[Federal Register Volume 69, Number 145 (Thursday, July 29, 2004)]
[Rules and Regulations]
[Pages 45270-45275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16785]


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POSTAL SERVICE

39 CFR Part 601


Issue 2 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 2 of the 
Postal Service Purchasing Manual. Issue 2 supersedes previous editions 
of the Purchasing Manual, and is incorporated by reference in the Code 
of Federal Regulations.

DATES: Effective Date: This final rule is effective on July 29, 2004. 
The incorporation by reference of the Purchasing Manual, Issue 2 is 
approved by the Director of the Federal Register as of July 29, 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. 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, Issue 2 of the Purchasing Manual was issued on 
January 31, 2002. Pending the updating of purchasing support systems 
for consistency with the new policies contained in Issue 2, purchasing 
organizations were advised that they might adopt the policies and 
procedures contained in Issue 2 immediately, or might continue to 
follow the policies and procedures contained in Issue 1. If a 
purchasing organization adopted Issue 2 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 2 or Issue 1, as revised through November 15, 2001) 
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 2, and 
vice versa. To date, the Postal Service has not formally transitioned 
from PM Issue 1 to PM Issue 2 primarily because of problems in updating 
purchasing support systems for consistency with the new policies 
contained in Issue 2. 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

[[Page 45271]]

policy changes and other major features contained in Issue 1 of the 
Purchasing Manual. The following is a similar discussion of the policy 
changes and other significant changes contained in Issue 2 of the 
Purchasing Manual.

Purchasing Manual Issue 2--Major Policy Changes

    Overview: Issue 2 of the Postal Service Purchasing Manual (PM) 
contains a number of major policy changes. These major changes are 
centered on the Postal Service's continuing efforts (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 2 also contains the 
cumulative changes made to Issue 1 of the Purchasing Manual between 
January 31, 1997, and January 31, 2002. A discussion of all significant 
changes contained in Issue 2 is available to all users on the World 
Wide Web at http://www.usps.com/business.
    Supply Chain Management: Supply chain management is a business 
philosophy that concentrates on analyzing the purchasing process and 
the supply stream in order to increase customer satisfaction and lower 
overall cost. It involves a number of business practices, including 
close coordination between end-users, buyers and suppliers, long-term 
contracts, and ongoing analysis and improvement of operating and 
administrative processes. With the issuance of PM Issue 1, the Postal 
Service began to make many of these practices a central part of its 
purchasing policies; that foundation has been built upon and is 
reflected throughout Issue 2. The supply chain management philosophy 
and its importance to Postal Service purchasing is discussed in a new 
section 3.1.2. Additionally, new text has been added to section 3.1.1 
addressing the fact that some Postal Service-supplier relationships are 
closer and more interdependent than others, based upon the impact the 
relationship has or may have on the Postal Service's business and 
competitive interests.
    Establishment of Standard Solicitation Provisions and Clauses: PM 
Issue 1 established a single, streamlined purchasing process modeled on 
private sector business practices while maintaining the Postal 
Service's commitment to the accountability and fairness expected of a 
public institution. To further this continuing objective, PM Issue 2 
establishes basic solicitation provisions and contract clauses that may 
be modified, added to or supplemented as required by the particular 
purchase. These provisions (Provisions 4-1, Standard Solicitation 
Provisions, 4-2, Evaluation, and 4-3, Representation and 
Certifications) and clauses (Clauses 4-1, General Terms and Conditions 
and 4-2, Contract Terms and Conditions Required to Implement Policies, 
Statutes, or Executive Orders) are based on and replace the commercial-
purchasing provisions and clauses in PM Issue 1. With their 
establishment as the basic contractual documentation, the need for a 
specific commercial purchasing process has been obviated. The new 
provisions and clauses are contained in Appendices A, Solicitations, 
and B, Contract Clauses, and their use is discussed in the appendices 
and in 4.2.2.e, Solicitation Provisions, and 4.2.7, Contract Clauses.
    Prescriptions for Use of Provisions and Clauses: The provisions and 
clauses noted above incorporate by reference a number of other 
provisions and clauses that are: (1) Required by Postal Service policy 
(such as the Postal Service's preference for domestic supplies or 
construction materials); (2) required by law (such as the Service 
Contract Act and the Davis-Bacon Act); or applicable by Executive Order 
(such as Equal Employment Opportunity). In some cases, these 
incorporations are included in the basic provision or clause, and in 
others they are incorporated when checked-off by the contracting 
officer in light of the particular purchase. This modular approach to 
solicitation and contract formation ensures that contractual 
documentation remains simple and streamlined while also ensuring that 
the Postal Service continues to meet its policy, legislative, and other 
mandates. At the same time, provisions and clauses that address other 
aspects of the purchasing process, such as contract type, have been 
left available to contracting officers to use when their terms and 
conditions match the needs of the particular purchase. This means that 
there are a number of subjects in the basic provisions and clauses that 
may be replaced by more effective terms and conditions, and that the 
provision and clause prescriptions throughout PM Issue 2 allow 
contracting officers to make such additions and replacements as they 
feel necessary. Contracting officers have also been given the 
discretion to modify, add to or supplement provisions and clauses as 
they see fit, subject to review of assigned counsel.
    Purchase Method: A new section 2.1.6, Purchase Method, has been 
included in PM Issue 2. This section addresses the responsibility of 
the purchase team to decide during purchase planning and as part of the 
individual purchase plan whether a purchase should be made 
competitively or noncompetitively. This section spells-out under what 
business scenarios the noncompetitive method may best meet the Postal 
Service's business and competitive interests, and also requires the 
purchase team to prepare a business case documenting the rationale for 
the decision. This section also delineates review and approval 
thresholds for the business case and the purchase. A new section 1.6.1, 
Business Objectives and Practices, discusses in general how these 
objectives and practices fit into overall organizational strategy, and 
there have been ancillary changes in sections 1.6.2, Best Value, and 
1.6.3, Competition. PM Issue 1 section 3.5.5, Noncompetitive Purchases, 
has been deleted.
    Publicizing: PM section 3.5.3, Publicizing Purchasing 
Opportunities, has been retitled Publicizing Purchase Opportunities and 
Contract Awards. This part has been revised to: (1) Maintain the $1 
million publicizing threshold for commercially available goods and 
services; (2) provide purchase teams the discretion to publicize 
noncompetitive purchase opportunities when the team determines that 
such publicizing would improve market research, while at the same time 
changing the mandatory publicizing threshold for noncompetitive awards 
from $500,000 to $1 million; (3) encourage purchase teams to publicize 
other noncompetitive awards (generally over $500,000) when it feels the 
award holds significant subcontracting opportunities; and (4) encourage 
the team to publicize other awards when it feels such an announcement 
would benefit future competition. In addition, previous references to 
the Commerce Business Daily (CBD) throughout the PM have been replaced 
by the term ``Governmentwide point of entry (GPE)'' which has replaced 
the CBD as the means of publicizing purchase opportunities and contract 
awards.
    Appendix A, Solicitations: Appendix A has been revised to reflect 
the establishment of the basic solicitation provisions discussed above 
and to address their use. Several provisions included in PM Issue 1 
have been deleted due to the subject matter being covered in the new 
standard provisions or because they were inconsistent with the Postal 
Service's continuing efforts to streamline purchasing policies and 
procedures.

[[Page 45272]]

    Appendix B, Contract Clauses: Appendix B has been revised to 
reflect the establishment of the basic contract clauses discussed above 
and to address their use. Several clauses included in PM Issue 1 have 
been deleted due to the subject matter being covered in the new general 
clauses or because they were inconsistent with the Postal Service's 
continuing efforts to streamline purchasing policies and procedures. 
Commodity-specific clauses used in design and construction, and mail 
transportation contracts are listed as they were in PM Issue 1.
    Appendix C, Contract Format: Appendix C, Forms and Formats, of PM 
Issue 1, has been replaced by a new Appendix C, Contract Format. This 
appendix describes the four-part contract format used in Postal Service 
purchasing.

Purchasing Manual Issue 2--Other Significant Changes

    Chapter 1, Authority, Responsibility, and Policy: 1.1.1.c, 
Applicability (Purchasing Manual), has been revised to reference new 
Handbooks P-1, General Purchasing Concepts and Practices, P-2, Design 
and Construction Purchasing Practices, and to provide the Web site 
where they may be accessed.
    1.1.2.b, Purchasing Policy Committee (Responsibility for Purchasing 
Policy), has been revised to state that the PPC evaluates proposed 
changes to the PM for the vice president, Purchasing and Materials.
    1.1.2.c, Membership, has been revised to add the manager, Supplier 
Development and Diversity (Purchasing and Materials), and the manager, 
Materials, to the PPC and to remove the managers, Facilities Program 
Management, and Supplier Diversity, (Diversity Development).
    1.2, Publication and Changes, has been revised as discussed in 
Major Policy Changes above.
    1.3.1.b.1 (Deviations) has been revised to state that replacing 
text contained in Provisions 4-1, Standard Solicitation Provisions and 
4-2, Evaluation, and Clause 4-1, General Terms and Conditions, with 
another PM provision or clause does not constitute a deviation and does 
not require review and approval. As a result of this change, previous 
1.3.1.b.2 has been deleted.
    1.3.2.c, Records (Authorization of Deviations), has been revised to 
require approval officials to retain copies of approved deviations.
    1.4.1.b.4, Required Approvals (Contracting Authority--Vice 
President, Purchasing and Materials), has been revised to clarify that 
the subject approvals are the responsibility of the vice president, 
Purchasing and Materials.
    1.4.2, Contracting Officers, has been revised and reorganized for 
clarity.
    1.4.3, Contracting Officer's Representatives, has been revised to 
reference Management Instruction PM-610-2001-1, Contracting Officer's 
Representative Program.
    1.4.4.b.3(d), Training (Selection), has been revised to state that 
Level I design and construction contracting officers are required to 
complete the training courses on Contract Administration, Pricing and 
Claims, and Introduction to Facilities R&A Contracting.
    1.6.1, Business Objectives and Practices, is a new section and has 
been added as a general statement addressing the primary goal of Postal 
Service purchasing and the business practices used to further that 
goal. 1.6.2, Best Value, and 1.6.3, Competition, have been revised to 
reinforce the new policy discussed in Major Policy Changes above.
    1.6.5, Release and Exchange of Information, and 1.6.6, Privacy 
Protection, have been revised to conform to Postal Service policy 
regarding privacy protection. As a result of these changes, Clause 1-1, 
Privacy Protection, has been revised and retitled, Clause 1-7, 
Nondisclosure of Address Information, has been deleted, and ancillary 
changes have been made to subparagraphs 4.5.3.c.4 and 4.5.5.f.
    1.6.7.c.1, Progress Payments, has been revised to exclude the 
required approval of the vice president, Finance, when the contract is 
for architect/engineer and construction management services.
    1.6.13, Domestic Preference, replaces previous part 1.7.12, Buy 
American Policy. The new title is intended to reflect the voluntary 
aspect of the Postal Service's policy in this area. The titles of the 
related provisions and clauses have also been changed to reflect the 
new term.
    1.6.13.b.2(c), Domestic End Products, and 1.6.13.b.2(g), Canadian 
End Products (previous 1.7.13.b.2.(c) and 1.7.13.b.(g)) have been 
revised to update definitions.
    1.6.14, Contracts with Former Postal Service Officers, Executives, 
and Employees, is a new section that replaces previous 1.7.13. This 
revision, providing new or revised policies regarding contracts with 
former employees and the use of personal services contracts, resulted 
in related changes to 4.5.3, Professional/Technical and Consultant 
Services, and a new section 4.5.4, Personal Services Contracts. Lastly, 
this change also resulted in a new Provision 1-5, Proposed Use of 
Former Postal Service Employees, and a new Clause 1-12, Use of Former 
Postal Service Employees.
    Previous 1.7.14, Year 2000 Compliance, has been deleted as have 
Clauses 1-12, Year 2000 Warranty--Commercial Items, and 1-13, Year 2000 
Warranty--Noncommercial Items.
    Previous 1.9.4, Supplier's Statement of Contingent Fees, has been 
deleted, as has Provision 1-2, Contingent Fee Representation, to 
conform to current general federal practice. Contingent fees are now 
addressed in subchapter 1.8.
    Chapter 2, Purchase Planning: 2.1.1, The Importance of Purchase 
Planning, is a new section discussing the central role purchase 
planning plays in a successful purchase, and the factors that go into 
effective planning.
    2.1.3.a (Purchase Planning) has been revised to further discuss the 
role of the contracting officer as leader of the purchase team.
    2.1.3.b 2(b) (Responsibilities) has been revised to state that the 
purchasing organization is responsible for gathering and analyzing 
spend and demand data in order to identify opportunities for strategic 
sourcing and consolidated purchases. 2.1.3.b.3 is a new subparagraph 
describing the expertise the materials organization can bring to a 
purchase team.
    2.1.4.a, Importance (Market Research), has been revised to add 
commodity or industry trends as an important element of successful 
market research.
    2.1.5.b, Elements (Individual Purchase Plans), has been revised to 
include a statement that effective plans should address the total cost 
of ownership of the purchase (subparagraph 2.1.5.b.6) and to require 
that individual purchase plans contain a written description of the 
purchase method to be used (subparagraph 2.1.5.b.14). See Major Policy 
Changes above.
    2.1.6, Purchase Method, is a new part discussing the manner in 
which a purchase will be conducted, specifically, whether the purchase 
will be made competitively or noncompetitively. This part discusses 
when either method is appropriate, and describes the various business 
scenarios under which a noncompetitive purchase is most appropriate and 
the business case required when the noncompetitive method is used. See 
Major Policy Changes above.
    2.1.7.b.5 (Developing Strategies) has been revised to state that, 
depending on the particular purchase, it is a good business practice to 
develop supplier selection strategies that invite new and emerging 
suppliers to compete for Postal Service purchases.

[[Page 45273]]

    2.1.9.c.2, Past Performance, has been revised to remove supply 
chain management as a subfactor of past performance and to address it 
as a more general aspect of past performance as a whole.
    2.1.9.c.3, Suppler Capability: Subparagraph 2.1.9.c.3(b)(4), has 
been revised to require that suppliers have a sound quality control 
program that complies with solicitation requirements in order to be 
deemed capable. Subparagraph 2.1.9.c.3(b)(7) has been revised to state 
that the fact that a supplier is suspended, debarred or otherwise 
declared ineligible, bars award without regard to the weight assigned 
to capability as an evaluation factor. Subparagraph 2.1.9.c.3(c)(1) has 
been revised to state that the Postal Service's list of debarred and 
suspended suppliers, and GSA's consolidated list of debarred, suspended 
or declared ineligible suppliers are sources of information for 
determining that a supplier is capable. Subparagraph 2.1.9.c.3(d) has 
been revised to include workforce, subcontractors and other resources 
to be used in contract performance as appropriate subjects of a 
preaward survey, and Subparagraph 2.1.9.c.3(e) has been revised to 
require that preaward survey results must be in writing.
    2.1.10, Performance Evaluation and Cost/Price Factors, is a new 
section combining text from previous sections 2.1.7 and 2.1.8.
    2.2.1.a Policy (Quality Requirements) has been revised to clarify 
that the supplier is responsible for providing supplies or services 
conforming with the requirements of the purchase and for providing 
reasonable assurance that requirements are met, and that the purchase 
team is responsible for determining the necessary quality requirements.
    2.2.1.b, Quality Assurance Requirements, has been revised to state 
that the supplier is responsible in most cases for performing necessary 
inspection and testing and that the Postal Service may opt to perform 
these functions.
    2.2.2.a, Uses (First Article Approval), 2.2.3.b, Delayed Acceptance 
(Acceptance), and 2.2.5.f, FOB Points (Delivery or Performance 
Schedule), have been revised for clarity.
    2.2.5.h, Using Mail, has been revised to state that contracting 
officers should consult with a material management specialist when the 
weight of a consolidated mailing to a single destination exceeds 300 
pounds.
    2.2.5.i, Packing and Packaging, is a new paragraph stating that, 
generally, suppliers are expected to use standard packing and packaging 
practices, but that the purchase team may require more stringent 
standards when needed.
    2.2.10.d, Noncompetitive Purchases (Value Engineering), has been 
revised to state the conditions under which a contracting officer may 
negotiate a noncompetitive contract or contract modification 
incorporating a change proposal.
    2.4.6.e, Ordering (Indefinite Delivery Contracts), and 2.4.6, 
Provisions, have been revised as was discussed In Postal Bulletin 22037 
(11/16/00).
    2.4.7.b, Limitations (Ordering Agreements), has been revised to 
require the periodic--rather than annual--review of ordering agreements 
extending more than one year.
    Chapter 3, Supplier Relations: 3.1.1, General (Policy), has been 
revised to address the fact that the nature of the partnership between 
the Postal Service and a given supplier will depend on the potential 
impact of the supplier's performance on the Postal Service's 
competitive and financial position. See Major Policy Changes above.
    3.1.2, Supply Chain Management, is a new part discussing the Postal 
Service's use of this business philosophy. See Major Policy Changes 
above.
    3.2.2a, Definition (Sourcing), has been revised to provide a 
clearer definition of this business practice.
    3.2.2.c, Assistance (Sourcing), has been revised to direct purchase 
teams to Supplier Development and Diversity (Purchasing and Materials), 
when they need sourcing assistance.
    3.2.3, Subcontracting with Small, Minority, and Woman-owned 
Businesses, has been revised to help the Postal Service more fully 
realize the benefit of a supplier base that reflects the diversity of 
the American supplier community. 3.2.3.d.1, Contracts Valued at $1 
Million or More, has been revised in subparagraph b to state that 
Clause 3-1, Small, Minority, and Woman-owned Business Subcontracting 
Requirements, need not be included in subject contracts when the 
contract is an indefinite delivery contract or ordering agreement and 
the purchase team has determined that requiring a subcontracting plan 
would not be feasible. In addition, 3.2.3.d.2, Contracts Valued at 
$500,000 or More, has been revised to require the inclusion of Clause 
3-2, Participation of Small, Minority, and Woman-owned Businesses, in 
design and construction contracts valued at $250,000 or more.
    3.3.2, Existing Assets, has been revised to redefine this term, and 
to illustrate when they should be considered in lieu of new purchases. 
3.3.5, Defense Energy Support Center, has been revised to provide the 
new name of this organization (previously called the Defense Fuel 
Supply Center).
    3.5.1, Policy (Commercial Suppliers), has been revised to emphasize 
that, except for commodities available from mandatory sources, it is 
Postal Service policy to purchase goods and services from commercial 
suppliers using the business practices and terms and conditions 
customary to the commercial marketplace, or to purchase goods and 
services from the nonmandatory government sources in 3.4.
    3.5.2.a, Policy (Prequalification), has been revised for clarity.
    3.5.2.b.3 (General) has been revised to clarify the rules 
concerning prequalification and noncompetitive purchases.
    3.5.2.b.4 (General) has been revised to state that during the 
prequalification process suppliers should be evaluated in the same 
manner as for any other purchase.
    3.5.3, Publicizing Purchasing Opportunities and Contract Awards, is 
new and replaces PM Issue 1, 3.5.3, Publicizing Purchase Opportunities. 
See Major Policy Changes above.
    3.5.4, Unsolicited Proposals, has been revised to direct readers to 
Publication 131, The Postal Service Unsolicited Proposal Program, for 
information regarding the submission and processing of unsolicited 
proposals.
    3.7, Debarment, Suspension, and Ineligibility, has been revised to: 
(1) Provide a new definition of ``Ineligible Suppliers''; (2) discuss 
the handling of the Postal Service's and the General Services 
Administration's lists of debarred and suspended suppliers; (3) require 
contracting officers to review the Postal Service's and GSA's lists 
before making a contract award; and (4) discuss the treatment of 
suppliers on the Postal Service's list.
    Chapter 4, Purchasing: 4.1, Policy, has been revised to discuss in 
general the purchasing process and the basic terms and conditions used 
in Postal Service purchases.
    4.2.2.b, Types (Solicitations), has been revised to discuss the use 
of written and oral solicitations and to state that the use of Form 
8203, Order/Solicitation/Offer/Award, or equivalent, should be used as 
the request for proposal and subsequent award.
    4.2.2.e, Solicitation Provisions, has been revised as discussed in 
Major Policy Changes above.
    4.2.2.g, Availability of Solicitations, has been revised to state 
that requests for copies of solicitations may be denied once a 
reasonable number of copies have been distributed to the solicited

[[Page 45274]]

suppliers and others who have requested them.
    4.2.6.a (Contract Award) has been revised to state that contract 
award is made by the execution of a contract by both parties or by 
written acceptance of or performance against a purchase order.
    4.2.7, Contract Clauses, is a new part discussing the new basic 
clauses (4-1, General Terms and Conditions, and 4-2, Contract Terms and 
Conditions Required to Implement Policies, Statutes, or Executive 
Orders) and their use. See Major Policy Changes above.
    4.5.5.a.5, Information Technology (Definitions), has been revised 
and a new subparagraph 4.5.5.a.7, Undue Burden, has been added to align 
Postal Service policies and procedures regarding information technology 
accessibility with the approaches taken by other federal agencies. 
Paragraph 4.5.5.b.2 has been revised, and a new Clause 4-18, 
Information Technology Accessibility Standards, has been added to 
Appendix B, Contract Clauses.
    4.5.5.d.2, General Services Administration (Sources--Information 
Technology), has been revised to provide new addresses, including an 
Internet address, for information regarding GSA contracts for 
information technology.
    Previous subparagraph 4.6.5.b.3, Year 2000 Compliance, has been 
deleted.
    Chapter 5, Contract Pricing: 5.2.5.a.13 (Unallowable Costs) is a 
new subparagraph and has been added to delineate a new category of 
unallowable costs: legal costs related to a defense against a Postal 
Service claim or appeal and legal costs related to the prosecution of a 
claim or appeal against the Postal Service.
    Chapter 6, Contract Administration: 6.1.1.b, Contracting Officer's 
Representatives, has been revised to specifically describe what sort of 
authorities may be delegated to a contracting officer's representative 
(COR), what must be contained in the COR's appointment letter, and to 
reference Management Instruction PM-610-2001-1, Contracting Officer's 
Representative Program.
    6.2.1.b.12 (Postaward Orientation) has been deleted in order to 
reinforce that commercially accepted accounting procedures should be 
used.
    6.2.3.b.2, Other Contracts (Using Suppliers to Monitor 
Performance), has been revised to allow third parties to perform 
acceptance in addition to other contract administration 
responsibilities.
    6.2.6.c, Clause (Bankruptcy), has been deleted, as has Clause 6-1, 
Bankruptcy, as part of the overall effort to reflect common commercial 
terms and conditions in Postal Service contracts.
    6.3.2.b, Responsibility (Acceptance), has been revised to remove 
the reference to ``another postal employee'' and replace it with 
``other party.''
    6.3.3, Receiving Reports (Quality Assurance), has been revised to 
clarify the use of certificates of conformance.
    Chapter 7, Bonds, Insurance, and Taxes: 7.1.2.a.5, Amount 
(Performance and Payment Bonds for Construction Contracts), has been 
revised to reflect the provisions of the Construction Industry 
Protection Act of 1999.
    7.2.2.c, Automobile Liability Insurance, has been revised to set a 
new minimum limit of $100,000 per accident for property damage.
    Chapter 8, Patents and Data Rights: No significant changes have 
been made in this Chapter.
    Chapter 9, Labor Policies: 9.2.1, Convict Labor (Policy), has been 
revised to state that the Postal Service may purchase supplies from 
firms employing persons on parole or probation under the terms of 
Executive Order 11755.
    9.7.3, Preaward Compliance Reviews, has been revised in view of 
changes to Executive Order 11246, as have Provision 9-4, Preaward Equal 
Opportunity Compliance Review, and Clause 9-9, Equal Opportunity 
Preaward Compliance of Subcontracts.
    9.10.1, Requirement (Veterans), has been revised to reference the 
Veterans Employment Opportunities Act of 1999.
    Appendix A, Solicitations: This appendix has been revised as 
discussed in Major Policy Changes above. Provision 1-5, Proposed Use of 
Former Employees, is new.
    Appendix B, Contract Clauses: This appendix has been revised as 
discussed in Major Policy Changes above. Clause 1-1, Privacy 
Protection, and Clause 1-12, Use of Former Postal Service Employees, 
are new clauses as discussed above. Clause 7-4, Insurance, has also 
been revised to establish new minimum liability coverage for automobile 
insurance.
    Appendix C, Contract Format: This appendix has been changed as 
discussed in Major Policy Changes above.
    Appendix D, Rules of Practice in Proceedings Relative to Debarment 
and Suspension from Contracting: No changes have been made to this 
appendix.
    Appendix E, Rules of Practice Before the Postal Service Board of 
Contract Appeals: No changes have been made to this appendix.
    Appendix F, Index: This appendix was revised to reflect the changes 
throughout PM Issue 2.

List of Subjects in 39 CFR Part 601

    Government procurement, Incorporation by reference, Postal 
Service.e

0
In view of the considerations discussed above, the Postal Service 
hereby amends 39 CFR as follows:

PART 601--PURCHASE PROPERTY AND SERVICES

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. 410(b)(1), and as provided in this part, the U.S. Postal 
Service hereby incorporates by reference its Purchasing Manual (PM), 
Issue 2, dated January 31, 2002. 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. The successive Issues of the PM are 
listed in the following table:

------------------------------------------------------------------------
             Purchasing manual                    Date of issuance
------------------------------------------------------------------------
Issue 1...................................  January 31, 1997.
Issue 2...................................  January 31, 2002.
------------------------------------------------------------------------


0
3. Section 601.101 is revised to read as follows:


Sec.  601.101  Effective date.

    The provisions of the Purchasing Manual Issue 2, effective January 
31,

[[Page 45275]]

2002, are applicable with respect to all covered purchasing activities 
of the Postal Service.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 04-16785 Filed 7-28-04; 8:45 am]
BILLING CODE 7710-12-P