The U.S. Postal Service manages about 30,000 contract actions (awards and modifications), and spends roughly $13 billion on contracts annually. The sheer volume of contracts and the huge dollar amounts involved make it an area to regularly monitor for fraud, waste, and abuse.
It also means USPS contract officers (COs) have a big responsibility given the essential role they play in the contracting process.
COs are responsible for solicitation, award, management, and termination of contracts. COs can extend contracts when there is a good reason for it, such as when there is a continuing need for goods or services or when maintaining the current supplier would represent the best value for the Postal Service.
Our recent audit report found COs were not consistently extending contracts according to policies and procedures.
We selected for review 62 contracts out of 313 open contracts over eight years old, for which the Postal Service paid over $520 million. We found COs:
- Added options after contract award that continuously extend 14 contracts.
- Inconsistently used option clauses when exercising options for 39 contracts.
- Improperly extended 33 contracts by repeatedly using one-time renewal clauses.
- Failed to incorporate required contract extension clauses into the contract language for 46 contracts.
Our report noted that without adequate processes over contract administration, the risk of not complying with policy increases and contracts can be improperly extended. This hinders competition, reducing the opportunity to get the best value, and may impact the continuity of goods and services. Also, contracts not closed properly may still have funds obligated that the Postal Service could use for other purchases.
We recommended management revise policy and strengthen training and communication around the proper use of option and renewal clauses.
Do you have any ideas for ways to improve the Postal Service’s contract program? Have you seen indications of misuse? Are there ways that the program can be more efficient?