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Yet another U.S. Postal Service manager has pled guilty to fraud and corruption charges relating to USPS transportation contracts. In March 2012, the former USPS Manager of Postal Vehicle Service Operations for the Bay Valley District in Oakland, CA was indicted in a $4.4 million fraudulent billing scheme. Last year, five Postal Service officials at the Detroit, MI Vehicle Maintenance Facility were charged with similar crimes. One might well wonder how many more such episodes need to be uncovered before the Postal Service issues binding procurement regulations and institutes effective protest procedures. Here’s what happened in the most recent case.

Personal use of an undeliverable coupon by a mail delivery contractor violated postal regulations but did not justify the default termination of her contract.  The particular post office had allowed others in the office to use such undeliverable items, though that local practice violated postal regulations.  Although the Postal Service Board of Contract of Contract Appeals (PSBCA) decided the case in the contractor’s favor, one judge dissented and believed the termination was justifiable.  See Laura K. McNew, PSBCA No. 6286, April 23, 2012.

Oral contracts do exist, and the U.S. Postal Service cannot force you to sign a contract with different terms than previously agreed upon. That’s the take-way from a recent decision issued by the Postal Service Board of Contract Appeals (PSBCA) in a case called Sharon Roedel, PSBCA No. 6347, 6348, April 10, 2012.  The PSBCA found that the Postal Service breached an oral contract it had with Roedel, and that USPS owed her the profits and wages she would have earned under the six-month emergency contract.

Doing business with the U.S. Postal Service has always been different than contracting with other federal agencies and commercial entities. As an independent agency, the Postal Service is exempt from most federal procurement laws and regulations. That’s why our firm is presenting a full-day seminar on “Postal Service Contracting: What Every Contractor Should Know,” at the Westin Tysons Corner hotel on Thursday, May 10, 2012. Click here to learn more or click here to register.

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. 

Procurement spending by the U.S. Postal Service declined slightly in 2011, but capital spending was anemic, according to the agency’s recently released Form 10-K report. Capital expenditures experienced a 15% drop from 2010 levels. This comes on top of a 24% decline in capital spending a year ago.  Transportation spending was once again the leading procurement category, totaling $6,389 million — an increase of $511 million, or 8.7%, compared to 2010.  More expensive fuel accounted for much of this increase, as diesel fuel prices rose 26.6% from a year ago.

Contractors beware: the U.S. Postal Service Office of Inspector General (OIG) thinks that $1 out of every $20 spent by USPS on its contractors is fraudulent, and OIG is itching to find it. According to a July 18, 2011 OIG blog article, “conservative business estimates project up to 5 percent of contracted dollars are lost to fraud, meaning $1.45 billion of Postal Service funds are potentially at risk.” While these numbers are fanciful, there is no doubt that the OIG is taking this seriously. Read on for more details.

Saving the Postal Service also requires reforming its contracting policies, according to a bill introduced by Rep. Issa (R-Calif.) on June 23, 2011. Prompted by the Postal Service’s decision to stop paying into the federal retirement system and $27 billion in projected losses over three years, the bill would enact sweeping reforms. The “Postal Reform Act of 2011” would create two separate oversight bodies that would have broad, receivership-type authority to impose cost-cutting measures on the agency. While curing postal deficits is the primary goal, the bill specifically addresses postal procurement practices and would impact postal contracting in significant ways. Read on for the details.

Did the U.S. Postal Service’s lack of procurement regulations inadvertently help USPS officials carry out a $13 million bribery scheme over several years?  Five Postal Service employees were indicted in May 2011 by a Detroit, MI grand jury for taking bribes and steering as much as $13 million in vehicle maintenance work to a private contractor. Could this scheme have been prevented, or caught earlier, if USPS had not abolished its procurement regulations in 2006?

The Postal Service recently issued a revised version of its purchasing policy manual, called the Supplying Principles and Practices (SPP).  The changes adopt recommendations made by the USPS Office of Inspector General (OIG) in two high-level reviews conducted in 2010. The revisions add new procedures and requirements applicable to noncompetitive procurements, and establish an internal Competition Advocate.  For more details, read on.