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Purchasing makes up a significant portion of annual expenses for the U.S. Postal Service (USPS). USPS has recently made significant changes to its purchasing regulations which, according to USPS, will result in a more businesslike purchasing process. Some stakeholders, including smaller suppliers who stated they rely on USPS for the majority of their business, have raised concerns about these changes. GAO was asked to (1) describe these changes, stakeholder views, and USPS's rationale for the changes and (2) assess how these changes reflect the principles of postal reform and practices of leading organizations and identify areas, if any, for continued oversight.

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Recommendations for Executive Action

Agency Affected Recommendation Status
United States Postal Service 1. The Postmaster General should take actions to address the inconsistencies in USPS's ombudsman with the leading principles and practices related to independence and impartiality. USPS should consult with expert ombudsman and dispute resolution organizations to explore options related to its intended purpose for the ombudsman position and alternatives for changing this position to conform to leading principles and practices. If USPS wants to retain the ombudsman position, it should revise (1) the ombudsman's reporting relationship to the purchasing organization so that it is independent and neutral; (2) the ombudsman's role so that it makes recommendations rather than final, binding decisions; and (3) the appeals provision so that it applies to the final, binding agency decision rather than the ombudsman's recommendation. Another alternative is that USPS could eliminate the ombudsman position and use other dispute resolution mechanisms, such as ADR. USPS could then designate another agency official to make the final, binding decision. For either alternative, USPS would need to change its regulations and guidance accordingly.
Closed - Implemented
In response to our recommendations, Postal officials told us that they talked to representatives from leading ombudsman-related organizations, conducted research, and benchmarked the practices of several private-sector companies. Based on this research, they agreed with us that their use of the title "ombudsman" is misleading and have revised their regulations in three areas by changing: 1)the Ombudsman title to Supplier Dispute Resolution Official (SDR official), 2) the confidentiality requirements related to material held in confidence by the SDR official, and 3) the process for resolving disagreements to require attempts to resolve disputes with contracting officers prior to lodging a disagreement with the SDR official. The Postal Service submitted a notice of these changes to the Federal Register on October 15th, and the regulations became effective on November 14th.

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