[Federal Register: October 15, 2007 (Volume 72, Number 198)]
[Rules and Regulations]
[Page 58251-58258]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15oc07-5]
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POSTAL SERVICE
39 CFR Part 601
Purchasing of Property and Services
AGENCY: Postal Service.
ACTION: Final rule.
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SUMMARY: The Postal ServiceTM is making several minor
revisions to its regulations governing the purchasing of property and
services to comply with certain findings and suggestions of the
Government Accountability Office, and to clarify a variety of
procedural matters.
DATES: This final rule is effective November 14, 2007.
FOR FURTHER INFORMATION CONTACT: Paul McGinn, (202) 268-4638, or Syvera
O'Pharrow, (202) 268-8110.
SUPPLEMENTARY INFORMATION: The Postal Service is making several minor
revisions to its regulations governing the purchasing of property and
services in order to (1) comply with some of the findings in the
Government Accountability Office's (GAO) report, GAO-06-190, U.S.
Postal Service: Purchasing Changes Seem Promising, but Revisions to
Ombudsman Position are Needed, and (2) clarify some procedural matters.
In its report, GAO stated that the Postal Service's Ombudsman
regulatory provisions and guidance contained in 39 CFR Part 601 were
inconsistent with leading Ombudsman principles and practices. In
response, the Postal Service benchmarked its supplier disagreement
resolution process against a variety of private sector companies, and
found that the process conforms to leading business principles and
practices. We do agree with GAO that the use of the term Ombudsman is
inaccurate, however, and therefore have changed the term to Supplier
Disagreement Resolution Official (SDR Official). In addition, several
minor procedural changes have been made to the regulations and business
processes published in May of 2005, and these are explained in more
detail below.
Explanation of Changes
Section 601.100 Purchasing Policy
This section has been revised for clarity, specifically by stating
that the Postal Service acquires property and services pursuant to the
authority of 39 U.S.C. 410.
Section 601.101 Effective Date
This section has been revised to state that the revised regulations
will take effect thirty days after publication.
Section 601.102 Revocation of Prior Purchasing Regulations
The reference to section 601.103 has been deleted due to a revision
to that section.
Section 601.103 Applicability and Coverage
This section has been revised to state that these regulations apply
to all Postal Service acquisitions of property (except real property)
and services.
Section 601.104 Postal Purchasing Authority
This section has not been changed.
Section 601.105 Business Relationships
In paragraph (a), the last sentence of the text has been revised to
make it clear that the Postal Service reserves the right to decline to
accept or consider proposals from a person or organization when that
person or organization fails to meet reasonable business expectations.
Previous section 601.106 has been revised and included in this section
as a new paragraph (b). The first sentence in the new paragraph (b) has
been revised for clarity by indicating under what circumstances the
Postal Service reserves the right to decline to accept or consider
proposals. Paragraph (c) has been revised to state that written notices
must be by certified mail, return receipt requested. Subparagraph
(c)(4) has been revised to require that the written notice to the
supplier establish the period of time during which the decision to
decline to accept or consider proposals is in effect. Paragraph (d) has
been revised to provide a cross-reference to section 601.108.
Section 601.106 Reserved
As discussed above, the previous text in this section has been
combined into a new paragraph (b) of section 601.105.
Section 601.107 Initial Disagreement Resolution
This section includes a new paragraph (a) ``Definitions'', that
provides definition for certain terms that appear throughout the
regulations. Paragraph (b) has been revised to state that all
disagreements lodged with the contracting officer must be in writing
and to describe the methods in which a person or organization may lodge
a business disagreement with the contracting officer and to delineate
the timeframe a person or organization has to lodge a disagreement.
This section has also been revised to state that the contracting
officer's manager may help to resolve the disagreement and that at the
conclusion of the ten day resolution period, the contracting officer
must communicate, in writing, to the supplier his or her resolution of
the disagreement. This section has been further revised by moving the
text discussing disagreements not resolved within 10 days to section
601.108(a). The text regarding alternative dispute resolution has been
retained and codified in paragraph (c).
Section 601.108 SDR Official Disagreement Resolution
The Ombudsman has been given a new title: Supplier Disagreement
Resolution Official (``SDR Official''), and this term is used
throughout the regulations. Text regarding disagreements not resolved
within 10 days has been moved from section 601.107 to this section
under paragraph (a). Because neither 39 U.S.C. 410 nor other public
laws apply to the Postal Service's administrative resolution of
supplier disagreements, the previous reference to ``39 U.S.C. 410, and
all other applicable public laws enacted by Congress'' has been
deleted. The definition of disagreements in paragraph (b) has been
deleted and is now included in the ``Definitions'' paragraph discussed
above. Paragraph (c) has been expanded to include the address for
submitting supplier disagreements. In
[[Page 58252]]
paragraph (d), new text has been added delineating the timeframes that
apply for lodging a disagreement with the SDR Official, and new text
has also been added addressing the supplier's filing of a request for
an extension of time. Paragraph (e) has been revised to incorporate
guidance on the submission of confidential information. The term
``interested parties'' now defined in paragraph 601.107(a), replaces
``interested persons'' throughout section 601.108.
Section 601.109 Contract Claims and Disputes
Paragraph (a) has been revised to give the supplier the option of
using the SDR Official as a mediator for contract performance
disagreements prior to bringing a contract claim or dispute under this
section. Paragraph (g)(3) has been revised to give the contracting
officer the option to request additional information prior to making a
decision.
Section 601.110 Payment of Claims; Section 601.111 Interest on Claim
Amounts; Section 601.112 Review of Adverse Decisions
These sections have not been changed.
Section 601.113 Debarment, Suspension, and Ineligibility
Paragraph (a) has been revised to be consistent with the discussion
of the same matter in subparagraph (d)(2). The definition of
``Affiliate'' under subparagraph (b)(1) has been revised to clarify the
definition of control. The definition of ``Judicial Officer''
originally set forth in subparagraph (b)(6) has been deleted.
Subparagraph (c)(1) has been revised because the Postal Service no
longer distributes a hardcopy of the list of debarred and suspended
suppliers to contracting officers; the list is maintained
electronically and is available internally on the Postal Service's
Supply Management Web site. Subparagraph (c)(2) has been revised
because the original regulations only considered hardcopy versions; GSA
no longer publishes hardcopies and the list is maintained
electronically on GSA's Web site. Subparagraph (d)(2) has been revised
to state clearly that the supplier must review the consolidated GSA
list in order to exclude suppliers debarred or suspended by the Postal
Service from performing part of a Postal Service contract (the Postal
Service list is available internally only). Subparagraph (d)(3) has
been changed for consistency with the previous subparagraph. The words
``insignificant or significant minor service changes'' have been added
in subparagraph (d)(5); this requires only major service changes to be
approved by the vice president of Supply Management. In subparagraph
(e)(3) the term ``debarring official'' has been replaced with the term
``vice president of Supply Management'' for consistency.
A new subparagraph (e)(v) has been included as a basis for
debarment.
List of Subjects in 39 CFR Part 601
Government procurement, Postal Service.
0
Accordingly, 39 CFR part 601 is revised to read as follows:
PART 601--PURCHASING OF PROPERTY AND SERVICES
Sec.
601.100 Purchasing policy.
601.101 Effective date.
601.102 Revocation of prior purchasing regulations.
601.103 Applicability and coverage.
601.104 Postal purchasing authority.
601.105 Business relationships.
601.106 Reserved.
601.107 Initial disagreement resolution.
601.108 SDR Official disagreement resolution.
601.109 Contract claims and disputes.
601.110 Payment of claims.
601.111 Interest on claim amounts.
601.112 Review of adverse decisions.
601.113 Debarment, suspension, and ineligibility.
Authority: 39 U.S.C. 401, 404, 410, 411, 2008, 5001-5605.
Sec. 601.100 Purchasing policy.
The Postal Service acquires property and services pursuant to the
authority of 39 U.S.C. 410.
Sec. 601.101 Effective date.
These regulations are effective November 14, 2007. Solicitations
issued and resulting contracts entered into prior to that date will be
governed by the regulations in effect at the time the solicitation was
issued.
Sec. 601.102 Revocation of prior purchasing regulations.
All previous postal purchasing regulations, including the Postal
Contracting Manual, Procurement Manual, the Purchasing Manual (Issues
1, 2 and 3), and procurement handbooks, circulars, and instructions,
are revoked and are superseded by the regulations contained in this
part.
Sec. 601.103 Applicability and coverage.
The regulations contained in this part apply to all Postal Service
acquisition of property (except real property) and services.
Sec. 601.104 Postal purchasing authority.
Only the Postmaster General/CEO; the Postal Service's vice
president, Supply Management; contracting officers with written
statements of specific authority; and others designated in writing or
listed in this part have the authority to bind the Postal Service with
respect to entering into, modifying, or terminating any contract
regarding the acquisition of property, services, and related purchasing
matters. The Postal Service's vice president, Supply Management, or his
or her designee, may also delegate in writing local buying authority
throughout the Postal Service.
Sec. 601.105 Business relationships.
(a) General. A person or organization wishing to have a continuing
business relationship with the Postal Service in purchasing matters is
expected to treat the Postal Service in the same manner as it would
other valued customers of similar size and importance. The Postal
Service reserves the right to decline to accept or consider proposals
from a person or organization when that person or organization fails to
meet reasonable business expectations or provide a high level of
confidence regarding quality, prompt service, and overall
professionalism.
(b) Declining to accept or consider proposals. The Postal Service
may decline to accept or consider proposals when a person or
organization exhibits unacceptable conduct or business practices that
do not meet reasonable business expectations or does not provide a high
level of confidence about the entity's current or future business
relations. Unacceptable conduct or business practices include, but are
not limited to:
(1) Marginal or dilatory contract performance;
(2) Failure to deliver on promises made in the course of dealings
with the Postal Service;
(3) Providing false or misleading information regarding financial
condition, ability to perform, or other material matters, including any
aspect of performance on a contract; and
(4) Engaging in other questionable or unprofessional conduct or
business practices.
(c) Notice. If the Postal Service elects to decline to accept or
consider proposals from a person or organization, the vice president,
Supply Management, or his or her designee, will provide a written
notice to the person or organization by Certified Mail, return receipt
requested, explaining:
(1) The reasons for the decision;
(2) The effective date of the decision;
(3) The scope of the decision;
[[Page 58253]]
(4) The period of time the decision will be in effect, (a matter at
the Postal Service's discretion consistent with the circumstances); and
(5) The supplier's right to contest the decision.
(d) Contesting Decisions. If a person or organization believes the
decision not to accept or consider proposals is not merited, it may
contest the matter in accordance with Sec. 601.108. The Postal Service
may reconsider the matter and, if warranted, rescind or modify the
decision to decline to accept or consider proposals.
Sec. 601.106 [Reserved]
Sec. 601.107 Initial disagreement resolution.
(a) Definitions.
(1) Days. Calendar days; however, any time period will run until a
day which is not a Saturday, Sunday, or legal holiday.
(2) Disagreements. All disputes, protests, claims, disagreements,
or demands of whatsoever nature arising in connection with the
acquisition of property and services within the scope of Sec. 601.103,
above, except those:
(i) That arise pursuant to a contract under the Contract Disputes
Act under Sec. 601.109;
(ii) That concern debarment, suspension, or ineligibility under
Sec. 601.113; or
(iii) That arise out of the non-renewal of transportation contracts
containing other provisions for the review of such decisions.
(3) Interested parties. Actual or prospective offerors whose direct
economic interests would be affected by the award of, or failure to
award, the contract.
(4) Lodge. A disagreement is lodged on the date it is received by
the Contracting Officer or the Supplier Disagreement Resolution
Official, as appropriate.
(5) SDR Official. The Supplier Disagreement Resolution Official, an
individual designated by the Postal Service to perform the functions
established under Sec. 601.108.
(b) Policy. It is the policy of the Postal Service and in the
interest of its suppliers to resolve disagreements by mutual agreement
between the supplier and the responsible contracting officer. All
disagreements arising in connection with the purchasing process must be
lodged with the responsible contracting officer in writing via
facsimile, e-mail, hand delivery, or U.S. Mail, within ten days of the
date the supplier received notification of award or ten days from the
date the supplier received a debriefing. During the supplier-
contracting officer ten-day resolution period, the responsible
contracting officer's management may help to resolve the disagreement.
At the conclusion of the ten-day resolution period, the contracting
officer must communicate, in writing, to the supplier his or her
resolution of the disagreement.
(c) Alternative dispute resolution. Alternative dispute resolution
(ADR) procedures may be used, if agreed to by all interested parties.
The use of ADR to resolve the disagreement must be considered,
regardless of the nature of the disagreement or when it occurred during
the purchasing process. If the use of ADR is agreed upon, the ten-day
limitation is suspended; if the parties cannot reach an agreement under
ADR, the supplier has ten days to lodge its disagreement with the SDR
Official.
Sec. 601.108 SDR Official disagreement resolution.
(a) General. From time to time, disagreements may arise between
suppliers, potential suppliers, and the Postal Service regarding awards
of contracts and related matters that are not resolved as set forth in
Sec. 601.107 above. If a disagreement under Sec. 601.107 is not
resolved within ten days after it was lodged with the contracting
officer, if the use of ADR fails to resolve it at any time, or if the
supplier is not satisfied with the contracting officer's resolution of
the disagreement, or if the decision not to accept or consider
proposals under Sec. 601.105 is contested, the SDR Official is
available to provide final resolution of the matter. The Postal Service
desires to resolve all such disagreements quickly and inexpensively in
keeping with the regulations in this part. In resolving disagreements,
non-Postal Service procurement rules or regulations will not govern.
(b) Scope and applicability. In order to resolve expeditiously
disagreements that are not resolved at the responsible contracting
officer level, to reduce litigation expenses, inconvenience, and other
costs for all parties, and to facilitate successful business
relationships with Postal Service suppliers, the supplier community,
and other persons, the following procedure is established as the sole
and exclusive means to resolve disagreements. All disagreements will be
lodged with and resolved, with finality, by the SDR Official under and
in accordance with the sole and exclusive procedure established in this
section.
(c) Lodging a disagreement. The disagreement must be lodged in
writing and must state the factual circumstances relating to it, the
scope and outcome of the initial disagreement resolution attempt with
the contracting officer, and the remedy sought. The address of the SDR
Official is: Room 4130 (Attn: SDR Official), United States Postal
Service Headquarters, 475 L'Enfant Plaza, SW., Washington, DC 20260-
4130. E-mail Address: SDROfficial@usps.gov. Fax Number: (202) 268-6234.
(d) Lodging timeframes. If a supplier wishes the SDR Official to
consider any of the matters identified in Sec. 601.108(a)
disagreements must be lodged with that official within the following
timeframes:
(1) Disagreements under Sec. 601.107 not resolved with the
contracting officer must be lodged with the SDR Official within twenty
days after they were lodged with the contracting officer (unless ADR
had been used to attempt to resolve them);
(2) Disagreements under Sec. 601.107 for which ADR had been agreed
to be used must be lodged with the SDR Official within ten days after
the supplier knew or was informed by the contracting officer or
otherwise that the matter was not resolved;
(3) Disagreements under Sec. 601.107 resolved by the contracting
officer as to which the supplier is unhappy with the resolution must be
lodged with the SDR Official within ten days after the supplier first
receives notification of the contracting officer's resolution; and
(4) Contests of decisions under Sec. 601.105 to decline to accept
or consider proposals must be lodged with the SDR Official within ten
days of the supplier's receipt of the written notice explaining the
decision.
(5) The SDR Official may grant an extension of time to lodge a
disagreement or to provide supporting information when warranted. Any
request for an extension must set forth the reasons for the request, be
made in writing, and be delivered to the SDR Official on or before the
time to lodge a disagreement lapses.
(e) Decision process. The SDR Official will promptly provide a copy
of a disagreement to the contracting officer, who will promptly notify
other interested parties. The SDR Official will consider a disagreement
and any response by other interested parties and appropriate Postal
Service officials within a time frame established by the SDR Official.
The SDR Official may also meet individually or jointly with the person
or organization lodging the disagreement, other interested parties,
and/or Postal Service officials, and may undertake other activities in
order to obtain materials, information, or advice that may help to
resolve the disagreement. The person or
[[Page 58254]]
organization lodging the disagreement, other interested parties, or
Postal Service officials must promptly provide all relevant,
nonprivileged materials and other information requested by the SDR
Official. If a submission contains trade secrets or other confidential
information, it should be accompanied by a copy of the submission from
which the confidential matter has been redacted. The SDR Official will
determine whether any redactions are appropriate and will be solely
responsible for determining the treatment of any redacted materials.
After obtaining such information, materials, and advice as may be
needed, the SDR Official will promptly issue a written decision
resolving the disagreement and will deliver the decision to the person
or organization lodging the disagreement, other interested parties, and
appropriate Postal Service officials.
(f) Guidance. In considering and in resolving a disagreement, the
SDR Official will be guided by the regulations contained in this part
and all applicable public laws enacted by Congress. Non-Postal Service
procurement rules or regulations and revoked Postal Service regulations
will not apply or be taken into account in resolving disagreements.
Failure of any party to provide requested information may be taken into
account by the SDR Official in the decision.
(g) Binding decision. A decision of the SDR Official will be final
and binding on the person or organization lodging the disagreement,
other interested parties, and the Postal Service. However, the person
or organization that lodged the disagreement or another interested
person may appeal the decision of the SDR Official to a federal court
with jurisdiction over such claims, but only on the grounds that the
decision was procured by fraud or other criminal misconduct, or was
obtained in violation of the regulations contained in this part or an
applicable public law enacted by Congress.
(h) Resolution timeframe. It is intended that this procedure
generally will resolve disagreements within approximately thirty days
after the receipt of the disagreement by the SDR Official. The time may
be shortened or lengthened depending on the complexity of the issues
and other relevant considerations.
Sec. 601.109 Contract claims and disputes.
(a) General. This section implements the Contract Disputes Act of
1978, as amended (41 U.S.C. 601-613). If ADR is used, the SDR official
may serve as a mediator for contract performance disagreements prior to
bringing a contract claim or dispute under this part.
(b) Policy. It is the Postal Service's intent to resolve
contractual claims and disputes by mutual agreement at the level of an
authorized contracting officer whenever possible. In addition, the
Postal Service supports and encourages the use of alternative dispute
resolution as an effective way to understand, address, and resolve
conflicts with suppliers. Efforts to resolve differences should be made
before the issuance of a final decision on a claim, and even when the
supplier does not agree to use ADR, the contracting officer should
consider holding informal discussions between the parties in order to
resolve the conflict before the issuance of a final decision.
(c) Supplier claim initiation. Supplier claims must be submitted in
writing to the contracting officer for final decision. The contracting
officer must document the contract file with evidence of the date of
receipt of any submission that the contracting officer determines is a
claim. Supplier claims must be submitted within 6 years after accrual
of a claim unless the parties agreed to a shorter time period. The 6-
year time period does not apply to contracts awarded prior to October
1, 1995.
(d) Postal Service claim initiation. The contracting officer must
issue a written decision on any Postal Service claim against a
supplier, within six years after accrual of a claim, unless the parties
agreed in writing to a shorter time period. The 6-year time period does
not apply to contracts awarded prior to October 1, 1995, or to a Postal
Service claim based on a supplier claim involving fraud.
(e) Certified claims. Each supplier claim exceeding $100,000 must
be accompanied by a certification in accordance with the supplier's
contract.
(f) Misrepresentation or fraud. When the contracting officer
determines that the supplier is unable to support any part of the claim
and there is evidence or reason to believe the inability is
attributable to either misrepresentation of fact or fraud on the
supplier's part, the contracting officer must deny that part of the
claim and refer the matter to the Office of Inspector General.
(g) Decision and appeal--(1) Contracting officer's authority. A
contracting officer is authorized to decide or settle all claims
arising under or relating to a contract subject to the Contract
Disputes Act, except for:
(i) Claims or disputes for penalties or forfeitures prescribed by
statutes or regulation that a Federal agency administers; or
(ii) Claims involving fraud.
(2) Contracting officer's decision. The contracting officer must
review the facts pertinent to the claim, and may obtain assistance from
assigned counsel and other advisors, and issue a final decision in
writing. The decision must include a description of the claim or
dispute with references to the pertinent contract provisions, a
statement of the factual areas of agreement and disagreement, and a
statement of the contracting officer's decision with supporting
rationale.
(3) Insufficient information. When the contracting officer cannot
issue a decision because the supplier has not provided sufficient
information, the contracting officer may request the required
information. Further failure to provide the requested information is an
adequate reason to deny the claim.
(4) Furnishing Decisions. The contracting officer must furnish a
copy of the decision to the supplier by Certified Mail\TM\, return
receipt requested, or by any other method that provides evidence of
receipt.
(5) Decisions on claims for $100,000 or less. If the supplier has
asked for a decision within sixty days, the contracting officer must
issue a final decision on a claim of $100,000 or less within sixty
calendar days of its receipt. The supplier may consider the contracting
officer's failure to issue a decision within the applicable time period
as a denial of its claim, and may file a suit or appeal on the claim.
(6) Decisions on certified claims. For certified claims over
$100,000, the contracting officer must either issue a final decision
within sixty days of their receipt or notify the supplier within the
60-day period of the time when a decision will be issued. The time
period established must be reasonable, taking into account the size and
complexity of the claim, the adequacy of the supplier's supporting
data, and any other relevant factors.
(7) Wording of decisions. The contracting officer's final decision
must contain the following paragraph: ``This is the final decision of
the contracting officer pursuant to the Contract Disputes Act of 1978
and the clause of your contract entitled Claims and Disputes. You may
appeal this decision to the Postal Service Board of Contract Appeals by
mailing or otherwise furnishing written notice (preferably in
triplicate) to the contracting officer within ninety days from the date
you receive this decision. The notice should identify the contract by
number, reference this decision, and indicate that an appeal is
intended. Alternatively, you may bring an action
[[Page 58255]]
directly in the United States Court of Federal Claims within twelve
months from the date you receive this decision.''
(8) Additional wording for decisions of $50,000 or less. When the
claim or claims denied total $50,000 or less, the contracting officer
must add the following to the paragraph: ``In taking an appeal to the
Board of Contract Appeals, you may include in your notice of appeal an
election to proceed under the Board's small claims (expedited)
procedure, which provides for a decision within approximately 120 days,
or an election to proceed under the Board's accelerated procedure,
which provides for a decision within approximately 180 days. If you do
not make an election in the notice of appeal, you may do so by written
notice anytime thereafter.''
(9) Additional wording for decisions over $50,000 up to $100,000.
When the claim or claims denied total $100,000 or less, but more than
$50,000, the contracting officer must add the following to the
paragraph: ``In taking an appeal to the Board of Contract Appeals, you
may include in your notice of appeal an election to proceed under the
Board's accelerated procedure, which provides for a decision within
approximately 180 days. If you do not make an election in the notice of
appeal, you may do so by written notice anytime thereafter.''
(10) Information and resources. Contracting officers must have
sufficient information available at the time a final decision is issued
on a claim so resolution of an appeal within the period set for an
expedited disposition will not be delayed. Once an appeal is docketed,
and expedited disposition is elected, contracting officers must devote
sufficient resources to the appeal to ensure the schedule for
resolution is met. Nothing in this part precludes an effort by the
parties to settle a controversy after an appeal has been filed,
although such efforts to settle the controversy will not suspend
processing the appeal, unless the Board of Contract Appeals so directs.
Sec. 601.110 Payment of claims.
Any claim amount determined in a final decision to be payable, less
any portion previously paid, should be promptly paid to the supplier
without prejudice to either party in the event of appeal or action on
the claim. In the absence of appeal by the Postal Service, a board or
court decision favorable in whole or in part to the supplier must be
implemented promptly. In cases when only the question of entitlement
has been decided and the matter of amount has been remanded to the
parties for negotiation, a final decision of the contracting officer
must be issued if agreement is not reached promptly.
Sec. 601.111 Interest on claim amounts.
Interest on the amount found due on the supplier's claim must be
paid from the date the contracting officer received the claim (properly
certified, if required) or from the date payment would otherwise be
due, if that date is later, until the date of payment. Simple interest
will be paid at the rate established by the Secretary of the Treasury
for each 6-month period in which the claim is pending. Information on
the rate at which interest is payable is announced periodically in the
Postal Bulletin.
Sec. 601.112 Review of adverse decisions.
Any party may seek review of an adverse decision of the Board of
Contract Appeals in the Court of Appeals for the Federal Circuit or in
any other appropriate forum.
Sec. 601.113 Debarment, suspension, and ineligibility.
(a) General. Except as provided otherwise in this part, contracting
officers may not solicit proposals from, award contracts to, or, when a
contract provides for such consent, consent to subcontracts with
debarred, suspended, or ineligible suppliers.
(b) Definitions--(1) Affiliate. A business, organization, person,
or individual connected by the fact that one controls or has the power
to control the other or by the fact that a third party controls or has
the power to control both. Indications of control include, but are not
limited to, interlocking management or ownership, identity of interests
among family members, shared facilities and equipment, contractual
relationships, common use of employees, or a business entity organized
following the debarment, suspension, or proposed debarment of a
supplier which has the same or similar management, ownership, or
principal employees as the supplier that was debarred, suspended, or
proposed for debarment. Franchise agreements are not conclusive
evidence of affiliation if the franchisee has a right to profit in
proportion to its ownership and bears the risk of loss or failure.
(2) Debarment. An exclusion from contracting and subcontracting for
a reasonable, specified period of time commensurate with the
seriousness of the offense, failure, or inadequacy of performance.
(3) General Counsel. This includes the General Counsel's authorized
representative.
(4) Indictment. Indictment for a criminal offense. An information
or other filing by competent authority charging a criminal offense is
given the same effect as an indictment.
(5) Ineligible. An exclusion from contracting and subcontracting by
an entity other than the Postal Service under statutes, executive
orders, or regulations, such as the Davis-Bacon Act, the Service
Contract Act, the Equal Employment Opportunity Acts, the Walsh-Healy
Public Contracts Act, or the Environmental Protection Acts and related
regulations or executive orders, to which the Postal Service is subject
or has adopted as a matter of policy.
(6) Suspension. An exclusion from contracting and subcontracting
for a reasonable period of time due to specified reasons or the
pendency of a debarment proceeding.
(7) Supplier. For the purposes of this part, a supplier is any
individual, person, or other legal entity that:
(i) Directly or indirectly (e.g., through an affiliate) submits
offers for, is awarded, or reasonably may be expected to submit offers
for or be awarded, a Postal Service contract, including a contract for
carriage under Postal Service or commercial bills of lading, or a
subcontract under a Postal Service contract; or
(ii) Conducts business or reasonably may be expected to conduct
business with the Postal Service as a subcontractor, an agent, or as a
representative of another supplier.
(c) Establishment and maintenance of lists--(1) The vice president,
Supply Management will establish, maintain, and make available a list
of suppliers debarred or suspended by the Postal Service to contracting
officers.
(2) The General Services Administration (GSA) compiles and
maintains a consolidated list of all persons and entities debarred,
suspended, proposed for debarment, or declared ineligible by Federal
agencies or the Government Accountability Office. GSA posts the list on
the Internet.
(3) The vice president, Supply Management will notify the GSA of
any Postal Service debarment, suspension, and change in the status of
suppliers, including any of their affiliates, on the Postal Service
list.
(d) Treatment of suppliers on Postal Service or GSA lists.
(1) Contracting officers will review the Postal Service and GSA
lists before making a contract award.
(2) Suppliers on the Postal Service list are excluded from
receiving contracts and subcontracts, and contracting officers may not
solicit proposals or
[[Page 58256]]
quotations from, award contracts to, or, when a contract provides for
such consent, consent to subcontracts with such suppliers, unless the
vice president, Supply Management, or his or her designee, after
consultation with the General Counsel, has approved such action.
Suppliers on the Postal Service list may not provide goods or services
to other persons or entities for resale, in whole or part, to the
Postal Service and such other persons or entities are obligated to
review the consolidated GSA list in order to exclude suppliers debarred
or suspended by the Postal Service from performing any part of a Postal
Service contract.
(3) Suppliers on the GSA list are assigned a code by GSA which is
related to the basis of ineligibility. The vice president, Supply
Management maintains a table describing the Postal Service treatment
assigned to each code. Suppliers on the GSA list who are coded as
ineligible are excluded from receiving contracts and subcontracts, and
contracting officers may not solicit proposals or quotations from,
award contracts to, or, when the contract provides for such consent,
consent to subcontracts with such suppliers, unless the vice president,
Supply Management, or designee, after consultation with the General
Counsel, has approved such action. Suppliers on the GSA list may not
provide goods or services to other persons or entities for resale, in
whole or part, to the Postal Service, and such other persons or
entities are obligated to review the consolidated GSA list in order to
exclude debarred or suspended suppliers from performing any part of a
Postal Service contract.
(4) Suppliers on the GSA list are assigned codes for which the
table provides other Postal Service guidance, and are considered
according to that guidance. When so indicated on the table, contracting
officers must obtain additional information from the entity responsible
for establishing the supplier's ineligibility, if such information is
available.
(5) The debarment, suspension, or ineligibility of a supplier does
not, of itself, affect the rights and obligations of the parties to any
valid, pre-existing contract. The Postal Service may terminate for
default a contract with a supplier that is debarred, suspended, or
determined to be ineligible. Contracting officers may not add new work
to any contract with a supplier that is debarred, suspended, or
determined to be ineligible by supplemental agreement, by exercise of
an option, or otherwise (unless the work is classified as an
insignificant or significant minor service change to a mail
transportation contract), except with the approval of the vice
president, Supply Management, or designee.
(e) Causes for debarment--(1) The vice president, Supply
Management, with the concurrence of the General Counsel, may debar a
supplier, including its affiliates, for cause such as the following:
(i) Conviction of a criminal offense incidental to obtaining or
attempting to obtain contracts or subcontracts, or in the performance
of a contract or subcontract.
(ii) Conviction under a Federal antitrust statute arising out of
the submission of bids or proposals.
(iii) Commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making false statements, tax
evasion, or receiving stolen property.
(iv) Violation of a Postal Service contract so serious as to
justify debarment, such as willful failure to perform a Postal Service
contract in accordance with the specifications or within the time
limit(s) provided in the contract; a record of failure to perform or of
unsatisfactory performance in accordance with the terms of one or more
Postal Service contracts occurring within a reasonable period of time
preceding the determination to debar (except that failure to perform or
unsatisfactory performance caused by acts beyond the control of the
supplier may not be considered a basis for debarment); violation of a
contractual provision against contingent fees; or acceptance of a
contingent fee paid in violation of a contractual provision against
contingent fees.
(v) Any other offense indicating a lack of business integrity or
business honesty.
(vi) Any other cause of a serious and compelling nature that
debarment is warranted.
(2) The existence of a conviction in paragraph (e)(1)(i) or (ii) of
this section can be established by proof of a conviction in a court of
competent jurisdiction. If appeal taken from such conviction results in
a reversal of the conviction, the debarment may be removed upon the
request of the supplier, unless another cause or another basis for
debarment exists.
(3) The existence of any of the other causes in paragraphs
(e)(1)(iii), (iv),(v), or (vi) of this section can be established by a
preponderance of the evidence, either direct or indirect, in the
judgment of the vice president of Supply Management.
(4) The criminal, fraudulent, or improper conduct of an individual
may be imputed to the firm with which he or she is or has been
connected when an impropriety was committed. Likewise, when a firm is
involved in criminal, fraudulent, or other improper conduct, any person
who participated in, knew of, or had reason to know of the impropriety
may be debarred.
(5) The fraudulent, criminal, or other improper conduct of one
supplier participating in a joint venture or similar arrangement may be
imputed to other participating suppliers if the conduct occurred for or
on behalf of the joint venture or similar arrangement, or with the
knowledge, approval, or acquiescence of the supplier. Acceptance of the
benefits derived from the conduct will be evidence of such knowledge,
approval, or acquiescence.
(f) Mitigating factors--(1) The existence of any cause for
debarment does not necessarily require that a supplier be debarred. The
decision to debar is within the discretion of the vice president,
Supply Management, with the concurrence of the General Counsel, and
must be made in the best interest of the Postal Service. The following
factors may be assessed in determining the seriousness of the offense,
failure, or inadequacy of performance, and may be taken into account in
deciding whether debarment is warranted:
(i) Whether the supplier had established written standards of
conduct and had published internal control systems at the time of the
activity that constitutes cause for debarment or had adopted such
procedures prior to any Postal Service investigation of the activity
cited as a cause for debarment.
(ii) Whether the supplier brought the activity cited as a cause for
debarment to the attention of the Postal Service in a prompt, timely
manner.
(iii) Whether the supplier promptly and fully investigated the
circumstances involving debarment and, if so, made the full results of
the investigation available to appropriate officials of the Postal
Service.
(iv) Whether the supplier cooperated fully with the Postal Service
during its investigation into the matter.
(v) Whether the supplier paid or agreed to pay all criminal, civil,
and administrative liability and other costs arising out of the
improper activity, including any investigative or administrative costs
incurred by the Postal Service, and made or agreed to make full
restitution.
(vi) Whether the supplier took appropriate disciplinary action
against the individual(s) responsible for the activity that could cause
debarment.
(vii) Whether the supplier implemented and/or agreed to implement
remedial measures,
[[Page 58257]]
including those identified by the Postal Service.
(viii) Whether the supplier instituted and/or agreed to institute
new and/or revised review and control procedures and ethics programs.
(ix) Whether the supplier had adequate time to eliminate
circumstances within the supplier's organization that could lead to
debarment.
(x) Whether the supplier's senior officers and mid-level management
recognize and understand the seriousness of the misconduct giving rise
to debarment.
(2) The existence or nonexistence of mitigating factors or remedial
measures such as those above is not determinative whether or not a
supplier should be debarred. If a cause for debarment exists, the
supplier has the burden of demonstrating, to the satisfaction of the
vice president, Supply Management that debarment is not warranted or
necessary.
(g) Period of debarment--(1) When an applicable statute, executive
order, or controlling regulation of other agencies provides a specific
period of debarment, that period applies. In other cases, debarment by
the Postal Service should be for a reasonable, definite, stated period
of time, commensurate with the seriousness of the offense or the
failure or inadequacy of performance. Generally, a period of debarment
should not exceed three years. When debarment for an additional period
is deemed necessary, notice of the proposed additional period of
debarment must be furnished to the supplier as in the case of original
debarment.
(2) Except as precluded by an applicable statute, executive order,
or controlling regulation of another agency, debarment may be removed
or the period may be reduced by the vice president, Supply Management
when requested by the debarred supplier and when the request is
supported by a reasonable justification, such as newly discovered
material evidence, reversal of a conviction, bona fide change of
ownership or management, or the elimination of the causes for which
debarment was imposed. The vice president, Supply Management may, at
his or her discretion, deny any request or refer it to the Judicial
Officer for a hearing and for findings of fact, which the vice
president, Supply Management will consider when deciding the matter.
When a debarment is removed or the debarment period is reduced, the
vice president, Supply Management must state in writing the reason(s)
for the removal of the debarment or the reduction of the period of
debarment.
(h) Procedural requirements for debarment--(1) After securing the
concurrence of the General Counsel, the vice president, Supply
Management will initiate a debarment proceeding by sending the supplier
a written notice of proposed debarment. The notice will be served by
sending it to the last known address of the supplier by Certified Mail,
return receipt requested. A copy of the notice will be furnished to the
Office of Inspector General. The notice will state that debarment is
being considered; the reason(s) for the proposed debarment; the
anticipated period of debarment and the proposed effective date; and
that, within thirty days of the notice, the supplier may submit, in
person or in writing, or through a representative, information and
argument in opposition to the proposed debarment. In the event a
supplier does not submit information or argument in opposition to the
proposed debarment to the vice president, Supply Management within the
time allowed, the debarment will become final with no further review or
appeal.
(2) If the proposed debarment is based on a conviction or civil
judgment, the vice president, Supply Management, with the concurrence
of the General Counsel, may decide whether debarment is merited based
on the conviction or judgment, including any information received from
the supplier. If the debarment is based on other circumstances or if
there are questions regarding material facts, the vice president,
Supply Management may seek additional information from the supplier
and/or other persons, and may request the Judicial Officer to hold a
fact-finding hearing on such matters. The hearing will be governed by
rules of procedure promulgated by the Judicial Officer. The vice
president, Supply Management may reject any findings of fact, in whole
or in part, when they are clearly erroneous.
(3) When the vice president, Supply Management proposes to debar a
supplier already debarred by another government agency for a period
concurrent with such debarment, the debarment proceedings before the
Postal Service may be based entirely upon the record of evidence,
facts, and proceedings before the other agency, upon any additional
facts the Postal Service deems relevant, or on the decision of another
government agency. In such cases, the findings of facts by another
government agency may be considered as established, but, within thirty
days of the notice of proposed debarment, the supplier may submit, in
person or in writing, or through a representative, any additional
facts, information, or argument to the vice president, Supply
Management, and to explain why debarment by the Postal Service should
not be imposed.
(4) Questions of fact to be resolved by a hearing before the
Judicial Officer will be based on the preponderance of the evidence.
(5) After consideration of the circumstances and any information
and argument submitted by the supplier, the vice president, Supply
Management, with the concurrence of the General Counsel, will issue a
written decision regarding whether the supplier is debarred, and, if
so, for the period of debarment. The decision will be mailed to the
supplier by Certified Mail, return receipt requested. A copy of the
decision will be furnished to the Office of the Inspector General. The
decision will be final and binding, unless the decision was procured by
fraud or other criminal misconduct, or the decision was obtained in
violation of the regulations contained in this part or an applicable
public law enacted by Congress.
(i) Causes for suspension. The vice president, Supply Management,
may suspend any supplier, including any of its affiliates:
(1) If the supplier commits, is indicted for, or is convicted of
fraud or a criminal offense incidental to obtaining, attempting to
obtain, or performing a government contract, violates a Federal
antitrust statute arising out of the submission of bids and proposals,
or commits or engages in embezzlement, theft, forgery, bribery,
falsification or destruction of records, or receipt of stolen property,
or any other offense indicating a lack of business integrity or
business honesty;
(2) For any other cause of such serious and compelling nature that
suspension is warranted; or
(3) If the Postal Service has notified a supplier of its proposed
debarment under this Part.
(j) Period of suspension. A suspension will not exceed one year in
duration, except a suspension may be extended for reasonable periods of
time beyond one year by the vice president, Supply Management. The
termination of a suspension will not prejudice the Postal Service's
position in any debarment proceeding. A suspension will be superseded
by a decision rendered by the vice president, Supply Management, under
paragraph (h)(5) of this section.
(k) Procedural requirements for suspension--(1) The vice president,
Supply Management will notify a supplier of a suspension or an
extension of a suspension and the reason(s) for the suspension or
extension in writing sent
[[Page 58258]]
to the supplier by Certified Mail, return receipt requested, within ten
days after the effective date of the suspension or extension. A copy of
the notice will be furnished to the Office of the Inspector General.
(2) The notice will state the cause(s) for the suspension or
extension.
(3) Within thirty days of notice of suspension or an extension, a
supplier may submit to the vice president, Supply Management, in
writing, any information or reason(s) the supplier believes makes a
suspension or an extension inappropriate, and the vice president,
Supply Management, in consultation with the General Counsel, will
consider the supplier's submission, and, in their discretion, may
revoke a suspension or an extension of a suspension. If a suspension or
extension is revoked, the revocation will be in writing and a copy of
the revocation will be sent to the supplier by Certified Mail, return
receipt requested. A copy of the revocation will be furnished to the
Office of the Inspector General.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. E7-20267 Filed 10-12-07; 8:45 am]
BILLING CODE 7710-12-P