Postal Procurement

Ethics Violations Did Not Invalidate an Automation Contract Gao ID: GGD-92-119 August 13, 1992

In reviewing the U.S. Postal Service's (USPS) purchase of an image processing subsystem that would allow the addition of bar codes during mail processing, GAO found that USPS acted within the scope of its procurement authority in awarding the contract to ElectroCom, which has secured more than half of all postal automation contract dollars during the past decade. Several USPS officials accepted meals and travel from a German affiliate of ElectroCom, a violation of both the law and USPS standards of conduct. Even though these actions created the appearance of a conflict of interest, the contract could have been legitimately awarded to ElectroCom under federal procurement rules.

GAO found that: (1) the vendor that USPS selected was eligible to compete for the contract; (2) USPS officials committed ethics violations on several procurement-related trips, but those violations did not invalidate the contract award; (3) USPS officials visited all competing vendors' manufacturing sites; (4) before proposals were submitted, USPS added three evaluation criteria to the solicitation, which was allowed under USPS procurement regulations; (5) the signing of the licensing agreement between the vendor and the equipment's original manufacturer after the due date for proposals did not legally affect the award of the production contract; (6) the USPS attorney who denied the protest of the contract award did so objectively and independently of the procurement process; (7) USPS published adequate notices of the solicitation for the production contract; (8) the vendor and its licensing partner have received 65 percent of USPS mail automation contracts since 1983, while other federal agencies have awarded few contracts to them; (9) USPS recordkeeping concerning the solicitation and contract award met USPS procurement regulations; and (10) USPS did not violate its procurement regulations and could have awarded the production contract to the winning vendor under federal procurement regulations.

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