[Federal Register Volume 69, Number 123 (Monday, June 28, 2004)]
[Rules and Regulations]
[Pages 36018-36023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13747]


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POSTAL SERVICE

39 CFR Parts 211 and 601


Establishment of the Purchasing Manual To Replace the Procurement 
Manual; Incorporation by Reference

AGENCY: Postal Service.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Postal Service has issued completely revised purchasing 
regulations, replacing the former U.S. Postal Service Procurement 
Manual with a new Postal Service Purchasing Manual. The Purchasing 
Manual focuses on using the purchasing process to further the business 
and competitive interests of the Postal Service. As such, the new 
Purchasing Manual reflects a fundamental change to Postal Service 
purchasing policies and procedures.

EFFECTIVE DATE: This final rule is effective on June 28, 2004. The 
incorporation by reference of the Purchasing Manual is approved by the 
Director of the Federal Register as of June 28, 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. 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). 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.
    The new U.S. Postal Service Purchasing Manual contains a complete 
revision of the Postal Service's purchasing regulations, replacing the 
former USPS Publication 41, U.S. Postal Service Procurement Manual. 
Following is a brief discussion of some of the major policy changes. 
This is followed by a chapter-by-chapter explanation of the relevant 
changes, as reflected in the new Purchasing Manual.
    To ensure close cooperation between all of the parties involved in 
the purchasing process, the new Purchasing Manual mandates that 
contracting officers work with their business partners in groups known 
as purchasing teams. These teams determine the business priorities of 
the particular purchase, and enter into business arrangements which 
reflect the business objectives of the USPS. Whenever appropriate, 
purchasing professionals are encouraged to prequalify suppliers who 
have a proven track record of integrity, quality, and on-time 
performance. Prequalification, which has been used by the Postal 
Service since 1988, ensures quality contract performance while 
enhancing competition and maintaining our historical commitment to 
providing opportunity to the best suppliers.
    In the interests of furthering purchasing uniformity and 
consistency, the Purchasing Manual establishes a general purchasing 
process containing elements common to all Postal Service purchases. The 
Purchasing Manual also adopts and emphasizes the proven commercial 
buying practices of the Postal Service's private sector counterparts 
and competitors. These changes will save many hours of administrative 
effort and improve purchasing lead time.
    The Purchasing Manual encourages the use of oral presentations to 
obtain a clear and succinct understanding of a supplier's technical 
proposal. Oral presentations can provide a better understanding of 
suppliers' technical abilities and also significantly reduce the time 
it takes to complete a purchase. Communications with suppliers during 
the purchasing process have also been enhanced by allowing discussions 
during any stage of the process.
    The Purchasing Manual also consolidates and makes uniform Postal 
Service purchases of supplies, services, equipment, facility design, 
construction, and mail transportation. It emphasizes commonalties among 
the differing commodities--purchasing best value, prequalifying 
suppliers, using commercial approaches whenever appropriate--while at 
the same time recognizing the Postal Service's unique needs and the 
areas in which they differ.
    The Purchasing Manual reflects a complete reorganization of the 
Procurement Manual. It now has 9 chapters rather than the previous 12, 
and much material has been moved from one chapter or section to 
another.
    The Purchasing Manual replaces the Postal Service Procurement 
Manual, which was incorporated by reference in the Code of Federal 
Regulations (see 39 CFR 601.100). A copy of the Purchasing Manual will 
be provided to the Director, Office of the Federal Register. The 
Purchasing Manual is available for

[[Page 36019]]

examination on the World-Wide Web at http://www.usps.com/business.

Explanation of Changes

Chapter 1--Authority, Responsibility and Policy

    Significant changes:
     Name of Postal Service purchasing regulations changed from 
Procurement Manual to Purchasing Manual.
     Introduction of the concept of the purchasing team.
     Changes in training courses required for contracting 
officer qualification.
     Best value defined and established as a basic purchasing 
policy.
     Supplier security clearance requirements established.
     Strategic alliances defined.
     Policy established regarding contracts with former 
executives or officers.
    Discussion:
    The new name of the Manual adopts the commonly used private sector 
term ``purchasing'' instead of the traditional government term 
``procurement''. The permanent membership of the Purchasing Policy 
Committee (PPC) has been expanded to represent the diverse group of 
stakeholders involved in Postal Service purchasing policy and procedure 
development.
    The concept of purchase teams is included throughout the Manual and 
is fully defined in 1.6.2 and 2.1, where its role in purchase planning 
is discussed.
    With the advent of the new Purchasing Manual, the training 
curriculum for contracting officers has undergone some changes. Some 
courses (Simplified Purchasing, Contract Formation, Advanced Contract 
Administration) have been dropped from the curriculum and several new 
courses have been introduced (Commercial Purchasing, Advanced 
Purchasing, and Fundamentals of Purchasing). All remaining courses 
within the Purchasing and Materials curriculum have been revised and/or 
redesigned to reflect policy changes. Training requirements to qualify 
for each CO level are outlined in Chapter 1.
    Requirements for security clearances have been added for some 
service contractors, along with a definition of strategic alliances 
which differentiates these arrangements from contracts for supplies, 
services and equipment.

Chapter 2--Purchase Planning

    Significant changes:
     Purchase planning defined.
     The role and responsibility of the purchase team are 
discussed.
     Individual purchase plans are identified as the only 
planning document required.
     Supplier-selection strategies are defined and discussed. 
The supplier-selection strategy is developed by the purchase team and 
lists components that must be addressed in the source selection 
strategy contained in the individual purchase plan.
     Evaluation teams are defined and team membership, duties, 
and required reports are discussed.
     Performance evaluation factors are defined and discussed. 
There are two types: proposal-specific and supplier-specific (past 
performance and supplier capability). These replace traditional 
evaluation factors.
     The type of contract is designated an important element in 
purchase planning. Purchase teams are authorized increased flexibility 
to determine the contract type to be used in a given business 
situation.
    Discussion:
    Purchase planning has been redefined as the ``process of 
establishing objectives and tactics to obtain the best value in a 
specific purchase.'' Purchase teams, composed of the requesting 
organization, the purchasing organization and other Postal Service 
representatives and headed by the contracting officer, perform the 
purchase planning.
    Individual purchase plans have replaced annual summary, 
implementation, and source selection plans. Individual purchase plans 
are tied to the particular purchase or series of purchases, and are 
composed of a series of elements such as potential sources, delivery 
schedules, purchasing method, and contract type. Individual purchase 
plans require the establishment of project milestones to ensure the 
success of the purchase.
    Supplier-selection strategies are developed by the purchase team as 
appropriate. These strategies provide guidance regarding performance 
evaluation factors, determining the best value offered, and other 
matters, and are incorporated into the individual purchase plan.
    Evaluation teams are established by the purchase team to analyze, 
compare, and rank competing proposals.
    Performance evaluation factors provide vital information to both 
the purchase team and interested suppliers: the first by describing the 
supplier's proposed approach and documented ability to perform the work 
called for in the solicitation; the second by informing interested 
suppliers of the particular aspects of value sought by the Postal 
Service. There are two types of performance evaluation factors: 
proposal-specific and supplier-specific. Proposal-specific factors 
address aspects of a particular requirement and purchase; supplier-
specific factors address aspects central to the supplier being 
evaluated. Any number of factors may be proposal-specific, including 
management plan, key personnel, delivery terms, etc. Past performance 
and supplier capability comprise the supplier-specific factors. For 
many purchases supplier-specific factors and price will be sufficient 
to determine the best value.
    Due to the important role they play in determining the success of 
the purchase, contract types are now addressed in this chapter on 
purchase planning.

Chapter 3--Supplier Relations

    Significant changes:
     Establishes Postal Service policy for a strong, 
competitive supplier base, and states that the Postal Service is 
committed to establishing mutually beneficial partnerships with the 
supplier community.
     Establishes that contracting officers must manage supplier 
diversity and, in concert with the purchase team, ensure that the 
Postal Service's supplier base reflects the diversity of the American 
business community.
     Describes the responsibilities of both the purchase team 
and the contracting officer in identifying sources.
     Lists mandatory suppliers which must be considered before 
purchasing certain commodities, and discusses available government 
sources.
     Establishes that except for commodities available from 
mandatory suppliers, it is Postal Service policy to purchase its 
requirements from commercial suppliers whenever feasible.
     When appropriate, purchase teams should prequalify 
commercial suppliers regardless of the purchasing method being used, or 
the commodity being purchased.
     Maintains Postal Service policy and procedures regarding 
commercial suppliers, and encourages purchase teams to investigate 
other means of publicizing purchase opportunities.
     Establishes new policy and procedures for noncompetitive 
purchases and provides for exceptions to justification, reviews, and 
approval requirements.
     Establishes new policy and procedures regarding protests, 
adjusting time schedules for consistency with current protest 
provisions and establishing the contracting officer's

[[Page 36020]]

general responsibility for accountability to prospective suppliers.
    Discussion:
    Although the Purchasing Manual contains many changes in policy and 
procedure, several areas have not changed. Among these are the Postal 
Service's historic commitments to (1) treating all suppliers fairly, 
openly and equally and; (2) providing opportunities to small, minority 
and woman-owned businesses to compete for Postal Service contracts. 
These commitments are reemphasized in this chapter, and contracting 
officer responsibilities in this area have been more accurately 
described and delineated, as has policy regarding subcontracting with 
small, minority and woman-owned businesses.
    For legislative or policy reasons, certain commodities may only be 
obtained from specific sources, including the Workshops for People who 
are Blind or Severely Retarded, State Licensing Agencies, etc. As a 
part of purchase training, purchase teams must ensure that these 
suppliers are considered for relevant purchases.
    Purchasing from commercial suppliers whenever possible is the 
preferred method in the new Purchasing Manual, and purchase teams are 
encouraged to consider prequalifying suppliers prior to solicitation 
and award. Prequalification may be used for a single purchase or a 
series of purchases; when prequalification is used, competition may be 
limited to only those suppliers who have been prequalified or to 
selected suppliers on a prequalified list.
    In addition to publicizing all purchase opportunities valued at 
more than $100,000, purchase teams may now use their market knowledge 
to determine the extent and means of further publicizing. Publicizing 
may be accomplished through whatever media is deemed the most promising 
in terms of adequate competition, enhancing competition, or gaining 
greater awareness of a particular marketplace or segment.
    Noncompetitive purchases have been moved to this chapter, as they 
are more the result of the state of the marketplace rather than a 
particular purchasing method.
    Protests have also been moved to this chapter. Changes have been 
made to policy and procedures regarding protests.

Chapter 4--Purchasing

    Significant changes:
     Establishes policy that a single purchasing process be 
used for all Postal Service requirements, and describes the process.
     Defines commercial, design and construction, mail 
transportation and special purchasing and sets forth policy and 
procedures for their use.
     Establishes general policy regarding solicitations, 
release of information, oral presentations, performance evaluations, 
discussions, best value determinations, contract award, notification, 
and debriefings.
    Discussion:
    Since 1993, the Postal Service has promoted increased uniformity 
and consistency throughout its buying practices. The establishment of a 
single purchasing process is an important result of this ongoing 
effort. The process entails three basic phases: solicitation of a 
sufficient number of qualified suppliers to ensure adequate and 
effective competition; a two-step evaluation process requiring the 
review and analysis of proposals in relation to the solicitation's 
performance evaluation factors and a subsequent comparison of the 
proposals to each other; and discussions among the most able suppliers 
in order to determine which is offering the best value to the Postal 
Service.
    The comparison of competing proposals is a significant change to 
current purchasing processes, as is the new role of discussions during 
the evaluation and award period. Comparing proposals should allow 
evaluation teams, and subsequently the contracting officer and purchase 
team, to attain a clearer grasp of the relative quality and value being 
offered by competing suppliers; it should also make determinations of 
relative value easier and more effective. Discussions, a single concept 
replacing what were previously termed ``clarifications,'' 
``discussions,'' or ``negotiations'', are used to reach understandings 
and agreement with suppliers over what is being required, what is being 
offered, and what the final contract terms and conditions will be. 
Discussions are also used to improve suppliers' proposals so that the 
Postal Service receives best value. They are held with the suppliers 
deemed most qualified, and may be opened or reopened at any time before 
contract award.
    Within the general framework of the purchasing process, contracting 
officers and purchase teams may use a number of purchasing methods. The 
method used depends on the item being purchased (mail transportation or 
design and construction) or on the relative complexity of the purchase 
itself.

Chapter 5--Contract Pricing

    Significant changes:
     Inclusion of the purchase team in decision making relative 
to cost or pricing.
     Contract types coverage has been moved from this chapter.
    Discussion:
    Contracting officers remain responsible for the ultimate pricing 
decision. However, new policies make this decision subject to dialogue 
among the members of the purchase team. With reorganization of the 
Purchasing Manual, it was deemed more effective to discuss contract 
types in relation to purchase planning (see 2.4 of the new PM).
    Other than these changes, the contents of this chapter remain 
generally unchanged.

Chapter 6--Contract Administration

    Significant changes:
     Identifies post-award roles and responsibilities of the 
purchase team.
     Establishes Postal Service policy to resolve contractual 
issues by mutual agreement at the level of the manager and the 
contracting officer.
     Supports and encourages the use of alternative dispute 
resolution (ADR) as an effective way to understand, address, and 
resolve conflicts with suppliers.
     Parties by mutual consent may agree to use an ADR process 
to assist in resolving a claim. If ADR is not appropriate or acceptable 
to the parties, the contracting officer must review all pertinent 
facts, obtain assistance from assigned counsel if necessary, and issue 
a final decision in writing.
    Discussion:
    The role of the purchase team does not end with contract award but 
carries over throughout the life of the contract. The contracting 
officer remains the head of the purchase team, continuing to act in the 
capacity as business manager to the team. After contract award, it 
becomes critical for the purchase team to partner with the supplier to 
ensure quality contract performance. By developing mutual performance 
objectives at the beginning of contract performance, all parties have a 
clear understanding of their respective roles and responsibilities. 
This continuing dialog not only solidifies and reinforces expectations, 
but also will resolve misunderstandings or apparent conflicts before 
they develop into an adversarial situation.
    The use of Alternative Disputes Resolution (ADR) procedures has 
been established. ADR provides a nonlitigious method of handling 
misunderstandings or conflicts. ADR procedures are established in 
Clause B-9, Claims and Disputes.

[[Page 36021]]

Chapter 7--Bonds, Insurance, and Taxes

    Significant changes:
     Requirement for proposal guarantees has been deleted
     Alternate provisions in addition to performance bonds have 
been provided for construction contracts between $25,000 and $100,000, 
reflecting Miller Act amendments.
    Discussion:
    The new purchasing policies minimize the likelihood of the supplier 
not agreeing to contract terms and conditions or not performing. 
Therefore, the need for performance guarantees is no longer necessary.
    Legislation has amended the Miller Act to make provisions for 
alternate payment protection for construction contracts valued at over 
$25,000 and less than $100,000. Alternate payment protection consists 
of a performance bond, a irrevocable letter of credit, tripartite 
agreements or certificates of deposit. Such alternates are specified in 
individual solicitations.

Chapter 8--Patents and Data Rights

    Significant changes:
     Previously, this material was covered in Chapter 9 of the 
Procurement Manual.
    Discussion:
    None.

Chapter 9--Labor Policies

    Significant changes:
     Previously, this material was covered in Chapter 10 of the 
Procurement Manual.
    Discussion:
    None.

Appendix A--Solicitations

    The following provisions have been revised or added to Appendix 
A:

------------------------------------------------------------------------
                No.                                 Title
------------------------------------------------------------------------
A-2...............................  Submission of Proposals.
A-3...............................  Modification or Withdrawal of
                                     Proposals.
A-17..............................  Telegraphic Proposals.
2-2...............................  Time of Delivery.
2-3...............................  Evaluation of Options.
2-4...............................  Evaluation Exclusive of Options.
2-5...............................  Evaluation Exclusive of Unpriced
                                     Options.
2-6...............................  Type of Contract.
3-1...............................  Notice of Small, Minority and Women-
                                     owned Contracting Requirements.
4-1...............................  Instruction to Offerors--Commercial
                                     Items.
4-2...............................  Evaluation--Commercial Items.
4-3...............................  Representations and Certifications--
                                     Commercial Items.
4-7...............................  Postal Computing Environment.
4-8...............................  Pre-Proposal Conference.
4-9...............................  Preparation of Proposals
                                     (Construction).
7-1...............................  Performance Bond Requirements.
7-2...............................  Payment Bond Requirements.
7-5...............................  Alternative Payment Protections.
------------------------------------------------------------------------

Appendix B--Contract Clauses

    The following clauses have been revised or added to Appendix B:

------------------------------------------------------------------------
                No.                                 Title
------------------------------------------------------------------------
B-9...............................  Claims and Disputes.
B-31..............................  Supplier Clearance Requirements.
B-32..............................  Differing Site Conditions.
B-33..............................  Inspection and Acceptance
                                     (Construction).
B-34..............................  Notice to Proceed and Commencement,
                                     Prosecution and Completion of Work.
B-35..............................  Specifications and Drawings.
B-36..............................  Postal Service Partial Occupancy.
B-37..............................  Changes (Construction).
B-38..............................  Accident Prevention.
B-39..............................  Indemnification.
B-40..............................  Construction Cost Breakdown.
B-41..............................  Conditions Affecting the Work.
B-42..............................  Performance of Work by Supplier.
B-43..............................  Superintendence by Supplier.
B-44..............................  Use of Premises.
B-45..............................  Other Contracts.
B-46..............................  Subcontracts (Construction).
B-47..............................  Permits and Responsibilities.
B-48..............................  Payment (Construction).
B-49..............................  Building Codes, Fees, and Charges.
B-50..............................  Protection of Existing Vegetation,
                                     Structures, Utilities, and
                                     Improvements.
B-51..............................  Heat.
B-52..............................  Debris and Cleanup.
B-53..............................  Survey Monuments and Bench Marks.
B-54..............................  Measurements.
B-55..............................  Standard References.
B-56..............................  Shop Drawings, Coordination
                                     Drawings, and Schedules.
B-57..............................  Record ``As Built'' Drawings.
B-58..............................  Spare-Parts Data.
B-59..............................  Construction Progress Chart.
B-60..............................  Postal Service Occupancy.
B-61..............................  Warranty (Construction).
B-62..............................  Samples.
B-63..............................  Materials and Workmanship.
B-64..............................  Accountability of the Supplier
                                     (Highway).
B-65..............................  Adjustments to Compensation.
B-66..............................  Appeals to the Next Higher Level
                                     Contract Authority.
B-67..............................  Changes (Transportation).
B-68..............................  Changes in Corporate Ownership or
                                     Corporate Officers.
B-69..............................  Events of Default.
B-70..............................  Release of Supplier.
B-71..............................  Termination for Convenience
                                     (Transportation).
B-72..............................  Termination for Convenience--
                                     Emergency Contracts.
B-73..............................  Trailer Damage.
B-74..............................  Payment (Highway).
B-75..............................  Accountability of the Supplier (Non-
                                     Highway).
B-76..............................  Excusable Delays (Mail
                                     Transportation Non-Highway).
B-77..............................  Protection of the Mail.
B-78..............................  Renewal.
B-79..............................  Forfeiture of Compensation.
B-80..............................  Laws and Regulations Applicable.
B-81..............................  Information or Access by Third
                                     Parties.
B-82..............................  Access by Officials.
B-83..............................  Payment (Air Taxi).
1-8...............................  Organizational Conflict of Interest.
2-24..............................  Inspection and Acceptance--Non-fixed
                                     Price.
2-25..............................  Unpriced Options.
2-26..............................  Payment--Fixed Price.
2-27..............................  Incentive Price Revision.
2-28..............................  Economic Price Adjustment--Labor and
                                     Materials.
2-29..............................  Economic Price Adjustment (Index
                                     Method).
2-30..............................  Allowable Cost and Payment.
2-31..............................  Limitation of Cost.
2-32..............................  Limitation of Funds.
2-33..............................  Cost Contract--No Fee.
2-34..............................  Cost--Sharing Contract--No Fee.
2-35..............................  Incentive Fee.
2-36..............................  Fixed Fee.
2-37..............................  Award Fee.
2-38..............................  Payment (Time-and-materials and
                                     Labor-Hour Contracts).
2-39..............................  Ordering.
2-40..............................  Delivery-Order Limitations.
2-41..............................  Definite Quantity.
2-42..............................  Indefinite Quantity.
2-43..............................  Requirements.
2-44..............................  Contract Definitization.
2-45..............................  Execution and Commencement of Work.
2-46..............................  Limitation of Postal Service
                                     Liability.
2-47..............................  Payment of Allowable Costs Before
                                     Definitization.
3-1...............................  Participation of Small, Minority and
                                     Women-owned Business.
3-2...............................  Small, Minority and Women-owned
                                     Business Subcontracting
                                     Requirements.
4-2...............................  Contract Terms and Conditions--
                                     Commercial Items.
4-3...............................  Contract Terms and Conditions
                                     Required to Implement Statutes or
                                     Executive Orders--Commercial Items.
4-16..............................  Substitution of Information
                                     Technology.
4-17..............................  Technology Enhancement.
6-2...............................  Contracting Officer's
                                     Representation.
------------------------------------------------------------------------

Appendix C--Forms and Formats

    No changes have been made to this Appendix.

Appendix D--Rules of Practice in Proceedings Relative to Debarment And 
Suspension from Contracting

    No changes have been made to this Appendix.

[[Page 36022]]

Appendix E--Rules of Practice Before the Postal Service Board of 
Contract Appeals

    This Appendix has been revised to reflect changes required by 
the Federal Acquisition Streamlining Act's changes to the Contract 
Disputes Act.

Appendix F--Purchasing Manual Index

    This Appendix has been updated as necessary.

List of Subjects

39 CFR Part 211

    Administrative practice and procedure.

39 CFR Part 601

    Government procurement, Postal Service, Incorporation by reference.

0
In view of the considerations discussed above, the Postal Service 
hereby adopts the Purchasing Manual in replacement of the Procurement 
Manual, Publication 41, and therefore amends 39 CFR parts 211 and 601 
as follows:

PART 211--APPLICATION OF REGULATIONS

0
1. The authority citation for part 211 continues to read as follows:

    Authority: 39 U.S.C. 201, 202, 401(2), 402, 403, 404, 410, 1001, 
1005, 1209; Pub. L. 91-375, Secs. 3-5, 84 Stat. 773-75.


Sec.  211.2  [Amended]

0
2. In section 211.2(a)(2), remove ``Postal Contracting Manual'' and add 
in its place ``Purchasing Manual''.

0
3. Part 601 is revised to read as follows:

PART 601--PURCHASING PROPERTY AND SERVICES

Sec.
601.100 Purchasing Manual; incorporation by reference.
601.101 Effective date.
601.102 Applicability and coverage.
601.103 Content of Purchasing Manual.
601.104 Amendments to the Purchasing Manual.

    Authority: 5 U.S.C. 552(a); 39 U.S.C. 401, 404, 410, 411, 2008, 
5001-5605.


Sec.  601.100  Purchasing Manual; incorporation by reference.

    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. 410(b)(1), and as provided in this part, the U.S. Postal Service 
hereby incorporates by reference its Purchasing Manual (PM). 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 
Purchasing Manual 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.


Sec.  601.101  Effective date.

    The provisions of the Purchasing Manual, issued January 31, 1997, 
are applicable, effective January 27, 2000, with respect to all covered 
purchasing activities of the Postal Service.


Sec.  601.102  Applicability and coverage.

    (a) The Purchasing Manual applies to all Postal Service 
procurements of property and services (except real estate and related 
services).
    (b) The Purchasing Manual supersedes the Procurement Manual.


Sec.  601.103  Content of Purchasing Manual.

    The Purchasing Manual consists of 9 chapters and 6 appendices, as 
follows:
    (a) Chapter 1--Authority, Responsibility, and Policy--covers 
general purchasing policies, including the delegation of purchasing 
authority and responsibility; introduces the concept of the purchasing 
team; defines and establishes best value as a basic purchasing policy.
    (b) Chapter 2--Purchase Planning--establishes requirements and 
procedures for advance purchase planning, including supplier-selection 
strategies and performance evaluation factors.
    (c) Chapter 3--Supplier Relations--establishes policy for a strong, 
competitive supplier base; describes the responsibilities of both the 
purchase team and the contracting officer in identifying sources; 
discusses sources and their priority; and sets forth policy and 
procedures regarding commercial suppliers, noncompetitive purchases, 
and protests.
    (d) Chapter 4--Purchasing--establishes a single purchasing process 
for all requirements; defines commercial, design and construction, mail 
transportation, and special purchasing and sets policy and procedures 
for their use; establishes general policy regarding solicitations, 
release of information, oral presentations, performance evaluations, 
discussions, best value determinations, contract award, notification, 
and debriefings.
    (e) Chapter 5--Contract Pricing--establishes policies and 
procedures for price evaluation, including price analysis, cost 
analysis, and principles for determining the allowability of costs; 
includes the purchase team in decision making relative to cost or 
pricing.
    (f) Chapter 6--Contract Administration--identifies post-award roles 
and responsibilities of the purchase team; establishes policy to 
resolve contract issues by mutual agreement at the level of the manager 
and the contracting officer; supports and encourages the use of 
alternative dispute resolution (ADR) to address conflicts with 
suppliers.
    (g) Chapter 7--Bonds, Insurance, and Taxes--sets forth policies and 
procedures governing bonds and insurance under contracts, and discusses 
the applicability of Federal, State, and local taxes.
    (h) Chapter 8--Patents and Data Rights--covers the acquisition of 
patents, copyrights, and other rights in data.
    (i) Chapter 9--Labor Policies--contains procedures for contracting 
with minority-owned businesses, and policies carrying out the 
requirements of certain statutes, including the Contract Work Hours and 
Safety Standards Act, the Davis-Bacon Act, and the Service Contract 
Act. It establishes Postal Service policy and preference regarding 
purchase of domestic-source products and services.
    (j) Appendix A--Solicitations--prescribes the forms, format, and 
provisions to be used in preparing solicitations, and the establishment 
and maintenance of solicitation mailing lists. It contains all 
solicitation provisions prescribed in the Manual.
    (k) Appendix B--Contract Clauses--prescribes certain clauses not 
prescribed elsewhere in the Manual and contains all clauses prescribed 
in the Manual.
    (l) Appendix C--Forms and Formats--states that the forms and 
computer generated formats necessary to implement and supplement the 
manual are in the Procurement Handbook, the Facilities Design and 
Construction Handbook, the Mail Transportation Procurement Handbook, 
and other publications and directives referenced in the Manual or in 
these handbooks.
    (m) Appendix D--Rules of Practice in Proceedings Relative to 
Debarment and Suspension from Contracting--contains

[[Page 36023]]

a reprint of the rules of practice issued by the Judicial Officer as 39 
CFR 957.
    (n) Appendix E--Rules of Practice Before the Postal Service Board 
of Contract Appeals--contains a reprint of the rules of practice issued 
as 39 CFR 955.
    (o) Appendix F--Purchasing Manual Index--is an alphabetical index 
of important words and terms used in the Manual.


Sec.  601.104  Amendments to the Purchasing Manual.

    New issues of the Purchasing Manual will be incorporated by 
reference into this part and will be available at http://www.usps.com/business. The text of amendments to the Purchasing Manual will be 
published in the Federal Register and will be available at http://www.usps.com/business.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 04-13747 Filed 6-25-04; 8:45 am]
BILLING CODE 7710-12-P