FR Doc E7-20267
[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