the Federal Register entitled
``Purchasing of Property and Services''. In this document, the Postal
Service proposed to amend its regulations in order to implement the
acquisition portions of its Transformation Plan (April 2000) and the
similar recommendations of the President's Commission on the United
States Postal Service (July 2003) as they relate to the acquisition of
property and services. That earlier, ongoing rulemaking is proceeding
separately and independently, and should not be considered to be a part
of this current notice.
On June 28, 2004 (69 FR 36018), the Postal Service published in the
Federal Register a detailed discussion of the policy changes and other
major features contained in Issue 1 of the Purchasing Manual.
Subsequently, on July 29, 2004 (69 FR 45270) the Postal Service
published a detailed discussion of the policy changes and other major
features contained in Issue 2 of the Purchasing Manual. The following
is a similar discussion of the most significant changes in Postal
Service purchasing policy contained in Issue 3.
Purchasing Manual Issue 3--Major Policy Changes
Overview: Issue 3 of the Postal Service Purchasing Manual continues
the efforts of the Postal Service (1) to reflect the best practices of
the private and public sectors, (2) to streamline the purchasing
process and ensure it concentrates on furthering the business and
competitive interests of the Postal Service, and (3) to provide a
policy structure that furthers the Postal Service's use of supply chain
management business practices. Issue 3 also contains the cumulative
changes made to Issue 2 of the Purchasing Manual between January 31,
2002, and December 25, 2003. A discussion of all significant changes
contained in Issue 3 is available to all users on the World Wide Web at
http://www.usps.com/business.
Organizational Changes: The restructuring of Purchasing and
Materials into Supply Management has resulted in numerous changes in
organization names (i.e., Purchasing and Materials is now called Supply
Management) and managerial titles and authorities. These changes are
reflected throughout Purchasing Manual Issue 3.
Purchasing Manual Issue 3--Other Significant Changes
Chapter 1, Authority, Responsibility and Policy: 1.1.2.b Supply
Management Policy Committee. The Supply Management Policy Committee
(SMPC) replaces the Purchasing Policy Committee. SMPC membership has
changed to reflect the SM organization.
1.4.1.b.4 Required Approvals has been revised to state that the
Vice President (VP), Supply Management's (SM) approval of a proposed
contract award or modification serves as the delegation of authority
required by PM 1.4.2.d Actions Exceeding a Contracting Officer's
Delegated Authority.
1.4.2.c Delegations of Authority has been revised to state that,
unless specifically limited in his or her letter of delegation, a
contracting officer may award a contract regardless of commodity group.
1.4.4.a.2 Appointment Authority has been revised to state that
contracting officer appointment officials must keep a record of all
letters of delegation, certificates of appointment, and documentation
concerning a contracting officer's education, experience and training
related to the individual CO's level.
1.4.4.b.3 Qualifications has been revised in a number of areas to
(1) specify that a certification as a certified purchase manager from
the Institute of Supply Management meets the certification requirement
for level I contracting officer; and (2) establish new training
requirements.
Chapter 2, Purchase Planning: 2.1.3.b.2 Responsibilities (Purchase
Planning) has been revised to state that the purchase team has the
responsibility to maintain and apply the cost and pricing models in
order to optimize the total cost of ownership, and in 2.1.3.b.3,
transportation planning matters have been added as areas in which
materials professionals may offer expertise.
2.1.5.b Elements (Individual Purchase Plans) has been revised to
add two elements (subparagraphs 7 and 21) that a purchase plan should
include.
2.1.6.c.4 Reviews and Approvals (Noncompetitive Purchase Method)
has been revised to clarify approval authority for noncompetitive
purchases.
2.1.7.b.3 Developing Strategies (Supplier Selection Strategy) has
been revised to state that purchase teams should take care to ensure
that solicitations do not include unnecessary minimum standards,
mandatory feature call outs or other inappropriate limitations on
supplier selection.
2.2.1.c Clauses (Quality Requirements). This paragraph has been
revised to discuss the use of new Clauses 2-1, Inspection and
Acceptance and 2-2, Quality Management System. These clauses replace
previous Clauses 2-1, Inspection and Acceptance--Supplies, 2-2, Quality
Assurance I--Supplies, 2-3, Quality Assurance II--Supplies, 2-24,
Inspection and Acceptance--Supplies--Nonfixed Price, 2-48, Inspection
and Acceptance--Services, and 2-49, Quality Assurance--Services, all of
which have been deleted.
2.2.5.f F.O.B. Points (Delivery and Acceptance). Subparagraph 1 has
been revised to state that solicitations should require offerors to
include both f.o.b. origin and destination prices for transportation
analysis and that such analysis is available from field material
[[Page 51366]]
management specialists and Headquarters. Subparagraph 3 has been
revised to add shipment base points to the areas that may be specified
as f.o.b. destination.
2.2.10.c Sharing Savings (Value Engineering). This paragraph has
been revised to change the sharing scheme to one that is based on a
negotiated arrangement contained in the contract. Paragraph 2.2.10.e
Evaluation has been revised to for clarity, and Clause 2-22, Value
Engineering, has been revised to reflect these changes.
2.2.11 Price Reduction. This new section states that when they plan
to award strategically-sourced or long-term contracts, purchase teams
must consider the inclusion of new Clauses 2-48, Most Favored Customer
Pricing and 2-49, Cost/Price Reduction. The new clauses are included in
Appendix B.
2.2.12 Investment Recovery. This new section states that an
effective and efficient investment recovery plan can further the Postal
Service's supply chain management goals, and directs purchase teams to
include new Provision 2-8, Investment Recovery, in solicitations when
it is determined that investment recovery will play a significant role
in the overall success of the purchase. The new provision is included
in Appendix A.
2.4.4.h Provision (Cost-Reimbursement Contracts). This new
paragraph requires purchase teams to include new Provision 2-9,
Accounting System Guidelines--Cost Type Contracts, in all solicitations
for cost-type contracts the estimated value of which is $100,000 or
more. The provision requires pre-award review and approval of the
potential supplier's cost accounting system by the Postal Service's
Inspector General or representative, and delineates the elements
required in such accounting systems. The new provision is included in
Appendix A.
Chapter 3, Supplier Relations: 3.3.3.b Procurement Lists (Workshops
for People who are Blind or Severely Disabled) has been revised to
state that additions and deletions to the Procurement List are
published in the Federal Register as they occur.
3.4.5 Department of Veterans Affairs has been revised to provide
the proper name of this department.
3.7 Debarment, Suspension and Ineligibility. This subchapter has
been revised extensively. Some of the highlights of the revision are:
3.7.1.a Definitions contains a new set of relevant definitions.
3.7.1.c Treatment of Suppliers on the Postal Service and GSA List
has been rewritten and now states that suppliers proposed for debarment
are treated the same as those which are debarred or suspended and
excluded from receiving contracts unless other treatment is approved by
the Vice President, Supply Management. In addition, the VP, SM, may
direct the termination for default of any contracts with a supplier
which has been debarred, suspended or made ineligible.
3.7.1.d Causes for Debarment has been rewritten to add to the
causes for which a supplier may be debarred, and to state that the
existence for several of the causes for debarment will be established
by a preponderance of the evidence.
3.7.1.e Mitigating Factors is a new section, and contains a series
of factors the VP, SM, should consider when deciding whether debarment
is warranted.
3.7.1.f Period of Debarment has been revised in paragraph 2., to
state that the VP, SM, may refer requests for removal from debarment or
a reduction of the period of debarment to the Judicial Officer for a
hearing and findings of fact which the VP will then consider.
3.7.1.g Procedural Requirements for Debarment has been revised to
state that debarment decisions are made based on the preponderance of
the evidence, and that, if there are questions regarding material
facts, that the VP, SM, may (1) seek additional information or (2)
request the Judicial Officer to hold fact-finding hearings on the
matter. The VP, SM, may reject findings when they are deemed arbitrary
or capricious or clearly erroneous.
3.7.1.m Solicitation Provision is a new section that requires that
offerors complete a new paragraph e. of Provision 4-3, Representations
and Certifications, when the contract value is expected to exceed
$100,000.
Chapter 4, Purchasing: 4.2.2.e Solicitation Provisions. This
paragraph has been revised to state (1) that when a purchase team
decides to modify, supplement or add to Provision 4-1, Standard
Solicitation Provisions, or paragraphs b. and c. of Provision 4-2,
Evaluation, counsel need not be consulted if a provision already
contained in Appendix A, Solicitations, will replace similar subject
matter in Provision 4-1 or b. and c. of Provision 4-2; and (2) that
counsel should be consulted when the evaluation scheme to be used in
Provision 4-2 is unusual, particularly complex, or there are other
circumstances under which such consultation is advisable. Similar
changes are reflected in A.2.1, Solicitation Contents in Appendix A,
Solicitations.
4.2.5.d.3 Documentation (Best Value Determinations) has been
revised to state that this documentation should include the extent and
result of any discussions with the supplier awarded the contract and
any other offerors.
4.2.7.a Clause 4-1 General Terms and Conditions has been revised to
state that replacing subject matter contained in this clause with the
text of a PM clause addressing the same subject matter does not require
consultation with counsel. Similar changes are reflected in B.2.1 in
Appendix B, Contract Clauses.
4.2.7.b Clause 4-2 Contract Terms and Conditions Required To
Implement Policies, Statutes, or Executive Orders has been revised to
state (1) that neither this clause nor any of the clauses added by
reference may be modified unless a deviation has been reviewed and
approved by an individual at a higher level than the contracting
officer who holds deviation approval authority; and (2) that any
changes to paragraph b of this clause (Examination of Records) must be
reviewed by assigned counsel and the Office of the Inspector General
before a related deviation request is submitted.
4.2.7.d Modifying Clauses has been revised to agree with the
revision to 4.2.7.a and 4.2.7.b, above.
4.5.5.a.6 Definitions (Information Technology) has been revised to
provide a new definition of this term.
4.5.5.b.6 Security Considerations (Information Technology) has been
revised to state that purchase teams ensure that specifications or
statements of work for IT purchases address the security aspects of the
Business Impact Assessment (BIA).
Chapter 5, Contract Pricing: 5.2.12.d Educational Institutions has
been revised to reference the new Office of Management and Budget
Circular (OMB Circular A-21) that establishes the indirect cost rates
for cost-reimbursement contracts with educational institutions and to
provide a new source for the Directory of Federal Contract Audit
Offices.
Chapter 6, Contract Administration: 6.1.2.a.7 Contracting Officer
Responsibilities (Contract Administration Functions) has been revised
to state that, when appropriate, the contracting officer is responsible
for including in the contract file the business reason for a particular
action.
Chapter 7, Bonds, Insurance and Taxes: 7.1.8.g.1 Contract
Modifications (Execution of Bonds) has been revised to state that, when
a contract modification increases the contract price, the supplier and
the surety must execute a consent of surety and increase the penal
amount, and submit it to the contracting officer.
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Chapter 8, Patents and Data Rights: No significant changes have
been made in this Chapter.
Chapter 9, Labor Policies: 9.4.5.l Liquidated Damages has been
revised to state that, under certain circumstances, when the VP, SM,
finds that an assessment of liquidated damages is incorrect, the VP may
adjust the damages, or release the supplier, lessor or subcontractor
from liability when the amount of damages is $500 or less.
9.7.2.e Contracts With a Religious Corporation, Association, or
Educational Institution or Society (Exempt Contracts) is a new
paragraph that states that, when contracting with these types of
organizations, it is not a violation of Section 202 of Executive Order
11246 to employ individuals of a certain religion to perform work
connected with the carrying-on of such an entity. Previous paragraphs
9.7.2.e and 9.7.2.f are renumbered as 9.7.2.f and 9.7.2.g.
9.10 Veterans has been revised as a result of the passage of the
Veterans' Employment Opportunities Act and the Secretary of Labor's
related implementing regulations. Clause 9-14 Affirmative Action for
Special Disabled Veterans, Veterans of the Vietnam Era, and Other
Eligible Veterans has been similarly revised.
Appendix A, Solicitations: A.2.1 Solicitation Contents has been
revised along the lines discussed in 4.2.2.e, above.
Provision 2-8 Investment Recovery is a new provision and has been
added as discussed in 2.2.12 above.
Provision 2-9 Accounting System Guidelines--Cost Type Contracts is
a new provision that has been added as discussed in 2.4.4.h above.
Provision 4-1 Standard Solicitation Provisions paragraph b., Period
for Acceptance of Offers, has been deleted.
Provision 4-3 Representations and Certifications has been revised
to include a new paragraph e (Certification Regarding Debarment,
Proposed Debarment, and Other Matters) as discussed in 3.7 above.
Appendix B, Contract Clauses: B.2.1 Clause 4-1 General Terms and
Conditions has been revised along the lines discussed in 4.2.7.d,
above.
B.2.2 Clause 4-2 Contract Terms and Conditions Required To
Implement Policies, Statutes, or Executive Orders has been revised
along the lines discussed in 4.2.7.a and d, above.
Clauses 2-1 Inspection and Acceptance and 2-2 Quality Management
System. As discussed in 2.2.1.c, above, this clause and Clause 2-2
replace previous Clauses 2-1, 2-2, 2-3, 2-24, 2-48 and 2-49.
Clause 2-9 Definition of Delivery Terms and Supplier's
Responsibilities has been revised for clarity.
Clause 2-22 Value Engineering Incentive has been revised along the
lines of 2.2.10.c above.
Clauses 2-48 Most Favored Customer Pricing and 2-49, Cost/Price
Reduction are two new clauses as discussed in 2.2.11 above.
Clause 3-2 Participation of Small, Minority and Woman-Owned
Businesses has been revised in b.(1) by stating that showing the amount
of money paid to subcontractors during the reporting period is one of
the methods by which suppliers report subcontracting activity.
Clause 4-1 General Terms and Conditions has been revised by adding
new c.1.(e) which states that the delivery or performance schedule is
one of the contractual elements the contracting officer may change
under the Changes paragraph of this clause. Paragraph m. has also been
revised to state that the debarment, suspension, or ineligibility of a
supplier, its partners, officers, or principal owners may constitute an
act of default under the contract, and that act will not be subject to
notice and cure pursuant to any termination of default provision of the
contract.
Clause 4-2 Contract Terms and Conditions Required To Implement
Policies, Statutes, or Executive Orders. Paragraph b., Examination of
Records, has been revised. In addition, no changes may be made to this
paragraph before (1) consultation with assigned counsel and the Office
of the Inspector General and (2) a deviation has been reviewed and
approved by a higher level than the contracting officer who holds
deviation approval authority.
Clause 4-5 Inspection of Professional Services has been revised by
deleting the final sentence.
Clause 4-14 Software Development Warranty has been revised for
clarity.
Clause 7-5 Errors and Omissions has been revised for clarity.
Clause 8-1 Patent Rights has been revised by removing the reference
to Form 7398, Report of Inventions and Subcontracts (this form is
obsolete) and by stating that the reports required under this clause
must be in a form acceptable to the contracting officer.
Clause 9-14 Affirmative Action for Special Disabled Veterans,
Veterans of the Vietnam Era, and Other Eligible Veterans has been
revised to reflect the changes discussed in 9.10 above.
Appendices D Rules of Practice in Proceedings Relative to Debarment
and Suspension From Contracting and E, Rules of Practice Before the
Postal Service Board of Contract Appeals: These appendices have been
revised to correct obsolete mailing addresses.
List of Subjects in 39 CFR Part 601
Government procurement, Postal Service, Incorporation by reference.
0
In view of the considerations discussed above, the Postal Service
hereby amends 39 CFR as follows:
0
1. The authority citation for part 601 continues to read as follows:
Authority: 5 U.S.C. 552(a); 39 U.S.C. 401, 404, 410, 411, 2008,
5001-5605.
0
2. Section 601.100 is revised to read as follows:
Sec. 601.100 Purchasing Manual; incorporation by reference.
(a) Section 552(a) of Title 5, U.S.C., relating to public
information requirements of the Administrative Procedure Act, provides
in pertinent part that ``* * * matter reasonably available to the class
of persons affected thereby is deemed published in the Federal Register
when incorporated by reference therein with the approval of the
Director of the Federal Register.'' In conformity with that provision,
with 39 U.S.C. section 410(b)(1), and as provided in this part, the
U.S. Postal Service hereby incorporates by reference its Purchasing
Manual (PM), Issue 3, dated December 25, 2003. The Director of the
Federal Register approves this incorporation by reference in accordance
with 5 U.S.C. 552(a) and 1 CFR part 51. The PM is available for
examination on the World-Wide Web at http://www.usps.com/business. You
may inspect a copy at the U.S. Postal Service Library, 475 L'Enfant
Plaza West SW., Washington, DC 20260-1641, or at the National Archives
and Records Administration (NARA). For information on the availability
of this material at NARA, call 202-741-6030, or go to: http://www.archives.
gov/federal --register/code -- of-- federal--
regulations/ ibr-- locations.html.
(b) The current Issue of the PM is incorporated by reference in
paragraph (a) of this section. Successive issues of the PM are listed
in the following table:
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Purchasing manual Date of issuance
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Issue 1.............................. January 31, 1997.
Issue 2.............................. January 31, 2002.
Issue 3.............................. December 25, 2003.
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0
3. Section 601.101 is revised to read as follows:
[[Page 51368]]
Sec. 601.101 Effective date.
The provisions of the Purchasing Manual Issue 3, effective December
25, 2003, are applicable with respect to all covered purchasing
activities of the Postal Service.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 04-18772 Filed 8-18-04; 8:45 am]
BILLING CODE 7710-12-P