New mandates on how evaluation criteria must be stated in Postal Service solicitations are required by the recently revised USPS Supplying Principles and Practices (SPP) manual. The SPP revisions were issued on December 12, 2011. The full text of the new SPP is available by clicking here. In addition to these changes, the Postal Service has introduced a new “Simplified Purchasing” method. Simplified Purchasing will be more streamlined than the traditional method, will commonly use oral solicitations, and may be used on procurements valued at up to $1 million. 

Proposal evaluation strategy

The Postal Service substantially revised SPP § 2-26, entitled “Develop Proposal Evaluation Strategy.”  As before, obtaining “best value” is the basis for all Postal Service purchasing decisions.  The concept of “best value” is now defined by the requirements of each particular purchase:

What constitutes best value will vary depending on the particular purchase and the aspects of value (quality, prices, delivery terms, etc.) sought by the Postal Service. These aspects of value are expressed in the solicitation’s evaluation factors, which should be tailored to the particular purchase and consistent with the requirements, purchase planning, market research, and any other business considerations deemed important to the success of the purchase.

What’s new here is the direct connection between “best value” and the evaluation factors set out in the solicitation. It is now clear that the “best value” for any particular procurement is defined by the solicitation’s stated evaluation factors. This is an improvement, because it removes the potential disconnect between what the solicitation says will be evaluated and what the USPS purchase team might separately think is the “best value.”

Past performance and supplier capability

The SPP now requires that in all solicitations “(p)ast performance and supplier capability must always be included as evaluation factors, and risk of successful performance should almost always be considered.” (SPP § 2-26.2.) Thus, even when price is the most important factor in an award decision, the Postal Service must also consider the offeror’s past performance and supplier capability.

This revision makes it even more important that suppliers ensure they are on the same page as the Postal Service concerning any contractual performance issues. Any concerns expressed by the Postal Service about performance deficiencies should be dealt with and resolved as soon as they arise. If agreement cannot be reached, then suppliers must at least ensure their views are on record with the Postal Service.

Price vs. non-price factors

Under the new SPP, the solicitation must also state the relationship of cost/price factors to non-price factors in how proposals will be evaluated for award. (SPP § 2-26.3.1.) In other words, the solicitation must state whether price is more important, equal in importance, or less important, than technical or other non-price factors. This is another improvement. Solicitations should always let suppliers know the importance of price versus other factors so that offerors can develop their technical solution and pricing strategy accordingly. 

Simplified Purchasing

The Postal Service has also created a new, streamlined purchasing method called “Simplified Purchasing.” (SPP § 2-43.) Simplified purchasing is generally to be used to purchase commercially-available goods and services valued at $250,000 or less. With higher level approval, however, it can be used for purchases up to $1 million — but no higher.

Under the Simplified Purchasing method, oral solicitations are typically sufficient. Whether oral or in writing, the solicitation must state all factors that will be considered in the evaluation, as well as the relative importance of price to non-price factors. Typically, the only factors beyond price that would be considered are past performance and supplier capability. The contracting officer is permitted to engage in discussions and negotiations with offerors to the same extent permitted under other purchasing methods.

In evaluating proposals submitted under this method, formal evaluation plans and the scoring and ranking of proposals is not required. Contracting officers, however, must evaluate and compare proposals in accordance with the solicitation, and make an informed business decision as to which proposal represents the best value. The best value rationale must also be documented and included in the contract file. Offerors who competed but were not awarded a contract must be sent a written notification within three days of contract award. The written notification must provide the name of the successful offeror and the contract price.

Authority of Level I contracting officers

All contracting officers are not created equal. The Postal Service has four different levels of contracting officer. The lowest level is Level I. Contracting officers at this level previously had delegated authority up to $100,000. Under the SPP revisions, Level I contracting officers are now delegated authority up to $250,000. They also may place orders up to the maximum limit on indefinite delivery contracts and ordering agreements.

As before, Level II contracting officers have authority up to $1 million, and Level III contracting officers have authority up to $10 million. Level IV contracting officers have unlimited contracting authority.

It is not impertinent to ask your contracting officers about their level of authority or to see a copy of the warrant which evidences it. That’s because, with some limited exceptions, contracting officers may not make binding commitments above the limit of their delegated authority.  Suppliers must know what that limit is to ensure that the agreements they sign will be enforceable.

Is it binding?

Is the SPP binding on suppliers or the Postal Service? The SPP was not issued as a regulation and the SPP states that it does not contain “binding regulations.”  The SPP states that it is intended “for internal use only to assist the Postal Service in obtaining best value and efficiently conducting its supply chain functions.”  The SPP is “advisory and illustrative of approaches that may generally be used.” (See SPP at p. 3.) As such, the SPP creates “no rights, substantive or procedural, enforceable against the Postal Service.”

Because the SPP was not issued as a binding regulation, it does not have the force and effect of law — as USPS’s former regulations did have. Thus, the SPP cannot be applied against suppliers by operation of law. Therefore, unless a clause or instruction from the SPP is specifically mentioned in a supplier’s contract, it does not apply to the supplier.

The SPP, however, is a final Postal Service policy statement. So if the Postal Service acts contrary to the SPP, it has likely acted unreasonably, arbitrarily, or capriciously, and would thus face the same outcome as if it had violated a regulation.

Ironically, the Postal Service’s attempt to relieve itself from complying with regulatory obligations actually has the opposite effect — it still requires agency compliance but relieves suppliers from it! Suppliers are only required to comply with the clauses that are in their contract, and any other applicable laws or regulations.