on Oct 15th, 2012 in Finances: Cost & Revenue | 1 comment
The U.S. Postal Service spent $12.3 billion on supplies and services in FY 2011, which made up about 17 percent of its total operating expenses. Suppliers to the Postal Service range from large integrators, such as FedEx and UPS, to individuals responsible for cleaning offices and transporting mail between postal locations. With thousands of suppliers, the Postal Service needs a procurement process that is agile, yet transparent and secure. When the Postal Reorganization Act created a self-supporting Postal Service, it exempted it from many federal purchasing laws, including the Federal Acquisition Regulation, which most other federal agencies must follow. Since then, the Postal Service’s purchasing policies have gone through many changes and iterations in an effort to follow the procurement developments of the private sector, streamline its acquisition process, and reduce purchasing costs. In 2005, the Postal Service implemented the Supplying Principles and Practices, which are not legally binding and allow it to make purchasing decisions based on best value rather than rigid factors. Postal contracting officials have much greater discretion than their counterparts at other federal agencies. The streamlined process was designed to create a more efficient businesslike approach, but it has also opened the door for potential problems, especially in the area of non-competitive contract awards. A 2010 audit by the Office of Inspector General on the Postal Service’s noncompetitive contracts said the Postal Service needed to put in additional controls to make sure its interests are protected. Among the suggestions were to strengthen oversight of noncompetitive contracting, maximize competition, and avoid any potential conflicts of interest. The streamlining of purchasing procedures also created a new process for resolving supplier disagreements. Previously, suppliers filed disagreements with the Postal Service’s general counsel and decisions could be appealed to a federal court. Under the new process, suppliers file disagreements with a Postal Service manager, designated as the supplier disagreement resolution official, whose decisions are final and cannot be appealed by the supplier. Do you think streamlining of the purchasing procedures has positively or negatively affected the Postal Service? What is working particularly well in the current procurement process? What could be improved? Should the Postal Service follow procurement developments of the private sector, or should it be required to follow more federal procurement rules? Share your thoughts below.