Op Ed Published in the Federal Times
Every year, the U.S. Postal Service spends close to $12 billion on goods and services. With that kind of money in play, entire businesses â€” from supplies to mail transport to construction â€” revolve around contracts with the Postal Service. As a government entity, the Postal Service has an obligation to make sure that its contracts are in the best interest of the American people.
New purchasing rules issued by the Service in June offer some potentially worthwhile improvements. But for the process to work, it needs to include an external control audit force.
The current purchasing process continues to be fraught with problems. USPS has enormous leeway â€” with minimal external control â€” in deciding who gets a contract. The Service itself determines whether to conduct competitive bidding or to just hand out a contract to a sole bidder.
In the business world, and even elsewhere in government, competitive bidding helps determine who can provide the best service at the best price. But the Postal Service is not required â€” nor is it often inclined to attempt â€” to maximize healthy competition for the projects it hands out. The USPS Office of the Inspector General has documented numerous cases of consumers losing out because of lax purchasing practices.
Last year, a special Presidential Commission proposed recommendations to reform the Postal Service. The commission urged USPS to “revise its purchasing regulations” to better reflect commercial practices. It also stressed the need for greater accountability and oversight.
But the Postal Service did not take the Commissionâ€™s conclusion into account in issuing its new rules. Under the new, streamlined procurement system, the need for an external auditor is that much greater.
The American Bar Association warns that if the regulations are implemented, “there will no longer be any rules governing such basic procurement procedures as publicizing procurement opportunities, soliciting proposals, evaluating proposals and awarding and administering contracts.”
If the goal is to save money by protecting consumers from money-losing sweetheart deals, the Postal Service needs more external oversight, not less.
Without clear, enforceable rules open to public scrutiny, whatâ€™s to prevent the Postal Service from making smoky, back-room agreements with some companies while arbitrarily blacklisting others. In the words of the American Bar Association, “The lack of any defined purchasing policies or procedures in a large government organization would lead to inconsistent and contradictory practices, and could easily result in fraud, waste, and abuse.”
As the Presidential Commission suggested, postal purchasing rules should incorporate the best practices of the commercial sector. That means clarity, transparency and cost-effectiveness. Wherever possible, there needs to be more competition in the bidding process not just in terms of price, but also quality.
Here are a couple of suggestions. A good place to start incorporating the best purchasing practices of the private sector would simply be to encourage fully-competitive bidding, including routine post-contract evaluation and competitive rebidding. Quality of service must be considered. An external control should also make sure the Postal Service pursues dual-sourcing, in which two companies are given side-by-side deals to compete for future contracts.
It is nothing new for Postal Service management to seek to avoid rules and oversight in the name of “greater flexibility.” In fact, it is part of a pattern that has characterized many of their sought-after policy changes in recent years.
By law, the Postal Service has far more purchasing flexibility than other government agencies. Abused, that flexibility could become an excuse for a lack of oversight, sloppiness and waste. Employed effectively, however, it gives the Service an excellent opportunity to emulate the best private companies, improve service, and, ultimately, give Aunt Minnie the better deal she deserves.
Charles Guy, Ph.D., is Adjunct Fellow with the Lexington Institute and former Director, Office of Economics, Strategic Planning, U.S. Postal Service.
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