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186 IRET Congressional Advisory 1 (2005)

handle is hein.taxfoundation/iretcgadv0183 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. June 1, 2005 Advisory No. 186 THE POSTAL SERVICE'S PROCUREMENT REFORM Executive Summary The Postal Service's purchases of services and property, which totaled $12.4 billion in 2002, significantly affect its financial health and its ability to perform its government-assigned mission. How it conducts its purchasing is of concern to policymakers, taxpayers, and mail users. Effective May 19, 2005, the Postal Service scrapped all the regulations it had developed over the years concerning purchases of services and non-real property. It replaced them with a nine page rule, issued in the Federal Register in April, that mainly discusses canceling business relationships, debarring or suspending suppliers, and limiting suppliers' ability to seek redress when disputes or contract claims arise. Contrary to the Service's claims, neither its own Transformation Plan nor the President's Commission on the U.S. Postal Service recommended abolishing the Service's procurement regulations or downgrading them to non-binding internal guidance. They recommended revising the regulations, which had been an ongoing process with much support in the postal community. The Postal Service identified neither undesirable inflexibilities in the old purchasing regulations nor provided examples of desirable practices being blocked to justify dismantling the regulations. The regulations already gave the agency considerable flexibility and discretion, including a simple means of obtaining approval to deviate from normal procedures when necessary. Government Accountability Office studies that criticized some aspects of recent supply management initiatives did not identify the old procurement regulations as part of the problem. The agency's action reduces transparency and accountability. That is a bad business practice at a government enterprise, and contrary to the agency's claim of pursuing best business practices. The Postal Service's penchant for secrecy is also evident in its largest supply contract, whose details the Service refuses to publicly disclose. To instill greater financial discipline and permit easier monitoring by citizen/voters, true reform would increase transparency and accountability. The Service is moving in the wrong direction. The Postal Service should restore its former purchasing regulations. If it does not, Congress should keep very close tabs on what the government agency is doing.

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