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Postal Contracts Look Better by Daylight
Federal
decisionmakers are feeling considerable pressure to take action to rescue the
Postal Service from its desperate financial situation. But decades of
Congressional interference has been a major reason the Service’s business plan
is so broken, and the danger persists that, despite projections of $200 billion
in cumulative losses if Congress fails to act, any major missteps now could
make matters even worse.
Tightening postal contracting provisions would seem like an obvious and
noncontroversial fix, especially in light of some widely-reported scandals and
pointed criticism regarding noncompetitive contracts. Best practices in
federal contracting are, after all, not so difficult to find. And
continued improvements in Postal Service business practices that ensure
adequate transparency and competition will be essential to returning it to
viability.
But it is
unclear how the reforms currently being discussed in this area would be
improvements over positive changes already being implemented by the Postal
Service. A January 2011 postal purchasing manual, called Supplying Principles
and Practices, established new rules for noncompetitive contracts. These
included defining four specific scenarios under which they are appropriate, and
the creation of an independent competition advocate with regular
responsibilities for evaluating and publicizing proposed purchases.
It seems sensible that elected officials would seek to codify contracting
reforms into law. But recent, legislative versions of the plan, despite
their bipartisan support, appear to lack the clarity, detail and rigor of the
new agency policies they would replace. And it is not clear that
entrusting these vital details to the legislative process in the current
environment can be counted on to produce them.
With the 11 largest
suppliers to the Postal Service each paid over $100 million in FY 2010, the
stakes for the Service are high. Last year’s contracting changes were
made amid numerous reports of problems in this area. One 2010 audit by
the Postal Service Inspector General found that more than one-third of noncompetitive
contracts reviewed were insufficiently supported. These included 17
recent contracts awarded noncompetitively to former Postal Service
executives.
In fact, the Inspector General has noted that Postal Service sole-source
contracts incurred hundreds of millions of dollars in unnecessary costs in
recent years. Increased oversight and monitoring in specific areas were
among the recommendations regularly issued by the IG to avoid incurring
unnecessary future costs. Such continued scrutiny will be important. But
any new reforms that undermine the progress already made could prove costly and
ill-timed.
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