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**INVITATION FOR EXPRESSIONS OF INTEREST**

**TO BE DESIGNATED AS A QUALIFIED LOCKBOX PROVIDER FOR**

**FEDERAL AGENCY GENERAL LOCKBOX COLLECTIONS**

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**Issue Date:** August 15, 2003

**Deadline for Submission of Notice of Intention to Respond:** September
5, 2003

**Deadline for Submission of Proposals:** October 8, 2003

***A Message from Assistant Commissioner Bettsy H. Lane***

For 20 years, the Financial Management Service (FMS), a bureau of the
U.S. Department of the Treasury, has been in the business of issuing
solicitations for lockbox services and subsequently designating
financial institutions as our agents. FMS wants and expects to be on the
cutting edge in this business and in our other collections business
lines. If your financial institution encourages innovation, we are
interested in receiving a proposal for the lockbox services described in
this solicitation.

Based on our 20 years of experience in the lockbox arena, we understand
well that developing a response to this solicitation is a significant
undertaking on your part. Your management will ask you for some level of
assurance that their non-refundable investment in developing a proposal
will eventually result in a sound return. While we obviously cannot
guarantee that your proposal will result in your authorization to
provide lockbox services, we know that with a strong commitment from the
top of an organization and an innovative operational team, this business
has proven profitable. Your role in processing a portion of the \$26
billion collected through 277 general lockbox accounts for nearly 30
different Federal agencies can bring positive results to your bottom
line and give you an edge in promoting your product lines with other
customers in the public and private sectors.

For those of you considering a proposal, we are pleased to share with
you some background on our lockbox program and where we envision the
program going in the near future so that you may decide whether this
business is a good fit with your organization's direction and goals.
We'll start with explaining the uniqueness of this business line and
then describe where we are headed in the next few years.

**This Really is Different**

For FMS, the lockbox business line is unique and challenging to
administer. We have learned some important lessons in 20 years and want
you to benefit from our experience.

**FMS' Role**

Years ago, we decided that the best way to manage the lockbox business
was to separate out lockbox services for the Internal Revenue Service
(IRS) from lockbox services for the rest of the Federal agencies. We did
this because requirements for the IRS are unique within the Federal
sector. We call our two-lockbox business lines the IRS Lockbox Network
and the General (read "non-IRS") Lockbox Network. The solicitation you
are reading now exclusively involves the collection of non-tax payments
and remittances received in **paper form** at the lockbox. Fedwire and
Automated Clearing House (ACH) transactions will not be processed in the
new network. The new network will further the government's adoption of
21^st^ Century collection processes by utilizing flexible Web-based
information flows and emerging technologies to expedite the collection
and settlement of paper remittances received at designated lockboxes. We
continue to examine even better ways to manage this business, and you
will see a significant change in that regard later in the document with
your ability to bid on one, two, or all three types of general lockbox
applications called retail lockbox, wholesale lockbox, and specialized
wholesale lockbox applications.

In short, our role is to conduct this solicitation process and have it
result in the establishment of a "schedule" of high-performing service
providers from which to choose, to serve dozens of agencies, many of
which have multiple bureaus deeper within their organizations. Consider
FMS as the principal in assuring that: (1) the right service provider is
matched with the right Federal program agency; (2) performance is up to
specified standards; and (3) the Federal program agency is meeting its
obligations for timely and efficient implementation and operation of the
program.

**The Lockbox Bank's Role**

Banks that provide lockbox services to the Federal government have often
told us that this business is a "one of a kind." Many banks try to find
a "fit" for the Federal lockbox business within their existing corporate
structure and come to realize that it deserves a unique position within
their organization. For example, some banks have tried to couple this
line of business with their "large corporate" customers, and soon
realize that the profile of our business is quite different. Some banks
have formed a separate "Federal government" sector, concentrating
exclusively on serving their Federal customers. While it is not our
place to dictate how you would manage this business, please accept as
guidance that it deserves a unique approach.

When we designate a financial institution to provide lockbox services,
the FI's staff becomes an extension of our workforce. They become our
operational eyes and ears within the agencies, and we think of them as
"one of us" -- not free agents. We expect to have a very close
partnership with our lockbox banks, so that we know what you know in
real time. This is absolutely vital to the success of the program. While
some of your customers may prefer an "arm's length" relationship with
you, we seek the exact opposite. For example, in instances of urgent
matters that may impact the security of our deposits, we will want
direct access to your senior level officials, and expect that they will
receive our phone calls at any time. We view this as a proactive and
positive approach to doing business, and will expect that you share this
same view.

**Federal Agencies' Role**

We work closely with Federal program agencies to determine their needs
and to provide the best possible level of service to manage their
collections.

The fact that we pay for the basic lockbox services provided to them
(while they pick up the tab for what are called ancillary services) is
certainly viewed favorably by them and by their budget examiners. The
real challenge, in their view, is securing the commitment of us and of
the lockbox banks to get to know their mission and their people. Federal
program agencies are directed by Congress to implement laws and
regulations related to their agency missions -- they are not driven
exclusively by financial management objectives as we are. Therefore, the
"relationship" between FMS, the lockbox banks, and the agency is vitally
important to the success of the operations. We are all linked
inextricably in assuring the success of the agency's mission by virtue
of our ties to their collection operations. Your commitment to
relationship management cannot be emphasized strongly enough as you
contemplate responding to this solicitation.

All that said, we expect to create the most innovative and high-quality
General Lockbox Network (GLN) possible on the cutting edge in agency
collection processing. If that appeals to your organization, please read
on.

**A "Sea Change" is Coming**

As we move forward with developing and utilizing new technologies, the
paper lockbox program will change considerably from, in some cases,
manual and partially automated processing and stovepipe system
development and reporting, to a future paper lockbox which will offer
electronic options for settlement and check clearing as well as
centralized reporting and single system platforms. We will be embracing
and implementing technological changes in lockbox as they become
available in the marketplace. In some cases, we are pushing the industry
to bring innovations to market as evidenced by the specifications within
this solicitation. Even those lockbox banks with whom we have been
partnering for up to 20 years will notice that this document is
promoting a "sea change" in the way we process lockbox transactions.
While incumbency may sometimes provide a level of familiarity with
current business, the scope of changes we seek in operating the General
Lockbox Network means that only the most creative, innovative, and
cost-effective candidates will be certified at the end of the selection
process. All responses, whether submitted by incumbents or
non-incumbents, shall be evaluated objectively under the same standards.

To give you a flavor for these numerous changes, we would like to
summarize them before you move into the main portion of this document.

**Developing a Schedule of Service Providers**

In previous solicitations for lockbox services, we designated financial
institutions to perform lockbox services for specific Federal program
agencies. In other words, at the end of the solicitation process, banks
and agencies were teamed up for 5 or more years. With this solicitation,
we will be certifying financial institutions to be what we call
Qualified Lockbox Providers (QLPs). This certification process is
referred to throughout this document as Phase I. In the ensuing months
and years, we will be pairing the QLPs with the appropriate Federal
program agency (called Phase II throughout the document) for specific
cash flows.

This approach will provide maximum flexibility to all stakeholders. We
will work closely with the QLPs and with the Federal program agencies to
assure a good fit. For some applications, we will seek bids from QLPs,
resulting in the designation being made of the QLP that provides the
optimal response. In other cases, we will simply designate a QLP to
perform lockbox services without seeking bids.

In Phase I of this solicitation, an FI will provide pricing for
designated TMA codes. This pricing will be used as a cap for the initial
term of the agreement. As indicated above, QLPs may have an opportunity
to bid on specific lockbox accounts in Phase II. It is expected that the
Phase II competition may lower these prices even further.

**Three Types of Lockbox Business Lines**

It has become very clear to us that there is not a "one size fits all"
approach that works in serving Federal program agencies, and it is
equally clear that some financial institutions specialize in providing
cash management services.

Federal program agencies' missions and geographic reach are diverse.
Some lockbox accounts have "typical remitter profiles" and others do
not. Some accounts are great candidates for high-volume processing
equipment, and others are not. Conversely, some financial institutions
specialize in the plain vanilla retail applications and others prefer
the more complex wholesale applications.

Therefore, we have created three different categories of lockbox
services -- retail, wholesale, and specialized wholesale. While the
first two categories are self-explanatory, the third reflects that some
agency specifications are especially complex. For example, the
application process to obtain a U.S. Passport through the State
Department requires considerable supporting documentation from the
applicant and very secure handling by a QLP.

This differentiation process for the three types of accounts will
require your careful consideration in deciding the category -- one, two,
or all three -- in which to respond. The end result of this process will
be a certified list of QLPs in each of the three categories, from which
we will work with Federal program agencies to select the most
appropriate service provider.

**A Regional Approach**

In this IEI, we are implementing a regional concept that has proven
successful in the IRS Lockbox Network. For the first time in the General
Lockbox Network, financial institutions will indicate in their proposal
the region(s) of the United States in which they would provide lockbox
services to Federal program agencies. By doing so, we recognize that
financial institutions' footprints tend to be regional, capitalizing on
their existing niche markets, and we will have yet another tool to best
match a QLP with an agency's lockbox cash flow. We would discourage,
though not prohibit, financial institutions from creating a lockbox site
in a regional market they do not currently serve for purposes of
enhancing their chances of becoming certified as a QLP. The lockbox
product is a mature one, and we doubt that a financial institution would
achieve internal support to build a new regional base, and we question
whether a financial institution could be competitive if "new market"
expenses had to be built into their cost proposals.

**Security in a Changed World**

Obviously, security requirements, including physical, personnel and
information systems within this document have been strengthened since
our last solicitation for general lockbox services back in 1994. The
security of government receipts is our top priority and reflected in our
specifications. We realize that some of the requirements may be more
stringent than any of you have seen. We cannot compromise on any of
them, and understand that they may hinder some otherwise very qualified
service providers from submitting a proposal.

Nevertheless, this is an area in which we may be setting the trend for
the private sector's handling of their secure documents and receipts.
Our specifications will probably be showing up in future Requests for
Proposals from your other potential public and private sector customers.
Therefore, it may be in your best interest to review how to
cost-effectively implement these security measures now, so that your
organization remains competitive in the cash management arena.

**Previous Performance**

In this IEI, we will be examining the past performance of potential QLPs
very vigorously. Again, all of our collections business lines, including
lockbox, are now high profile, and we will ensure that the taxpayers are
served by the highest quality service providers possible. For example,
we welcome proposals from organizations that have implemented quality
improvement and control programs.

**Compensation of QLPs**

Recently, we introduced a new method of compensation called the
Depositary Compensation Security (DCS), which is a non-marketable
security issued by the U.S. Treasury, the interest from which serves as
payment to the service provider. This is a major step forward in opening
the field of potential QLPs to more small and mid-size financial
institutions because it eliminates the requirement to collateralize
large compensating balances. We have been told over the years that
collateralization requirements for compensating balances were
show-stoppers for some potential service providers, and we will continue
to explore options that will ease any administrative burdens in this
area and enhance competition. As part of this network, however, FMS may
compensate QLPs via any of the following options, at FMS' sole
discretion: Compensating Balances, Depositary Compensation Securities,
Direct Payments via ACH, and any other method, which may become
available.

**Technological Advances -- Macro**

In the past 3 years, FMS has been developing several initiatives
intended to incorporate the latest technological advances in information
and collections processing. All of these will impact how QLPs serve
Federal program agencies in the coming years and will require maximum
flexibility on all stakeholders' parts as they are implemented initially
and in updated versions.

First, FMS has created and implemented a product called Pay.gov that
enables Federal program agencies' receipt of funds and transmission of
data via Web-based technology. The Federal Reserve has been designated
as the lead in rolling out this program Governmentwide, and designated
QLPs can expect to work closely with them on cross cutting measures. One
measure will include the Internet matching of checks received in the
lockbox with electronic forms processed by Pay.gov.

Additionally, our current lockbox network includes "electronic lockbox
accounts" through which we collect Automated Clearing House (ACH) and
Fedwire transactions. All of these accounts will be closed over the next
year and we will begin processing these electronic collections through
Pay.gov. With this change, funds will be settled by the Federal Reserve
directly into Treasury's account instead of passing through a QLP. Until
this conversion is completed, current service providers will continue to
process the "electronic lockbox accounts" under existing arrangements.
As a result, this General Lockbox Network (GLN) will only process paper
check transactions.

Also, FMS will be implementing shortly a new and improved internet-based
cash concentration and reporting system called CA\$HLINK II. All
deposits received via lockbox will be reported into CA\$HLINK II.
Monthly account analysis statements will also be submitted through
CA\$HLINK II.

And finally, FMS is developing a Central Reporting System (CRS) that
will, among other things, provide Federal program agencies with a
single, consolidated daily report of all revenue activity across all
collection systems. Once this is implemented, QLPs will be required to
interface with it and should realize substantial operational
efficiencies.

**Technological Advances -- Micro**

When we began processing collections via lockbox 20 years ago, the
primary cost-savings came from speeding the flow of funds into the
Treasury to take advantage of the high percent interest rates that
prevailed. Every day delayed in depositing funds had a profound impact
on our cash position. Now, 20 years later and with interest rates at
historic lows, we have mastered the speedy deposit of funds and have
turned our attention to saving costs by using the most modern technology
possible.

This IEI is seeking proposals that will implement cost-cutting measures
like imaging technology, check truncation, paper check conversion (PCC),
and linking credit card collections to the lockbox processing
operations, just to name a few. Of particular note, the introduction of
PCC in lockbox processing will require QLPs to separate items for
settlement. Convertible items processed via PCC will be settled by the
Federal Reserve; non-convertible items will be settled by the QLP.
Additionally, QLPs will be expected to interface with the Imaging
Enterprise Platform that will be built according to the proposal
outlined in the Technical Requirements of the IEI. While some debate
ensues regarding the appropriate means to implement these measures,
there is no debate over whether we want to move ahead on these fronts.
We are serious about reaching the goal of processing 100 percent of our
collections electronically, and see these products as tools to get from
the current 80 percent electronic collections rate to 100 percent.

**Summary**

We hope that this introductory message has been helpful in describing
where we want to take the General Lockbox Network. Be assured that there
is time allotted in this process for you to ask questions about this
document and to receive answers timely so that you can meet the
deadlines for submitting proposals. We thank you in advance for your
interest in our program and look forward to hearing from you.

Bettsy H. Lane

Assistant Commissioner

Federal Finance

August 15, 2003

**GENERAL LOCKBOX NETWORK**

**INVITATION FOR EXPRESSIONS OF INTEREST**

**TABLE OF CONTENTS**

***A Message from Assistant Commissioner Bettsy Lane***

[1.0 INTRODUCTION 1](#introduction)

[2.0 ADMINISTRATIVE ASPECTS AND THRESHOLD REQUIREMENTS
3](#administrative-aspects-and-threshold-requirements)

[2.1 Designation of an FI - Phase I and Phase II
3](#designation-of-an-fi---phase-i-and-phase-ii)

[2.2 Eligibility to Participate in the IEI Competition
5](#__RefHeading___Toc48714171)

[2.3 Authority to Designate 5](#authority-to-designate)

[2.4 Right to Amend IEI; Disclaimers 5](#right-to-amend-iei-disclaimers)

[2.5 Public Information And Freedom of Information Act
6](#public-information-and-freedom-of-information-act)

[2.6 Financial Agent Qualifications Under This IEI
6](#financial-agent-qualifications-under-this-iei)

[2.7 Compensation 7](#compensation)

[2.8 Agreements 8](#agreements)

[2.8.1 Designation and Authorization of Financial Agent (DFA)
8](#designation-and-authorization-of-financial-agent-dfa)

[2.8.2 Memorandum of Understanding (MOU)
8](#memorandum-of-understanding-mou)

[3.0 RESPONSE REQUIREMENTS 9](#response-requirements)

[3.1 Written Responses 9](#written-responses)

[3.1.1 Notice of Intention to Respond
9](#notice-of-intention-to-respond)

[3.1.2 Substantive Response Requirements and Point of Contact
10](#substantive-response-requirements-and-point-of-contact)

[3.2 IEI Clarifications/Questions 10](#iei-clarificationsquestions)

[3.3 Schedule of Key Dates and Deliverables
11](#schedule-of-key-dates-and-deliverables)

[3.4 Contents of Proposal/Criteria and Scoring
11](#contents-of-proposalcriteria-and-scoring)

[3.4.1 Content and General Scoring Information
11](#content-and-general-scoring-information)

[3.4.2 Technical Proposal 13](#__RefHeading___Toc48714188)

[3.4.3 Past Performance Response 13](#__RefHeading___Toc48714189)

[3.4.4 Pricing Response 14](#__RefHeading___Toc48714190)

[3.4.5 Security Response 16](#__RefHeading___Toc48714191)

[3.4.6 Innovations and Bonus Points 16](#__RefHeading___Toc48714192)

[3.5 Designation of Qualified Lockbox Providers (QLP) Under the IEI
17](#__RefHeading___Toc48714279)

[3.6 General Lockbox Network Processing Regions -- Map
19](#__RefHeading___Toc48714281)

[4.0 TECHNICAL REQUIREMENTS 20](#technical-requirements)

[4.1 Technical Requirements - Introduction
20](#technical-requirements---introduction)

[4.2 General Requirements 20](#general-requirements)

[4.3 Performance Measures 20](#performance-measures)

[4.4 Processing Requirements 21](#processing-requirements)

[4.4.1 Core Processing Requirements for All Categories
21](#core-processing-requirements-for-all-categories)

[4.4.1a Check Processing 25](#a-check-processing)

[4.4.1b Deposit Reporting/CA\$HLINK II (Non-PCC Items Only)
34](#b-deposit-reportingcahlink-ii-non-pcc-items-only)

[4.4.1c Data Transmission and Reports (Central Reporting System (CRS))
37](#c-data-transmission-and-reports-central-reporting-system-crs)

[4.4.1d Internet Check Matching via Pay.gov
38](#__RefHeading___Toc48714292)

[4.4.1e Customer Service 39](#e-customer-service)

[4.4.2 Processing Requirements -- Retail Lockbox
39](#__RefHeading___Toc48714294)

[4.4.3 Processing Requirements -- Wholesale Lockbox
40](#processing-requirements-wholesale-lockbox)

[4.4.4 Processing Requirements -- Specialized Wholesale Lockbox
41](#processing-requirements-specialized-wholesale-lockbox)

[4.5 Requirements for Credit Card/PCN Lockbox Processing
42](#requirements-for-credit-cardpcn-lockbox-processing)

[4.5.1 Connectivity To A PCN Financial Agent
42](#__RefHeading___Toc48714298)

[4.5.2 Governmentwide Accounting (GWA)
43](#governmentwide-accounting-gwa)

[4.6 Check Processing Option -- Check Truncation
43](#check-processing-option-check-truncation)

[4.7 Imaging Enterprise Platform Concept
43](#imaging-enterprise-platform-concept)

[4.8 Contractors 45](#contractors)

[4.9 Audit and Report Requirements 45](#audit-and-report-requirements)

[4.9.1 Internal Audits 45](#internal-audits)

[4.9.2 Independent Audits 46](#independent-audits)

[4.9.3 Formal Dispute Process 46](#formal-dispute-process)

[4.9.4 Required Transition Services 47](#__RefHeading___Toc48714307)

[4.9.5 Document Retention/Schedules 47](#document-retentionschedules)

[4.9.6 Account Analysis Formats 48](#account-analysis-formats)

[4.10 Security Requirements 50](#security-requirements)

[4.10.1. Physical Security 50](#physical-security)

[4.10.12. Personnel Security 71](#personnel-security)

[4.11 Information Technology (IT) Security
79](#information-technology-it-security)

[4.12 Disaster Recovery And Processing Continuity Plans
84](#disaster-recovery-and-processing-continuity-plans)

[APPENDIX 1](#__RefHeading___Toc48714315)

[LEGAL AGREEMENTS -- DFA and MOU 86](#__RefHeading___Toc48714316)

[APPENDIX 2](#__RefHeading___Toc48714317)

[TECHNICAL EVALUATION CRITERIA 105](#__RefHeading___Toc48714318)

[APPENDIX 3](#__RefHeading___Toc48714319)

[PRICING RESPONSE TEMPLATES 112](#__RefHeading___Toc48714320)

[APPENDIX 4](#__RefHeading___Toc48714321)

[GLOSSARY OF GENERAL LOCKBOX TERMS 124](#__RefHeading___Toc48714322)

# 1.0 INTRODUCTION

The Financial Management Service (FMS) is pleased to issue this General
Lockbox Network (GLN) Invitation for Expressions of Interest (IEI) to
all qualified financial institutions. In order to help you navigate
through this document, below is a snapshot of the upcoming sections in
this IEI, along with key features of the new GLN (pay close attention to
the Technical Requirements section).

> **Section 2.0 Administrative Aspects and Threshold Requirements**
> outlines the threshold requirements to participate in the IEI
> competition and how FMS will administer the GLN.
>
> **Section 3.0 Response Requirements** describes the processes
> necessary to respond to the IEI, and includes deadlines, criteria and
> scoring elements, along with a map of the five geographic regions that
> are designated for servicing the GLN.
>
> **Section 4.0 Technical Requirements** specifies current, new and
> unique features, such as the Central Reporting System, CA\$HLINK II,
> standardized Treasury Management Association (TMA) codes, Internet
> Check Matching via Pay.gov, Paper Check Conversion, Check Truncation
> and Disaster Recovery and Continuity Plans.

Four appendices follow the last section:

> **Appendix 1 -- Legal Agreements -- DFA and MOU** (models),
>
> **Appendix 2 -- Technical Evaluation Criteria,**
>
> **Appendix 3 -- Pricing Response Templates,**
>
> **Appendix 4 --** **Glossary of General Lockbox Terms.**

Throughout the IEI, several attachments are referenced and are available
on FMS' Web site at
[www.fms.treas.gov/rebids/attachments](http://www.fms.treas.gov/rebids/attachments).

Finally, the IEI, and its appendices and attachments, refer to the terms
"financial institution", "Financial Agent" and "Qualified Lockbox
Provider". In order for prospective bidders to understand these terms,
we offer the following definitions:

> ***Financial Institution (FI***) -- An FI is a financial institution
> eligible under 31 CFR 202.2 to be designated by the Financial
> Management Service as a Financial Agent to provide various types of
> essential banking services.
>
> ***Financial Agent (FA)*** -- An FA is an institution that is
> designated an agent by and enters into an agreement with the Financial
> Management Service, as principal, to provide various types of
> essential banking services.
>
> ***Qualified Lockbox Provider (QLP)*** -- A QLP is a designated
> Financial Agent that becomes a service provider within the General
> Lockbox Network. A QLP may bid on or be assigned business within the
> General Lockbox Network, depending on the availability and location of
> that business.

# 2.0 ADMINISTRATIVE ASPECTS AND THRESHOLD REQUIREMENTS

##  Designation of an FI - Phase I and Phase II

As mentioned in the opening message from the Assistant Commissioner of
Federal Finance, this IEI presents a two-phased process; differentiates
retail, wholesale, and specialized wholesale lockboxes; and, implements
a regional approach -- all to assure that the best possible lockbox
services are provided for Federal program agencies.

Phase I encompasses the receipt, review, and evaluation of proposals
from interested and qualified FIs. As part of this process, FIs will
indicate the type of lockbox service they propose to provide (retail,
wholesale, and/or specialized wholesale) and the region of the country
in which they propose to provide this service (see Sections 3.5 and
3.6).

Phase I of this competitive process will culminate in the designation of
FIs as Qualified Lockbox Providers (QLPs). It should be noted that
designation, during Phase I, as a QLP does not guarantee any lockbox
processing work or compensation during the term of the GLN.

Then, once the new GLN is underway later this year with its QLPs in
place, Phase II will begin. Phase II will encompass the selection by FMS
of designated QLPs to actually perform lockbox processing work for
specific Federal agency cash flows. In Phase II, FMS may, depending on
the specific Federal agency collection flow that needs to be processed:

> 1\. Assign the work to an eligible QLP without further competition, if
> FMS determines, in its sole discretion, it is in the best interests of
> the Federal government to do so, or
>
> 2\. Conduct a mini-competition among eligible QLPs in the pertinent
> Region to determine which QLP will be assigned the processing
> work.[^1]

FIs designated as QLPs in a particular Region shall be required to
perform specific lockbox processing work if directed by FMS to do so in
Phase II, for an amount not to exceed the ceiling price. In addition, if
FMS initiates a Phase II mini-competition in a particular Region, and no
bids are received during Phase II from eligible QLPs in that Region, FMS
reserves the right to either: a) direct any QLP in the Region to perform
the work at the ceiling price, or b) assign the work to an out-of-region
QLP or non-QLP. Thus, QLPs do not have the option of rejecting work
assigned by FMS in Phase II. FMS anticipates that the outcome of Phase
II competitions will be primarily determined by price considerations,
although FMS reserves the right, in its sole discretion, to evaluate
other objective factors, including, but not limited to availability,
technical merit and past performance, as deemed appropriate, on a
case-by-case basis.

The pricing responses submitted by FIs in response to this IEI will
operate as a ceiling in Phase II, i.e. QLPs assigned processing work by
FMS in Phase II must perform required services at or below the prices
specified in the FI's response to this IEI. QLPs bidding for a specific
Federal agency collections flow in a Phase II competition will need to
make a competitive business decision whether to submit the ceiling price
or a lower price. Any bid submitted by a QLP in a Phase II competition
above the ceiling price will not be considered. The following three
examples illustrate, in part, the Phase II Selection Process:

**[GLN Phase II Selection Process Example #1 (Competitive
Selection)]{.underline}**

Federal Agency A requires wholesale lockbox services in Region 1. Three
FIs were designated by FMS as QLPs in Region 1 for wholesale lockbox
services at the conclusion of the IEI competition. FMS establishes Phase
II competition criteria and thereafter administers a Phase II
competition to determine which of these three QLPs will be awarded the
work. All three QLPs eligible to perform wholesale work in Region 1
submit bids at prices at or below the ceiling amount. A fourth QLP only
eligible to perform wholesale work in Region 2 requests permission to
enter the Phase II competition. FMS rejects the request because the
fourth QLP is not eligible to provide wholesale services in Region 1,
and the circumstances referenced in IEI footnote 1, do not apply in this
particular case. Based on the Phase II proposals submitted by the 3
eligible QLPs, FMS selects one of them to perform wholesale work in
Region 1 for Federal Agency A based on an objective evaluation of the
Phase II competition criteria.

**[GLN Phase II Selection Process Example #2 (Competitive
Selection)]{.underline}**

Federal Agency B requires retail lockbox services in Region 3. Two FIs
were designated by FMS as QLPs in Region 3 for retail lockbox services
at the conclusion of the IEI competition. FMS determines that it will
conduct a Phase II competition for this Federal Agency collection flow
but neither of the eligible QLPs responds to FMS' request for Phase II
bids. FMS may: a) direct either of the two QLPs in the Region to perform
the work at the ceiling price provided in Phase I (in which case the
selected QLP may not decline the work), or b) assign an out-of-region or
non-QLP financial institution to perform the work.

**[GLN Phase II Selection Process Example #3 (Non-competitive
Selection)]{.underline}**

Federal Agency C requires retail lockbox services in Region 5. Federal
Agency C has a large collection flow that requires significant oversight
by Agency personnel. Federal Agency C worked with QLP #1 in the former
GLN and wants to continue the relationship with QLP #1 because any
switch in lockbox banks providing retail lockbox services will require
an inordinate expenditure of time and resources by Agency C to maintain
the continuity of Federal agency operations. Federal Agency C submits a
written request for FMS to extend QLP #1's authority to continue
processing the collection without a Phase II competition. QLP #1 has not
been designated as a QLP in Region 5, but is a designated QLP in another
Region. FMS agrees with the written request and selects QLP #1 as the
lockbox bank without conducting a Phase II competition. Agency C may be
required to absorb the additional costs for QLP #1 to perform the work
for Federal Agency C if the costs are higher than for the QLPs in Region
5.

[]{#__RefHeading___Toc48714171 .anchor}2.2 Eligibility to Participate in
the IEI Competition

All FIs that are qualified to be designated as depositaries and
financial agents of the United States under 31 Code of Federal
Regulations (CFR) Part 202 (see <http://www.access.gpo.gov/nara/cfr>),
and that otherwise meet the threshold requirements under IEI, Section
2.6 are eligible to participate in this IEI competition. Responses
submitted by entities that do not meet these requirements will not be
considered.

## 2.3 Authority to Designate 

Pursuant to Sections 265 of Title 12, United States Code (U.S.C.), 31
U.S.C. Chapter 33, 31 CFR Part 202, and other authorities ([see
e.g.,]{.underline} 12 U.S.C. §§ 90, 266, 1464(k), and1789a), the
Secretary of the Treasury has authority to designate FIs to be
depositaries and financial agents of the United States. The Secretary of
the Treasury has delegated to FMS the authority to select and designate
depositaries and financial agents for, among other purposes, lockbox
collection services.

Depositaries and financial agents designated to perform lockbox services
by FMS, as Principal, act in Treasury's stead for the stated purposes, a
function that does not constitute a procurement within the meaning of
the Federal Property and Administrative Services Act (41 U.S.C. §§
251-260). Thus, this IEI is **not** a procurement subject to, or
governed by, the Federal Property and Administrative Services Act or the
Federal Acquisition Regulation (FAR). [See e.g.,]{.underline} [United
States v. Citizens & Southern National Bank]{.underline}, 889 F.2d 1067,
1069-70 (Fed. Cir. 1989).

## 2.4 Right to Amend IEI; Disclaimers

Information contained in this document is subject to modification to
comply with legislative, regulatory, organizational, or policy changes.
FMS may amend this IEI at any time prior to the selection of QLPs. If
appropriated funds are used to pay for services under this IEI, the
government's obligation is contingent upon the availability of
appropriated funds from which payment for the agreed-upon services can
be made. No legal liability on the part of the government for any
payment may arise until funds are made available for the performance of
banking services under this IEI. This IEI shall, in no way, commit the
Federal government to any legal or fiduciary obligation to any of the
respondents to this IEI.

FMS is not liable for any costs incurred by respondents in preparing and
submitting a response to this IEI.

FMS reserves the right to accept or reject any and all responses, in
whole or in part, received in response to this IEI, or to waive or
permit the cure of minor irregularities to serve the best interests of
the Federal government.

Based on the responses to this IEI, FMS may select and designate as QLPs
those FIs whose response FMS determines, in its sole discretion, to be
optimal in terms of evaluated point scores, and in the best interests of
the Federal Government.

A responding FI may be required to provide additional information orally
or in writing, or to submit to a site inspection by FMS representatives,
in order to clarify or document the FI's responses and qualifications.

FMS may cancel this IEI, in whole or in part, whenever cancellation is
determined to be fiscally advantageous to the Federal Government or
otherwise in its best interest.

## 2.5 Public Information And Freedom of Information Act

All responses to this IEI and documents pertaining to the responses will
be open to the public, except for material, which has been designated by
responding FIs as proprietary or confidential. Pages containing such
information shall be marked by FIs with the following statement: \"This
page contains confidential and proprietary information.\"

If a request under the FOIA is received for disclosure of proprietary or
confidential data for which an FI has made a written request for
confidentiality or otherwise designated information as commercially or
financially sensitive, FMS will advise the FI of such request and
provide the FI with the opportunity to provide a detailed statement
within 10 working days specifying any objection to disclosure. Refer to
31 CFR 1.6(d) for specific objection requirements. FMS will evaluate any
objection to disclosure and resolve the request for disclosure in
accordance with 31 CFR 1.6(e).

## 2.6 Financial Agent Qualifications Under This IEI

The role of a QLP, as financial agent (FA), is to act on behalf of the
U.S. Treasury in providing financial services to Federal departments and
agencies. FMS is seeking to build a solid working relationship with the
selected QLPs that benefits all parties and that evolves with new and
proven technologies to result in increased efficiencies.

Responses shall be accepted from FIs meeting the qualifications of this
section. Failure to meet any of the qualifications listed below shall
result in the rejection of the response from further consideration. To
be eligible to compete for selection as a QLP under this IEI an FI
shall:

1.  Be eligible to be designated as a depositary and financial agent of
    the United States as defined in Title 31 CFR Part 202;

2.  Be in compliance with existing Treasury regulations and procedures
    concerning the handling of government deposits;

3.  Not be on the Federal Debarment and/or Suspension List and not be
    delinquent on any debts owed to the U.S. Government;

4.  Provide a response that demonstrates that the FI understands the
    technical and other requirements of this IEI and that it is
    completely responsive to those requirements;

5.  Be able to perform all of the requirements of this IEI;

6.  If currently doing business with FMS, not be in a probationary
    status, and has addressed and resolved any identified deficiencies
    in performance, if any;

7.  Covenant that it shall address, to the satisfaction of FMS, any
    potential personnel or organizational conflicts of interest as
    between itself or any subsidiaries or contractors;

8.  If currently doing business with FMS, have completed and submitted
    to FMS all required information in internal and external audits of
    depositary services currently required by Treasury;

9.  Be able to partner with other FAs, when determined by FMS to be in
    the best interest of the government; and

10. Comply fully with all security requirements detailed in Section 4.0,
    Technical Requirements.

## 2.7 Compensation

The method of compensating a QLP for required general lockbox services
is at the sole discretion of FMS. FMS may compensate the QLP by means of
Depositary Compensation Securities (DCS), a compensating balance, direct
payment, or other appropriate method. Whichever method of compensation
is chosen, FMS will fully disclose to the QLP all terms, conditions,
requirements, and obligations under that form of compensation.

The three potential methods of compensation available at this time are
described as follows:

**Compensating Balance** is a balance placed at an FA in a Treasury Time
Balance (TTB) account. Compensation is made through the imputed earnings
on the investable balance using an earnings credit rate (ECR) provided
by FMS. The investable balance includes a TTB held by the FA in a
separate non-interest-bearing account expressly for this purpose and
(where appropriate) collected balances from lockbox deposits.

**Depositary Compensation Securities** are non-marketable securities
issued by the U.S. Treasury to FAs as an investment vehicle that will be
used for investing funds maintained in the TTB account. Compensation is
made by means of the interest accrued on these securities, which is paid
to the FA on a monthly basis.

**Direct Payment** is a payment to the FA reimbursing it directly for
banking services provided. This payment, either an Automated Clearing
House (ACH) or Fedwire transaction, is made on a monthly basis.

**This IEI does not guarantee any** **quantity or minimum amount of
business or compensation to a QLP.** Requirements set forth by FMS,
which fail to result in the level of activity, or compensation
anticipated by any party shall not constitute the basis for price
adjustments or additional compensation to a QLP.

## 2.8 Agreements 

The following agreements shall be executed at the times specified in
this section.

### 2.8.1 Designation and Authorization of Financial Agent (DFA)

Upon selection as a QLP, the FI then shall execute the DFA with FMS (see
Appendix 1 of this IEI). The DFA designates the FI as a lockbox
depositary and financial agent of the United States and details the
legal requirements, and principal/agent relationship between FMS and the
QLP. The terms of the DFA are not negotiable. The duration of the DFA
will be an initial term of three (3) years, with two (2) two-year
renewal options that FMS has the sole discretion to exercise in whole or
in part. The contents of this IEI and the responses submitted by an FI
will be incorporated by reference into the DFA (see Appendix 1).

### 2.8.2 Memorandum of Understanding (MOU)

At the sole discretion of FMS, QLPs may bid for or be assigned Federal
agency business during the Phase II selection process. A QLP awarded
such Federal agency business shall execute an MOU with the Federal
agency and FMS, detailing the agreement among the parties of the
specific General Lockbox services to be performed (see Appendix 1 for a
model MOU).

# 3.0 RESPONSE REQUIREMENTS

## 3.1 Written Responses 

### 3.1.1 Notice of Intention to Respond 

FIs interested in responding to this Invitation shall send a completed
Notice of Intention to Respond Form. (The form required to be completed
is provided in Attachment A on FMS' Web site at
[www.fms.treas.gov/rebids/attachments](http://www.fms.treas.gov/rebids/attachments))
to the FMS contact listed below by 4:00 p.m. (ET) no later than
September 5, 2003.

> Financial Management Service
>
> Program Assistance Division
>
> Attn: Carolyn Dunston, Program Manager
>
> Room 415A
>
> 401 14th Street SW
>
> Washington, DC 20227
>
> Telephone: 1-800-487-1735
>
> Facsimile Number: (202) 874-6965

The Notice may be sent by mail, fax, via hand delivery, or messenger
service. Those FIs submitting the Notice by fax must follow up the fax
transmission with a mailed copy of the original Form.

FIs that do not submit a completed Notice of Intention to Respond Form
by September 5, 2003, ***will not*** be eligible to submit responses to
this IEI.

The Notice, which shall be signed by an authorized FI official, requires
the FI to certify that the FI meets the threshold requirements to
participate in the IEI competition. It also requires the FI to submit,
as references, the names of its top ten largest lockbox clients (based
on transaction volume) by September 5, 2003. The FI submitting the
Notice authorizes FMS to contact these references and to use the
information collected for IEI competition evaluation purposes. For those
FIs currently performing Federal agency lockbox work on behalf of FMS,
at least four (4) of the references must be Federal agencies. For those
FIs not currently performing Federal lockbox work on behalf of FMS, the
FI is requested to provide client references from state or local
government customers or large decentralized corporations. The Notice
also requires the FI to specify its point of contact for the IEI
competition.

Each Notice of Intention to Respond Form and all information provided by
an FI will be held in complete confidence, subject to the provisions of
Section 2.5.

The Notice of Intention to Respond Form specifies that an FI may elect
to withdraw from the process at any time prior to the selection by FMS
of QLPs. It is the expectation of FMS that an FI shall notify FMS in
writing of such withdrawal.

### 3.1.2 Substantive Response Requirements and Point of Contact

FIs shall submit a written response addressing all the requirements of
this IEI. The FI shall submit seven (7) copies of its written response.
The written response shall consist of four (4) parts: a technical
response, security certification, past performance response, and a price
response. FIs shall also submit pricing responses on a diskette in
Microsoft Excel format. Response requirements for each of these parts
are addressed in Section 3.4. Technical responses shall provide a
detailed description of how the FI plans to address all of the
requirements described in this IEI. The technical responses shall not
contain any price information. The security certification requirements
are outlined in Section 3.4.5. Price responses shall contain all price
information related to the services requested in this IEI, by TMA code
and proposed lockbox processing site within a Region (see Section
3.4.4). The entire response must be submitted as a package and received
no later than 1 p.m. (Eastern time) on October 8, 2003 at the address in
Section 3.1.1.

Responses received after the time indicated ***[will not]{.underline}***
be considered.

Responses may be mailed or hand-delivered**; FMS will not accept e-mail
or fax responses**. All responses shall be signed by an officer of the
FI authorized to make the commitments and representations included in
its response. Responses to each section (technical, past performance,
security, and pricing) shall be separately identified, sealed, and bound
and sent in one delivery.

Written responses shall be evaluated in accordance with the criteria
specified in this IEI.

## 3.2 IEI Clarifications/Questions

FMS' Point of Contact will accept written questions regarding this IEI
(including the attachments and appendices) at any time up to September
5, 2003. E-mail questions to the following address:
<general.lockbox.rebid@fms.treas.gov>. Questions shall be concise and
cogent and must contain an IEI citation where applicable. All questions
must also include an FI contact person and phone number in case FMS
requires any further explanation. FMS' verbal responses shall not be
legally binding. However, FMS' Point of Contact will answer and post all
written questions timely submitted on the FMS Rebid Web site located at
<http://www.fms.treas.gov/rebids>.

**NOTE:** It is not permissible for an FI, or any entity representing
the FI, to request information from any governmental source other than
from FMS' Point of Contact or her designee. Any violations regarding
requests for information or attempts to contact Treasury personnel other
than the designated Point of Contact or her designee concerning this IEI
are grounds to disqualify the violator's response from consideration,
thereby precluding the FI from participation in this IEI.

FMS intends to provide full and complete answers to properly submitted
written questions in order to clarify pertinent IEI issues. FMS reserves
the right to provide a single aggregated response to questions submitted
on the same or similar topics to avoid duplication and confusion.
Amendments, if any, to this IEI resulting from written questions
submitted in accordance with this section will be posted on FMS' Rebid
Web site at [www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids).
The Point of Contact for each FI who submitted a Notice of Intention to
Respond letter will be automatically e-mailed with a notification that
the FMS Rebid Web site has been updated with new information.

## 3.3 Schedule of Key Dates and Deliverables

IEI Activities Date

+---------------------------------------------+------------------------+
| Release of Invitation for Expressions of    | August 15, 2003        |
| Interest                                    |                        |
+---------------------------------------------+------------------------+
| Notice of Intention to Respond Form/Past    | September 5, 2003      |
| Performance References Due                  |                        |
+---------------------------------------------+------------------------+
| Deadline for Submission of Written GLN      | September 5, 2003      |
| Questions                                   |                        |
+---------------------------------------------+------------------------+
| Responses to GLN Questions Published        | September 19, 2003     |
+---------------------------------------------+------------------------+
| Written Responses to IEI Technical          | October 8, 2003        |
| Requirements Due                            |                        |
+---------------------------------------------+------------------------+
| Written Responses to IEI Pricing Proposal   | October 8, 2003        |
| Due                                         |                        |
+---------------------------------------------+------------------------+
| Completed Financial Institution             | October 8, 2003        |
| Questionnaire Due                           |                        |
+---------------------------------------------+------------------------+
| Security Certification Due                  | October 8, 2003        |
+---------------------------------------------+------------------------+
| Complete Evaluation of Responses            | October 29, 2003       |
+---------------------------------------------+------------------------+
| Announcement of FIs Selected As QLPs\*      | November 5, 2003       |
+---------------------------------------------+------------------------+
| Signing of DFAs                             | November 21, 2003      |
+---------------------------------------------+------------------------+
| On-Site Security Reviews of QLPs            | November 2003 --       |
|                                             | January 2004           |
+---------------------------------------------+------------------------+
|                                             |                        |
+---------------------------------------------+------------------------+
| **Security Deliverables**                   |                        |
+---------------------------------------------+------------------------+
| Security Awareness Program                  | November 21, 2003      |
+---------------------------------------------+------------------------+
| Facility Security Plan                      | November 21, 2003      |
+---------------------------------------------+------------------------+
| Occupant Emergency Plan                     | November 21, 2003      |
+---------------------------------------------+------------------------+
| Facility Blueprint                          | A. November 21, 2003   |
|                                             |                        |
| A. Initial Facility Blueprint               | B. December 19, 2003   |
|                                             |                        |
| B. Final Facility Blueprint                 |                        |
+---------------------------------------------+------------------------+
| Continuity of Operations Plan               | November 21, 2003      |
+---------------------------------------------+------------------------+
| Completion of Security Awareness Training   | December 31 , 2003     |
+---------------------------------------------+------------------------+

**\*Note:** Selections are contingent upon, and subject to, acceptable
Security Documents, as well as certification of satisfactory Physical
and Personnel security reviews conducted by FMS.

## 3.4 Contents of Proposal/Criteria and Scoring

### 3.4.1 Content and General Scoring Information

Interested FIs are required to prepare and submit seven copies of their
proposal that is in compliance with the specifications shown in this
section. Because each part will be evaluated by a separate and distinct
review panel, a proposal will consist of seven copies of four separately
bound parts: 1) technical; 2) past performance; 3) pricing and 4)
security.

All parts should be delivered in one package to FMS, with pricing
proposals sealed securely within the single package.

More succinctly, banks should submit in one box/package: 1) seven copies
of spiral bound technical proposals; 2) seven copies of bound security
certifications; 3) seven copies of bound past performance proposals; and
4) seven copies of bound price proposals, each in a separate and secure
envelope.

Specific security documents, including the Security Awareness Program,
Facility Security Plan, Occupant Emergency Plan, Facility Blueprint, and
Continuity of Operations Plan will be submitted at a later date in a
separate package.

To assist you in preparing your proposal, each of the following sections
contains bold print showing exactly what documents should be submitted
by the financial institution.

**[Evaluation of Responses]{.underline}**

Responses shall be evaluated in order to determine compliance with the
mandatory requirements of this IEI, and to determine which responses are
optimal in terms of technical requirements, past performance, pricing
and security. Each technical, past performance, and pricing proposal
will be awarded points during the evaluation process. Security
requirements will be evaluated on a pass/fail basis.

During the evaluation process, FMS will award the following range of
points: Technical Requirements Response (0-300), Past Performance
Response (0-100), and Pricing

(0-100). Thus, the maximum score possible for these three required
categories is 500.

**Technical Requirements (60%) Maximum Score = 300**

Staffing and Management Personnel (0-45 points)

Mail Processing/Handling (0-55 points)

Data Capture/Transmission (0-60 points)

Disaster Recovery & Continuity Plans (0-50 points)

Record Retention (0-20 points)

Lockbox Processing (0-70 points)

**Past Performance (20%) Maximum Score = 100**

Performance Questionnaire for FIs (0-20 points)

Client Questionnaire (0-60 points)

Required Audit Information (0-20 points)

**Pricing (20%) Maximum Score = 100**

**Security Pass/Fail**

In addition, FIs are encouraged, but not required, to submit proposed
innovative ideas to improve the GLN. Approved innovations may result in
the FI being awarded bonus points as described under IEI, Section 3.4.6.

Each separate response submitted by an FI will be awarded a distinct
score.

> **Example:** Consistent with IEI Section 3.5, a particular FI submits
> responses to provide lockbox services in Region 1 (retail and
> wholesale), and Region 2 (wholesale and specialized wholesale), FMS
> will evaluate the responses as four separate submissions. Thus, the FI
> will receive four different evaluated scores: Region 1 retail, Region
> 1 wholesale, Region 2 wholesale, and Region 2 specialized wholesale.

Those FIs with the highest evaluated points will be designated QLPs by
FMS in the pertinent Region(s), and in the pertinent service category:
retail, wholesale, and/or specialized wholesale. As stated in IEI,
Section 3.5, FMS intends to designate one or more QLPs in each Region in
each lockbox sub-category: retail, wholesale, and specialized wholesale
lockbox, based on evaluated score results.

Keep in mind that FMS evaluators may award a minimal number of points in
the technical requirements category if the FI merely addresses pro forma
the mandatory technical requirements in the IEI. FMS evaluators may
award more points (not to exceed 300) if the technical response provides
greater and more helpful detail, which demonstrates a better quality
understanding and ability to meet the mandatory requirements.

### 3.4.2 Technical Proposal

Respondents will be rated on how well they propose meeting the technical
requirements. Unless otherwise noted, all services described in this IEI
are mandatory. For the convenience of FIs preparing proposals, FMS has
listed at Appendix 2, the Technical Evaluation Criteria and topics to be
considered during the Technical Response evaluation process.

As noted above, the technical proposal score (0-300) is worth 60% of the
total evaluation score.

### 3.4.3 Past Performance Response

FMS is committed to providing Federal government agencies with the most
effective and efficient general lockbox services available. To that end,
FMS will take careful note of and rate all responding FIs past
performance in their lockbox business line. FMS will evaluate the
following items in order to determine a past performance score:

1.  The completed **Performance Questionnaire for Financial
    Institutions**, submitted by FIs with their proposals (see IEI
    Attachment B on FMS' Web site:
    [www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids)[/attachments]{.underline}).

2.  The **Client Questionnaire** responses from references supplied by
    the FI as required by Section 3.1.1. FMS will send client
    questionnaires to at least five (5) of the ten (10) references
    provided. FMS may also contact the clients by telephone.

3.  **Required Audit Information.** Financial institutions shall provide
    the opinion letter from the independent auditor that performed the
    most recent SAS 70 audit evaluating the adequacy of controls of the
    FI's lockbox operations. If there are substantial weaknesses noted
    in the opinion letter, the FI shall provide a description of the
    actions taken to address the weaknesses. At the request of FMS, the
    FI may be required to provide the complete copy of the SAS 70 audit.

> Financial institutions that have not previously been required to have
> an SAS 70 audit conducted on their lockbox operations shall provide
> sufficient documentation that a review, which includes the lockbox
> operations, has been conducted within the past two years. This review
> can be a part of an internal or external review. The FI shall provide
> a description of actions taken to address significant weaknesses noted
> in such reviews. If selected, a QLP will be required to provide an
> independent audit of its lockbox operations using an SAS 70 Type II
> audit standard as described in the General Lockbox Processing
> Technical Requirements, [4.9]{.underline} [Audit and Report
> Requirements]{.underline} on the reporting schedule described therein.

As noted above, the past performance score (0-100) is worth 20% of the
total evaluation score.

### 3.4.4 Pricing Response 

Respondents must submit proposed pricing responses per TMA code, per
proposed regional site and type of lockbox (retail, wholesale, and
specialized wholesale) by completing the pricing response templates in
the format provided in Appendix 3. Appendix 3 includes three Pricing
Response templates: one for Retail lockbox services, one for Wholesale
lockbox services, and one for Specialized Wholesale lockbox services.
The FI must indicate on the top of each completed template the region to
which the response applies.

> **Example:** If an FI is submitting proposals to provide lockbox
> services in Region 3 (retail and wholesale), and Region 4 (retail and
> wholesale), the FI must submit four separate pricing response
> templates: two separate retail lockbox pricing templates marked Region
> 3 and Region 4, respectively, and two wholesale lockbox pricing
> templates marked Region 3 and Region 4, respectively.

Please note that the three pricing templates (retail, wholesale, and
specialized wholesale) provided at Appendix 3 each have a volume figure
associated with the TMA codes. These volumes were derived by taking the
most recently available aggregate nationwide lockbox volumes (for each
type of lockbox) and dividing that figure by 5, to reflect the new
regional approach. Thus, these volumes are provided for evaluation
purposes only. The template volumes do not reflect projections for
future business, nor are they intended to reflect actual current
business activity because the regional approach is new and actual
weighted figures for regions are not yet available. FIs submitting
responses to this IEI expressly acknowledge, without recourse, that
volumes short of the numbers provided in any template, in any region (or
regions in the aggregate), during the term of the new GLN will not
provide grounds for an upward price adjustment in any case at any time.
Volumes of business and levels of compensation are not guaranteed.

For the convenience of FIs submitting proposals, FMS has provided under
IEI, Section 3.5 information on the states presently assigned to the
five distinct regions.

FMS has decided that in the new GLN, all costs associated with post
office box rentals and courier related services will be treated as a
"Pass-Through", i.e., FMS will compensate the bank its reasonable actual
cost for these services (no mark-up), provided FMS approves, in advance,
the amount of the Pass-Through charge.

FMS will not be soliciting Best and Final Offers in Phase I, so
respondents are encouraged to submit bids with their best prices. FMS is
seeking the same or better discounts as the respondents provide to their
best corporate, state, or local government customers.

As noted above, the pricing proposal score (0-100) is worth 20% of the
total evaluation score.

**Note:** Pricing will be fixed for 3 years, with two two-year options
to renew thereafter. At each renewal, the price adjustment for the
option period may not exceed the lesser of either: (a) the **Consumer
Price Index (CPI)**, specifically entitled the *CPI-U, U.S., All-items
(not seasonally adjusted)*, or (b) the **Employment Cost Index (ECI)**,
specifically entitled the *ECI for Total Compensation (not seasonally
adjusted), private industry workers, white collar, administrative
support including clerical occupations*. Regardless of the CPI or ECI
index, in no case shall the price adjustment for the option period
exceed 4.9 percent (the average change in the *CPI-U, U.S., All items
index (not seasonally adjusted)* between 1970 and 2002).

The Bureau of Labor Statistics produces the CPI and ECI. The CPI and ECI
consist of various indexes based on population coverage, geographic
region, item or occupation coverage, and seasonality. The *CPI-U, U.S.,
All-items index (not seasonally adjusted)* is the CPI-All Urban
Consumers for the United States (approximately 87 percent of the total
U.S. population). It covers expenditures on all items purchased by
families living in urban areas and is not adjusted for seasonal
expenditure patterns. It represents about 87 percent of the total U.S.
population and is based on the expenditures of all families living in
urban areas. The *ECI for Total compensation (not seasonally adjusted),
private industry workers, white collar, administrative support including
clerical occupations* shows changes in total labor costs for a specific
type of worker in a specific occupational group. This index is also not
adjusted for seasonal compensation patterns.

**Note:** IEI, Section 2.1 clearly provides that price proposals
submitted as responses in Phase I (for purposes of designating QLPs)
operate as ceiling prices for work assigned in Phase II. At the time a
specialized wholesale collection flow is assigned or bid in Phase II,
QLPs must justify, in writing, any proposal to charge a price over and
above the ceiling price, based on special processing requirements
identified in an SOW, which are beyond the scope of the pricing
template. As a general rule, FMS believes the pricing template for
specialized lockbox addresses all anticipated requirements. Thus, FIs
are advised that such requests to approve a change over the ceiling
price for specialized wholesale services will only be granted by FMS in
clear and convincing and exceptional cases. The ceiling prices
applicable to retail and wholesale will not be waived.

### Security Response 

GLN security requirements are extensive and detailed commensurate with
the importance of maintaining the integrity of Federal cash management
operations. Respondents must certify that, if selected as a QLP, they
will satisfy the mandatory technical requirements specified in IEI,
Section 4.0, including, but not limited to, the security requirement
detailed in IEI, Section 4.10 (physical and personnel security) and
Section 4.11 (information technology), within 30 days of signing the
DFA.

**The Security Certification Statement must be submitted as the FI's
security response to this IEI** (see Attachment G on FMS' Web site:
[www.fms.treas.gov/rebids/attachments](http://www.fms.treas.gov/rebids/attachments)).

As noted above, the security response will be evaluated on a pass/fail
basis. A failure to meet the security requirements of this IEI will
result in automatic disqualification as a QLP, i.e. designation as a QLP
is contingent on meeting the security requirements.

**Note:** Final security documents must be provided and requirements
completed before a QLP can bid on or be assigned new business (see IEI,
Section 4.10, Section 4.11, and Section 3.3 -- Security Deliverables
schedule). The security documents must include timeframes for physical
and personnel security reviews by FMS at the proposed sites. FMS will
approve the final security documents by the end of December 2003. The
goal is to have the final QLP certification by FMS, authorizing the QLP
to perform general lockbox services by ***[January 2004]{.underline}***.

### 3.4.6 Innovations and Bonus Points

### 

As stated above, FIs are encouraged, but not required, to submit
proposed innovative ideas to improve the GLN. Approved innovations may
result in the FI being awarded 1-10 bonus points which will be added to
the FIs evaluated score. Ten points is the maximum aggregate bonus
points that will be awarded by FMS to an FI, even if more than one
innovation is approved and accepted. The bonus points awarded will be
applied to each proposal (Region and subcategory of service) to which it
pertains; therefore, the FI's proposal should make clear to which region
and subcategory the innovation applies.

If the innovation(s) is approved by FMS, and the FI is designated as a
QLP, the FI will pilot the innovation(s) in a particular region, for an
identified subcategory: retail, wholesale, specialized wholesale.

By submitting a proposed innovation in response to this IEI, the FI
acknowledges that FMS reserves the right to roll out the accepted
innovation across the GLN where it would be implemented by other GLN
QLPs to improve lockbox services provided to Federal agencies.

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87. []{#__RefHeading___Toc48714279 .anchor}Designation of Qualified
    Lockbox Providers (QLP) Under the IEI

**Process for Subsequent Assignment of Work to QLPs**

Under this IEI, FMS is soliciting proposals from FIs interested in being
designated by FMS as GLN QLPs for retail, wholesale, and specialized
wholesale lockbox services in one or more of the following five distinct
geographic Regions that comprise the reconfigured GLN:

**Region 1** -- **North East**

Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Washington,
DC

**Region 2** -- **Mid-West**

Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio,
Tennessee, Wisconsin

**Region 3** -- **South East**

Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North
Carolina, South Carolina, Virginia, West Virginia

**Region 4** - **Central**

Colorado, Kansas, Montana, Nebraska, New Mexico, North Dakota, Oklahoma,
South Dakota, Texas, Wyoming

**Region 5 -- West Coast**

Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah,
Washington

A map reflecting the states assigned to the five Regions is listed in
section 3.6.[^2] FMS anticipates designating one or more QLPs in each
Region in each lockbox sub-category: retail, wholesale, and specialized
wholesale lockbox, at the conclusion of the IEI competition. Across the
GLN as a whole, FMS estimates that approximately seven to ten different
FIs will be designated as QLPs.

Here is an example of a designation pattern that may result from Phase
I. The examples below are aligned with the selection process examples
shown in IEI section 2.1.

+-----------------+-----------------+-----------------+-----------------+
|                 | Retail          | Wholesale       | Specialized     |
|                 |                 |                 |                 |
|                 |                 |                 | Wholesale       |
+-----------------+-----------------+-----------------+-----------------+
| **Region 1**    | QLP A QLP B     | QLP A           | QLP A           |
|                 |                 |                 |                 |
|                 | QLP C           | QLP B           | QLP B           |
|                 |                 |                 |                 |
|                 |                 | QLP C           |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Region 2**    | QLP D           | QLP D           | QLP D           |
|                 |                 |                 |                 |
|                 | QLP E           | QLP E           | QLP E           |
|                 |                 |                 |                 |
|                 | QLP F           |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Region 3**    | QLP A           | QLP A           | QLP A           |
|                 |                 |                 |                 |
|                 | QLP E           | QLP E           |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Region 4**    | QLP C           | QLP D           | QLP D           |
|                 |                 |                 |                 |
|                 | QLP F           |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| **Region 5**    | QLP E           | QLP E           | QLP E           |
|                 |                 |                 |                 |
|                 | QLP F           | QLP F           | QLP F           |
|                 |                 |                 |                 |
|                 | QLP G           | QLP G           | QLP G           |
+-----------------+-----------------+-----------------+-----------------+

This pattern is provided for illustrative purposes only. The actual QLP
designation pattern/array will be determined by FMS upon the review and
evaluation of submitted responses.

3.  []{#__RefHeading___Toc48714281 .anchor}General Lockbox Network
    Processing Regions -- Map

![](media/image1.png)

# 4.0 TECHNICAL REQUIREMENTS

## 4.1 Technical Requirements - Introduction

This section of the IEI contains general lockbox processing requirements
for QLPs participating in the Treasury's GLN. These requirements address
standard Federal agency collection needs but should not be considered
inclusive of all Federal agency requirements. Specific processing
requirements for individual lockbox accounts will be defined during the
implementation phase for each account and specified in an
account-specific Statement of Work (SOW), which will be attached to a
memorandum of understanding (MOU) entered into by and among the QLP,
FMS, and the Federal agency requiring lockbox services.

The general processing requirements, in this IEI, are grouped into three
categories: retail, wholesale, and specialized wholesale lockbox
processing. Processes common to all three categories are presented once
as "Core Processing Requirements for All Categories" (see Section
4.4.1). Additional requirements distinguishing the categories follow
separately.

## 4.2 General Requirements 

QLPs shall be required to provide the services necessary for the
preparation and planning for lockbox transitions (where necessary) and
implementations. The characteristics of each collection stream vary in
volume, timing, and origination.

In general, preparatory activities to begin lockbox collections begin
with reviewing current agency receipts and processing practices. This
review may require on-site visits to Federal agencies and/or
presentations of paper lockbox fundamental processing and procedures.

In tandem with FMS, the designated QLP will assist agencies with
defining specific requirements for the individual collection streams.
The individual details of each process will be captured in an SOW.

## 4.3 Performance Measures

A QLP will be held to the highest standards of performance and quality.
At a minimum, a quarterly review of work in progress and daily output
must be performed by the QLP, the results of which are reported to FMS
and the Federal agency involved. Additionally, the QLP must perform
ongoing daily quality control review of work in process and daily
mailouts. FMS will review the established quality controls to ensure
that performance meets established standards. This review will include
ensuring that quality measurements are defined by the QLP, measured and
reported regularly, and monitored for performance within the standards
set by the agency and FMS. FMS monitoring processes will also include
periodic on-site reviews. Prior to the commencement of lockbox
processing under the new agreement, FMS will provide the selected QLPs
with the performance measures that will be required for quarterly
reporting.

Each quarter, the QLP shall submit in writing: (1) information on the
QLP's overall goals or standards for each specific measure, and (2) the
QLP's actual performance in meeting these measures for its government
customers' lockboxes. The QLP may also provide any additional measures
that it feels would be important. FMS recognizes that quality
performance standards may change depending on the specific requirements
for a particular lockbox application. At a minimum, quality measurement
standards will display performance as it relates to:

**Accuracy** -- the ability to provide service according to established
procedures and instructions without errors.

**Work Volume Accountability** -- the ability to establish control over
work volumes as early as possible.

**Workload Tracking** -- the ability to locate items at any point in the
workflow process.

**Responsiveness** -- the ability to respond to customer inquiries and
problems so that customer expectations are met.

**Timeliness** -- the ability to provide services within established
deadlines or turnaround times.

**System availability** -- the ability to make information and services
available to customers within agreed upon timeframes.

**Security** -- the ability to meet personnel, physical and information
security requirements.

## 4.4 Processing Requirements

### 4.4.1 Core Processing Requirements for All Categories

The following procedures represent a description of the general services
necessary to support standard processing for all categories of agency
work in the general lockbox environment. The selected QLPs shall perform
the services below as required by the SOW:

**[Mail Collection]{.underline}**

Collect mail from the post office in accordance with the negotiated
agency mail pickup requirements. FMS and the Federal agency must be
notified in writing prior to any changes in this schedule. Mail pickup
schedules should be established to collect 90% of the day's mail in time
to complete same-day processing.

Use a unique ZIP code or some other means to expedite mail delivery and
to distinguish collection streams (or accounts).

Use a separate identifier such as a post office box number or department
number for each agency collection stream. This separate identifier must
ensure a distinction between each collection stream in accordance with
agency and FMS requirements.

Pick up all mail on the first pass at the destination Area Distribution
Center (ADC) or Sectional Center Facility (SCF) in each location.

Receive express mail or other special deliveries at the lockbox site and
process according to the SOW. Certified and registered mail shall follow
SOW guidelines.

Establish controls as items are received.

**[Mail Processing]{.underline}**

General lockbox extraction processes shall not be co-mingled with
non-government extraction processes in the same space. Government
incoming mail shall be segregated from corporate mail and other
non-government media prior to extraction (see Security Requirements in
Section 4.10, Technical Requirements). The following are detailed
requirements for processing mail received by a QLP.

1\. Process all mail received for each agency collection stream to
insure same-day ledger credit in accordance with QLP processing
schedules.

2\. Process all mail on a first-in/first-out basis.

3\. Begin each daily processing cycle at a designated time.

4\. Notify FMS and the appropriate agency immediately if items received
in a business day are not processed within the designated business day
cycle and in accordance with the QLP's operating schedule.

5\. Open the envelopes and extract the contents. Use automated
extraction equipment wherever possible. Provide efficient alternative
means for opening non-standard mail, fats, and flats.

6\. Review the contents of the envelope to determine whether remittances
are processable or unprocessable according to specific instructions in
the individual agency SOW.

7\. Candling of envelopes may be requested by an agency and shall be
performed during extraction at the opening station. A second candling
shall be performed daily upon request from the agency.

> a\. Checks and correspondence that are discovered in the candling
> process which cannot be re-associated with the original mailing shall
> be identified as "found in candling" and sent to the agency within one
> day of discovery.

b.  A daily-itemized log of checks and documents found in final candling
    shall be maintained for one year. Each item found shall be entered
    into the log, using all available information. Information shall be
    entered regardless of whether the found checks/documents can be
    re-associated with the original mailing information. A copy of this
    log shall be sent to the agency on a monthly basis. The QLP shall
    perform periodic reviews of the final candled envelopes.

###### 8. Date-stamp all unprocessable items and correspondence upon receipt, assemble per agency instructions, and forward to the agency within one business day. Establish a count control of all unprocessable items and correspondence. Establish a dollar value for auditing purposes, agency by agency where possible or as stated in the SOW. 

###### 

9\. Follow procedures in the SOW for handling the contents of remittance
envelopes that do not contain a check or valid credit or debit card
authorization, follow procedures in the SOW for handling the contents.
At a minimum, this will include marking the envelope with a "C" (for
cash) and an ID Number and forwarding the items to the agency.

###### 

###### 10. Forward correspondence to Federal agency as specified in SOW.

###### 11. Examine the enclosed remittances for negotiability and acceptability. Acceptable forms of payment include:

###### a. Personal checks

b\. Corporate checks

c\. Money orders

d\. Certified checks

e\. Cashiers' checks

f\. Cash

g\. Credit or debit card payment authorizations as allowed by the SOW

> h\. Treasury checks (FMS discourages Federal agencies from paying each
> other with Treasury checks. This practice, however, continues to exist
> and QLPs may receive Treasury checks in certain lockboxes. QLPs may
> need to forward Treasury checks (along with a SF 215 Deposit Ticket)
> to the closest Federal Reserve Bank (FRB), which will serve as the
> bank of first deposit. Documentation originally accompanying the
> Treasury checks will be processed according to the SOW.)

Coupons, gift certificates, and gift cards are considered as
non-negotiable instruments for lockbox processing, and, therefore,
should be forwarded to the agency for handling.

###### 12. Process credit or debit card payment authorization allowed by the SOW, process in accordance with the [Plastic Card Network (PCN)]{.underline} instructions in Section 4.5.

###### 13. Examine check and money order remittances for the following conditions: 

a.  Acceptable payee as specified in the SOW.

b.  Check dates:

> i\. Stale Dated -- if the date is six months or more prior to the
> receipt date, the remittance shall be considered stale dated and
> forwarded to the agency,
>
> ii\. Post Dated -- if the date is more than three days beyond the
> receipt date, do not process the payment. Forward it to the agency for
> disposition,
>
> iii\. No Date -- write current date and process,

iv\. Timeliness -- Agencies may require stamping the remittance document
or entering a date received, as specified in the SOW.

c.  Differing amounts -- Compare the legal and courtesy amounts on the
    check with each other and with the amount paid on the remittance
    document. If one of the three amounts differs from the other two,
    process according to the two amounts that match. If all three
    amounts differ, process according to the legal amount on the check
    (according to an individual SOW, a QLP may reject any checks with
    differing amounts for consumer checks).

d.  Missing signature -- Affix an "Arrange to Be Honored" sticker (or a
    stamp impression requesting the drawer FI to contact drawer for
    authority to pay) and process (according to an individual SOW, a QLP
    may reject any checks with missing signatures for consumer checks).

e.  Foreign checks

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i.  Foreign checks drawn in U.S. dollars and payable through a U.S.
    financial

> institution shall be processed,

ii. Foreign checks payable in U.S. dollars drawn on foreign banks, or
    payable in foreign currency drawn on foreign banks shall be
    forwarded to the agency for disposition, along with all associated
    documentation.

> a\) Restrictive endorsements -- process according to the SOW.

b.  Checks endorsed "Paid in Full" -- process according to the SOW.

c.  Third party checks - if a check is endorsed over to the Federal
    agency or any acceptable payee specified by the Federal agency, or
    simply endorsed and accompanied with an agency document, then
    deposit check as a regular payment.

> (Note: Instructions relevant to this paragraph may vary by collection
> streams.)

14\. Account for incoming and outgoing items -- make sure that volume of
incoming mail equals the deposited item count plus the number of
unprocessed items.

**[Remittance Processing - General]{.underline}**

1\. Process remittances adhering to minimum service requirements and
each agency's requirements as specified in the individually negotiated
SOW. Minimum service requirements include sorting the documents into the
following batch categories:

a.  Single remittance with a single remittance document and the amounts
    match.

b.  Single remittance with a single remittance document but the amounts
    do not match.

c.  Single remittance with multiple remittance documents.

d.  Single remittance document with multiple remittances.

e.  Remittances without a remittance document. Process and key-enter the
    data and attach a photocopy of the remittance to the envelope. Where
    possible, all data capture information is key verified.

2\. Separate checks and documents into batches and send to a
multipurpose workstation.

### 4.4.1a Check Processing 

Over a period of time, FMS will be working with the QLPs to implement
FMS' Paper Check Conversion (PCC) Program in the lockbox accounts. PCC
is known in private industry as \"eCheck\" or "Accounts Receivable
Conversion (ARC)" and converts paper checks received through the mail or
drop box into electronic ACH debits to the check writer's account.
Processing within FMS' PCC Program is significantly different from check
processing or check conversion for a typical commercial lockbox account.
For example, checks converted to ACH debit entries at a lockbox
maintained for Treasury, are governed by 31 CFR Part 210, and applicable
National Automated Clearing House Association rules, rather than the
Uniform Commercial Code. Any given lockbox account may have checks that
are convertible to ACH and checks that are not convertible to ACH. For
those checks that are convertible, the QLP will be expected to use the
**Paper Check Processing (PCC) (convertible items)** described in Part 1
below. For those checks that are non-convertible, the QLP will be
expected to use the **Typical Check Processing** described in Part 2
below.

**Note:** FMS or the Federal agency will be responsible for fulfilling
notification requirements to remitters for lockbox accounts where PCC is
employed.

FMS and the QLPs will manage the transition from accounts that function
with typical check processing to those that will function with Paper
Check Conversion. Until these transitions occur, QLPs will use the
procedures outlined under **Typical Check Processing**. The following
Check Processing Workflow Diagram depicts the processing flow for
convertible and non-convertible items. Each separate process is
identified by a number or number/letter combination on the diagram that
is used in the following process descriptions.

> **Check Processing Workflow Diagram**

## 

**1. Paper Check Conversion (PCC) Processing (convertible items)**

The PCC process is a highly automated multi-redundant system that
greatly improves the collection, reconciliation, research and reporting
processes associated with Federal agency check collections.

All images of the PCC items are retained in the Central Image and
Research Archive (CIRA) for seven years or longer if the agency has a
need to store the images for a longer period. The CIRA is maintained
within the Treasury Web Application Infrastructure (TWAI) environment
operated by the Federal Reserve Banks (FRB).

Remittance Document Imaging is a digital electronic representation of a
remittance document, which may also be stored in the CIRA. This process
eliminates forwarding paper copies of remittance documents to the
agencies, which facilitates retrieval of document and payment
information much faster. QLPs will continue to send data files to
agencies or the Central Reporting System on a daily basis where
applicable.

The CIRA is an on-line central repository for all PCC check images,
associated financial information and other agency data that may be
captured at the time of the transaction. It is a password-protected Web
site, and login IDs are assigned by the FRB-Cleveland. From the time the
transactions are uploaded in batch form during published processing
hours to the CIRA, they are available for viewing within minutes.
Agencies or QLPs will be able to access PCC data through the CIRA, and
will have the ability to generate reports. The CIRA facilitates in
researching an item or pulling down reports in multiple file formats.

The QLP shall be responsible for converting checks from paper to ACH
transactions as directed in writing from FMS and/or the SOW at or below
the ceiling price contained in the QLP's Pricing Response.

The QLP shall perform Paper Check Conversion (PCC) lockbox services in
accordance with 31 CFR Part 210, as may be amended from time to time,
and the "United States Treasury Financial Management Service Paper Check
Conversion Standard Operating Procedures (PCC SOP)," dated May 30, 2003,
as may be amended from time to time. (See IEI Attachment C on FMS' Web
site
[www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids)[/attachments.]{.underline})
FMS may revise these procedures from time to time with at least 60 days
advance written notice to the QLP for a material change and 7 days
notice for a non-material change or earlier if upon the mutual agreement
of the parties^.^[^3]

**[Low Volume/High Volume PCC Throughput]{.underline}**

A QLP may use its own equipment when processing low- or high-volume PCC
cash flows, as long as the PCC transactions are formatted according to
the PCC specifications. QLPs may use Treasury's off-the-shelf PCC system
for low volume lockbox operations, but are encouraged to adopt their own
systems to the requirements of PCC.[^4]

***Low Volume Processing Steps***

1\. Sort mail (1)

Mail is received at the lockbox processing facility and sorted in
lockbox number order. In select cases, a Post Office (PO) Box is used
and no sorting is necessary.

2\. Open Envelopes (2)

Mail is distributed to the processing desk(s) where the following
occurs:

> a\. Contents of the envelope are removed and reviewed for check
> negotiability.
>
> b\. Check amounts are compared to the voucher amounts.

3\. Sort -- Convertible and Non-Convertible Items

> a\. The QLP shall use its best efforts in accordance with developed
> procedures to recognize and manually sort non-convertible items. FMS
> recognizes that the QLP may not detect all non-convertible items:
>
> (3b) convertible items.

4\. Data Entry (if applicable to the agency cash flow)

> a\. Any agency specific data from remittance documents should be
> captured using the
>
> existing capture method for all remittances: (batch ranges may be
> input separately).
>
> (4b) convertible items
>
> b\. The detail information is used to create:
>
> (4c) a Voucher file that is forwarded/transmitted to the Agency.
>
> The voucher file will provide subtotals facilitating Governmentwide
> accounting (GWA) reporting. The nature of these subtotals will be
> specific to each agency application, and the details will be provided
> in the SOW for each application. In some cases, the subtotals will be
> based on a combination of GWA Information. In other cases, the
> subtotals will be based on key elements within the data associated
> with a collection transaction. These key elements are known as
> Classification Keys. The method for determining the subtotals and the
> data elements involved will be outlined by the agency in the SOW. The
> subtotals will be part of the CA\$HLINK II document prepared by the
> PCC Fiscal Agent and the sum of the subtotal amounts on each document
> must equal the total document amount. Accordingly, the QLP must
> provide the subtotal information to the PCC Fiscal Agent in such a way
> that it can be associated with the proper CA\$HLINK II document.

5\. Encode Checks (5b) (if applicable)

> a\. Online entry reconciles checks against [Step 4's]{.underline} Data
> Entry detail. (This step only applies if data transmission.)
>
> b\. There are detailed instructions for adjusting incorrect
> cashier/operator entries. (See PCC-SOP Attachment C)

6\. Image/MICR Data Capture (Convertible Items)

> a\. The convertible items (6b) are scanned through the PCC system and
> the transaction record is created.

b.  The QLP's operator/processor will manually key into the system the
    dollar amount for convertible items, and any other agency specific
    data in the configurable fields provided in the PCC software.

c.  A transaction record includes system generated transaction date and
    time, Item Reference Number (IRN), dollar amount, and any other
    associated agency data that is manually entered by the operator.

d.  Additional agency specific data may be entered into PCC transaction
    record for future Central Image and Research Archive (CIRA) research
    by the agency, e.g., account number. The required data elements need
    to be defined and will vary by agency; however, the PCC process will
    not change.

e.  Depending on the remittance document and agency needs, the
    remittance document may be imaged and stored in the CIRA. The
    remittance document must be approved by FMS, if applicable.

f.  The file is balanced and reviewed before transmitting.

g.  The image and remittance information is used to create:

> The PCC Image File (6c), which is forwarded to CIRA.

h.  CIRA houses the images for agency and QLP viewing.

i.  The PCC total will be reconciled against the check amount total.

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1.  QLPs may use their own equipment and procedures to complete the
    above steps. However, the QLP must:

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a.  Transmit the images and data to the TWAI in the specified PCC
    format.

b.  Use an FMS approved transmission tool, such as Connect: Direct with
    Secure Plan Option.

c.  Use a transmission medium capable of handling the volume in a
    reasonable time. A reasonable time generally means no more than two
    hours after balancing. Higher volume cash flows may balance and
    transmit several times throughout the day if necessary.

8\. Convertible Items (9) - FRB

a\. FRB creates and originates the ACH debits for the converted items.

> For returns (10):
>
> 1\) If the returned item is an administrative return, i.e. the Drawee
> account has an ACH debit block, the FRB will create a paper draft and
> re-clear.
>
> 2\) If the return item requires some type of Drawee account and/or
> routing number changes, the FRB will make these required changes and
> resubmit.
>
> 3\) If the return is a NSF return, the FRB will follow the existing
> return item instructions to either resubmit or retire.
>
> 4\) If a final return or the item is deemed uncollectable, the FRB
> will make an SF 5515 CA\$HLINK II entry and notify the agency and QLP,
> if applicable.
>
> b\. CA\$HLINK II (9b) - FRB
>
> The FRB creates the SF 215s, creates the Deposit Ticket number and
> enters the ACH deposit total into CA\$HLINK II.
>
> 1\) The FRB e-mails or makes available online SF 215s/5515s to the
> agency. Copies of the SF 215s are e-mailed to the QLP to be kept with
> the associated converted items.
>
> c\. CA\$HLINK II (9c) Reconciliation

1.  The QLP reconciles the FRB's SF 215 with the converted total on Day
    2 and reports any discrepancy to FMS. (See PCC SOP Adjusting
    Incorrect Entries, in the IEI Attachment C on FMS' Web site
    [www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids)[/attachments]{.underline}).

d\. Destruction of Checks (9d)

> \(1\) Within 14 calendar days of review of completed SF 215, the QLP
> destroys
>
> the original converted items but keeps a copy of the SF 215 for its
> record.
>
> \(2\) The CIRA will keep an image of the check and the associated
> transaction data for a minimum of 7 years.

9.  Returns & Customer Service

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a.  The FRB will provide customer service for PCC items. The QLP's
    customer service should be reduced overall, because the Federal
    agency will do more of its own customer service with the FRB.
    Likewise, any PCC related inquiries should be referred to the FRB
    Customer Support Line. (See PCC-SOP)

b.  The QLP follows the return item procedures as directed by FRB and
    set forth in 8a above.

**Note:** Additional PCC specifications or requirements will be provided
to the FIs at a later date.

**2. Typical Check Processing (Non--Convertible items only)**

1\. Sort mail (1)

Mail is received at the lockbox processing facility and sorted in
lockbox number order. In select cases, a Post Office (PO) Box is used
and no sorting is necessary.

2\. Open Envelopes (2)

Mail is distributed to the processing desk(s) where the following
occurs:

> a\. Contents of the envelope are removed and reviewed for check
> negotiability.
>
> b\. Check amounts are compared to the voucher amounts.

3\. Sort -- Convertible and Non-Convertible Items

> a\. The QLP shall use its best efforts in accordance with developed
> procedures to recognize and manually sort non-convertible items. FMS
> recognizes that the QLP may not detect all non-convertible items:
>
> (3a) non-convertible
>
> b\. Non-convertible items include: third-party checks; demand drafts
> and third-party drafts that do not contain the signature of the
> receiver; credit card checks; obligations of a financial institution
> (e.g., travelers checks, cashier's checks, official checks, money
> orders, etc.); checks drawn on the Treasury of the United States, an
> FRB, or a Federal Home Loan Bank; checks drawn on a state or local
> government; and checks payable in a medium other than United States
> currency. (See PCC SOP in the IEI Attachment C on FMS' Web site
> [www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids)[attachments]{.underline}).[^5]
>
> The QLP shall not attempt to convert items if, through its sorting
> process, it becomes aware that the items are not convertible under the
> Federal Government's Rules for Participation in the Automated Clearing
> House.

c.  Non-convertible items may change over time as the law, regulations
    or FMS policies direct.

4\. Data Entry (if applicable to the agency cash flow)

> a\. Any agency specific data from remittance documents should be
> captured using the
>
> existing capture method for all remittances: (batch ranges may be
> input separately).
>
> (4a) non-convertible items.
>
> b\. The detail information is used to create:
>
> (4c) a Voucher file that is forwarded/transmitted to the Agency.
>
> The voucher file will provide subtotals facilitating Governmentwide
> accounting (GWA) reporting. The nature of these subtotals will be
> specific to each agency application, and the details will be provided
> in the SOW for each application. In some cases, the subtotals will be
> based on a combination of GWA Information. In other cases, the
> subtotals will be based on key elements within the data associated
> with a collection transaction. These key elements are known as
> Classification Keys. The method for determining the subtotals and the
> data elements involved will be outlined by the agency in the SOW. The
> subtotals will be part of the CA\$HLINK II document and the sum of the
> subtotal amounts on each document must equal the total document
> amount. This information will be required for credits and debits to
> each lockbox account.

5\. Encode Checks (5a) (if applicable)

> a\. All non-converted checks are encoded with the dollar amount.
>
> b\. Spray checks with an accurate and legible audit trail on the back,
> including date processed, transaction number, and amount received.
>
> c\. Endorse all checks received with the following minimum Treasury
> requirements:
>
> i\. Routing Transit Number of Processing QLP (ABA)
>
> ii\. Credit to Agency
>
> d\. Perform balancing as specified in the SOW.

6\. Image/MICR/Data Capture (6a)

> a\. Capture an electronic image of the front and back of all checks
> processed. Images shall be in the formats specified by FMS in the SOW
> and available to the agency and/or FMS via the Internet, CD-ROM,
> e-mail, fax, or file transmission as specified in the SOW. Each check
> image shall have an Item Reference Number (IRN) associated with it. If
> the check was accompanied by remittance documents, the IRN associated
> with the check images shall match the IRN associated with the document
> images.
>
> b\. Retain check images for non-PCC items for a period of six and
> one‑half (6 1/2) years. Upon written or oral request, the QLP shall
> provide to the agency, within two business days, a printed image or
> electronic copy of any check the QLP processed. If the timeframe
> cannot be met, an interim response explaining reasons for the delay
> shall be sent to the agency.
>
> **NOTE:** QLPs may be required to retain check copies and/or images
> for an indefinite time, as directed by FMS, due to litigation
> court-mandated retention requirements (see Section 4.9.5).
>
> c\. While electronic image transfers to the agency are the preferred
> solution, in some cases the agency may require a photocopy of each
> check when it is processed. The photocopy will be in addition to the
> electronic image and routinely forwarded to the agency as specified in
> the SOW.

7\. Specific requirements for deposit reporting through CASHLINK II and
mail out of agency documentation for non-convertible items are provided
in the next two sections (7).

8\. Process cash received - If cash is received for any processable
item, convert the cash to a QLP cashiers check, money order, or internal
QLP document payable to the agency involved. If the item is
unprocessable, convert cash of \$1.00 or more to a QLP cashiers check or
money order and return to the agency. If unprocessable and less than
\$1.00, insert cash into an envelope, marked as "C," staple to upper
left corner of the document, and send to the agency. All cash received
shall be listed in a log. A copy of the log shall be forwarded to the
agency monthly. The log shall include all available information and an
indication if the cash was processed or unprocessable.

### 4.4.1b Deposit Reporting/CA\$HLINK II (Non-PCC Items Only)

### 

### 

The CA\$HLINK II system is used to automate the movement of funds and
accounting detail from FAs to the U.S. Treasury's General Account.
Functions performed in the CA\$HLINK II system by FAs include:
accepting, compiling, and reporting agency deposits; transferring funds
through the Automated Clearing House (ACH) network or by Fedwire; and
preparing and reporting lockbox income and expense information on a
monthly basis.

Deposit information collected by the QLP shall be reported
electronically by entering data into a personal computer using Deposit
Reporting software provided by FMS. The debits and credits that
constitute [**today's work**]{.underline} (day of deposit) are those
received and processed before the cutoff time for same day credit and
those items received or prepared before the cutoff for today's posting
date (returned items or adjustments). The cutoff time for today's work
shall be included in each presentation, but shall generally not be
earlier than 2:00 p.m. local time.

The diagram below illustrates "today's work" for a 4:00 p.m. cutoff.
Assume today is October 21 and this is a paper lockbox transaction.

  ---------- -------------------- ---------- -------------------- --------
  Oct. 20    Oct. 21                         Oct. 22              

  4 p.m.     Midnight             4 p.m.     Midnight             4 p.m.

                                                                  

  For work                        For work                        
  in this                         in this                         
  time                            time                            
  period                          period                          

  "Today's                        "Today's                        
  Date" =                         Date" =                         
  Oct. 21                         Oct. 22                         

  Date of                         Date of                         
  Deposit =                       Deposit =                       
  Oct. 21                         Oct. 22                         

  Funds                           Funds                           
  Transfer =                      Transfer =                      
  Oct. 22                         Oct. 23                         
  ---------- -------------------- ---------- -------------------- --------

Below are the steps for deposit reporting for non-convertible items.
Note the following procedure must be followed for all deposit reporting
in CA\$HLINK II, including deposit ticket, credit adjustments, and debit
vouchers:

QLPs will be required to include, as part of each CA\$HLINK II document,
a breakout of the document amounts by one or more subtotals supporting
Governmentwide accounting. The nature of these subtotals will be
specific to each agency application, and the details will be provided in
the SOW for each application. In some cases the subtotals will be based
on a combination of Treasury Governmentwide accounting information. In
other cases the subtotals will be based on key elements within the data
associated with a collection transaction. These key elements are known
as Classification Keys. The method for determining the subtotals and the
data elements involved will be outlined by the agency in the SOW. The
subtotals will be part of the CA\$HLINK II document, and the sum of the
subtotal amounts on each document must equal the total document amount.
This information will be required for credits and debits to each lockbox
account.

1\. Checks forwarded for collection - Prepare a U.S. Treasury Deposit
Ticket (SF 215) for the total amount of the daily tape or transmission
file that is sent to the designated Agency Location Code (ALC) address.
Only one Deposit Ticket per CA\$HLINK II account number (a three‑digit
number representing each account in CA\$HLINK II) is required; however,
multiple Deposit Tickets may be used, if necessary. QLPs may generate
their own automated SF 215 with the prior approval of FMS. If the SF 215
is typed and an error occurs, no corrections can be made to the
document. The document shall be voided and a completely new Deposit
Ticket prepared. Enter all appropriate SF 215 data into CA\$HLINK II.

2\. Returned checks ‑ the following procedure shall be followed for any
check that is not paid by the remitter's FI on which it was drawn:

> a\. Debit the demand deposit account for the total dollar amount of
> items not paid for any reason following second presentation or for
> those checks that cannot be recleared after the first presentation.
>
> b\. Prepare a U.S. Treasury Debit Voucher (SF 5515) daily for the
> total amount of the returned items and process accordingly. Enter all
> appropriate SF 5515 data into CA\$HLINK II.
>
> c\. Forward returned checks to the agency with a prepared listing of
> the items (internal QLP debit memorandum), citing the date the
> returned items were posted to the account. Returned checks and debit
> memoranda shall be included in each day's accounting package.

3\. Miscellaneous adjustments ‑ Encoding errors or other deposit
discrepancies (other than return items) shall be handled as follows:

> a\. For each debit adjustment to the account, a Debit Voucher (SF
> 5515) shall be completed detailing the nature of the adjustment. Enter
> the original deposit date from the Deposit Ticket (SF 215) in box 2
> and current date in box 6. Enter all appropriate SF 5515 data into
> CA\$HLINK II.

a.  For each credit adjustment to the account, a Deposit Ticket (SF 215)
    shall be completed detailing the nature of the adjustment. Enter the
    original deposit date from the SF 215 in box 2 and current date in
    box 6. Enter all appropriate SF 215 data into CA\$HLINK II.

> c\. Documentation explaining both debit and credit adjustments shall
> be attached to the Deposit Ticket or Debit Voucher.
>
> d\. Debit and credit adjustments documentation will depend on the type
> of adjustment. At a minimum, any adjustment documentation must include
> a copy of the check (front and back) for encoding errors. Any other
> documentation necessary to explain the adjustment (such as a copy of
> the deposit ticket correction) shall be included.
>
> Note: FMS reserves the right to accelerate the transfer of deposits to
> occur on the day of deposit.

**[Mailout]{.underline}**

Mail remittance, accounting documents, and/or tapes to the Federal
agency in accordance with the instructions in the SOW. All documents and
tapes shall be packaged securely. First-class and overnight mailout
deadlines shall be established to meet agency-specific needs.

**[Data Transmission and Reports (Interim Process]{.underline})**

1\. The QLP will transmit deposit detail transaction data electronically
and securely in formats specified by FMS in consultation with the
agency. Initially, as an interim solution, the QLP will be required to
transmit such files directly to the agencies, with formats, connectivity
requirements, and encryption specified in the SOW.

2\. In some cases, a daily data tape exchange with the agency may be
necessary until data transmission requirements have been defined and
testing has been completed. The following procedures shall be followed:

a.  The tape shall be sent to the agency with the daily mailout package.
    When the data transmission begins, the transmission shall occur
    during a mutually agreed upon-time, Monday through Friday. Weekend
    activity shall be included in Monday's transmission or next business
    day, except during peak periods (for specific agencies), when it
    shall be done every day.

b.  System back‑up tapes shall be maintained for thirty (30) calendar
    days, unless specific circumstances require an extension. Back‑up
    and/or duplicate tapes shall not be shipped to the agency.

c.  When a replacement tape is requested, it shall be recreated and
    shipped to the agency with the next shipment after notification. The
    replacement tape(s) shall be identified and labeled "Replacement
    Tape(s) for MMDDYY -- Replaces Tape 1XXXX."

d.  The QLP shall provide any updated program documentation necessary
    for testing annually, prior to Quality Systems Testing.

3\. In some cases, computer printouts or CD ROMs of daily transactions
will be mailed to the agency.

#### 

#### 4.4.1c Data Transmission and Reports (Central Reporting System (CRS))

The Financial Management Service will be developing a Central Reporting
System (CRS) that will enable Federal agencies to more effectively
manage the financial transaction information resulting from FMS'
collection processes. This effort will greatly improve the way
government agencies collect, analyze, and redistribute financial
transaction information. In addition, the CRS will eliminate
redundancies and disconnects across and between the numerous
point-to-point connections currently in place between collection points
and Federal agencies. After the implementation of the CRS system, each
QLP will be required to transition the distribution of this information
from the individual Federal agencies to a single touch point within the
CRS. QLPs must have Burstable T-1 or T-3 lines available for
transmission to FMS. Data transmissions will be required to comply with
standard government-wide XML schemas. As mentioned above, the CRS
platform will be established as an open architecture based on the XML
standard. As a centralized system, the CRS will offer a suite of
electronic information services that Federal agencies can use to meet
their financial management and reporting responsibilities. Specifically,
the CRS will, at a minimum, provide for the following:

> **Consolidated Financial Transaction Reporting**: The CRS will
> collect, normalize, and retain detailed financial transaction
> information from all collection systems in use by Federal agencies.
>
> **Single Touch Point**: The CRS will provide Federal agencies, QLPs,
> and Federal Reserve Banks with a single touch point for the exchange
> of all financial transaction information across all collection
> systems.
>
> **Summary and Detailed Transaction Information**: Provide standard and
> customized financial information reports to Federal agencies on a
> real-time basis.
>
> **Daily Collection Summaries**: Provide Federal agencies with a
> single, consolidated, daily report of all revenue activity across all
> collection systems.
>
> **Real-Time Inquiries**: Provide Federal agencies with the capability
> to review detailed and summary transaction information by
> Government-wide accounting (GWA) Information.
>
> **Data Distribution**: Provide data transfers (downloads) in standard
> formats to enable agencies to further manipulate transaction
> information on in-house systems.
>
> **Standard Financial Information Exchange Formats**: Establish and
> utilize standard government-wide XML schemas for all collection
> transactions.

The CRS system is scheduled to be implemented in 2004. Consequently, it
will be necessary for each QLP to modify its collection systems to
comply with FMS' standard data formats and single distribution point
after the CRS is implemented. After implementation, the detailed
transaction information will be sent to FMS via the CRS rather than each
individual agency. Once reporting requirements have been changed and QLP
processes streamlined, FMS will ask for price adjustments to reflect
these efficiencies.

[]{#__RefHeading___Toc48714292 .anchor}4.4.1d Internet Check Matching
via Pay.gov

The QLP shall be required to fulfill "Internet matching" services if
required by a Federal agency. Internet matching is the process of
matching a paper check received at a lockbox location with associated
remittance information, such as completed forms, that have been
submitted online at the Pay.gov Web site. Pay.gov is a Government-wide
transaction portal managed by FMS that offers a suite of electronic
financial services to assist Federal program agencies. See Pay.gov
information on FMS' Web site at [www.pay.gov](http://www.pay.gov/).

With some cash flows, Federal agencies require the option of allowing a
remitter to file detailed information about a transaction or set of
transactions online, including the upload of large files of program
information, but with the associated payment delivered by check to a
lockbox. In these cases, Pay.gov will host the online filings, and the
QLP will operate the associated lockbox. The QLP shall be required to:

1\. Receive the paper checks and process them through the lockbox.

2\. Receive a file from Pay.gov of transactions conducted online.

> 3\. Match the Pay.gov filings and lockbox receipts based on
> transaction identifiers assigned by Pay.gov.

4\. Send files to Pay.gov or the agency showing matched and unmatched
items.

File formats shall be specified by FMS.

### 4.4.1e Customer Service 

### 

The QLP shall designate a customer service liaison (name, telephone,
etc.) to receive all Federal agency customer service requests. The QLP
customer service liaison or his/her representative shall receive and log
all written requests to research processing errors, excluding photocopy
requests, and shall provide a written response within five (5) business
days or as specified in the SOW (fewer days may be desired). Where
extensive research is required, an interim written response will be sent
to the requestor. Special expedited processing shall be required on
Congressional, Judicial, and "priority" requests, in any case no more
than 2 business days. Agencies should provide all pertinent information
to the QLP when requesting customer service assistance regarding
processing errors including: deposit date, batch/block number,
batch/block dollar total, sequence number, and the dollar amount. All
QLP customer service unit responses shall include, as a reference, a
copy of the Federal agency's initial written request for assistance. The
QLP customer service unit shall respond to all inquiries within one (1)
business day. Telephone logs should be developed and maintained to
indicate name of Federal agency; processing error(s) including deposit
date, batch number, batch dollar total, sequence number, and the dollar
amount; and Federal agency contact information including telephone
number. The QLP will prepare a written interim response to Federal
agencies when significant delays are encountered or anticipated.

> The QLP will prepare quarterly customer service reports to FMS. The
> QLP shall cooperate fully in remedying customer service issues
> identified by FMS and the agencies.

### 4.4.2 Processing Requirements -- Retail Lockbox

### 

### 

### Generally, a retail lockbox will have a scannable document returned with the remittance. A scannable document is one that possesses the line of machine-readable information that a Federal agency prints on payment documents or documents. The following procedures represent a description of the general services necessary to support standard agency **[retail]{.underline}** lockbox processing. The QLPs shall perform the services below as required by the SOW:

**[Core Processing Requirements]{.underline}**

Retail lockbox processing requirements include the core processing
requirements identified above as well as the additional services
specific to retail accounts.

**REQUIREMENTS SPECIFIC TO RETAIL LOCKBOXES**

1\. Process remittance documents through an automated processing system
to capture data encoded on the scan line of the remittance document. The
scan line shall be captured and stored electronically for reporting to
the agency.

2\. For remittance documents with no scan line, or if the scan line is
unreadable, key-enter the appropriate fields from the remittance
document as outlined in the SOW. All key entered data are to be
key-verified.

3\. Disposal of envelopes/coupon -- Forward to the agency or destroy, as
specified in the SOW. Add imaging of envelopes/coupons to perform
timeliness inspections.

4\. Change of address - If the change of address box on the remittance
slip is marked, the remittance slip will be returned to the agency after
regular payment processing. The QLP shall have the capability to create
a file of address changes if required by the agency.

### 4.4.3 Processing Requirements -- Wholesale Lockbox

Generally, a wholesale lockbox will not have a scannable document
returned with the remittance. Instead, there will be one or more
documents relating to the remittance that may require some form of data
capture. However, all wholesale lockbox providers under this SOW must be
prepared to accept and process scannable documents in addition to other
remittance documents as the need arises.

The following procedures represent a description of the general services
necessary to support standard agency **[wholesale]{.underline}** lockbox
processing. The selected QLPs shall perform the services below as
required by the SOW.

**CORE PROCESSING REQUIREMENTS**

Wholesale lockbox processing requirements include the core processing
requirements identified above as well as the additional services
specific to wholesale accounts.

**REQUIREMENTS SPECIFIC TO WHOLESALE LOCKBOXES**

1\. If there is a scannable remittance document (coupon), process the
remittance document through an automated processing system to capture
data encoded on the scan line. The scan line shall be captured and
stored electronically for reporting to the agency.

2\. Change of address -- If the change of address box on the remittance
coupon is marked, return the coupon to the agency after regular payment
processing. The QLP shall have the capability to create a file of
address changes if required by the agency.

3\. Flatten invoice and/or other remittance documents as specified in
the SOW.

4\. Sort remittance documents and perform other document handling tasks
as specified in the SOW.

5\. Process relevant remittance documents through an imaging or
Intelligent Character Recognition (ICR) system to facilitate data
capture of fields required by the agency. Correct and supplement
captured fields via key entry or other technology (i.e., voice
recognition). Captured data shall be stored electronically for
forwarding to the agency.

6\. Disposal of envelopes/remittance documents -- Forward to the agency
or destroy, as specified in the SOW. Add imaging of envelopes/coupons if
specified in the SOW.

### 4.4.4 Processing Requirements -- Specialized Wholesale Lockbox

Generally, a specialized wholesale lockbox will be similar to other
wholesale lockboxes in that there is no scannable document returned with
the remittance but rather it will have one or more documents relating to
the remittance. What distinguishes this category is that the
accompanying documents involve more complex business rules (e.g.,
validations) and document handling procedures, e.g., imaging both sides
of the remittance document. In addition, security requirements
(addressed in Section 4.10) may be higher in one or more of the areas of
physical, personnel, document, and information security. Only FIs able
and willing to perform highly manual and customized processing and meet
higher security requirements should express interest in this category.

The following procedures represent a description of the general services
necessary to support agency **[specialized wholesale]{.underline}**
lockbox processing. Because of the unique and involved requirements for
each of these applications, the details of the processing requirements
will vary greatly by application and will be fully defined in the SOW.
At a minimum, however, the selected financial institution(s) can expect
to perform the services below.

**[CORE PROCESSING REQUIREMENTS]{.underline}**

Specialized wholesale lockbox processing requirements include the core
processing requirements identified above as well as the additional
services unique to each account.

**BROAD REQUIREMENTS FOR SPECIALIZED WHOLESALE LOCKBOXES**

1\. Flatten invoice and/or other remittance documents as specified in
the SOW.

2\. Sort associated documentation and perform other complex document
handling tasks and business rule validations as specified in the SOW.

3\. Process relevant remittance documents through an imaging or
Intelligent Character Recognition (ICR) system to facilitate data
capture of fields required by the agency. Correct and supplement
captured fields via key entry or other technology (i.e., voice
recognition). Captured data shall be stored electronically for
forwarding to the agency.

4\. Destroy or forward all envelopes and remittance documents to the
Federal agency as specified in the SOW. Often this task involves sorting
documents for multiple daily mailouts.

5\. Perform basic arithmetic computations for individual remittances or
groups of remittances as specified in the SOW.

6\. Conduct logical evaluations based on predefined criteria as
specified in the SOW. For example, evaluate whether the appropriate fee
has been enclosed for the type of application submitted or for other
characteristics of the applicant such as age.

Examples of actual statements of work for specialized wholesale lockbox
accounts are available upon request from prospective bidders.

## 4.5 Requirements for Credit Card/PCN Lockbox Processing

All credit/debit card transactions processed through the General Lockbox
Network using the Federal Government's Plastic Card Network (PCN) must
fulfill the following requirements.

**CREDIT CARD PROCESSING FIELDS**

The paper document that the lockbox processes must contain
[complete]{.underline} and [legible]{.underline}:

1\. Credit Card Number (16 digits)

2\. Expiration Date of the card (4 digits)

3\. Dollar amount

4\. Card holder Billing Address

5\. Open field for Agency Use

> 6\. Open field for future card association required fields (additional
> Address Verification Services)

7\. Field to capture security codes (additional 4 digits after credit
card number)

If portions of the above requirements cannot be processed, the QLP must
highlight the required field error and forward the document to the
agency to research and remedy. An agency may specify additional
requirements such as promotional codes.

### 

[]{#__RefHeading___Toc48714298 .anchor}4.5.1 Connectivity To A PCN
Financial Agent

The lockbox must connect to a PCN financial agent for authorization.
This can be either online, batch, or a combination of both. The detail
as to how connectivity is accomplished, and on what platform, is
dependent on the PCN financial agent.

**Batch Authorization Information**

The lockbox must be able to receive an authorization file back and post
those collections to its other settlements for that day. Typically, the
lockbox has one large collection file that contains cash, check, and
credit cards aggregated together. Ideally, this requirement will be met
through system integration; i.e., no manual file manipulation and no key
entry.

**DISTINCT PLASTIC CARD FILES AND TRANSACTIONS**

When plastic card authorizations post as collections, the transactions
shall be designated as credit or debit card and distinguished from cash,
check, or other collections for accurate posting and reporting.

**Adherence To PCN Rules**

Participating agencies and QLPs must complete the appropriate
applications, Agency Participation Agreements, and amendments in order
to use the PCN to collect credit/debit cards.

### Governmentwide Accounting (GWA)

The PCN financial agent is responsible for reporting into CA\$HLINK II
the collections and adjustments received via the PCN. If the QLP is not
the same as the PCN financial agent, the QLP must forward to the PCN
financial agent the data necessary to complete CA\$HLINK II reporting,
in particular subtotals facilitating Governmentwide accounting. The
nature of these subtotals will be specific to each agency application,
and the details will be provided in the SOW for each application. In
some cases, the subtotals will be based on a combination of GWA
information. In other cases, the subtotals will be based on key elements
within the data associated with a collection transaction. These key
elements are known as Classification Keys. The method for determining
the subtotals and the data elements involved will be outlined by the
agency in the SOW. The subtotals will be part of the CA\$HLINK II
document and the sum of the subtotal amounts on each document must equal
the total document amount. Accordingly, the QLP must provide the
subtotal information to the PCN financial agent in such a way that it
can be associated with the proper CA\$HLINK II document.

## 4.6 Check Processing Option -- Check Truncation

In addition to paper check conversion process described in Section 4.4.1
(sometimes referred to as accounts receivable check (ARC) conversion),
an alternative for clearing checks may include check truncation. Earlier
this year, the U.S. House of Representatives passed H.R. 1474, Check
Clearing for the 21^st^ Century Act, also known as Check 21. It would
allow FIs to truncate, or voluntarily exchange electronic images of
checks instead of using paper checks, automating the clearing process.
Currently, FIs are required to exchange the paper checks, which are
subject to transport delays. Check 21 would also grant the same legal
validity to images of checks as to the original checks themselves. Check
truncation uses the same settlement process as paper checks; the
payments are not converted into Automated Clearing House (ACH)
transactions.

If the Check 21 Act becomes law, FMS will draft additional technical
requirements as needed. FMS would then expect QLPs to truncate checks
that are unable to be converted to ACH through the PCC process.

## 4.7 Imaging Enterprise Platform Concept

In this section, FMS provides notice that it is considering the
development of a system platform (Imaging Enterprise Platform) to
support lockbox-imaging services conducted at lockbox processing sites
of any QLP. This notice is a high-level concept paper and provides a
preview of an intended offering. QLPs should acknowledge and understand
that they shall be required to interface with and use the Imaging
Enterprise Platform at the direction of FMS.

**Purpose**

> FMS intends to offer imaging and automated decision-making technology
> to Federal program agencies:

1.  To electronically capture information from agency forms and apply
    agency business rules,

2.  Allow for the deposit of any associated fees through lockbox
    operations, and

3.  Provide Federal program agencies the ability to track, balance, and
    monitor transactions through a Web Based processing platform through
    a unique identifier.

> In addition, this technology will reduce costs by providing
> scalability, reducing redundant form-by-form development costs.

**Concept**

The Imaging Enterprise Platform will:

1.  Accept from any QLP images and associated captured data, which data
    has been verified by the QLP prior to transmission. Images may
    include checks, forms, and supporting documents;

2.  Apply business rules, established in conjunction with the Federal
    program agencies, to captured data;

3.  Transmit to the QLP a file of accepted or rejected items;

4.  Transmit all images, under specifications to be provided by
    Treasury, to the Treasury Web Architecture Infrastructure (TWAI)
    where the images will be stored and will be Web accessible to the
    QLP and the Federal program agency; and

5.  Transmit daily file of processed items to Federal program agency,
    under specifications to be provided by the agency.

**Detailed Statement of Work**

A detailed statement of work will be included in the second phase of
this rebid for any payment streams that will require use of the Imaging
Enterprise Platform.

## 

## 4.8 Contractors

**Terms for Use of Contractors**

A QLP may perform required lockbox processing services by utilizing
other FIs or third parties only with the prior consent of FMS. Upon
consent, the QLP shall provide to FMS, within 60 calendar days prior to
implementation of general lockbox services for a Federal agency, a
Contractor Plan, which, at a minimum, shall include:

Identification of the contractor's full name, complete street address,
and phone number;

1.  Evidence of the contractor's intent to participate;

2.  The type of services to be secured through the contract and the
    percent of overall agency processing performed by the contractor;

3.  The technical qualifications of the contractor;

4.  A list of three professional references of the contractor that
    utilize the same services as will be provided to FMS;

5.  A contingency plan to rectify any contractor work stoppage; and

6.  The QLP's quality control plan for the contractor.

All contracts between the QLP and a contractor must be available for
review by FMS upon request.

The DFA requires the QLP to perform depositary and financial agent
services involving the collection and transfer of public funds to
Treasury in accordance with the requirements of 31 CFR Part 202.
Contractors who are not eligible and designated as depositaries and
financial agents under Part 202 may not control or possess public funds
at any time.

The proposed use of contractors shall be clearly explained in the FI's
response to this IEI. A QLP remains solely responsible for the
performance of its contractor(s). If used, contractors shall adhere to
the same standards required of the QLP. Any change of contractor by a
selected QLP requires prior written approval by FMS.

## 4.9 Audit and Report Requirements

### 4.9.1 Internal Audits

The QLP is required to conduct and prepare, at its own expense,
semiannual internal audit reports of its lockbox operations. The QLP
shall submit such audit report results to FMS within 30 calendar days of
completion of the report. Audit reports shall be due no later than the
last day of January and July of each year, unless alternative dates are
mutually agreed upon by the parties in writing. FMS will evaluate these
semiannual audit reports and track resolution of findings.

### 4.9.2 Independent Audits

The QLP is also required to obtain a biannual external audit (from an
independent audit firm) of its lockbox operations using an SAS 70 Type
II accounting or audit standard. The first report shall be due to FMS no
later than one (1) year from the effective date of the first MOU/SOW
entered into with any Federal agency pursuant to the DFA. Subsequent
reports shall be due on the same date every two years, unless
alternative dates are mutually agreed upon by the parties in writing.

### 4.9.3 Formal Dispute Process

**General:** FMS and the QLP agree that it is in their mutual interest
to resolve disputes by agreement. If a dispute arises from the
implementation or administration of this DFA, FMS and the QLP will make
all reasonable efforts to resolve the dispute by mutual agreement.

**Initiation of a Formal Dispute:** If the dispute cannot be resolved
informally by mutual agreement, the QLP and FMS will use the following
dispute resolution mechanism:

> The QLP will submit to the Authorized Treasury Official (ATO) a
> written statement within 90 days of the aggrievement with supporting
> documentation in appendices that articulates the dispute, the QLP's
> position, the relief sought, and the methodology used to calculate or
> determine the relief sought. (The ATO is the FMS official authorized
> to act for and bind the U.S. Treasury regarding U.S. Government
> lockbox collections. Currently, the ATO is the Director of the Cash
> Management Directorate, Financial Management Service, U.S. Department
> of the Treasury.)
>
> The written statement will include a certified statement executed by
> an appropriate representative of the QLP (the Authorized Bank
> Official, or ABO), which states that:

1.  The dispute or claim is presented in good faith;

2.  Supporting documentation is accurate and complete; and

> 3\. The amount of relief requested is accurate.
>
> The ATO will review the written statement and supporting
> documentation, and make a threshold determination on whether the
> dispute should proceed. Specifically, if the ATO decides that the
> dispute is without merit, the ATO will dismiss the dispute and so
> notify the QLP in writing. If the ATO determines that the dispute will
> proceed, the ATO will provide to any affected Federal agency the QLP's
> statement and supporting documentation.
>
> Within 30 calendar days of the date the ATO sends the QLP's statement
> to any other party, such other party may submit to the ATO a written
> response statement with supporting documentation in appendices. The
> responding parties are responsible for concurrently serving their
> responses to the QLP.
>
> The ATO will issue a written decision within 30 calendar days after
> the period for submission of the response statements. The ATO may
> unilaterally extend this period for decision up to an additional 30
> calendar days. The written decision of the ATO may order that specific
> actions be taken, including but not limited to:
>
> 1\. Payment, method of payment, and payment due date(s) for Value of
>
> Funds Assessments,
>
> 2\. Authorized fines,
>
> 3\. Loss of Treasury Time Balance or Depositary Compensation
> Securities
>
> without recompense, and
>
> 4\. Full or partial revocation of the DFA.

The ATO will send the written decision to all affected parties.

**Payment:** The amount determined payable under the ATO\'s decision,
less any portion already paid, will be paid by the liable party in
accordance with the ATO\'s decision.

**Obligation to Continue Performance:** The QLP shall proceed diligently
with performance of the services required by the DFA pending final
resolution of any claim.

**Other Remedies:** Notwithstanding the provisions of this section, the
QLP, and FMS have the right to pursue any and all available legal or
equitable rights they may have notwithstanding any written decision by
the ATO.

[]{#__RefHeading___Toc48714307 .anchor}4.9.4 Required Transition
Services

The QLP recognizes that the services provided under this DFA are vital
to the U.S. Government and must be continued without interruption, and
that, upon the expiration or termination of the DFA, FMS may designate
another QLP to provide the services required hereunder. Upon expiration
of the DFA, the QLP shall, unless otherwise directed in writing by FMS,
provide all approved transition services e.g., transporting remittances
to successor and phase-in training of successor.

Compensation for Transition Services - The QLP will be compensated for
all phase-in and phase-out transition services.

### 4.9.5 Document Retention/Schedules 

A QLP (and its approved contractor(s)) performing general lockbox
services for a Federal government agency shall maintain all books,
records, reports, documents, and other evidence related to the
performance of services, which will, among other things, properly
support all claims for compensation, lockbox processing, and deposit
activity. FMS reserves the right to examine, audit and obtain copies of
any of the above without substantial delay and without charge. See the
DFA, Appendix 1, for specific document retention requirements. Due to
continuing litigation, the QLP must retain indefinitely (until further
notice) all SF 215s,

SF 5515s, and any supporting documentation associated with transactions
relating to deposits received from the following Federal agencies:

> 1\. U.S. Department of Homeland Security/Bureau of Customs and Border
> Protection,
>
> 2\. U.S. Department of the Treasury/Treasury Tax Bureau, and U.S.
> Department of Justice/Bureau of Alcohol, Tobacco, Firearms and
> Explosives
>
> 3\. U.S. Department of the Interior and all bureaus and agencies of
> the Department of Interior.

As necessary, FMS may instruct the QLP that it must retain documents as
required by any litigation involving FMS.

### 4.9.6 Account Analysis Formats

Minimum Lockbox Expense Reporting Requirements -- QLPs will submit
account analysis information to FMS on a monthly basis in both paper
(preferably in Microsoft Excel) and the ANSI X.12 Account Analysis
Transaction Set (822). The paper submission will include the following
minimum reporting sections: Summary Account Analysis Statement, Account
Summary, and Detailed Account Analysis Statement.

QLPs will prepare a Summary Account Analysis Statement and Account
Summary for each processing site and will prepare Detailed Account
Analysis Statements for each Demand Deposit Account (DDA). The Summary
Account Analysis Statement and Account Summary will precede the Detailed
Account Analysis Statements.

In addition, QLPs will provide FMS with Ancillary Charges Invoice
Support and prepare a separate invoice for each Lockbox Account in
Microsoft Excel format detailing the fiscal year ancillary expenses.

Examples of the above-mentioned lockbox expense reporting requirements
can be accessed at FMS' Web site under the IEI Attachments section at
[www.fms.treas.gov/rebids/attachments](http://www.fms.treas.gov/rebids/attachments).

1.  **Summary Account Analysis Statement (Template) -- Attachment D**

2.  **Account Summary Information (Template) -- Attachment E**

3.  **Detailed Account Analysis Statement (Template) -- Attachment F**

**[Ancillary Charges Invoice Support]{.underline}**

QLPs in the GLN will provide FMS with invoices in Microsoft Excel format
detailing ancillary expenses for each lockbox on an annual basis.

**Invoice Due Date**

Fiscal year (October through September) invoices are due to FMS by the
last business day of October in each year of the Agreement.

**Invoice Data Requirements**

An invoice will contain the following administrative information:

> 1\. Attention: Agency Contact Person, Agency, Telephone Number and
> E-Mail Address of Agency Contact
>
> 2\. From: FMS Account Analyst Assigned to the QLP, FMS, and Telephone
> Number of Account Analyst
>
> a\. Invoice-Fiscal Year 200X Ancillary Expenses
>
> b\. Name of Agency
>
> c\. Name of FI
>
> d\. DDA Number
>
> e\. Lockbox Number
>
> f\. Agency Location Code

3\. An invoice will contain the following ancillary services-related
information:

> a\. TMA Code
>
> b\. TMA Description
>
> c\. Unit Price for Each TMA Code/Description
>
> d\. Monthly Volumes for each Service
>
> e\. Monthly Expenses for each Service
>
> f\. Total Fiscal Year Expenses for each Service
>
> g\. Total Fiscal Year Ancillary Expenses

# 

#  

# 4.10 Security Requirements 

The security requirements set forth in this section 4.10 are derived
from FMS Security Manual, which was developed in furtherance of the
Treasury policies contained in Treasury Directive 71-10.

### 4.10.1. Physical Security

Physical security of QLPs is required to ensure that adequate controls
exist to detect and deter instances of theft, fraud, waste, and/or abuse
of checks, remittances, negotiable instruments, and privacy act
information. Physical security is the first line of defense as it
pertains to attempted intrusion or internal theft, while acting as the
last line of defense when all other counter measures or controls fail.

The security of QLP facilities requires the integration and
implementation of intrusion detection systems (e.g., door alarms, motion
detectors, etc.), closed circuit television (CCTV) monitoring, camera
technology, video recording equipment, and other physical security
controls.

QLPs are required to meet the security standards herein to protect
government remittances and associated sensitive information, and
mitigate the risk of the theft, loss, and compromise of sensitive but
unclassified information.

The structure and location of the building combined with the scope and
sensitivity of operations are the major considerations in determining
appropriate security safeguards. The number of floors, doors, windows,
fire exits, roof vents, along with the degree of ground-level access,
and parking facilities all affect building security. The
minimum-security standards for access controls for the perimeter of the
building are as follows:

> Commercial, multi-tenant facilities must have security guards to
> perform access control duties, monitor personnel entering the facility
> (e.g., main lobbies, entrances designated for \"employees only\") and
> personnel reporting to loading dock/delivery areas. Security guards
> must be assigned to a security guard station or designated guard
> posts. The security guard station must be equipped with CCTV
> monitoring equipment (with the capability to observe and monitor
> entrances to the general lockbox processing area and other areas as
> required), duress alarms, land line telephone, internal communications
> (e.g., two-way radios), and post orders. Secondary guard posts should
> be equipped at an appropriate level that guards can perform
> effectively. Security guards must be required to physically touch each
> badge to verify the legitimacy of the badge and to match the badge
> photo with the face of the presenter, in the event card access
> controlled turnstiles, proximity cards, man-traps in conjunction with
> card readers, or other security controls/automated entry systems are
> not used to verify and validate personnel entering the facility.

If the facility does not have security guards to perform access control
duties, then dedicated security guards assigned to the general lockbox
processing floor are required. In cases where security guards are
dedicated and assigned to the general lockbox processing floor, some
form of access control for the building (e.g., main lobbies, \"employee
entrances,\" loading docks) is expected. The following are acceptable
access control measures for entrances to facilities where general
lockbox processing occurs and can be used individually or in
combination:

> 1\. Card access (e.g., photo identification, swipe, or proximity
> cards) controlled doors monitored by surveillance cameras combined
> with anti-piggybacking technology.
>
> 2\. Card access controlled revolving doors or portals that permit one
> person at a time into the facility while simultaneously providing an
> audit trail.
>
> 3\. Use of key pads requiring a Personal Identification Number (PIN)
> in conjunction with biometrics.

Where possible, parking should be located at least 50 feet from the
perimeter of the building. Avoid facilities with underground or
under-building parking. Facilities with uncontrolled/unmonitored
underground or under-building parking that are not controlled (e.g., via
card access controlled hydraulic gates or crash-resistant arms, card
access controlled garage doors, on-site security guards dedicated to
parking control, etc.) are not acceptable.

Security cameras must cover the primary entranceway to the lockbox
facility, loading docks and surrounding areas, freight elevators and
surrounding areas, parking areas, security guard stations that control
parking lots, truck delivery areas, mail-sorting areas, mail extraction
areas, and doors entering/exiting the general lockbox processing floor.

Trash, newspaper, mail receptacles, and unnecessary materials or
equipment shall not be located within 50 feet of the building, thus
eliminating the opportunity to conceal explosive or incendiary devices.

> 1\. Where possible, parking should be located at least 50 feet from
> the perimeter of the
>
> building. Avoid facilities with underground or under-building parking.
> Facilities with uncontrolled/ unmonitored underground or
> under-building parking that are not controlled (e.g., via card access
> controlled hydraulic gates or crash-resistant arms, on-site security
> guards dedicated to parking control, etc.) are not acceptable.

2\. Public/employee parking shall not be allowed in the loading dock
area.

> 3\. Signage for the building, parking stalls, or on the building
> directory should not include any words indicating that the QLP
> performs government financial operations.
>
> 4\. Exposed exterior ladders/fire escapes shall not be available on
> the exterior of the building.

Trees must not allow accessibility to the building structure (e.g.,
roof, decks, and terraces).

**Facility Security Plan:** A facility security plan prepared in
accordance with the prescribed Financial Management Service (FMS) format
is required for each QLP facility and must be updated annually (see
Attachment H on FMS' Web site
[www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids)[/attachments]{.underline}).

**Facility Blueprint:** A blueprint of the facility, specifically
processing floors and ground floors where main lobbies/entrances to the
facility and loading docks are located, must be at least 2 feet (width)
x 3 feet (height) in size and contain all security equipment (i.e.,
motion sensors, door alarms, emergency door exits, glass break sensors,
cameras (interior and exterior), card readers, fire alarms, intercom
systems, CCTV monitors, security guard stations, turnstiles, etc.). The
blueprints should indicate the location and orientation of all cameras,
and all security equipment should be numbered. The naming activity and
numbers for security equipment should be consistent with naming activity
and numbers reflected on CCTV monitors, camera numbers reflected on
multiplexers, and with information used by the central monitoring
station. Facility blueprints must be updated annually and submitted to
FMS. Blueprints must be professionally prepared and reflect all
processing work areas.

**4.10.2. General Lockbox Perimeter**

**Secured Space**

General lockbox processing shall be conducted in a secured space.
Secured space is designed to prevent undetected entry by unauthorized
persons. The following minimum standards must be met to qualify as
secured space:

1.  Surveillance camera coverage of entrances/exits to the processing
    floor, mail sorting/mail extraction areas

2.  Security guard coverage

3.  Intrusion Detection System (motion detectors, door alarms, glass
    break sensors)

4.  CCTV monitoring

General lockbox extraction processes shall not be co-mingled with
non-government extraction processes in the same space. Government
incoming mail shall be segregated from corporate mail and other
non-government media prior to extraction. Government mail shall be
extracted in a dedicated room that meets the following minimum physical
security standards:

1.  Card reader on doors to track access

2.  Surveillance camera coverage (interior and exterior)

3.  Intrusion Detection System (motion detectors, door alarms)

4.  Motion detectors to trigger room lights

**Intrusion Detection System (IDS)**

To detect attempted breaches into secured space, all perimeter doors
leading into the general lockbox processing area and designated
government work space must be equipped with door alarms*.* Designated
general lockbox processing areas located on the ground floor must have
glass break sensors to detect intrusions through the windows. Motion
detectors must be used throughout the secured space to detect
unauthorized intrusion.

The IDS must have a power source able to provide uninterrupted four (4)
hours of battery-powered backup in the event of a primary power failure.
The back-up power source should be tested at least once each year. A
test of all IDS equipment should be conducted once a year. A logbook or
alternate method to record testing dates must be maintained to document
test dates and results. The test results should be documented and
readily available for FMS inspections.

**Duress Alarms**

Duress alarm switches should be hidden from the public eye but
accessible to sensitive guards and appropriate personnel without raising
suspicion. The duress alarm should be programmed to invoke an immediate
911 response and notification to cognizant central monitoring stations.
When pressed, the duress alarm should annunciate in the on-site
manager's office. The annunciation can be non-audible (e.g., flashing
strobe light, dull vibration, etc.) so as not to draw attention to the
alarm within the facility.

Duress alarm procedures should be developed and documented by each
lockbox site. The procedures must include the guard's responsibilities
during an emergency situation. Testing of these alarms must be conducted
twice a year. A logbook or alternate method must be maintained to
document test dates and results. Security guards performing
interior/exterior roving patrols, or responsible for escorting bank
management and verifying visitors at loading docks, freight elevators,
or other areas must perform such duties with a portable duress alarm.

**Automated Entry System (AES)**

QLPs using an AES must develop and document procedures to ensure that
inventories of proximity or swipe cards are maintained in order to
provide audit trails and deter unauthorized access. All employee
information should be entered into the database, which must remain
current to preclude entry of unauthorized individuals. Functional
personnel should be fully trained on system capabilities and usage. A
database log must be established and maintained to ensure accountability
for proximity/swipe cards inclusive of the name of the person who issued
the card, name of the recipient of the card, date card was issued, and
date card was terminated or deactivated. Bank management must review the
logbooks on a monthly basis. QLP facilities will have twenty-four (24)
hours to delete access privileges for an employee that has been
terminated, resigned, or whose tour of duty (e.g., temporary or seasonal
employees) has been completed.

QLP facilities that utilize swipe card or proximity card access control
to maintain separation of government processing space from other areas
are required to ensure proper accountability procedures are used to
detect and deter theft of cards. The QLP cannot delegate the badge
issuance and turn-in (activation/deactivation) process to security
guards or other third parties. The QLP must perform the necessary
oversight to ensure proper checks and balances are used.

**Exterior Doors**

All perimeter doors leading into the QLP facility restricted secure
space, and doors that permit access to/from the perimeter of the
facility must:

> 1\. Be solid wood or metal, at least 1 ¾ inches thick (this pertains
> to electrical and telecommunication rooms only),
>
> 2\. Have interior door hinges or exterior door hinges equipped with
> security pins to prevent removal of the door from the hinge,
>
> 3\. Not have windows, vents, or louvers that may be removed from the
> exterior, allowing unauthorized access, and
>
> 4\. Not have openings that will allow the incision of tools to open
> the door latch while the door is closed.

All perimeter doors and doors to restricted areas (e.g., dedicated
government mail extraction room, computer room, etc.) must have a
key-operated, mortised or rim-mounted deadbolt lock, double cylinder of
five (5) or more pin tumblers, and a one (1)-inch throw, at minimum.
Combination/cipher locks may be used during duty hours to control entry
into a facility. **However, during non-duty hours, combination and
cipher locks must not be used as a sole locking device.** If deadbolt
locks cannot be installed, IDS must be installed to indicate
unauthorized access into the space.

**Key and Combination Controls**

Keys and/or combinations must be controlled and issued only to persons
having a need to have access to an area, room, or container. The number
of keys or knowledge of combinations must be kept to a minimum. Keys
that are issued to an individual employee must be kept with the
individual and not left in unsecured places, such as desk drawers. Keys
should be "off master" (in multi-tenant buildings). A key register must
be used to inventory and account for all keys, by type of key and total
number, inclusive of keys under security guard control. Keys issued to
individuals must be properly signed out using the key control log. The
QLP is responsible for reviewing the key control logs monthly. The QLP
is also responsible for conducting semiannual inventories of the key
register to reconcile keys signed out according to the key log, with
keys on-hand. All keys under the QLP control must be secure using a
locked key box. Combinations to cipher door locks, safes, locks, and
alarm systems must be changed:

1\. When the safe or lock is originally received,

2\. At least once a year,

> 3\. When an employee who knows the combination retires, terminates
> employment, or transfers to another job/position, and

4\. Whenever the combination is compromised.

At a minimum, combinations to cipher door locks, electronic locks (e.g.,
omni locks, etc.), safes, and alarm systems must be comprised of four
(4) or more digits, and individually signed for to ensure accountability
and for tracking, monitoring, and proper controls. Temporary
combinations given to visitors must be issued using a log to ensure the
visitor signs for the combination. Combination logs should be reviewed
by bank management weekly, and bank management should deactivate
combinations immediately upon the conclusion of the visitor's tour of
duty or departure from the facility.

**Surveillance Equipment**

Specific requirements for surveillance cameras are as follows:

> **Mail Sorting and Mail Extraction:** Surveillance cameras must allow
> management to view all workstations and activities in all mail-sorting
> and mail extraction areas (inclusive of certified mail extraction
> areas). Pan, Tilt, Zoom (PTZ) cameras must be used, and can be
> augmented by fixed cameras.
>
> **Loading Dock:** Surveillance cameras must allow for complete
> coverage of the loading dock area (i.e., all bays, doors, points of
> approach). If security guards are assigned to sign in and badge
> vendors at the loading dock, this area must also be covered.
>
> **Freight Elevators:** Surveillance cameras must be used to provide
> coverage of freight elevator doors and surrounding areas.

**Video Tape Retention**

The following guidelines apply for image retention:

1.  Videotapes or other forms of image retention should be maintained by
    the lockbox for a [minimum of six (6) months after]{.underline} the
    date of the tape's last annotated creation. After six (6) months
    from the date the tape was created, the tape can be destroyed or
    reused.

2.  Tapes must be safeguarded in a locked container. Recording equipment
    must be secured at all times to prevent tampering. Access and usage
    must be limited to specific bank officials only.

**4.10.3. Information Protection**

The use of security containers or appropriate file cabinets to provide
minimum protection standards is required for Privacy Act information,
which includes incoming mail that has not yet been distributed or
processed, negotiable instruments and related documents (e.g., checks,
money orders, and related forms), as well as computer cartridges.

Items that require a higher level of security are listed below. These
items must be controlled and stored in containers to prevent theft and
fraud.

1.  Currency

2.  Key/key cards

3.  Alarm and lock combinations

4.  Passwords

5.  Date stamps

Access to employee privacy information and assets that should be
protected must be limited to select authorized bank employees only.

**4.10.4. Lockers**

Lockers may be provided for permanent bank employees, temporary lockbox
employees, contractors, and Treasury employees to store personal
belongings. Lockers must be located outside of the controlled work
areas.

**4.10.5. Badges**

Anyone who enters the general lockbox processing area must wear an
identification badge issued by the guard on duty. **These badges must be
worn above the waist at all times**.

All QLP associates must have a unique ID swipe card that provides access
to work functions within the processing area. Associates must display
their ID cards at all times. **No associate will be permitted in the
processing area without displaying his or her ID card**.

**4.10.6. Security Equipment**

**Surveillance Cameras**

Surveillance camera coverage strategically positioned to monitor
perimeter doors leading into the facility, all doors that allow
entry/exit to and from the general lockbox processing floor, loading
dock areas, freight elevators and surrounding areas, security guard
stations, mail-sorting areas, mail extraction areas, and check
imaging/data processing areas (e.g., computer rooms) is required. PTZ
cameras are required for mail-sorting and mail extraction areas, but
could also be used to provide coverage of emergency exits, other
sensitive areas on the processing floor (areas with a high
susceptibility to identity theft or document theft/compromise), or to
augment fixed camera coverage. Surveillance cameras are crucial to
performing the necessary monitoring, observation, and recording of
events associated with the processing of government remittances. PTZ
cameras must be programmed and pre-positioned to support alarm call up
in response to emergency exit doors and other designated entry/exit
doors. All interior and exterior cameras must be in protective, tamper-
proof domes. Cameras must be capable of monitoring both normal and low
light situations. Per-camera resolution shall be a minimum horizontal
400 lines.

**Monitoring and Recording Equipment**

**Recording Equipment:** QLP sites are required to record surveillance
using digital video recording (DVR) systems using DVR multiplex
recorders. The DVR system must be supported by the necessary peripheral
security equipment to ensure effectiveness and compatibility. Video
cassette recording (VCR) technology including the use of VCR tapes is
not acceptable. Time-lapse recording is permitted provided that the time
lapse does not exceed two seconds. When lockbox personnel are present,
DVR recording must be on and activated. When lockbox personnel are not
present, DVR recording must be either continuous or event activated.
Event-activated recording means that activity such as an unauthorized
breach into facilities and/or secured space is detected by IDS systems
and triggers DVR recording. If event-activated recording is employed,
all DRV recording must be conducted in real time.

**Closed Circuit Television (CCTV) Monitoring Equipment:** CCTV monitors
must be large screen monitors capable of showing multiple cameras
simultaneously (i.e., split screen, quad screen (quad splitters),
multi-screen viewing). All monitors must produce a sharp,
high-resolution picture of exceptional clarity. The horizontal
resolution must be 600 to 700 lines at center. CCTV monitors must be
located where they can be viewed by security guards (i.e., security
guard stations). CCTV monitoring equipment and associated wiring should
be checked twice annually by qualified security technicians. Automatic
switchers and sequencers should be used to ensure CCTV monitors are
capable of automatically switching to cameras in the area of
activity/emergency, and have the ability to hold a scene on the screen
or manually override the automatic action and select a specific camera.
Monitoring and recording equipment must be supported by matrix and
sequential switchers.

**Intercom/Camera Devices**

The use of combination intercom/camera device(s) is essential to
effective physical security and access controls. An Aiphone® is an
example of a combination intercom/camera device. Such a device allows an
employee or security guard to perform critical validation and
verification tasks prior to granting access to the facility and/or
general lockbox processing floor area. It is imperative that facilities
be equipped with such devices at key points of ingress, in order to (a)
identify an individual and (b) to inspect the individual's
identification, prior to permitting access to the facility and/or to
sensitive areas. The use of substations is also a benefit since this
configuration permits visual and verbal communication with multiple
employee users such as between the receptionist, main guard station, and
loading dock entrance. Since lockbox facilities vary (e.g., stand-alone
versus multi-tenant facility) placement of these devices will vary.
Examples of placement areas include, but are not limited to, main
entrances, employee entrances, loading docks, and gated situations that
are designed to control vehicular traffic.

All security equipment must have four (4) hours of UPS/battery back-up
to ensure continued operations until the alternate source of power is
initiated.

**Computer operations**: The computer operations must be in a secure
area. Non-related activities must not be located within the computer
space. Environmental and housekeeping standards must be developed and
maintained. Fire suppressant equipment, such as sprinklers, fire
extinguishers, and fire suppressant trashcans should be utilized.

Access to computer operations must be limited to authorized employees
and visitors.

A sign-in/sign-out log must be established and maintained. Each visitor
entering the area must sign in and out on the log. An authorized QLP
employee must escort visitors, whereas temporary employees will not be
permitted into the area.

**Separation of domains:** QLP security equipment and controls,
telecommunication equipment, and computer equipment must be located
within the general lockbox space; each must be stored in separate rooms.
Equipment and utilities must be locked to prevent tampering. Keys will
be controlled and limited to authorized bank employees.

**4.10.7. Access**

**Temporary Employees**

**Registration:** Temporary employees must surrender current valid
government-issued photo identification to the QLP prior to the issuance
of an ID badge and access into the general lockbox processing area(s).
The term "current, valid government-issued photo ID" should include the
following forms of identification: a valid Motor Vehicle Administration
(MVA)-issued driver's license, non-driver license issued by MVA,
military ID, passport, or a lawful permanent resident alien card.

**Note:** The use of identifications such as a store card (e.g., Sam's
Club card), credit cards, or other forms of identification issued by
non-government institutions do not meet the requirements of
government-issued photo identification and could lead to compromises and
unauthorized access if accepted. The ID badge must be returned at the
end of the shift in exchange for the temporary employee's photo ID. A
copy of the employee's ID card must be maintained in the temporary
employee's file.

All temporary agency personnel will only be permitted to access the site
through one door located in the building. Badges must be returned at the
end of the shift. An audit must be conducted at the end of each shift to
ensure that all badges are accounted for. Identification media equipment
and supplies must be stored in locked containers at all times to prevent
theft and tampering.

**Visitors**

Only authorized visitors will be allowed access to the lockbox facility.
Authorized visitors must provide proper identification; surrender
current valid government-issued photo identification, and sign in with
the security officer. Visitor logs must be maintained for 2 years
starting with the date of the last entry.

**Bank Officials and Official Visitors**

Only QLP officials that have successfully completed the personnel
security background investigation requirements contained in sections
4.10.15. through 4.10.20, and are responsible for lockbox duties, will
be allowed unescorted access to the lockbox facility upon displaying the
appropriate bank identification. All other QLP officials must provide a
QLP-issued photo identification badge and sign in with the security
guard. Bank officials must display their photo identification badge at
all times. Official visitors are required to display their individual
identification badge or obtain a bank-issued visitors badge that must be
displayed at all times. No QLP official will be permitted in the
processing area without displaying his/her photo identification card.
QLP officials who have not successfully completed government personnel
security requirement must be escorted at all times by a cleared
employee.

**Government Officials**

Only government officials on the official contact listing will be
allowed access to the lockbox facility upon authentication of the
individuals' identity. Authorized government officials must provide a
Federal government-issued photo identification badge and sign in with
the security guard. Authorized government officials are exempt from the
disclosure statement requirement. Government officials must display
their photo identification card at all times. No government official
will be permitted in the processing area without displaying his/her
photo identification card. If possible, a temporary swipe card will be
issued for the duration of the visit. Government officials on the
official contact list do not require an escort. Any visiting government
official who is not on the official contact list will be required to
surrender a valid government-issued photo identification, sign in with
the security guard (with the exception of FMS security review team
members), and be escorted at all times.

**Inspection Personnel**

Special Agents and other auditors representing the investigative and
program review functions of the U.S. Treasury Office of the Inspector
General (OIG), respectively, should be granted staff-like access after
proper authentication of IDs by the FA. The OIG, per the Inspector
General Act of 1978, should receive full cooperation of the QLP in
support of the OIG's broad investigative and audit powers related to (a)
determining whether programs are achieving intended results and in
compliance with governing laws and regulations, and (b) identifying
fraud, waste, and abuse. This is applicable to other government auditors
(e.g., General Accounting Office) and/or their designated independent
audit agencies or firms.

**Emergency Personnel**

Emergency response personnel are exempt from personnel background
requirements contained in this document. To the greatest extent
possible, these personnel should be escorted by QLP management
personnel; however, in the case of an extreme emergency situation QLP
management should ensure all data being processed is secured in an
appropriate location.

Emergency personnel may include but are not limited to building guards,
firefighter personnel, fire marshals and rescue personnel, FBI
personnel, medical professionals, and law enforcement personnel.

**4.10.8. Security Screening and Oversight**

The QLP will provide adequate security, equipment, and facilities to
safeguard all remittances and associated information received,
processed, and mailed out of the facility as follows:

1.  Lunch bags/boxes, purses, handbags, backpacks, briefcases,
    sports/duffel bags, notebooks, planners, baggy clothing (carpenter
    pants or oversized shirts) or bulky outerwear, hats, shopping bags,
    or any item similar to any of the aforementioned are not permitted
    in the areas where remittances are processed. Light jackets and
    sweaters may be worn in the remittance processing area if climatic
    conditions warrant. This requirement applies to everyone entering
    the processing area, including vendors, visitors, bank officials,
    and authorized government employees.

2.  In the event that a vendor needs to enter the processing area with
    work-related items (e.g., tool kits, repair apparatus, testing
    equipment, manuals, etc.), the security guards must conduct a
    thorough search of these items before the vendor is allowed to enter
    or exit the processing area and escort the vendor at all times on
    the processing floor.

3.  Food and beverages (those not in spill-proof containers) will not be
    allowed at the workstations.

4.  Employees must be required to wear proper identification badges.

5.  Access to sensitive work areas must be restricted.

6.  Remittances will be controlled and secured between the source of
    receipt (post office) and the completion of processing the mail-out
    packages.

7.  FMS will perform on-site security reviews to determine the
    effectiveness of security controls and compliance with this IEI. The
    security reviews will be performed normally in conjunction with the
    bank personnel, and may include the seeding of cash or checks.

8.  Date stamps used by the QLP must be safeguarded against unauthorized
    use.

**4.10.9. Courier Service**

All courier service contracts are negotiated between the QLP and the
courier service. QLPs should ensure that couriers that are utilized are
bonded. QLPs have the option of utilizing internal personnel for courier
services; however, these personnel must be designated as such in writing
and adhere to those applicable rules outlined below:

**Packaging requirements**: Privacy Act information, including checks,
must be packaged for transmission in a manner that prevents unauthorized
observation of Privacy Act data, loss, theft, or altering of documents
or information. Government data should be transported in secure, locked
tamper-proof containers.

The courier must reject shipments containing any opened, untagged, or
unsealed packages and must allow the QLP 20 minutes to repair or replace
the packaging.

**Courier service driver procedures**: Courier service must:

1.  Adhere to policies and procedures required to transport government
    materials,

2.  Wear a company uniform or be a permanent employee of the lockbox
    facility,

3.  Be equipped with telephone/communication equipment,

4.  Travel in pairs,

5.  Be bonded or insured for \$500,000, and

6.  Carry the courier's identification card.

**Disaster contingency plan:** Prior to implementation of the contract,
the courier service must provide the QLP with a disaster contingency
plan. The contingency plan must cover labor disputes, employee strikes,
inclement weather, natural disasters, traffic accidents, and unforeseen
events. This plan should be reviewed and appropriate upgrades documented
at a minimum of once per year.

**Notification:** The courier service must immediately notify the QLP
when established timeframes cannot be met. The courier must also notify
the QLP within one (1) hour of accident or the theft and/or destruction
of government property being transported. To ensure this notification is
made promptly, vehicles must contain appropriate depositary contact
numbers and radio or telephone communication equipment within the
vehicle. The courier service must also provide to the depositary an
updated list of employees who will be assigned to the depositary during
the term of the contract. This must be accomplished annually on or about
October 1.

**Contact information:** Upon contract implementation, the courier
service must provide the QLP with two (2) contact names (a primary and
an alternate), telephone numbers, and pager numbers, if applicable. At
the same time, the courier service must also provide the QLP with a
24-hour emergency telephone number and name of the person to contact
during non-business hours.

The courier service must notify the QLP within 24 hours of any change in
contact persons and/or telephone numbers.

**Courier service employee information:** Upon contract implementation,
the courier service must provide the QLP, on official letterhead, the
following information for each employee [assigned to the QLP courier
contract]{.underline}:

1.  Employee name,

2.  Title,

3.  Signature,

4.  A valid driver's license, and

5.  Photograph of each employee assigned.

The courier service must notify the QLP within 24 hours, via facsimile
transmission, when an employee assigned is discharged from his/her
duties. The courier service must also deliver the identification
information to the QLP prior to assigning the new employee to any route.
The courier service must also notify the QLP within 24 hours, via
facsimile, of the hiring of new employees assigned to the contract.

The courier service must provide each employee assigned to the contract
with company photo identification. The company photo identification must
contain the following employee information, consistent with what has
been provided to the QLPs:

1.  Employee name,

2.  Employee signature,

3.  Company name,

4.  Company officer signature,

5.  Expiration date,

6.  Identification number, and

7.  Photograph.

The QLP should maintain files containing a copy of each courier's
driver's license and company photo identification. Procedures should be
developed and implemented to ensure proper validation of courier
drivers' identification.

**On-duty couriers**: All courier personnel must display (on their
person) the company-issued photo that clearly identifies the individual
as authorized messenger for the courier service. Company logo uniforms
are required for all courier employees assigned to the FA contract.

**Vehicle requirements**: The courier vehicle being used to transport
government data and/or remittance data must always be locked and secured
whenever government data are contained within the vehicle until it
reaches its destination. The vehicle must always be under the
supervision of one of the couriers and never left unattended while
transporting or containing government packages or containers.

**Shipment transport requirements**: The following must be adhered to
during transport:

1.  Vehicles used by the courier must be maintained in good condition,
    appearance, and working order. The vehicle must meet the minimum
    safety standards of the state in which each vehicle is operated.

2.  Vehicles used by the courier must be enclosed to ensure the packages
    or containers carried by the vehicle are secure. No open vehicles
    (pickup trucks with open beds, vehicles with glass camper tops or no
    doors, motorcycles, etc.) may be used to transport
    packages/containers.

3.  Vehicles must be secured (doors closed and locked) during
    transportation of the package or containers. Vehicle doors must be
    able to be secured from both inside and outside.

4.  To avoid lost documents, packages must be sealed and containers
    locked.

5.  When possible, packages must be placed in fire-resistant containers.

6.  Once the vehicle is in possession of the government's packages or
    containers and the doors are locked, the doors must not be unlocked
    until the vehicle has arrived at its destination.

7.  Upon arrival at the designated site, the driver must remain with the
    packages/containers until they are unloaded at the receiving site.

8.  Upon delivery of the packages/containers to the designated site, the
    driver must obtain a signature of the person receiving the material
    and annotate the time of the delivery.

9.  Couriers must promptly notify the QLP when packages/containers
    cannot be delivered within the established timeframes due to
    accident, vehicle disablement, robbery, or any other unforeseen
    event.

10. The QLP must maintain a log showing the courier driver's signature,
    date of pickup, number of boxes, and time of pickup.

11. QLP management must review the logs mentioned above on a monthly
    basis.

**QLPs involvement**: The **QLP** reserves the right to inspect vehicles
and personnel involved in courier operations to determine compliance
with applicable requirements.

**4.10.10. Guard Services**

**Overview**

Guards are an important element in the overall security plan, and the
functions they perform must be related to all other elements of the
plan. The image of a well-trained, uniformed security officer is an
asset that serves not only to deter crime, but also to promote an
environment in which employees will feel secure and safe.

When QLP personnel are not present, guards are not required. However,
when guards are not present, the facility should be secured and
intrusion detection systems fully activated. When personnel are present,
the minimum guard requirements are as follows:

Commercial, multi-tenant facilities must have security guards to perform
access control duties, monitor personnel entering the facility (e.g.,
main lobbies, entrances designated for "employees only") and personnel
reporting to loading dock/delivery areas. In cases where general lockbox
processing is performed in a facility that does not have security guards
located at main lobbies, loading dock areas, or other common areas to
monitor access controls, the QLP must have acceptable access control
measures for entrances to the facility as identified in Section 4.10.1
and dedicated security guards and a supporting security guard station on
the general lockbox processing floor. There must be a minimum of two (2)
guards on site per shift (one guard at all times at the entrance to the
general lockbox processing area and one (1) rover guard). Trained law
enforcement or security personnel who are dedicated to performing such
duties must perform security guard duties. Security guard duties are not
administrative duties and thus cannot be performed by unqualified
personnel (e.g., bank associates, temporary hires, etc.).

Security guards must be assigned to a security guard station or
designated guard posts. The security guard station must be equipped with
CCTV monitoring equipment, duress alarms, land line telephone, internal
communications (e.g., two-way radios), and post orders. Secondary guard
posts should be equipped at an appropriate level that guards can perform
effectively. Security guards must be required to physically touch each
badge to verify the legitimacy of the badge and to match the badge photo
with the face of the presenter.

Guards assigned to the facility (i.e., are not dedicated to the general
lockbox processing area) are not subject to the personnel security
requirements contained in Sections 4.10.12 through 4.10.23 (Personnel
Security Requirements); however, it is expected that these guards
undergo background checks in accordance with corporate policy. Dedicated
security guards assigned to the general lockbox processing floor,
however, are subject to the personnel security and background check
requirements contained in Sections 4.10.12 through 4.10.23.

Functions

####  {#section-32 .Subsections-(13)}

The basic functions of security guards are to respond to and report
incidents; monitor and observe activity on the processing floor; uphold
applicable security requirements; detect and deter theft, fraud, waste
and abuse; monitor material and personnel coming into and going out of
the processing area; maintain guard logs of activity and incidents; and
report suspicious or unusual activity. Security guard master logs must
be maintained for 2 years from the date of the last entry.

Closed Circuit Television (CCTV) Monitoring: Guards must be properly
trained in the use, capability, and purpose of surveillance equipment in
order to operate and monitor CCTV systems. Security guards are
responsible for monitoring CCTV activity to (a) observe
critical/sensitive areas (e.g., entrance(s), mailrooms, extraction
areas, etc.), (b) detect unusual activity and/or unsafe practices, and
(c) provide early warning of possible security compromises and attempted
compromises. The location of security monitors must be within proximity
to security guards to permit observation of areas (internal/external)
designated by the QLP as critical areas.

The responsibility for CCTV monitoring by security guards should be done
on an ongoing (active) basis and whenever guards are not engaged in
performing another security duty (e.g., signing in a visitor, badge
issuance/ID exchange, escorting bank management to the loading dock to
receive mail, or other security duties, etc.). Active monitoring does
not mean 24-hour continuous CCTV monitoring by a guard. Additionally,
security guards perform the following functions: (a) monitor the
extraction area; (b) staff the front desk/entrance into the processing
area; (c) patrol the perimeter; and (d) perform emergency response
duties. When QLPs rely on security personnel other than a dedicated
guard force, QLP management must ensure a designated trained bank
security official conducts active CCTV monitoring.

Post orders: Post orders provide security policies and summarize
required guard duties. They also avoid the inherent problems in
word-of-mouth instruction that can be forgotten or misunderstood. Post
orders should be specific for each major function the security guard
must perform. For example, a separate set of post orders should be
developed for guards posted on that entrance area versus roving guard
orders. Post orders should be developed with the following criteria in
mind:

1.  Post orders must be relevant to the unique operational settings and
    physical design of the facility. Post orders must be specific to the
    operations and associated vulnerabilities specific to the location
    and processes at the site.

2.  Each order must deal with one subject, permitting the guard or
    management to locate a policy or procedure rapidly when consulting
    with orders.

3.  Each order must be as brief as possible. The order is an action
    document stating clearly what is to be accomplished and when. It
    should not include narrative justification for the order.

4.  Each order must be written in simple terms that can be easily
    interpreted.

5.  Each order is indexed to permit ready reference.

> **Patrol**: Patrols can be performed either on foot or in a vehicle.
> Intermittent patrols of the perimeter of the facility (inclusive of
> parking lots, checks of perimeter doors, trash dumpsters, generator
> areas, etc.) shall be conducted and accounted for in the security
> guard's log. Items that must be checked and, thus, included in the
> officer post orders include:

1.  Doors, windows, or other openings that are not locked,

2.  All suspicious persons, vehicles, boxes/packages, or circumstances,

3.  Indications of disorder, excitement, or unusual activity, and

4.  Hazardous conditions, such as water leaks, unlocked rooms containing
    dangerous substances, fire hazards, and malfunctioning equipment.

**Escort**: Guards may be utilized to escort visitors and customers;
however, it is usually the responsibility of the individual being
visited to provide the escort. Guards may also escort those who need
assistance due to illness or physical disability.

**Incident reporting**: This is a key responsibility for the QLPs and,
in particular, the security guard force. The report should answer the
following questions:

> **Who** was involved? The guard should give a complete description,
> including names and titles, if appropriate,
>
> **What** happened? This does not mean what could have happened, or
> what someone thought might have happened,
>
> **Where** did the incident occur? To alleviate confusion, the
> description of where the incident occurred should be clearly
> identified,
>
> **When** did the incident occur? The specific timeframe (including
> date and hour of the incident), and
>
> **Why** did the incident occur? This is significant when intent is an
> element of the incident. The facts must be stated and the guard(s)
> must not include their own opinions.

Examples of reportable situations include, but are not limited to:

1.  Natural disasters, such as earthquakes, flooding, and hurricanes,

2.  Fires and explosions,

3.  Bomb threats or attacks,

4.  Arson,

5.  Chemical threats or attacks,

6.  Biological threats or attacks (including all "white powder"
    discoveries),

7.  Radiological threats/terrorist acts,

8.  Cyber attacks,

9.  Threats of violence against employees or the facility,

10. Information technology/equipment failures,

11. Workplace violence (if a 911 call is necessary or business is
    disrupted),

12. Civil disorder/demonstrations,

13. Weather-related closings or delays, such as severe ice or snow,

14. Theft (of checks or sensitive information),

15. Loss,

16. Unauthorized disclosure,

17. Unauthorized entry that created significant impact on operations or
    safety of employees,

18. Unauthorized shredding of government media,

19. Staffing or security problems, which cannot be mitigated immediately
    and threaten attainment of minimum daily processing or compliance
    with applicable security requirements, and

20. Any other critical events or events of such an unusual nature that
    immediate notification is required.

The bank must maintain a log of incident reports, noting corrective
follow-up actions taken on each incident.

**FMS must be notified within 30 minutes of an incident. A clear,
concise, and factual report (via the Event/Incident form), answering the
above questions, must be e-mailed and/or faxed to FMS within 24 hours of
the incident.**

**Issuance of weapons**: If an armed guard force is used, the guards
must be properly trained and certified in the use of firearms. The
firearm is to be drawn as a last resort---only in a defensive situation
for the protection and defense of life. The firearm must never be left
unattended, even momentarily. Aside from the competency of the guard,
the following major policy considerations should be reviewed:

1.  The conditions under which the weapon may be issued,

2.  The accountability maintained over the weapon and ammunition,

3.  Legal restrictions covering issuance and usage,

4.  Clearly written instructions as to the circumstances in which
    weapons may be utilized,

5.  Safety precautions surrounding the issuance and carriage of weapons,
    and

6.  Secure storage for weapons and ammunition when not in use (if
    applicable).

**Minimum Guard Coverage Requirements**

Commercial, multi-tenant facilities must have security guards to perform
access control duties, monitor personnel entering the facility (e.g.,
main lobbies, entrances designated for "employees only") and personnel
reporting to loading dock/delivery areas. In the event guards are not
present at the facility to perform access control duties, the general
lockbox processing sites must have two (2) security guards (one fixed
post and one rover) assigned to the processing floor at all times during
hours of operation. When the facility is closed, the Intrusion Detection
System (IDS) can suffice to provide security after hours of operation.

Main entrances and loading docks are required to have security guard
coverage during business hours and after business hours if IDS is not
available. QLP facilities may employee dedicated security guard
personnel or utilize security guard personnel provided for building
protection when the lockbox facility is a tenant in a host building.

**Security Guards -- Access Control**

A primary function of the guard is to permit authorized persons into a
facility and/or the lockbox-processing floor, and at the same time keep
unauthorized persons out.

Post orders given to the guards must include the following procedures:

1.  Ensure that all employees wear a badge above their waists. The badge
    must be visible at all times while in the processing area.

2.  Identify all visitors and issue special badges to them after the
    escort reports to the security guard station, verifies that the
    visitor has legitimate business at the facility, and signs the
    visitor's logbook.

3.  Provide sign-in/sign-out control for all visitors. Visitor logs must
    be maintained for 2 years starting with the date of the last entry.

4.  Report any person in the facility without authorization to
    management.

5.  Report individuals who bring liquor or other contraband into the
    facility or who are under the influence of liquor or drugs.

6.  Question individuals who attempt to remove property from the
    facility.

7.  Check all property removed from the facility to ensure that the
    individual has a valid property pass.

8.  Inspect all incoming packages and mail deliveries.

9.  Ensure that all boxes, packages, and courier vehicles are not left
    unattended in the loading area.

10. Escort the mail-out process for packages being picked up for
    delivery to the service center.

11. Inspect all personnel and materials leaving the processing floor
    (this includes inspecting all papers, documents, and other items for
    theft of checks, Privacy Act information, and other unauthorized
    data).

**QLP management is ultimately responsible for access control procedures
and accountable for ensuring that only authorized personnel are granted
access to the processing floor. Bank management must be involved in the
day-to-day access control process. This responsibility cannot be
delegated (e.g., to temporary agency personnel, security guards, third
parties, etc.)**

**Inspections**: QLP management must monitor the guard contract to
ensure that all officers are properly trained (including certification
of firearms proficiency), attired, and executing their duties. Also, QLP
management must maintain reports of inspections.

**4.10.11. Security Awareness Program**

An effective security awareness program must include the following as a
minimum:

1.  All new permanent and temporary QLP employees must go through a
    security orientation within 10 business days of arrival to the
    processing location. Before allowing employees to access Privacy Act
    information, employees must certify that they understand security
    procedures and instructions requiring their awareness and
    compliance. The initial certification and annual recertification of
    security awareness training should be documented and training
    attendance records validating the employee/temp hire attendance
    placed in personnel Treasury files. The annual recertification for
    security awareness training must be conducted between January and
    March of each year. This certification must be documented and made
    available for FMS inspectors upon request.

2.  Managers may use an after-hours review as an additional tool to
    assess employee awareness and security practices.

3.  A variety of methods may be used to disseminate security information
    and requirements: formal and informal training, group meetings,
    bulletin boards, employee newsletters, and posters. Documentation of
    such activities shall be presented upon request to QLP
    representatives during on-site security reviews; however, these
    informal methods of communicating security matters to ensure
    employee security awareness are not a substitute for the mandated
    formal security awareness training that is required within the
    employees' initial entry into the lockbox facility and annual
    recertification.

4.  Procedures for handling suspicious packages or suspected
    contaminated mail situations must be distributed and posted in the
    mailroom.

**Occupant emergency plan (OEP) and safety precautions**: An OEP must be
developed and updated annually. At minimum, the plan should contain a
call list for emergencies, as well as procedures to address bomb
threats, fire, evacuation, severe weather conditions, natural disasters
(e.g., earthquakes, tornadoes, etc.), demonstrations and civil
disorders, and procedures to ensure disabled employees are cared for
during such emergencies (see Attachment I on FMS' Web site
[www.fms.treas.gov/rebids](http://www.fms.treas.gov/rebids)[/attachments]{.underline}).

A fire drill should be conducted at a minimum of once a year. Fire
extinguisher locations throughout the space must be clearly marked and
extinguishers inspected by the local fire department annually. Upon
request, proof/certification that the facility has passed inspection
should be provided to FMS and/or QLPs.

The bank should exhibit good housekeeping and follow general safety
practices. Hazardous, combustible materials, as well as smoking, may not
be permitted in the facility. Computer equipment should be placed away
from obvious risks, such as water pipes. Cartridges should be protected
from magnets, liquids, and other hazards.

### 4.10.12. Personnel Security 

4.10.13. Personnel - Employee

The following personnel security requirements apply to any individual
that has staff-like (i.e., unescorted) access to lockbox facilities,
and/or any individual that handles/processes lockbox media
(remittances/information).

**4.10.14. Personnel Scope**

The extent to which an individual is considered an employee within a
general lockbox system is broad and applies as follows:

> Any QLP employee, including, but not limited to, full-time, part-time,
> temporary, or seasonal workers, as well as all contractors and vendors
> that transport, process, sort, extract, image, secure, or in any way
> handle lockbox media inclusive of managers and supervisors that are
> responsible for oversight, and
>
> QLP employees with staff-like access to general lockbox processing
> floors, information systems, and/or sensitive but unclassified
> information.

These requirements apply to the security guard force if such a force is
dedicated solely to the general lockbox. These requirements do not apply
if, in addition to the general lockbox, the guard force is also charged
with protecting a commercial, multi-tenant facility.

**4.10.15. Employee Eligibility**

Consistent with Title 12, United States Code, Section 1829, no person
shall work or have access to lockbox facilities and/or lockbox media who
have been convicted of criminal offenses involving dishonesty, breach of
trust, or money laundering. Outside of these requirements, the QLP has
the flexibility to hire and maintain individual employment; however, QLP
officials shall consider, weigh, and investigate results and
verifications that are obtained through initial background screenings,
employee-submitted documentation, and periodic reinvestigations.

**Employee Verification Service (EVS)**

This is a free screening that can only be cleared through the Social
Security Administration (SSA). SSA will advise the requesting employer
whether an employee's name and Social Security number (SSN) matches SSA
records. A non-match does not imply that the employee intentionally
provided incorrect information about his/her name or SSN. Once a
successful match is made via EVS, no periodic reinvestigation is
necessary since EVS is not a security-designated service. If there is a
non-match, the employee must be given reasonable time to visit

the local SSA office to correct any discrepancy, and appropriate
follow-up via EVS must be completed by the FA. SSA provides guidance to
all employers that use the EVS service, and financial agents are
expected to comply with EVS guidelines.

**4.10.16. Background Investigation**

[Screenings]{.underline}: Personnel security screenings must be
completed and adjudicated prior to deeming an employee eligible or
permitting unescorted access to lockbox facilities and/or the handling
of lockbox media for the Federal government. Two separate levels of
screening are outlined---Baseline and Standard.

[Baseline Screenings]{.underline}: Baseline personnel screenings apply
to all individuals with staff-like access to lockbox information and
facilities. At the discretion of FMS, baseline screenings may serve as
the sole investigative screening requirement contingent upon lockbox
scope. In addition, certain contractors such as janitors, electricians,
carpenters, photocopier/telephone repair vendors, and other facility
maintenance personnel with staff-like access are subject to baseline
screenings only.

1.  FBI fingerprint check,

2.  Local police check.

[Standard Screenings]{.underline}: Standard personnel screenings are
required based on job function, degree of staff-like access, and/or the
sensitivity of the lockbox operation. Standard screenings include:

1.  FBI fingerprint check,

2.  Local police check,

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```
3.  Credit check,

4.  Retail theft/fraud screening,

5.  Social Security Number Trace.

[Applying Standard Screenings]{.underline}: Within the lockbox
environment, it is recognized there will be personnel with greater
accessibility to government media by virtue of duties and/or lockbox
operations. For example, standard screenings would be required for
personnel with staff-like (i.e., unescorted) access including, but not
limited to, full-time, part-time, temporary and seasonal employees,
couriers, guards, and certain contractors such as unescorted systems
repair and security technicians. Except in cases where the baseline
screenings serve as the sole investigative standard, the standard
screenings will apply. FMS will make the determination whether the
standard screenings or baseline screenings apply to a particular lockbox
cash flow environment on a case-by-case basis and communicate its
decision in writing to the QLP.

1.  
2.  
3.  
4.  
5.  

**4.10.17. Primary Screening Requirements**

[Adjudication]{.underline}: QLP officials are responsible for ensuring
that primary screenings as outlined below are conducted and that
screening results are investigated, weighed, and adjudicated, except as
directed by FMS otherwise on a case-by-case basis. QLP officials shall
conduct screening result adjudications for suitability determinations
using the criteria specified in IEI, Attachment J, Suitability Factors
(see FMS' Web site
[www.fms.treas.gov/rebids/attachments](http://www.fms.treas.gov/rebids/attachments)[.]{.underline})
If requested, QLP officials must also be prepared to defend to Treasury
officials hiring decisions based on primary screening results.

[FBI Fingerprints]{.underline}: This clearance must screen for
felony/misdemeanor arrests and dispositions based on the subject's
fingerprints. Fingerprints may be submitted to the FBI either
electronically or by hard copy. If hard copy is used, two separate
fingerprint sets must be made. One set is sent to the FBI for screening
while the QLP must retain the other set. If fingerprints are submitted
electronically, the QLP must make and retain a copy using an
FBI-approved printer.

[Local Police Check]{.underline}: Using a subject's self-reported
seven-year address history, screen for felony and misdemeanor arrests
and dispositions with each jurisdiction. Because civic norms vary, local
police checks may involve clearing through courthouses, precincts,
cities, counties, or states. (See also \"SSN Trace\" below.)

[Credit Check]{.underline}: Obtain subject's financial history from a
credit reporting agency (CRA) for the past seven years including liens,
judgments, and bankruptcies. Make, justify, and document necessary
hiring decisions based on subject's creditworthiness.

[Retail Theft/Fraud History]{.underline}: A variety of private security
vendors have access to past incidents of confirmed employee and customer
theft against national and regional retail organizations. Such incidents
are not often prosecuted or reported to law enforcement agencies;
however, a restitution agreement, confession, or other evidence has been
substantiated. Screening involves generally submitting a subject's name
and SSN to a qualified vendor. The screening process must also comply
with the Fair Credit Reporting Act, and the scope of screenings must
include both regional and national retail organizations. Negative
findings must be substantiated by appropriate evidence since an accurate
"hit" shall disqualify the subject from employment.

[SSN Trace:]{.underline} This process is multifaceted and involves
authenticating information using a subject employee's SSN. Most private
security vendors obtain this information through CRAs and possibly other
sources. Fraudulent use of SSNs and identity theft is a growing problem,
and this form of authentication is designed to detect fraudulent use.
The SSN trace must include the following:

1.  Authenticate that an SSN is associated with the subject (name of
    individual) and no one else including aliases, names of others using
    the SSN, and use of false numbers;

2.  Authenticate that the subject's SSN, as issued by SSA, falls within
    a valid range based on verification of the year and state the SSN
    was issued in;

3.  Authenticate that the subject's SSN was never issued or was/was not
    used in a death report or is part of SSA's deceased file record; and

4.  Authenticate that the subject's seven-year self-reported address
    history is consistent with CRA records. Any discrepancies between
    the subject's self-reported address history and CRA information must
    be investigated (i.e., local police check).

**4.10.18. Periodic Reinvestigation**

[Full-Time Employees]{.underline}: Any employee designated as full time,
or maintains a regular and routine workweek of at least 35 hours, shall
be subject to a periodic reinvestigation inclusive of having primary
screenings refreshed every five years.

[Part-Time Employees]{.underline}: Any employee designated as part time,
temporary, seasonal, or lacking full- time status, shall be subject to a
periodic reinvestigation inclusive of having primary screenings
refreshed every three years.

**4.10.19. Background Employee Documentation**

[Vital Information]{.underline}: As a condition of employment, and prior
to staff-like access to lockbox facilities or media, the QLP must
request and obtain original documentation directly from the subject.
This documentation includes:

1.  Proof of U.S. citizenship,

2.  Lawful permanent resident status (if applicable),

3.  Signed non-disclosure statement, and

4.  Signed Rules of Behavior document.

[Table 1]{.underline}: The table below addresses documentation that is
required from the lockbox employees. How to treat this information,
including maintaining and updating documentation, is also addressed.

+-----------+-----------------------+----------------------------------+
| Table 1:  |                       |                                  |
| Primary   |                       |                                  |
| Employee  |                       |                                  |
| Docu      |                       |                                  |
| mentation |                       |                                  |
| --        |                       |                                  |
| Handling, |                       |                                  |
| Updating, |                       |                                  |
| and       |                       |                                  |
| Ver       |                       |                                  |
| ification |                       |                                  |
+-----------+-----------------------+----------------------------------+
| Source    | Documentation         | Handling/Verification            |
|           | /Updating             |                                  |
+-----------+-----------------------+----------------------------------+
| Employee  | Citizenship           | Review subject's original birth  |
|           |                       | certificate, original U.S.       |
|           | Mandatory for initial | passport, or original            |
|           | screening.            | Naturalization documentation and |
|           |                       | retain photocopy. Lacking        |
|           | Only                  | original documentation, contact  |
|           | update/reinvestigate  | appropriate civil authority to   |
|           | if situation          | verify citizenship. Maintain any |
|           | warrants.             | records/information related to   |
|           |                       | verification.                    |
+-----------+-----------------------+----------------------------------+
| Employee  | **Lawful Permanent    | Review subject's original        |
|           | Resident**            | documentation such as Form I-551 |
|           |                       | or "Green Card" issued by the    |
|           | Mandatory for initial | Immigration and Naturalization   |
|           | screening. Update if  | Service (INS) and retain         |
|           | indicated (see        | photocopy. If an expiration date |
|           | handling).            | is indicated, reinvestigate the  |
|           |                       | subject's proper renewal or      |
|           |                       | legal status at the appropriate  |
|           |                       | time. Maintain any records or    |
|           |                       | information related to           |
|           |                       | verification.                    |
+-----------+-----------------------+----------------------------------+
| QLP,      | **Non-disclosure      | Employee must agree and attest   |
| signed by | Statement**           | in writing to protect sensitive  |
| employee  |                       | lockbox media and information    |
|           | Mandatory initial     | from unauthorized disclosure.    |
|           | screening. Updated    | Statement must be signed and     |
|           | yearly thereafter.    | dated by the employee.           |
+-----------+-----------------------+----------------------------------+
| QLP,      | **FA Rules of         | Employee must agree and attest   |
| signed by | Behavior**            | in writing to protect assets and |
| employee  |                       | transmissions related to         |
|           |                       | government operations from       |
|           |                       | unauthorized disclosure and      |
|           |                       | uphold IT security principles    |
|           |                       | and guidelines.                  |
+-----------+-----------------------+----------------------------------+

**4.10.20. Additional Personnel Security Requirements**

[Treasury Folder]{.underline}: The QLP shall retain all initial
background screenings and periodic reinvestigations, together with other
documentation referenced in this section and in Sections 4.10.15.
through 4.10.19. Personnel Security, in a separate folder for each
employee. This folder, referred to as an employee's \"Treasury Folder,\"
must be stored in a secured space within the lockbox facility. Treasury
Folders should be separate and apart from personnel records that contain
private information related to job performance, salary, or other similar
information. Employees must be made aware that all information contained
in their Treasury Folder is subject to inspection and that information
is subject to reinvestigation. Other documentation may also need to be
stored in a subject's Treasury Folder, including, but not limited to,
proof of security awareness training.

[Tracking and Accountability]{.underline}: The QLP shall develop and
implement an acceptable tracking system, approved by Treasury, that is
designed to ensure that all required screenings, documentation, and
verifications are in place, current, adjudicated, and refreshed in a
timely manner.

[Audit and Review]{.underline}: QLP employees and management should be
made aware that that proof (or evidence) of background investigations,
or information contained in an employee's Treasury Folder, are subject
to inspection and review by appropriate Treasury officials. Appropriate
QLP representatives, including lockbox managers and supervisors or those
acting on behalf of same, agree to provide to Treasury officials, during
announced and unannounced site visits, immediate and unencumbered access
to Treasury Folders.

[Digital Photograph]{.underline}: QLP officials must obtain a current,
date-stamped retrievable digital photograph of the employee prior to
staff-like access to facilities or lockbox media. The retrievable
digital photograph must be dated within the last five years.

####### [Handwriting Exemplar, Requested Specimen]{.underline}: The subject must provide a handwriting sample based on a QLP-provided exemplar once employment eligibility is determined. The sample must also be completed under the full and direct scrutiny of a qualified witness. Exemplar language needs to be developed by the QLP, and the sample language should be relevant to a lockbox environment (e.g., sample incident report). The exemplar must contain a minimum of two four-sentence paragraphs, include numbers, and also contain at least three stand-alone sentences that are printed (not written) by the subject. The subject must both sign and print his/her name on the exemplar and include the date. After initial completion, an exemplar must be refreshed every five years thereafter. Older exemplar versions must also be retained. 

[Records Retention]{.underline}: All screenings and documentation as
outlined in Sections 4.10.15. through 4.10.23., that are contained in
Treasury Folders must be retained for five years after separation or
transfer. Except for handwriting exemplars and photographs/video image,
most background investigation reports (primary screenings) may be
shredded and destroyed as earlier results are updated due to periodic
reinvestigation requirements.

**4.10.21. Employee Roster**

[Immediate Staff]{.underline}: QLPs shall maintain a roster of current
eligible employees. Changes or updates to the roster must be annotated
by date. When the QLP deems an employee eligible, the roster must be
updated within 48 hours. Also, as employees resign or are otherwise
deemed ineligible, names must be removed or disqualification annotated
within 24 hours. Eligible employees include, but are not limited to,
full-time, part-time, and temporary staff including managers,
supervisors, and contractors who have completed the personnel security
investigative requirements and deemed suitable. At a minimum, the roster
must include the subject's name, job descriptor, date of eligibility,
and, if necessary, date of ineligibility.

[Vendors and]{.underline} [Contractors]{.underline}: Vendors and
contractors must also be included or addressed on a separate employee
roster. QLP officials must ensure that vendors and contractors
understand their responsibility to report changes in an employee's
eligibility status within a timely manner (i.e., eligibility within 48
hours; ineligibility within 24 hours) in order to maintain compliance.
At a minimum, the roster must include the subject's name, job
descriptor, assignment on the processing floor, date of eligibility,
and, if necessary, date of ineligibility.

**4.10.22. Security Awareness Training**

[Initial and Annual Recertification]{.underline}: Any and all eligible
employees must undergo security orientation by the QLP. Such an
orientation must be conducted initially or before an individual has
staff-like access to lockbox facilities and/or media and repeated at
least annually.

[FMS IT Security Policy]{.underline}: Any initial and annual refresher
program shall be in accordance with FMS IT Security Policy 2.15,
Information Technology Security Education and Awareness Training, for
all personnel involved in the management, operation, programming,
maintenance, or use of the lockbox system. QLPs and contractor employees
shall be aware of the security responsibilities, know how to fulfill
them, and know the penalties involved if they are not fulfilled.

[Security Awareness Program]{.underline}: The QLP must demonstrate that
an effective security awareness program is in place through practicing
and demonstrating to Treasury that these minimum requirements are in
place:

1.  Each employee must certify in writing that they understand security
    procedures and instructions that require their awareness and
    compliance. This certification and annual recertification must be
    contained in the employee's Treasury Folder.

2.  Employee completion of a non-disclosure statement, which is
    witnessed and completed in a controlled environment.

3.  Bank management must ensure that employees are aware of the
    penalties associated with unauthorized disclosure even after their
    employment has ended.

4.  Samples of security concerns that must be addressed include bomb
    threats, mail bombs, evacuation, incident reporting, and
    safeguarding facilities and media.

5.  Address the consequences of fraud and inadvertent and willful
    unauthorized disclosure. Also address deterrent practices and
    procedures related to CCTV surveillance, seeding, theft, dress code,
    and the proper stowage of personal belongings.

6.  Procedures for handling suspicious package situations must be
    addressed through training and also posted in the mailroom.

7.  Procedures for reporting crimes, suspicious activities, or other
    incidents.

8.  Procedures relevant to building and system security, which may
    include user codes, passwords, badges, building access, and
    intrusion detection.

9.  Any other practice or procedure that will facilitate and enhance
    security awareness.

> As part of the security awareness process, employees must be trained
> to protect lockbox media/information by:

1.  Not discussing it with individuals who do not have a need-to-know,

2.  Not discussing it in public areas where it could be overheard,

3.  Ensuring all printed reports, documents, and other information are
    securely stored when not in use,

4.  Ensuring printed documents and any diskettes containing information
    are properly destroyed when no longer needed,

5.  Ensuring they either exit the system and log off or use a
    password-protected screensaver when they are away from their
    workstations for any length of time,

6.  Ensuring they choose passwords that cannot be easily guessed by
    someone else, and

7.  Ensuring only they know the passwords.

**4.10.23. Exit Debriefing**

[Non-Disclosure]{.underline}: In addition to any other process or
procedures relative to employment resignation or termination, the
debriefing process must include guidance and signed statements, which
outline penalties associated with unauthorized disclosure should the
departing employee disclose information pertaining to lockbox
remittances and associated data, privacy act information, and any other
sensitive but unclassified, programmatic, operational, and/or
facility/security lockbox related information that they had knowledge
of/access to. The departing employee must be made aware of their
responsibility not to disclose information pertaining to lockbox
operations.

## 4.11 Information Technology (IT) Security

**Appropriate Security.** In general, the QLP shall ensure that an
appropriate level of information technology (IT) security, commensurate
with the risks and threats, is established for General Lockbox Services.

**FMS Entity-wide IT Security Program.** To the extent that IT systems
are employed to support General Lockbox Services, the provisions of the
Financial Management Service's (FMS) Entity-wide IT Security Program
apply, as identified in this section.

> In general, standard commercial check clearing, sorting, settlement,
> posting, and accounting resources are not the types of resources that
> will be considered IT systems for purposes of General Lockbox
> Services.
>
> In general, applications developed specifically pursuant to this IEI
> are the types of resources that may be considered IT systems.

**FMS IT Security Manuals.** To the extent that IT systems are employed
to support General Lockbox Services, the QLP shall comply with all
applicable elements of FMS IT Security Policy Manual and FMS IT Security
Standards Manual (these manuals are available upon request).

> Inquiries on FMS IT Security Manuals. During the bidding process, if
> the FI has a question about the applicability of an element of the
> Policy or Standards Manuals, inquiries may be directed to the General
> Lockbox Rebid Program Manager (see Section 3.1.1). After the DFA is
> signed, the QLP may contact FMS' Division Information Officer, Federal
> Finance for further clarification.

**Certification and Accreditation (C & A).** To the extent that IT
systems are employed to support General Lockbox Services prescribed in
this IEI, such systems must be certified and accredited in accordance
with the following definitions, rules, and procedures, prior to
processing transactions:

> 1\. Certification is an evaluation process resulting in a judgment
> stating whether a system meets a specified set of security
> requirements. Systems may be certified at Levels 1 -- 4 (as described
> later in this section under C & A Process).
>
> 2\. Accreditation (also called *Authority to Operate*) is an official
> management authorization for a system to process data in an
> operational environment at an acceptable level of residual risk.
>
> 3\. The QLP shall produce the following documents in support of
> Certification and Accreditation of any systems used to support General
> Lockbox Services:
>
> ***[System Security Authorization Agreement (SSAA]{.underline}).***
> The SSAA is an agreement among the accreditor, the certifier, program
> manager, and user representative. This document is described in and
> should be tailored from, Annex A of the National Information Assurance
> Certification and Accreditation Process, available at
> <http://www.nstissc.gov/Assets/pdf/nstissi_1000.pdf>. The Division
> Information Officer, Federal Finance, FMS, will assist in defining
> appropriate SSAA tailoring.
>
> *[**Security Plan**.]{.underline}* The Security Plan identifies the
> security requirements of the system and whether appropriate technical,
> management, and operational controls are in place or planned. This
> document must include all security requirements, if necessary, by
> reference to other documents (e.g., security, functional or business
> requirements documents that contain security requirements). The
> Security Plan is defined in NIST Special Publication 800-18, available
> at <http://csrc.nist.gov/publications/nistpubs/index.html>.
>
> ***[Security Activity Checklist.]{.underline}*** The Checklist has
> been developed by FMS based on the NIST Special Publication 800-26,
> Security Self-Assessment Guide for Information Technology Systems,
> available at <http://csrc.nist.gov/publications/nistpubs/index.html>.
>
> ***[Contingency Plan.]{.underline}*** The Contingency Plan identifies
> the priorities, resources, and procedures necessary to ensure that
> essential operational tasks can be continued after disruption to a
> system. This document should address both continuity of operations and
> disaster recovery. This document is defined in NIST Special
> Publication 800-34, available at
> <http://csrc.nist.gov/publications/nistpubs/index.html>.
>
> ***[Configuration Management (CM) Plan.]{.underline}*** The CM Plan
> defines the identification, control, accounting for, and auditing of
> all changes to system hardware, software, firmware, documentation,
> test plans, and test results throughout the life cycle of the system.
> This document includes Change Control.
>
> ***[Security Concept of Operations (ConOps).]{.underline}*** The
> Security ConOps describes how all types of users, administrators, and
> external processes interact with the system, ensuring that security
> controls are understood and used correctly, to include how the system
> is to be configured and operated to maintain its acceptable level of
> risk. This document includes Incident Response and an Escalation
> Matrix.
>
> ***[Business Risk Assessment (BRA).]{.underline}*** The BRA evaluates
> the sensitivity of the information being used by the business process,
> identifies threats to the business process, and identifies the
> management controls to protect the business process. The end result of
> this assessment is the identification of internal controls (both
> manual and automated controls) needed to maintain the integrity of the
> business process as well as the identification of privacy,
> reliability, and availability requirements imposed on the process.
> This document may be drafted after both the business process model
> diagram(s) and the logical data flow diagram(s) are approved. This
> process is defined in Technical Report -- 2002-04, *Financial
> Management Service Business Risk Assessment: A Methodology* (this
> document will be provided upon request).
>
> ***[Technical Vulnerability Assessment Report]{.underline}*** (also
> called System Risk Assessment). This identifies existing and potential
> threats, vulnerabilities, and the effectiveness of the current and
> proposed safeguards, including technical, management, and operational
> controls described in the Security Plan. This analysis need not use
> automated tools or hands-on testing. This is to be accomplished by an
> independent third party approved by the Division Information Officer,
> Federal Finance, FMS. Note that this document covers *technical*
> risks.
>
> ***[Security Test and Evaluation (ST&E) Report.]{.underline}*** The
> ST&E states the findings, potential impact, and recommendations of the
> effort to verify that all system security requirements are met in the
> deployed system. This is to be accomplished by an independent third
> party approved by the Division Information Officer, Federal Finance,
> FMS. The report should contain a matrix tracing the requirements in
> the Security Plan and other requirements documents to the system
> component(s), including operational procedures, that satisfy the
> requirement.
>
> ***[Configuration Audit and Penetration Test Report.]{.underline}***
> This report states the findings, potential impact, and recommended
> mitigations resulting from a thorough inside-out Configuration Audit
> and Penetration Test of the deployed system. This activity entails the
> systematic inspection, test, and analysis of the system's defensive
> mechanisms, networks, perimeter hosts, and key servers to assess that
> the system is suitably resistant to known vulnerabilities and attacks
> and properly implements established best security practices. This is
> to be accomplished by an independent third party approved by the
> Division Information Officer, Federal Finance, FMS.
>
> 4\. Limited Official Use. All certification and accreditation
> documents shall be delivered marked "Limited Official Use Only" on
> front and rear covers, the spine of any binder used to deliver hard
> copy, and on top and bottom of each page.
>
> 5**.** Templates. Templates for all of the required certification and
> accreditation documents may be obtained from the Web addresses
> indicated or from FMS.
>
> 6\. Roles. For purposes of the SSAA, the QLP shall be considered the
> "Program Manager" and the responsible FMS Division Director shall be
> considered the "Certifier." FMS shall be the system accreditor.
>
> 7\. Independent Third Party. The QLP shall engage an independent third
> party to produce the Technical Vulnerability Assessment Report, the
> ST&E Report, and the Configuration Audit and Penetration Test Report,
> as well as to provide advice and assistance to FMS Certifier. The
> Division Information Officer, Federal Finance, FMS, must approve in
> advance the choice of an independent third party. FMS will compensate
> the QLP for the direct costs charged by the Independent Third Party.
>
> 8\. C & A Process. Within 10 business days of being designated a
> financial agent for lockbox processing, the QLP shall meet with FMS to
> begin the Certification and Accreditation definition process. This
> definition process includes, but is not limited to, determining the
> certification level for the IT system. These levels include the
> following:
>
> **Level 1: Basic security review** requires completion of the
> system-relevant Security Activity Checklist. The system user or an
> independent certifier may complete the checklist.
>
> **Level 2: Minimum analysis** requires the completion of the
> system-relevant Security Activity Checklist and independent
> certification analysis.
>
> **Level 3: Detail analysis** requires the completion of the
> system-relevant Security Activity Checklist and a more in-depth,
> independent analysis.
>
> **Level 4: Comprehensive analysis** requires the completion of the
> system-relevant Security Activity Checklist and the most extensive
> independent analysis.

**Reaccreditation.** IT systems must be recertified and reaccredited at
least every 3 years, or after a major enhancement or change that results
in a significant modification of the operating environment or security
controls.

**IT Security Compliance Matrix.** To the extent that IT systems are
employed to support General Lockbox Services, the QLP shall submit for
FMS' review and approval, prior to processing transactions, an IT
Security Compliance Matrix, which shall include a listing of all
policies and standards from FMS IT Security Policy and Standards
Manuals, the extent to which the policies and standards apply to the
QLP's IT systems, and the means of compliance with the policies and
standards. The QLP shall certify the completeness and accuracy of the
matrix.

**Annual Responsibilities.** Consistent with the provisions of FMS IT
Security Policy and Standards Manuals, the QLP shall perform the
following responsibilities at least annually, upon the anniversary of
the most recently granted Authority to Operate:

1.  Conduct a Security Review.

2.  Update the Business Risk Assessment.

3.  Certify that all user accounts/profiles/passwords and associated
    roles, and access control lists are current and appropriate.

4.  Update the Security Activity Checklist or the Security
    Self-Assessment, as applicable.

5.  Update the Security Plan (NIST 800-18).

6.  Update the Technical Vulnerability Assessment Report.

7.  Conduct IT security awareness training.

8.  Update the IT Security Compliance Matrix.

9.  Update Diagrams and Topologies and Component Lists.

10. Test continuity of operations and disaster recovery procedures.

Note that these annual reviews do not need to be completed during years
when the IT system receives a full recertification and reaccreditation.

**Quarterly Responsibilities.** For IT systems certified at Levels 3 and
4, the QLP shall execute interim configuration audits and penetration
tests quarterly, which shall include basic checks to ensure that no
changes or new vulnerabilities have emerged since the last full
configuration audit and penetration test, and checks for
security-related patches and updates for all hardware, software, and
networking components.

**Security Officers.** The QLP shall designate an information systems
security officer (ISSO) responsible for the security of IT systems and
compliance with IT policies and standards. The QLP shall ensure that any
contractors that obtain or operate IT systems also designate an ISSO for
these purposes. The QLP shall ensure that such designations are kept up
to date. (See IEI Attachment K, ISSO Designation Template, available on
FMS' Web site at
[www.fms.treas.gov/rebids/attachments](http://www.fms.treas.gov/rebids/attachments).

**Vendor Security Guidelines.** To the maximum extent practicable, the
QLP shall comply with all security instructions and documentation
accompanying vendor hardware and software. The QLP shall thoroughly
review all vendor recommendations and requirements for the configuration
of security controls. If operational requirements dictate that such
security recommendations cannot be met, the QLP shall document
noncompliance prior to conducting any Technical Vulnerability
Assessments or Configuration Audits and Penetration Tests.

**Diagrams and Topologies.** To the extent that IT systems are employed
to support General Lockbox Services, the QLP shall provide a business
process model diagram, a logical data flow diagram, and a physical and
logical topology diagram.

**Component Lists.** To the extent that IT systems are employed to
support General Lockbox Services, the QLP shall provide a list of all
hardware, software, and networking equipment, including make, model, and
release or version number.

**Encryption Plan.** To the extent that IT systems are employed to
support General Lockbox Services, the QLP shall develop an encryption
plan to be submitted to FMS for review and approval. The encryption plan
shall include the following:

1.  Identification of all telecommunications and sensitive data.

2.  Encryption methods and algorithms.

3.  Information on any commercial off-the-shelf products used, and
    compliance with NIST Federal Information Processing Standards
    Publication (FIPS PUB) 140 series.

4.  Key management procedures for generation, distribution, storage,
    entry, use, and destruction.

## 4.12 Disaster Recovery And Processing Continuity Plans

Periodically, due to unexpected events or situations, normal day-to-day
lockbox processing operations are interrupted, thereby resulting in less
than 100% equipment/processing functionality. These unforeseen events
can be attributed to but not limited to fire, earthquakes, floodwaters,
storms, bombs, terrorist attacks, biochemical attacks, or
hurricanes/tornadoes. Each QLP must develop an internal **Disaster
Recovery and Processing Continuity Plans** for implementation in the
event of such occurrence.

The Disaster Recovery and Processing Continuity Plans will outline the
course of action QLPs will implement in the event an unexpected event
occurs that prevents normal operation of the processing facility, which
could be less than or more than 48 hours. QLPs are required to configure
processing sites with an alternative power source, in the event of power
failure, that will enable continuity of lockbox processing (at less than
100% equipment functionality) should a disaster or situation occur.
Consequently, each QLP must have a designated contingency site
established to accommodate daily lockbox processing in the event the
primary processing facility is shutdown in excess of 48 hours. The plan
should address assurance that all payments will be processed timely if
an outage or other unforeseen event disrupts normal operations for less
than 48 hours. Each processing site must have a Disaster Recovery Plan
that addresses the following:

1.  Workstation Processing,

2.  Information Capture, Storage, and Retrieval,

3.  Data Processing and Telecommunications,

4.  Full Operations Emulation, and

5.  Shut Down

At a minimum, the Disaster Recovery Plan must include:

> 1\. If the site is unavailable for two or more days, Disaster Recovery
> Plans must include provisions for the work to be transferred to a
> contingency site. This plan must include maintaining a log recording
> the volumes, received dates, and new site location(s) for transferred
> work.
>
> 2\. If the site is unavailable for a few hours or one day, the plan
> must stipulate that the work will be held at the QLP's site.
>
> 3\. The Disaster Recovery Plan must include primary and secondary
> contact personnel for each processing site.

Disaster Recovery Plans must include specific arrangements coordinated
with the post office in the event mail needs to be (1) transshipped to a
contingency site in a disaster (e.g., mail will be forwarded by post
office to another site/location); (2) mail will be packaged and picked
up by a special lockbox courier; or (3) mail will be received as usual
and prepared for transshipment by the QLP).

In addition, lockbox site disaster plans must include the stipulation
that arrangements to send QLP production support personnel to the
designated back-up facility will be made through a specific pre-arranged
agreement with that site. Staff must cover expertise in all functional
areas.

> 1\. Document Extraction
>
> 2\. Data Entry
>
> 3\. Proof Operations
>
> 4\. Manual/Exception Processing
>
> 5\. Quality Review
>
> 6\. Mail-Out/Packaging
>
> 7\. Shipping

Disaster Recovery Plans must stipulate that if personnel are available,
the mail will be sorted to identify high dollar amounts to be worked
first regardless of mailing address or received dates. The back-up
facility must agree to assume the responsibility for reporting into
CA\$HLINK II totals to FMS. The QLP agrees and understands that it shall
remain liable for all delays in funds capability as provided under the
DFA, Delay of Funds Availability, Section XII.

The plan must also stipulate that when the primary production facility
is again available, multiple shifts and overtime will be utilized until
the backlog situation is remedied.

All Disaster Recovery Plans must be tested at least once a year
including system and application testing, where appropriate. An
agreement by the QLP to provide annual testing schedules and results
must be included in the plan. In addition, lockbox processing
supervisors must agree to review disaster recovery procedures with all
personnel twice each year. It will be the specific responsibility of the
lockbox processing manager to review the disaster recovery plan with the
Lockbox Management Team and update it as needed to ensure the test meets
all of the business recovery needs.

# APPENDIX 1

# 

## LEGAL AGREEMENTS -- DFA and MOU

## 

# 

# 

# 

# 

# 

## 

##  

# 

# 

# **Designation and Authorization of {Name of Bank}**

**as Financial Agent**

**for General Lockbox Services**

**THIS DESIGNATION AND AUTHORIZATION OF FINANCIAL AGENT** (DFA), dated
as of \_[\_\_\_\_\_\_\_]{.underline}\_\_, 2003 (Effective Date), is
entered into by the Financial Management Service (FMS), a bureau of the
United States Department of the Treasury (Treasury), as Principal, and
[{Insert FA Name}]{.underline} (Financial Agent), as a Depositary and
Financial Agent of the United States. This DFA sets forth the terms and
conditions required of the Financial Agent for the establishment and
performance of general lockbox services.

***Recitals***

In furtherance of its role in managing collection and disbursement
mechanisms of the United States, FMS designates qualified financial
institutions as depositaries and financial agents to act on behalf of
the United States to perform essential banking services. In
consideration of those services, FMS may compensate its financial agents
for performing such duties.

FMS has determined that it is in the interests of the United States to
designate the Financial Agent to serve as a financial agent for the
essential banking services described herein.

The Financial Agent, in accordance with the terms and conditions stated
herein, desires to serve as financial agent for the United States.

Therefore, in consideration of the representations, warranties and
mutual promises and agreements set forth herein, the Financial Agent and
FMS agree as follows:

I.  **AUTHORITIES**

The parties acknowledge and agree that:

A. The Secretary of the Treasury has authority to designate financial
institutions as Depositaries and Financial Agents of the United States
to perform essential banking services pursuant to 31 U.S.C. § 3303, 12
U.S.C. §§ 90 and 265 and other authorities. The Secretary of the
Treasury has delegated to FMS the authority to select and designate
depositaries and financial agents for, among other purposes, providing
general lockbox services.

B. This DFA is not a Federal procurement contract, and is therefore not
subject to the provisions of the Federal Property and Administrative
Service Act (40 U.S.C. § 471 et seq.), the Competition in Contracting
Act (41 U.S.C. § 251-260) or the Federal Acquisition Regulations (48 CFR
Chapter 1).

**II. DESIGNATION AND AUTHORIZATION**

Pursuant to 31 U.S.C. § 3303 and 12 U.S.C. §§ 90 and 265, and relying on
the representations, warranties and promises contained herein, the
Secretary of the Treasury, through FMS, hereby designates and authorizes
the Financial Agent to act as depositary and financial agent for general
lockbox services, subject to the terms and conditions of this DFA, which
set forth the scope of the agency. The scope of the Financial Agent's
authority will be further defined in memoranda of understanding entered
into by and among the Financial Agent, FMS and Federal agencies
requiring lockbox services. (The term \"MOU,\" as used herein, refers to
such three-party agreements for performance of services pursuant to this
DFA.) Additionally, FMS may, from time to time, issue instructional
bulletins, consistent with this DFA, which further describe the scope of
authority and financial agent responsibilities under this DFA. This DFA
does not guarantee that the Financial Agent will be awarded any work
pursuant to an MOU. The Financial Agent acknowledges that it will not be
authorized to perform services until such an MOU becomes effective.

**III. INCORPORATION BY REFERENCE**

The following, as from time to time amended, are incorporated herein by
reference and given the same force and effect as though fully set forth
herein:

-   31 CFR Part 202;

-   Invitation for Expressions of Interest (IEI), Section 4.0,
    \"Technical Requirements\", including all amendments and
    modifications thereto (collectively referred to as the \"Technical
    Requirements\") ([See]{.underline} Attachment A);

-   The Pricing Schedule ([See]{.underline} Attachment B);

-   The Financial Agent's Response to the IEI, including its
    Certification Statement ([See]{.underline} Attachment C);

-   Volume V, Chapter 3000 of the Treasury Financial Manual (TFM) (V TFM
    Chapter 3000)[^6] ([See]{.underline} Attachment D);

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-   V TFM Chapter 2000, Supplement 1, governing CA\$HLINK Bank
    Management Reporting;

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-   V TFM Chapter 2000, Supplement 2, CA\$HLINK User's Guide;

-   I TFM part 5, Chapter 4600.

In the event of inconsistencies between this DFA, including any addenda
or amendments hereto, and any documents incorporated by reference, the
provisions of this DFA shall govern, to the extent it is consistent with
Federal law.

**IV. REPRESENTATIONS AND WARRANTIES**

The Financial Agent hereby represents and warrants to FMS the following
(which shall survive the execution and delivery of this DFA, the truth
and accuracy of which are a continuing condition of FMS' obligations
under this DFA):

A. The Financial Agent meets the class and eligibility requirements of a
Depositary and Financial Agent of the Government as stated in 31 CFR
Part 202.

B. The Financial Agent is not aware of any legal or financial
impediments to performing its fiduciary responsibilities and obligations
under this DFA, which it has not disclosed in writing to FMS.

C. Neither the Financial Agent, nor, to the best of the Financial
Agent's knowledge, its contractors or representatives have offered or
given a bribe or gratuity (including but not limited to entertainment
and gifts) to an officer, official or employee of Treasury.

D. The Financial Agent has full corporate power and authority to enter
into and execute and deliver this DFA and to carry out and perform its
obligations hereunder.

E. This Financial Agent has duly and properly executed this DFA.

F. All information contained in any document the Financial Agent signed
as part of the bid process for services performed pursuant to this DFA
remain true and accurate, unless otherwise disclosed in writing to FMS.

**V. SERVICES TO BE PERFORMED BY AGENT**

A. [Compliance with the Technical Requirements]{.underline}. The
Financial Agent shall comply with all requirements, terms and conditions
set forth for Qualified Lockbox Providers (QLPs) in the Technical
Requirements and in any MOU. The Financial Agent acknowledges that the
performance of obligations in the Technical Requirements and any MOUs is
vital to the United States Treasury and the people of the United States.

B. [31 CFR Part 210]{.underline}. To Financial Agent warrants that it
shall comply at all times with the provisions of 31 CFR Part 210, to the
extent they are applicable to work performed pursuant to this DFA.

C. [Fiduciary Responsibility]{.underline}. With respect to carrying out
its fiduciary responsibilities under this DFA, the Financial Agent
agrees to act at all times in the best interests of the United States.
FMS may from time to time issue guidance, consistent with the terms of
the DFA, regarding the Financial Agent's fiduciary responsibilities. The
Financial Agent agrees to comply with this guidance to the same extent
it complies with the terms of this DFA.

D. [Financial Agent Contracts]{.underline}. The Financial Agent will use
its own employees to carry out its obligations hereunder, except that
the Financial Agent may hire other financial institutions or third
parties as contractors to fulfill its obligations hereunder only in
accordance with the requirements and limitations of the Technical
Requirements Section 4.8. \"Contractors\". All work shall be performed
under the supervision and control of the Financial Agent and its
responsible employees. Contractors who are not designated as
depositaries and financial agents under 31 CFR Part 202 shall not
control or possess public funds at any time.

E. [Status of Financial Agent Contractors]{.underline}. Any contractors
hired by the Financial Agent for purposes of carrying out its
obligations hereunder, shall not be contractors, subcontractors, or
subagents of FMS. FMS shall not be deemed a party to any contract that
the Financial Agent enters into with a third party (other than an MOU)
in order to fulfill its obligations hereunder. FMS shall not be liable
for any compensation due to any contractors used by the Financial Agent.

F. [Information, Personnel and Physical Security]{.underline}. The
Financial Agent shall ensure that the required level of information,
personnel and physical security is provided and maintained in accordance
with the requirements set forth in Section 4.10 and 4.11 of the IEI,
\"Security Requirements\", and all other documents incorporated by
reference herein. In particular, the Financial Agent shall comply with
the Computer Security Act of 1987 (Public Law 100-235) and all
applicable standards and regulations established thereunder, as directed
by FMS. Additionally, the Financial Agent shall not publish or disclose
in any manner, without FMS' written consent, the details of any
safeguards either designed or developed by the Financial Agent pursuant
to this DFA or otherwise provided by FMS or other Federal agency. FMS
must notify the Financial Agent in writing that it has met all security
requirements prior to entering into an MOU or receiving any compensation
hereunder. FMS may amend such requirements from time to time as
necessary to protect the security, confidentiality and integrity of the
Treasury's collection systems and data and to maintain compliance with
all applicable laws and policies affecting lockbox collections.

G. [Privacy Act]{.underline}.

1.  The Financial Agent may be required to design, develop, operate or
    maintain a system of records on individuals or businesses to
    accomplish a government-required function that is subject to the
    Privacy Act of 1974 (5 U.S.C. § 552a), as amended (hereinafter,
    \"the Act\") and applicable Treasury regulations. Violations of the
    Act may involve the imposition of criminal penalties. Any
    information subject to the Act made available to the Financial Agent
    (or any contractor performing services for the Financial Agent in
    connection with this DFA) shall only be used for the purpose of
    carrying out the provisions of this DFA and any MOU, and shall not
    otherwise be divulged or made known in any manner to any person
    except as may be required by law.

2.  The Financial Agent shall inform its officers and employees (and any
    contractor officers and employees) to whom information is or may be
    disclosed of the penalties imposed under the Act for improper
    disclosure of information. For example, 5 U.S.C. § 552a(i)(1), which
    is made applicable to the Financial Agent by 5 U.S.C. § 552a(m),
    provides that any officer or employee of the financial institution
    who, by his /her employment or official position, has possession of,
    or access to, agency records, the disclosure of which is prohibited
    by the Act or regulations established thereunder, and who knowing
    that disclosure of the specific material is so prohibited, willfully
    discloses the material in any manner to any person or agency not
    entitled to receive it, shall be guilty of a misdemeanor and fined
    not more that \$5,000.

3\. The Financial Agent shall train all officers and employees (and any
contractor officers and employees) on the duties and responsibilities
imposed on them and the rights conferred on individuals by the Act and
Treasury regulations. The Financial Agent shall certify, in writing,
that all employees and contractor employees (or any future employees)
have received this training before they begin any tasks under which they
may gain access to any information subject to the Act. A certification
form for all training provided in support of this task order shall be
signed by each Financial Agent employee and contractor employee and
maintained on file by the Financial Agent. The Financial Agent shall
make these certifications available for reasonable review by FMS (or
other Treasury Department) personnel. The Financial Agent shall ensure
that information concerning the Act's requirements is posted in
appropriate places (including computer systems/databases) to continually
remind employees and contractor employees of their responsibilities
under the Act.

H. [Right to Examine and Audit]{.underline}. FMS, the Treasury Inspector
General's Office, and the General Accounting Office shall have the right
to conduct announced or unannounced, on-site security reviews and audits
of the Financial Agent's (and any contractor's) facilities, operations,
books and records related to the Financial Agent's performance
hereunder. Federal agencies for which the Financial Agent is performing
lockbox services shall also have the right to conduct such reviews and
audits.

I. [Access to Systems]{.underline}. To the extent required to carry out
a program of inspection to safeguard against threats and hazards to the
security, integrity, and confidentiality of data, the Financial Agent
shall afford FMS, its agents and contractors access to the Financial
Agent's facilities, installations, technical capabilities, operations,
documentation, records, and databases. If new or unanticipated threats
or hazards are discovered by either FMS or the Financial Agent, or if
existing safeguards have ceased to function, the party discovering such
problem shall immediately bring the situation to the attention of the
other party. If the Financial Agent requests that any FMS contractor
assisting FMS in the performance of an inspection sign a confidentiality
agreement, FMS shall require the contractor to sign the confidentiality
agreement attached as [Attachment E]{.underline} hereto. The Financial
Agent shall afford the contractor access if such confidentiality
agreement is signed.

J. [Continuity of Services.]{.underline} The Financial Agent recognizes
that the services provided under this DFA are vital to the U.S. Treasury
and must be continued without interruption, and that, upon the
expiration or termination of this DFA, FMS may designate another
financial institution to provide the services required hereunder. Upon
expiration of this DFA, the Financial Agent shall, unless otherwise
directed in writing by FMS, provide all transition services specified in
Section 4.9.4 of the Technical Requirements.

K. [Marketing]{.underline}. The Financial Agent understands and
acknowledges that it is designated for the purpose of providing lockbox
services only. This DFA does not designate or authorize the Financial
Agent to provide any other depositary, cash management, or financial
management service. The Financial Agent shall not market any other
financial services to Federal agencies without the prior written consent
of FMS to expand the scope of designation.

L. [Records Retention]{.underline}. The Financial Institution shall
retain all records in accordance with section 4.9.5 of the Technical
Requirements.

**VI. COMPLIANCE WITH APPLICABLE LAWS**

The Financial Agent shall, at all times, be in compliance with all
Federal, State and local laws applicable to its performance under this
DFA.

**VII. PRICING AND COMPENSATION\
**

A. [Method of Compensation]{.underline}. FMS will compensate the
Financial Agent for services provided under this DFA in such method or
methods as FMS deems appropriate in its sole discretion. The methods of
compensation include, but are not limited to, compensating balances,
direct payment, and Depositary Compensation Securities as offered and
described in 31 CFR Part 348, or any other method upon which FMS and the
Financial Agent mutually agree.

B. [Pricing]{.underline}. The amount of compensation for all charges
shall be determined in accordance with the Pricing Schedule attached
hereto as [Attachment B]{.underline}.

C. [Option Period Pricing]{.underline}. The prices for required services
provided during any Option Period are governed by the terms set forth in
[Attachment B]{.underline}.

D. [Compensation for Transition Services]{.underline}. The Financial
Agent will be compensated for all transition services in accordance with
Section 4.9.4 of the Technical Requirements.

E. [Compensation After Termination]{.underline}. If this DFA is
terminated pursuant to Articles XI or XVII, the Financial Agent shall be
compensated only for services received and accepted by FMS prior to the
effective date of termination. The Financial Agent shall not be
compensated for lost profits or business opportunities the Financial
Agent would have expected after the expiration of the term in which this
DFA is terminated.

F. [FMS Execution of MOU Required For Compensation]{.underline}. FMS
must be a party to any and all MOUs entered into pursuant to this DFA.
The Financial Agent will not be compensated for any services performed
pursuant to any agreement to which FMS is not a party.

VIII. **TRANSFER OF AGREEMENT**

A. [Transfer or Assignment Prohibited]{.underline}. The transfer or
assignment of this DFA by sale, operation of law, or other means, is
prohibited and shall be considered a Default pursuant to Article X,
paragraph A, unless the conditions of the following paragraph B are met.

> B. [Surviving Entity in a Merger or Acquisition]{.underline}. The
> transfer shall not be considered a Default if:

1\. The successor financial institution's (SFI) interest arises out of
the transfer of all the Financial Agent's assets or the entire portion
of the assets involved in performing this DFA. (Examples include, but
are not limited to, sales of these assets with a provision for assuming
and transfer of these assets incident to a merger or corporate
consolidation);

2\. The SFI meets the class and eligibility requirements of a Depositary
and Financial Agent under 31 CFR Part 202; and

3.  The conditions of Article IX \"Mergers and Consolidation\" are met.

C. [Written Acceptance Required]{.underline}. No SFI shall be considered
acceptable to FMS to act as the Financial Agent under this DFA unless
FMS expressly sets forth its acceptance in writing to the SFI.
Notwithstanding paragraph B above, if FMS, in its sole discretion,
determines that it is not in the best interests of the United States to
accept the SFI, then FMS may terminate this DFA, pursuant to Article
XVII herein.

D. [SFI Bound by DFA]{.underline}. If FMS allows assignment of this DFA
to the SFI, the SFI shall assume all obligations, liabilities and
responsibilities and meet all conditions required of the Financial
institution under this DFA and shall continue operations and performance
without interruption, unless otherwise directed in writing by FMS. In
the event of a default under this Article X, the SFI shall remain
obligated to perform pursuant to this DFA, unless FMS sends written
notice that it intends to terminate this DFA pursuant to Article XI.

E. [Cooperation of SFI]{.underline}. If the SFI is not acceptable to
FMS, the Financial Agent (or the SFI, as applicable) agrees to cooperate
and act in good faith in assisting FMS to ensure the smooth transition
of lockbox processing to the selected Financial Agent. All terms and
conditions identified under Article V, paragraph J, \"Continuity of
Services,\" shall apply.

**IX. MERGER AND CONSOLIDATION**

A. [Prior Written Notice to FMS]{.underline}. The Financial Agent shall
give written notice to FMS prior to the sale of the assets involved in
the performance of this DFA or the merger or consolidation of the
Financial Agent with another entity. Notice shall be delivered
simultaneously with notice to Federal banking regulators and prior to
such action becoming public knowledge, consistent with Federal laws and
regulations. FMS agrees to keep all such information confidential.

B. [Documents Relating to the Transaction]{.underline}. In the case of a
merger or consolidation involving the Financial Agent, promptly upon
FMS' request, the Financial Agent, or its SFI, shall furnish, or cause
to be furnished to FMS, true, correct and complete copies of all
agreements, documents and instruments relating to such merger or
consolidation, including, but not limited to, the certificate or
certificates of merger or consolidation as filed with each appropriate
Secretary of State and any documents required to be filed with any State
or Federal regulatory agencies having authority over the Financial
Agent's operations.

C. [Documents of Surviving Entity]{.underline}. FMS shall have the right
to examine documents of the surviving entity that FMS deems germane to
this DFA to determine whether FMS finds it to be an acceptable successor
under this DFA.

D. [Confirmation of Obligations]{.underline}. The SFI shall, immediately
upon the effectiveness of the merger or consolidation, expressly confirm
in writing, its obligation to perform hereunder.

**X. DEFAULTS**

The following constitute defaults under this DFA:

A. [Non-performance]{.underline}. The Financial Agent fails to duly
perform or comply with any of the obligations or conditions contained in
this DFA (including, but not limited to, any and all terms incorporated
by reference herein or any MOU), and, if applicable, such failure
continues beyond any time period granted to cure such failure.

> B. [Loss to U.S. Treasury]{.underline}. Any negligent, willful or
> reckless act of the Financial Agent or its contractors that results in
> a loss to the U.S. Treasury.
>
> C. [Breach of Fiduciary Duty]{.underline}. The Financial Agent
> breaches its fiduciary duty to the United States with respect to its
> agent responsibilities.

D. [Misrepresentation]{.underline}. Any representation made herein or
provided to FMS pursuant to the IEI was materially false, incorrect, or
incomplete when made.

E. [Insolvency]{.underline}. The Financial Agent becomes insolvent or
generally fails to pay, or admits its inability to pay, debts as they
become due or makes a general assignment for the benefit of any of its
creditors.

F. [Bankruptcy Proceedings]{.underline}. Any bankruptcy, reorganization,
liquidation, dissolution or other case and proceeding under any
bankruptcy or insolvency law is commenced in respect of the Financial
Agent.

G. [Appointment of Receiver]{.underline}. A receiver, trustee,
conservator or other custodian is appointed for any of the property of
the Financial Agent.

**XI. REMEDIES FOR DEFAULT**

A. [FMS Actions]{.underline}. FMS may take any or all of the following
actions in the event of a default, as described in Article X
\"Defaults\" above:

1\. [Terminate This DFA]{.underline}. FMS may revoke, in whole or in
part, this DFA and cease its performance hereunder. If this DFA is
terminated, the designation and authorization of the Financial Agent as
financial agent for purposes of general lockbox services under this DFA
is automatically revoked. If FMS terminates this DFA, the Financial
Agent shall cease all operations hereunder (including all services
performed pursuant to any MOUs) as of the effective date of termination
stated in the notification of termination. The Financial Agent shall
remain obligated to comply with Article V, paragraph J, \"Continuity of
Services\" herein.

2\. [Terminate an MOU]{.underline}. FMS may terminate one or more MOUs,
which FMS, in its sole discretion, determines should be terminated,
based upon the nature of the Financial Agent's default.

3\. [Revoke Financial Agent Status]{.underline}. FMS may revoke the
Financial Agent's designation as a depositary and financial agent for
the United States pursuant to 31 CFR Part 202. This DFA and any other
agreement with the Treasury requiring status as a depositary and
financial agent shall be deemed terminated as of the effective date of
such revocation.

4\. [Probation.]{.underline} FMS may place the Financial Agent in
probationary status while assessing the desirability of allowing the
Financial Agent to continue to perform essential banking services for
FMS under this DFA or any other agreement with FMS. During such
probationary time, the Financial Agent may not bid on additional FMS
services.

5\. [Future Work as Financial Agent]{.underline}. FMS may factor
information regarding any default hereunder when making any decisions
regarding future use of the Financial Agent for performance of financial
agent services, including, but not limited to, using such information in
the award of work pursuant to an invitation for expressions of interest
or other bid process.

6\. [Liquidate Collateral]{.underline}. FMS may liquidate collateral
pledged pursuant to 31 CFR 202.6.[\
]{.underline}

7\. [Determine Method of Compensation]{.underline}. If any default
should cause a loss to the United States Treasury, FMS may, in its sole
discretion, determine the means of compensating the Treasury for such
loss in accordance with Article XII, paragraph E herein.

B. [Optional Notice and Opportunity to Cure]{.underline}. Prior to
taking action under this Article XI, FMS may, but is not obligated to,
give the Financial Agent up to 30 calendar days from the date of
notification to propose, in writing, a plan and timetable to resolve any
deficiencies. The Financial Agent expressly acknowledges that FMS is
under no obligation in any case to give the Financial Agent an
opportunity to resolve the deficiencies before taking action under this
Article XI. To the extent that FMS, in its sole discretion, does give
the Financial Agent the opportunity to propose a plan and timetable to
resolve the deficiencies, the sufficiency of such plan and timetable
will be determined by FMS, in its sole discretion. If FMS makes the
determination that the proposed plan and timetable to resolve the
deficiencies are insufficient, FMS may take any action under this
Article XI that FMS deems necessary or advisable.

C. [Financial Agent's Obligations When DFA is Revoked]{.underline}. When
the Financial Agent's status as a depositary and financial agent for DFA
services is revoked, it shall provide transition services as required
and specified under Article V, paragraph J, "Continuity of Services,"
herein.

**XII. FINANCIAL INSTITUTION LIABILITY**

A. [Liability]{.underline}. The Financial Agent shall fully reimburse
the Government for any public funds lost as a result of a breach of this
DFA. In addition, the Financial Agent shall reimburse the Government for
its costs and expenses associated with any such breach. The method of
determining and recovering these costs will be at the sole discretion of
FMS. The Financial Agent expressly assumes liability for the negligence,
recklessness, and/or willful misconduct of its officers, employees,
agents, contractors and temporary employees. In the event that a third
party brings a claim against the Financial Agent for actions it has
taken contrary to, or outside the scope of, this DFA, the Financial
Agent may not bring a claim, in any form or at any time, against
Treasury, its employees, or officers for the cost or liabilities
incurred by the Financial Agent defending or paying any such claim.

B. [Delay of Funds Availability]{.underline}. If any act on the part of
the Financial Agent (including its contractors) results in a delay of
funds availability, or other loss to the U.S. Treasury, the Financial
Agent shall fully reimburse the U.S. Treasury for the amount of such
loss. The liability for delays in funds availability equals the time
\"Value of Funds\" as more fully described in Volume V of the Treasury
Financial Manual. Notwithstanding the foregoing, the Financial Agent
will not be liable for the time Value of Funds on the amount delayed or
any excess costs if: (a) the funds transfer delay or failure to perform
arises out of acts of God (e.g. fires, floods, epidemics, quarantine
restrictions, and unusually severe weather), the public enemy, the U.S.
Government in either its sovereign or contractual capacity, or strikes
or freight embargoes; (b) the Financial Agent (or any of its
contractors) did not have use of the funds delayed or did not realize
unjust enrichment; and (c) the Financial Agent (or its contractors)
could not have prevented the delay of funds availability, or other loss
to the U.S. Treasury, by obtaining required services from other sources
in sufficient time to prevent or avoid such delay or loss.

C. [Costs Incurred for Obtaining Other Services]{.underline}. Revocation
of the Financial Agent's status as a depositary and financial agent
pursuant to the Financial Agent's default under this DFA may require FMS
to obtain other services similar to those required under this DFA. The
Financial Agent shall be liable to FMS for its reasonable costs incurred
obtaining such substitute services.

D[. Method of Collecting Reimbursement]{.underline}. After the formal
Disputes process set forth in section 4.9.3 of the Technical
Requirements has been completed, FMS will, in its sole discretion,
determine the method to make the party who lost value whole. The
preferred method of collection is by means of an adjustment to the
Financial Agent's compensating balance Treasury Time Balance (TTB)
account cumulative position. However, FMS has the discretion to collect
any monies due to FMS from the Financial Agent by means of a direct
payment to the Treasury's General Account at an FRB. The methods of
direct payment from the Financial Agent include, but are not limited to,
an ACH debit, receipt of a hard dollar payment, a charge against the
Financial Agent's reserve account at the FRB, and a liquidation of
collateral pledged to secure deposits of public money. In the event that
FMS directly bills the Financial Agent, the Financial Agent shall remit
the amount set forth in the Value of Funds Assessment decision. If the
Financial Agent fails to pay such amount within the time specified, the
Financial Agent shall be held liable for interest, penalties, and
administrative costs in accordance with the authorities codified at 31
U.S.C. § 3717 and 31 CFR Parts 5 and 900-904.

**XIII. REPAYMENT OF EXCESS FUNDS TRANSFERRED TO TREASURY**

In the event excess funds are transferred from the Financial Agent, FMS
will be liable to the Financial Agent for the time Value of Funds of the
excess so transferred, less any expenses incurred by FMS. FMS will not
charge expenses if the transfer was directed by FMS.

**XIV.** **NO WAIVER**

Failure on the part of FMS to insist upon strict compliance with any of
the terms, covenants and conditions hereof shall not be deemed a waiver
of such terms, covenants and conditions, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times
be deemed a waiver or relinquishment of such right or power at any other
time or times. No waiver shall be valid unless in writing and signed by
an authorized officer of FMS. No failure to exercise and no delay in
exercising, on the part of FMS, any right, remedy, power or privilege,
hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.

**XV.** **RIGHTS TO SOFTWARE, DATA AND RECORDS**

A. [Rights to Program Software and Business Methods]{.underline}. FMS
shall have non-exclusive unlimited rights in the ideas, concepts,
design, and business methods developed for performance of lockbox
services pursuant to this DFA. \"Unlimited rights\" means the right of
FMS to use, disclose, reproduce, prepare derivative works, distribute
copies to the public, and perform publicly and display publicly, in any
manner and for any purpose, and to have or permit others to do so.
Immediately upon termination or expiration of this DFA, the Financial
Agent shall provide the databases, output formats and software used in
the performance of its obligations hereunder. Notwithstanding any
provisions to the contrary contained in any standard commercial license
or lease agreement, FMS shall have limited rights to any restricted
computer software that is necessary to operate any general lockbox
services pursuant to this DFA. \"Restricted computer software\" means
any computer program, computer database, or documentation thereof, that
has been developed at private expense and either is a trade secret, is
commercial or financial and confidential or privileged, or is published
and copyrighted. If the restricted computer software delivered under
this DFA is published and copyrighted, it is licensed to the Government,
without disclosure prohibitions. \"Limited rights\" means that FMS may:
(a) use, or copy the software for use in or with the computer or
computers accessing the data or services provided under this DFA; (b)
reproduce the software for safekeeping or backup purposes; (c) modify,
adapt, or combine the software with other computer software, provided
that the modified, combined, or adapted portions of the derivative
software are made subject to the same limited rights.

B. [Rights to Data and Records]{.underline}. Any records (including, but
not limited to, working papers and design documents) and data supplied
to the Financial Agent by FMS, or collected by the Financial Agent in
performance of this DFA, shall remain the exclusive property of FMS. The
Financial Agent shall not use, copy, or distribute such data or records
in any manner except as necessary for carrying out its responsibilities
under this DFA. Such data includes, but is not limited to, names,
addresses and other information about individuals and businesses making
payments to, or receiving payments from, the U.S. Treasury and software
which FMS supplies to the Financial Agent in connection with this DFA.
([See]{.underline} Article V, paragraph G of this DFA regarding Privacy
Act requirements.

**XVI. DISPUTES**

A. [General]{.underline}. The parties agree that it is in their mutual
interest to resolve disputes by agreement. If a dispute arises from the
implementation or administration of this DFA, the parties will make all
reasonable efforts to resolve the dispute by mutual agreement.

B. [Formal Dispute]{.underline}. If the dispute cannot be resolved
informally by mutual agreement, the dispute shall be resolved pursuant
to Technical Requirements section 4.9.3. The Financial Agent shall
exhaust this administrative remedy prior to commencing legal
proceedings.

C. [Obligation to Continue Performance]{.underline}. The Financial Agent
shall proceed diligently with performance of the services required by
the DFA pending final resolution of any dispute.

D. [Other Remedies]{.underline}. FMS and the Financial Agent have the
right to pursue any and all available legal or equitable rights they may
have notwithstanding any written decision that results from the formal
dispute process.

**XVII. BEST INTERESTS OF THE UNITED STATES.\
**

A. [FMS Actions]{.underline}. The Financial Agent acknowledges that the
United States must have complete control of public monies at all times.
Therefore, notwithstanding any other provisions of this DFA, when FMS,
in its sole discretion, determines such actions are necessary to protect
the interests of the United States, FMS may take the following actions
even in the absence of any of the conditions set forth in Article X
\"Defaults\":

> 1\. Terminate this DFA with 30 days written notice.
>
> 2\. Revoke the Financial Agent's status as a depositary and financial
> agent.
>
> 3\. Recall immediately any compensating balances placed with the
> financial institution.
>
> 4\. Call immediately any deposit securities prior to their stated
> maturity.

If practicable, FMS will give the Financial Agent up to fourteen (14)
calendar days notice before recalling the compensating balances and
deposit securities referenced in clauses 3 and 4 above; however, FMS
reserves the right in all cases to recall such balances and securities
immediately by providing only one (1) calendar day notice to the
Financial Agent.

B. [Transition]{.underline}. If FMS terminates the DFA pursuant to this
Article XVII, FMS may designate another financial institution to provide
the services required hereunder. In such instance, the Financial Agent
shall, unless otherwise directed in writing by FMS, provide the all
transition services specified in the Technical Requirements.

**XVIII. MODIFICATIONS**

A. [FMS' Right to Modify]{.underline}. FMS may, in its sole discretion,
modify, add to, or amend the general scope of, and terms and conditions
for providing, required services under this DFA, including incorporated
documents and requirements, by providing written notice to the Financial
Agent.

B. [Adjustment to Compensation]{.underline}. If any such modification,
addition, or amendment causes an increase or decrease in the cost of, or
the time required for, performance of any service required by this DFA,
FMS will make an equitable adjustment in the service price or other
terms of performance, or both, and this DFA and any applicable MOU shall
be modified accordingly. If the Financial Agent realizes a savings in
the cost of required services as a result of the new procedures,
operations, or changes such savings shall be reflected in a downward
adjustment to the DFA Price Schedule.

C. [Financial Agent Duty to Notify]{.underline}.

1\. [Change in Cost of Services]{.underline}. If the Financial Agent
regards any communication from FMS to be a modification of the services
required under this DFA, the Financial Agent shall notify FMS, in
writing, within 30 calendar days from the date that the Financial Agent
receives such communication. The Financial Agent must notify FMS if it
realizes a cost savings. Notwithstanding the preceding paragraph B, FMS
will bear no obligation to compensate the Financial Agent for any
additional costs, unless such notice is timely received. If the parties
fail to agree to any adjustment in price, FMS shall treat the request
for a price adjustment as a dispute, and it will be settled in
accordance with section 4.9.3 of the Technical Requirements.

2\. [Software or Hardware Modifications]{.underline}. If any
modification, addition, or amendment, or other change requires software
or hardware modification, the Financial Agent shall provide FMS with
written notification at least 30 calendar days prior to the Financial
Agent authorizing any work. If FMS approves of the modification work, in
writing, the Financial Agent shall place an order for programming or
equipment with the vendor of its choice within 30 calendar days of FMS'
notice of approval.

**XIX. PROVISION OF DATA**

Prior to the expiration of this DFA, FMS may solicit financial
institutions to function as depositaries and financial agent for general
lockbox services. The Financial Agent shall provide essential activity
data and other information upon request. The Financial Agent may be
required to provide data to an independent firm to conduct a nationwide
mail study. The Financial Agent shall fully cooperate in all
data-gathering activities at no cost to FMS.

**XX. INITIAL TERM OF FINANCIAL AGENT AGREEMENT**

This DFA shall become effective as of the Effective Date, and shall
remain in effect for three (3) years (Initial Term), unless earlier
terminated pursuant to Articles XI, \"Remedies for Default," or XVII,
"Best Interests of the United States," herein.

**XXI. FMS OPTIONS TO RENEW**

A. [FMS Options]{.underline}. FMS, in its sole discretion, shall have
two (2) successive options to renew this DFA for a period of two (2)
years each (Renewal Periods), which FMS shall exercise by giving written
notice at least thirty (30) calendar days prior to the expiration of the
Initial Term or the applicable Renewal Period. In the event FMS chooses
to exercise an option to renew, all requirements, terms and conditions
identified in this DFA and incorporated documents shall be effective for
the Renewal Period, unless otherwise modified by FMS. The pricing of
services for any renewal period are set forth in [Attachment
B]{.underline} hereto.

B. [Extension Beyond Renewal Periods]{.underline}. Notwithstanding any
provision herein to the contrary, FMS shall have the right to extend the
term of this DFA beyond the expiration date of the last Renewal Period,
if FMS determines that it is in the best interests of the United States
to do so. FMS shall exercise this right by giving the Financial Agent
written notice at least 60 calendar days prior to the expiration of the
current term of this DFA. In the event this right of extension is
exercised by FMS, all requirements, terms and conditions identified in
this DFA, including incorporated documents and requirements, shall be
effective for the term of the extension, unless otherwise modified by
FMS. The pricing of services for the extension period shall be as set
forth in [Attachment B]{.underline} hereto.

C. [Pricing Disputes]{.underline}. Any failure to reach an agreement on
a proposed price adjustment shall be resolved pursuant to the Disputes
process set forth in Section 4.9.3 of the Technical Requirements.

**XXII. NOTICES**

All notices required to be given herein shall be given to the following
contacts unless expressly stated otherwise herein:

[To FMS (other than the ATO)]{.underline}:

Director, Financial Services Division

Financial Management Service

401 14^th^ Street, SW

Washington, DC 20227

[To the FMS ATO]{.underline}:

Director, Cash Management Directorate

Financial Management Service

401 14^th^ Street, SW

Washington, DC 20227

[To the Financial Agent]{.underline}:

\[Contact Title/Office Information\]

**XXIII. MISCELLANEOUS**

A. [Counterparts]{.underline}. This DFA may be executed in two or more
counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall
constitute one and the same instrument.

B. [Third‑Party Beneficiaries]{.underline}. This DFA will inure to the
benefit of and be binding upon the parties hereto. No other person will
have any right or obligation hereunder, except for Successor Financial
Agents as described in Article VIII herein.

C. [Headings]{.underline}. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.

D. [Officials Not to Benefit]{.underline}. No member of, or delegate to,
Congress, or resident commissioner, or other U.S. Government official,
shall be permitted to share in any part of this DFA, or to receive any
benefit arising from it.

E. [Gratuities]{.underline}. The Financial Agent, its contractors or
representatives shall not offer or give a gratuity (including but not
limited to entertainment and gifts) to an officer, official or employee
of FMS or other bureau or unit of the Treasury Department.

F. [Federal Law Applies]{.underline}. The parties agree that this DFA
agreement will be interpreted under Federal law, but not under the
Federal Acquisition Regulation, since it is not a procurement subject to
the Federal Property and Administrative Service Act (41 U.S.C. §§
251-260). In the absence of applicable Federal law, this DFA shall be
interpreted pursuant to the laws of the State of New York, without
regard to its principles of conflict of laws

G. [FMS Not Liable for Acts Exceeding the Scope of
Authority]{.underline}. FMS will not be liable for any actions taken by
the Financial Agent, which are outside of the scope of authority
contained in this DFA.

H. [Binding Effect of Agreement]{.underline}. This DFA shall be binding
upon the Financial Agent and its successors and assigns.

**XXIV. DEFINITIONS**

Terms that are not defined herein are defined in Volume V, Chapter 3000,
of the TFM.

**Acceptance of Terms and Commitment**

The signing of this document by authorized officials forms a binding
commitment between FMS and the designated Financial Agent. The parties
are obligated to perform in accordance with the terms and conditions of
this document, any properly executed modification, addition, or
amendment thereto, any Attachment thereto, and any documents and
requirements incorporated by reference.

By their signing, the signatories represent and certify that they
possess the authority to bind their respective organizations to the
terms of this document, and hereby do so.

IN WITNESS WHEREOF, the Financial Agent and FMS by the following
officials sign their names to enter into this DFA.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date \_\_\_\_\_\_\_\_\_\_\_\_, Director, Financial Services Division

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Date Financial Agent Authorized Bank Official/Title

[Attachments:]{.underline}

Attachment A: Invitation for Expressions of Interest (IEI), Section 4.0,
\"Technical Requirements\", including all amendments and modifications
thereto

Attachment B: Pricing Schedule

Attachment C: The Financial Agent's Response to the IEI, including its
Certification Statement

Attachment D: Draft Volume V, Chapter 3000 of the Treasury Financial
Manual

Attachment E: FMS Form Confidentiality Agreement

Memorandum of Understanding

Establishing General Lockbox Processing Guidelines for

{Insert Name of Payment Stream}

This Memorandum of Understanding (this \"MOU\") is entered into by and
among, the U.S. Department of Treasury's Financial Management Service
(\"FMS\"), the { Insert name of Financial Institution} (\"Financial
Institution\"), and {insert name of Federal Agency requiring lockbox
services} (\"Agency\"), in order to establish a lockbox service
arrangement pursuant to the Designation and Authorization of {Insert
name of Financial Institution} as Financial Agent for General Lockbox
Services, entered into by and between FMS, as principal, and the
Financial Institution, as agent, dated {insert effective date of DFA}
(\"DFA\").

In accordance with Article II of the DFA, this MOU establishes roles and
responsibilities of the parties with respect to processing {insert name
of payment stream}. The specific lockbox requirements for this MOU are
contained in the attached Statement of Work (SOW), which is incorporated
by reference herein.

The term of this MOU is concurrent with the term of the DFA. Thus, this
MOU expires when the DFA expires. Any dispute arising under this MOU
will be addressed and resolved in accordance with the DFA Disputes
Clause (DFA, Article XVI).

By their signing, the officials below represent and certify that they
possess the authority to bind their respective organizations to the
terms of this MOU, and hereby do so.

FINANCIAL MANAGEMENT SERVICE

By: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_

Name: Date

Title:

{NAME OF FINANCIAL INSTITUTION}

By: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_

Name: Date

Title:

{NAME OF FEDERAL AGENCY}

By: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_

Name: Date

Title:

# APPENDIX 2

# 

# 

# 

# 

## TECHNICAL EVALUATION CRITERIA

# 

# 

# 

# 

# 

#  

+------------+----------------------------------------------+---------+
| **GENERAL  |                                              |         |
| LOCKBOX    |                                              |         |
| NETWORK**  |                                              |         |
|            |                                              |         |
| *          |                                              |         |
| *TECHNICAL |                                              |         |
| EVALUATION |                                              |         |
| CRITERIA** |                                              |         |
+------------+----------------------------------------------+---------+
| **         | **CRITERIA**                                 | **MA    |
| CATEGORY** |                                              | XIMUM** |
|            |                                              |         |
|            |                                              | **P     |
|            |                                              | OINTS - |
|            |                                              | 45**    |
+------------+----------------------------------------------+---------+
| ***ST      | 1\. Process for ensuring the coordination    | S       |
| AFFING/*** | and communication between the account        | taffing |
|            | relationship officer, the lockbox operations | and     |
| ***PE      | staff, and the customer service department.  | Man     |
| RSONNEL*** |                                              | agement |
|            | 2\. Staffing strategy for peak periods and   | Pe      |
| ***MAN     | for avoiding holdovers.                      | rsonnel |
| AGEMENT*** |                                              | co      |
|            | 3\. Procedures for back-up personnel and     | mbined, |
| ***PE      | cross training within a function.            | equals  |
| RSONNEL*** |                                              | a total |
|            | 4\. Quality improvement program, including   | of 45   |
|            | performance measurement reports for          | points. |
|            | monitoring quality/performance and address   |         |
|            | incentive programs.                          |         |
|            |                                              |         |
|            | 5\. Preparation and mailing of account       |         |
|            | analysis or billing statements to clients.   |         |
|            |                                              |         |
|            | 6\. Forwarding of bank management or billing |         |
|            | information to clients via EDI 822 (Customer |         |
|            | Account Analysis Transaction Set).           |         |
|            |                                              |         |
|            | 7\. Ability to meet all the reporting        |         |
|            | requirements for bank management according   |         |
|            | to the Treasury Financial Manual (TFM)       |         |
|            | Volume V, Part 1, Chapter 3000, Section      |         |
|            | 3060.                                        |         |
|            |                                              |         |
|            | 1\. Ability of key management personnel      |         |
|            | on-site at each lockbox location site.       |         |
|            | Coordination, responsibility, and            |         |
|            | communication with FI employees and          |         |
|            | contractors.                                 |         |
|            |                                              |         |
|            | 2\. Support senior management provides in    |         |
|            | the search for improvement maintaining       |         |
|            | quality control and encouraging innovative   |         |
|            | solutions for these services.                |         |
|            |                                              |         |
|            | 3\. Approach to account administration,      |         |
|            | e.g., account team, client account           |         |
|            | executives, support by administrative units, |         |
|            | etc. Support staff in terms of size and      |         |
|            | hours of availability.                       |         |
|            |                                              |         |
|            | 4\. Organization charts showing lines of     |         |
|            | authority, resumes of the Principal Manager, |         |
|            | Operations Manager, and other key contacts   |         |
|            | responsible for this effort.                 |         |
+------------+----------------------------------------------+---------+

+------------+----------------------------------------------+---------+
| **         | **CRITERIA**                                 | **      |
| CATEGORY** |                                              | MAXIMUM |
|            |                                              | P       |
|            |                                              | OINTS - |
|            |                                              | 55**    |
+------------+----------------------------------------------+---------+
| ***MAIL    | 1\. The financial institution's schedule for |         |
| P          | post office pickups of mail for weekdays,    |         |
| ROCESSING/ | weekends, and holidays.                      |         |
| H          |                                              |         |
| ANDLING*** | 2\. The distance to the post office, the     |         |
|            | average length of time between the pickup of |         |
|            | items at the post office and delivery to     |         |
|            | lockbox department. Information on who picks |         |
|            | up the items from the post office (courier   |         |
|            | or internally managed) and who manages this  |         |
|            | arrangement.                                 |         |
|            |                                              |         |
|            | 3\. Maintenance of a unique five-digit Zip   |         |
|            | code assigned exclusively for receipt of     |         |
|            | wholesale and retail lockbox items. If not   |         |
|            | applicable, the impact on mail delivery and  |         |
|            | sorting for lockbox processing.              |         |
|            |                                              |         |
|            | 4\. Security procedures for mail delivered   |         |
|            | to the lockbox processing site from the post |         |
|            | office.                                      |         |
|            |                                              |         |
|            | 5\. The mail-sorting operation. Includes     |         |
|            | manual and automated handling, ability to    |         |
|            | read bar codes, peak volume, and contingency |         |
|            | plans. The receipt and handling of           |         |
|            | remittances delivered by private services    |         |
|            | (e.g., Federal Express, UPS, and/or courier) |         |
|            | to the lockbox for processing.               |         |
|            |                                              |         |
|            | 6\. Procedures to expedite the sorting of    |         |
|            | mail for high-dollar boxes.                  |         |
|            |                                              |         |
|            | 7\. Procedures for the control and           |         |
|            | processing of cash received in remittance    |         |
|            | envelopes including dual controls, if any.   |         |
|            |                                              |         |
|            | 8\. Methods for monitoring mail deliveries   |         |
|            | so that any U.S. Postal Service changes      |         |
|            | affecting those deliveries and processing    |         |
|            | are identified as early as possible.         |         |
|            |                                              |         |
|            | 9\. The process for implementing             |         |
|            | customer-specific changes, or changes that   |         |
|            | may be necessary due to a high-volume        |         |
|            | customer that is added to volume mix and     |         |
|            | originates from several different regions.   |         |
+------------+----------------------------------------------+---------+

+------------+----------------------------------------------+---------+
| **         | **CRITERIA**                                 | **      |
| CATEGORY** |                                              | MAXIMUM |
|            |                                              | P       |
|            |                                              | OINTS - |
|            |                                              | 60**    |
+------------+----------------------------------------------+---------+
| ***DATA    | 1\. Procedures for the capture and           |         |
| C          | transmission of remittance detail, such as   |         |
| APTURE/*** | account or invoice number or other data for  |         |
|            | automated posting of accounts receivable     |         |
| ***TRANS   | records.                                     |         |
| MISSION*** |                                              |         |
|            | 2\. Procedures for retaining the actual      |         |
|            | check in the lockbox department until data   |         |
|            | capture is completed or sending them to the  |         |
|            | financial institution for collection prior   |         |
|            | to data capture.                             |         |
|            |                                              |         |
|            | 3\. Process for work requiring data capture  |         |
|            | (through input by keypunch operators) is     |         |
|            | processed.                                   |         |
|            |                                              |         |
|            | 4\. Types of image technology used such as   |         |
|            | the Courtesy Amount Read (CAR) or            |         |
|            | Intelligent Character Recognition (ICR)      |         |
|            | hardware. The number of encoding errors      |         |
|            | tracked that are attributed to CAR/ICR       |         |
|            | versus manual key payments and compare the   |         |
|            | error percentages for the two methods.       |         |
|            |                                              |         |
|            | 5\. The number of lockbox customers,         |         |
|            | remittance documents, and checks (annually)  |         |
|            | that have been converted to image            |         |
|            | technology.                                  |         |
|            |                                              |         |
|            | 6\. The number of wholesale and retail       |         |
|            | lockboxes for which FI provides data capture |         |
|            | and tape/transmission output for each        |         |
|            | lockbox site proposed. Specify numbers by    |         |
|            | method of delivery.                          |         |
|            |                                              |         |
|            | 7\. Data consolidation for customers'        |         |
|            | multi-lockbox systems.                       |         |
|            |                                              |         |
|            | 8\. The earliest transmission time available |         |
|            | to a customer without affecting the ability  |         |
|            | to deposit all checks received for a ledger  |         |
|            | credit day.                                  |         |
|            |                                              |         |
|            | 9\. Management of data capture programming   |         |
|            | in the lockbox area, or managed from a       |         |
|            | centralized systems development department.  |         |
|            | If other than lockbox area, controls over    |         |
|            | the lockbox has on the work processed.       |         |
|            |                                              |         |
|            | 10\. Procedures to ensure that transmissions |         |
|            | are received successfully and contain all    |         |
|            | remittance payment detail.                   |         |
|            |                                              |         |
|            | 11\. Retention period for retrieval of       |         |
|            | remittance payment detail files.             |         |
+------------+----------------------------------------------+---------+

+-----------+-----------------------------------------------+---------+
| **C       | **CRITERIA**                                  | **      |
| ATEGORY** |                                               | MAXIMUM |
|           |                                               | P       |
|           |                                               | OINTS - |
|           |                                               | 50**    |
+-----------+-----------------------------------------------+---------+
| **        | 1\. Procedures established for disaster       |         |
| *DISASTER | recovery for all existing lockboxes and       |         |
| RECOVERY  | branches and back-up sites.                   |         |
| &         |                                               |         |
| C         | 2\. Procedures for how lockbox depositary     |         |
| ONTINUITY | will maintain processing in case of a power   |         |
| PLANS***  | outage lasting up to 48 hours.                |         |
|           |                                               |         |
|           | 3\. Implementation of FI's disaster recovery  |         |
|           | plan if a disaster caused failure in          |         |
|           | operations for more than 48 hours.            |         |
|           |                                               |         |
|           | 4\. Maintenance of processing lockbox         |         |
|           | payments with less than 100% equipment        |         |
|           | utilization for any length of time, i.e.,     |         |
|           | continuation of 100% lockbox processing in    |         |
|           | the event of an equipment breakdown, power    |         |
|           | failure, or other circumstance that           |         |
|           | interrupts work/site operations.              |         |
|           |                                               |         |
|           | 5\. Contractual agreements FI has with        |         |
|           | equipment manufacturers for additional        |         |
|           | equipment should a disaster occur for all     |         |
|           | areas of remittance processing, including     |         |
|           | mail extraction and image processing.         |         |
|           |                                               |         |
|           | 6\. Procedures for use of a back-up postal    |         |
|           | facility for contingency situations at the    |         |
|           | Postal Service.                               |         |
|           |                                               |         |
|           | 7\. Establishment of a contingency (back-up)  |         |
|           | processing site in the event normal           |         |
|           | operations cease for more than 48 hours.      |         |
|           |                                               |         |
|           | 8\. Employee training at branches,            |         |
|           | processing/contingency sites in anticipation  |         |
|           | of power outage, terrorist attack, bomb       |         |
|           | threat, earthquake, biochemical attack, fire, |         |
|           | hurricane/tornado, etc.                       |         |
|           |                                               |         |
|           | 9\. Procedures for accounting for lockbox     |         |
|           | remittances that are shipped to another       |         |
|           | processing site.                              |         |
|           |                                               |         |
|           | 10\. Frequency of testing disaster recovery   |         |
|           | and continuity plans and revising procedures. |         |
+-----------+-----------------------------------------------+---------+

+-----------+-----------------------------------------------+---------+
| **C       | **CRITERIA**                                  | **      |
| ATEGORY** |                                               | MAXIMUM |
|           |                                               | P       |
|           |                                               | OINTS - |
|           |                                               | 7 0**   |
+-----------+-----------------------------------------------+---------+
| *         | 1\. The lockbox department's processing       |         |
| **LOCKBOX | flow/work flow. Highlight the quality control |         |
| PROC      | checkpoints and the components that are       |         |
| ESSING*** | directly controlled by the lockbox manager.   |         |
|           | Include a schematic or flow chart of the      |         |
|           | processing procedures.                        |         |
|           |                                               |         |
|           | 2\. The controls in place to ensure accurate  |         |
|           | processing per agency specifications.         |         |
|           |                                               |         |
|           | 3\. Priority handling of items for certain    |         |
|           | lockbox customers (e.g., large-dollar/item    |         |
|           | volume).                                      |         |
|           |                                               |         |
|           | 4\. Peak processing periods and procedures to |         |
|           | handle the increased volume.                  |         |
|           |                                               |         |
|           | 5\. Processing both retail, wholesale and     |         |
|           | specialized payments on the same equipment in |         |
|           | the lockbox department and prioritizing those |         |
|           | payments for processing.                      |         |
|           |                                               |         |
|           | 6.Throughput capacity per day on all          |         |
|           | equipment, including the age of equipment and |         |
|           | any plan to upgrade the equipment.            |         |
|           |                                               |         |
|           | 7\. Back-up lockbox processing arrangements   |         |
|           | in the event of an automated equipment or     |         |
|           | system failure.                               |         |
|           |                                               |         |
|           | 8\. List financial institution's and lockbox  |         |
|           | department's holidays.                        |         |
|           |                                               |         |
|           | 9\. Use of third-party processors by          |         |
|           | financial institution, including couriers,    |         |
|           | for any part of this service.                 |         |
|           |                                               |         |
|           | 10\. Detecting and correcting out-of-balance  |         |
|           | problems.                                     |         |
|           |                                               |         |
|           | 11\. Integration of return item processing    |         |
|           | with lockbox processing and length of time    |         |
|           | for agency notification once received by FI.  |         |
|           |                                               |         |
|           | 12\. Handling unprocessable and exception     |         |
|           | items by FI.                                  |         |
|           |                                               |         |
|           | 13\. Maintenance and disposition of coupons   |         |
|           | and other payment documents.                  |         |
|           |                                               |         |
|           | 14\. Recommended specifications for reply     |         |
|           | envelopes and remittance documents.           |         |
|           |                                               |         |
|           | 15. If bidding on retail applications,        |         |
|           |     experience FI has managing this           |         |
|           |                                               |         |
|           | type of work.                                 |         |
|           |                                               |         |
|           | 16\. If bidding on wholesale applications,    |         |
|           | experience FI has managing this type of work. |         |
|           |                                               |         |
|           | 17\. If bidding on specialized wholesale      |         |
|           | applications, experience FI has managing this |         |
|           | type of work.                                 |         |
+-----------+-----------------------------------------------+---------+
| ***CA     | **CRITERIA**                                  | **      |
| TEGORY*** |                                               | MAXIMUM |
|           |                                               | P       |
|           |                                               | OINTS - |
|           |                                               | 20**    |
+-----------+-----------------------------------------------+---------+
| ***RECORD | 1\. Retention of all forms of lockbox         |         |
| RET       | collection service documents or records       |         |
| ENTION*** | within the scope of the IEI for the entire    |         |
|           | term of the IEI.                              |         |
+-----------+-----------------------------------------------+---------+

#  

# 

# 

# 

# 

# 

#  

# APPENDIX 3

## PRICING RESPONSE TEMPLATES 

## RETAIL LOCKBOX PRICING TEMPLATE

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page i of iii

  -------------- --------------------------------------- ------------ -----------
  **TMA CODE**   **DESCRIPTION**                         **VOLUME**   **PRICE**

  010000         Demand Deposit Account Maintenance      2             

  010100         General Account Activity - Debit        1             
                 Posting                                              

  010101         General Account Activity - Credit       67            
                 Posting                                              

  010310         DDA Statement - Manual - Hard Copy      1             

  010320         DDA Statement -- Custom                 1             

  010400         Account Analysis - Automated --         1             
                 Maintenance                                          

  010600         General Account Relationship Assistance 1             
                 -- Inquiries/Request                                 

  010610         General Account Relationship Assistance 1             
                 -- Copies                                            

  050010         Retail Lockbox Maintenance              14            

  050012         Retail LBX Maintenance - P.O. Box       7             
                 Rental                                               

  050200         Retail LBX Remit - Machine Readable     384,091       
                 Item - Matched (scans)                               

  050201         Retail Lockbox Remit - Machine Readable 243,331       
                 -- Unmatched                                         

  050202         Retail Lockbox Remit - Machine Readable 7,497         
                 -- Multi                                             

  050211         Retail Lockbox Detail Sorting -         1             
                 Functional/Divisional                                

  050212         Retail Lockbox Detail Sorting - Rough   39,232        
                 Sort                                                 

  050214         Retail Lockbox Detail Sorting -- Fine   591           
                 Sort Alphanumeric                                    

  05021A         Retail Lockbox Photocopy                661           

  05021I         Retail Lockbox Hand Open Mail           7             

  05021L         Retail Lockbox Delivery Preparation     24            
                 Charge                                               

  05021P         Retail Lockbox Special Handling         453           

  050221         Retail Lockbox Data Capture - MICR Line 479           

  050222         Retail Lockbox Date Capture -- OCR      499,395       
                 /Micr Line                                           

  050223         Retail Lockbox Data Capture - Numeric   19,431        
                 Dual Entry                                           

  050226         Retail Lockbox Data Capture --          111,171       
                 Alphanumeric Single Entry                            

  050234         Retail Lockbox Stop File Processing     1             

  050238         Retail Lockbox Merchant Card Processing 5             

  050239         Special Retail Lockbox Services --      237,967       
                 Returns                                              

  05023A         Retail Lockbox Cash Payment Processing  18            

  05023B         Retail Lockbox Non-Standard Processing  2,005         

  05023C         Retail Lockbox Research                 411           

  050300         Lockbox Deposit                         38            

  050301         Lockbox Deposit- Ticket Preparation     37            

  050309         Lockbox Batch Processing                206           

  050310         Lockbox Deposit Reporting - Automated   4             
                 Total                                                

  050311         Lockbox Deposit Reporting - Automated   1             
                 Detail                                               

  050320         Lockbox Deposit Reporting - Manual --   1             
                 Total                                                

  050321         Lockbox Deposit Report - Manual Detail  1             

  050329         Lockbox Deposit Reporting - Wire        1             
                 Automated Fixed                                      

  050331         Lockbox Deposit Report - Custom Output  1             

  050400         Lockbox Information Delivery - Auto     1             
                 Maintenance                                          

                                                                      

                                                                      

                                                                      
  -------------- --------------------------------------- ------------ -----------

**RETAIL LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page ii of iii

  ----------------- --------------------------------------- -- ------------ -----------
  **TMA CODE**      **DESCRIPTION**                            **VOLUME**   **PRICE**

  050401            LBX Information Delivery - Automated --    30,999        
                    Transmission                                            

  050403            LBX Information Delivery - Automated --    1             
                    Tape                                                    

  050405            LBX Information Delivery - Automated -     1             
                    CD ROM                                                  

  050409            LBX Information Delivery - Automated --    34            
                    Diskette                                                

  050410            Lockbox Information Delivery - Manual      118           
                    Postage                                                 

  050412            LBX information Delivery -- Manual         97            
                    Expedited Mail                                          

  050413            LBX Information Delivery - Manual -        92            
                    Courier/Messenger                                       

  050500            LBX Reject Items - Exception Handling      4             

  050510            Lockbox Reject Items - Customer            2             
                    Specified Handling                                      

  050520            LBX Reject Items - OCR/MICR Repair         17            

  050530            LBX Reject Items -- Unprocessable          134           

  050600            Lockbox Document Storage -- Retention      1,416         

  059999            Undefined Lockbox services                 9             

  059999SAS         SAS 70 Audit                               1             

  059999PCCFARSM    Lockbox Services - Paper Check                           
                    Conversion - Detail Sort - Rough Sort                   
                    Manual                                                  

  059999PCCFAIS     Lockbox Services - Image Services per                    
                    Document Scanned                                        

  059999PCCFADCA    Lockbox Services - Data Captured --                      
                    Alphanumeric                                            

  059999PCCFADTM    Lockbox Services - Data Transmission --                  
                    Maintenance                                             

  059999PCCFASD     Lockbox Services - Safekeeping &                         
                    Destruction                                             

  059999PCCFANSPB   Lockbox Services - Non-Standard                          
                    Processing -- Balancing                                 

  101099215/215B    Special Depository Service -Variable       34            
                    SF-215/215B                                             

  1010995515        Special Depository Service -Variable       6             
                    SF-5515                                                 

  400699DR&C        Global Information Reporting-Deposit       8             
                    Reporting & Compiling                                   

  05031Z            Lockbox Deposit Reporting - Automated      15            
                    -- Bundled                                              

  05032Z            Lockbox Deposit Reporting - Manual -       1             
                    Bundled                                                 

  100000            Branch Deposit                             5             

  100200            Check Deposit Processing                   41            

  100210            Encoded Checks - On-Us                     20,811        

  100212            Encoded Checks - Local Clearinghouse       10,046        

  100213            Encoded Checks - Local Fed                 42,925        

  100214            Encoded Checks - Other Fed                 395,205       

  100215            Encoded Checks - Fed RCPC                  7,300         

  10021Z            Encoded Checks -- Bundled                  127,168       

  100220            Unencoded Checks - On-Us                   13            

  100222            Unencoded Checks - Local Clearinghouse     33            

  100223            Unencoded Checks - Local Fed               285           

  100224            Unencoded Checks - Other Fed               744           

  100225            Unencoded Checks - Fed RCPC                76            

  100228            Check Encoding Surcharge                   1             

                                                                            

                                                                            

                                                                            

                                                                            

                                                                            

                                                                            
  ----------------- --------------------------------------- -- ------------ -----------

**RETAIL LOCKBOX** **PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page iii of iii

  -------------- --------------------------------------- ------------ -----------
  **TMA CODE**   **DESCRIPTION**                         **VOLUME**   **PRICE**

  10022Z         Unencoded Checks -- Bundled             1             

  100230         Checks Deposited - MICR Reject/Repair   227           

  100299         Check Processing -- Undefined           1             

  100310         Non US Collection Item - US             47            
                 Dollar/Non-US Dollar Outgoing                        

  100400         Return Item Processing -- Regular       630           

  100401         Return Item Processing - Special        26            
                 Handling                                             

  100402         Return Item Processing - Reclear Item   1,868         

  100420         Return Item Notification -- Manual      47            

  100440         Return Item Notification -- Custom      188           

  100502         Deposit Adjustment Processing -- Checks 17            

  151351         Check Image Capture                     31,926        

  151353         Check Image -- CD ROM                   4             

  350000         Funds Transfer System Maintenance       1             

  350300         Incoming Fedwire Transfer               10            

  350320         Incoming Book Transfer                  1             

  350412         Funds Transfer Advice - Manual -        1             
                 Debit/Credit                                         

  350521         Drawdown Request - Fedwire Transfer     6             

  350560         Funds Transfer Investigation            1             

  359999         Undefined Wire and Other Funds Transfer 1             
                 Services                                             

  400000         Domestic Info Maint -                   1             
                 Terminal/Network - Previous Day --                   
                 Summary                                              

  400001         Domestic Info Maint -                   1             
                 Terminal/Network - Previous Day --                   
                 Detail                                               

  400003         Domestic Info Maint -                   1             
                 Terminal/Network - Intra Day -- Summary              

  400004         Domestic Info Maint - Terminal/Network  1             
                 -Intra Day -- Detail                                 

  400110         Domestic Information - Loading - High   8             
                 speed                                                

  400224         Domestic Reporting - Terminal/Network - 3             
                 Intra Day -- Detail                                  

  40022Z         Deposit Reporting Bundled               12            

  400822         Information Services Administration -   3             
                 Customer ID -- Storage                               

  409999         Undefined Information Services          6             

  40TTTT         Total Information Service Charge        7             
  -------------- --------------------------------------- ------------ -----------

**The volume figures provided in this template are for evaluation
purposes only. The template volumes do not reflect projections for
future business, nor are they intended to reflect actual current
business activity. FIs submitting responses to this IEI expressly
acknowledge, without recourse, that volumes short of the numbers
provided in any template, in any region (or regions in the aggregate),
during the term of the new GLN will not provide grounds for an upward
price adjustment in any case at any time. Volumes of business and levels
of compensation are not guaranteed.**

**WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page i of iiii

  ------------- --------------------------------------- ------------ -----------
  **TMA CODE**  **DESCRIPTION**                         **VOLUME**   **PRICE**

  010000        Demand Deposit Account Maintenance      53            

  010100        General Account Activity - Debit        21            
                Posting                                              

  010101        General Account Activity - Credit       1,583         
                Posting                                              

  010310        DDA Statement - Manual - Hard Copy      0             

  010320        DDA Statement -- Custom                 12            

  010400        Account Analysis - Automated --         12            
                Maintenance                                          

  010600        General Account Relationship            32            
                Assistance - Inquiries/Request                       

  010610        General Account Relationship Assistance 2             
                -- Copies                                            

  0107ZZ        Special General Account Services --     1             
                Bundled                                              

  050000        Wholesale Lockbox Maintenance           65            

  050002        Wholesale Lockbox Maintenance-P.O. Box  29            
                Rental                                               

  050100        Wholesale LBX Remittance Processing     207,635       
                (non-scans)                                          

  050101        Wholesale LBX Remittance -- Machine     80            
                Readable Item -- Matched                             

  050110        Wholesale Lockbox Detail Sort-Alpha     330           

  050111        Wholesale Lockbox Detail                10,784        
                Sort-Functional/Divisional                           

  050112        Wholesale LBX Document Handling - Rough 489,105       
                Sort                                                 

  050113        Wholesale Lockbox Detail Sorting - Fine 287           
                Sort Numeric                                         

  050115        Wholesale Lockbox Document Matching     82,048        

  050116        Wholesale LBX Document Notation         42,723        

  050117        Wholesale Lockbox Stapling-Attach       39,035        
                Document                                             

  050119        Custom Lockbox Special Handling         328,456       

  05011A        Wholesale LBX Photocopy                 51,150        

  05011B        Wholesale LBX Special Photocopy         38,961        

  05011D        Wholesale Lockbox Date Stamping         8,368         

  05011E        Wholesale Lockbox Return Envelope       17,926        
                W/Remittance Assoc                                   

  05011F        Wholesale Lockbox Return Envelope       74,125        
                W/Remittance Unassociated                            

  05011G        Wholesale Lockbox Destroy Envelopes     29,884        

  05011H        Wholesale Lockbox Flatten Invoice       70,443        

  05011I        Wholesale LBX Hand Open Mail            111,858       

  05011J        Wholesale Lockbox Special Stamping      57,444        

  05011K        Wholesale Lockbox Reinsert Detail in    2,267         
                Envelope                                             

  05011L        Wholesale LBX Delivery Preparation      1,476         
                Charge                                               

  05011M        Wholesale Lockbox Correspondence        10,591        

  05011N        Wholesale LBX Paid In Full Verification 37,675        

  05011P        Wholesale LBX Special Handling (define  5,878         
                each w/suffix)                                       

  05011R        Wholesale LBX Image                     104,475       

  05011RCK      Wholesale LBX Image -- Check                          

  05011RINV     Wholesale LBX Image -- Invoice                        

  05011RDOC     Wholesale LBX Image -- Document                       

  050120        Wholesale Lockbox Data Capture -- Fixed 73            
                Charge                                               

  050121        Wholesale LBX Data Capture - MICR Line  14,910        

                                                                     

                                                                     

                                                                     

                                                                     
  ------------- --------------------------------------- ------------ -----------

**WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page ii of iiii

  ---------------- --------------------------------------- ------------ -----------
  **TMA CODE**     **DESCRIPTION**                         **VOLUME**   **PRICE**

  050122           Wholesale Lockbox Date Capture --       814           
                   OCR/MICR Line                                        

  050124           Wholesale LBX Data Capture - Numeric    315,525       
                   Single Entry                                         

  050125           Wholesale Lockbox Data Capture -        23,397,726    
                   Alphanumeric Dual Entry                              

  050126           Wholesale LBX Data Capture -            4,060,816     
                   Alphanumeric Single Entry                            

  050129           Wholesale Lockbox Data Capture --       5,782         
                   Automated                                            

  050130           Wholesale LBX Early Release             2             

  050131           Wholesale LBX Multiple Payees           372,851       

  050133           Wholesale LBX Multiple Output Locations 3             

  050134           Wholesale Lockbox Custom Detail         31,464        
                   Assembly                                             

  050135           Wholesale LBX Stop File Processing      125           

  050136           Wholesale LBX Custom Programming        34            

  050137           Wholesale Lockbox Custom Programming    56            

  05013A           Wholesale Lockbox Merchant Card         871           
                   Processing                                           

  05013B           Wholesale LBX Cash Payment Processing   3             

  05013F           Wholesale LBX Non Standard Processing   2,644         

  050300           Lockbox Deposit                         907           

  050301           Lockbox Deposit- Ticket Preparation     868           

  050309           Lockbox Batch Processing                4,903         

  050310           Lockbox Deposit Reporting - Automated   84            
                   Total                                                

  050311           Lockbox Deposit Reporting - Automated   4             
                   Detail                                               

  050320           Lockbox Deposit Reporting - Manual --   7             
                   Total                                                

  050321           Lockbox Deposit Report - Manual Detail  27            

  050329           Lockbox Deposit Reporting - Wire        12            
                   Automated Fixed                                      

  050331           Lockbox Deposit Report - Custom Output  23            

  050400           Lockbox Information Delivery - Auto     20            
                   Maintenance                                          

  050401           LBX Information Delivery -- Automated   736,232       
                   -- Transmission                                      

  050403           LBX Information Delivery -- Automated   6             
                   -- Tape                                              

  050405           LBX Information Delivery -- Automated - 8             
                   CD ROM                                               

  050409           LBX Information Delivery -- Automated   810           
                   -- Diskette                                          

  050410           Lockbox Information Delivery - Manual   2,808         
                   Postage                                              

  050412           LBX information Delivery -- Manual      2,304         
                   Expedited Mail                                       

  050413           LBX Information Delivery - Manual -     2,184         
                   Courier/Messenger                                    

  050500           LBX Reject Items - Exception Handling   105           

  050510           Lockbox Reject Items - Customer         42            
                   Specified Handling                                   

  050520           LBX Reject Items - OCR/MICR Repair      410           

  050530           LBX Reject Items -- Unprocessable       3,187         

  050600           Lockbox Document Storage -- Retention   33,620        

  059999           Undefined Lockbox services              217           

  059999SAS        SAS 70 Audit                                          

  059999PCCFARSM   Lockbox Services - Paper Check                        
                   Conversion - Detail Sort - Rough Sort                
                   Manual                                               

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        
  ---------------- --------------------------------------- ------------ -----------

**WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_ Region 2 \_\_\_ Region 3 \_\_\_ Region 4 \_\_\_ Region
5 \_\_\_** Page iii of iiii

  ----------------- --------------------------------------- ------------ -----------
  **TMA CODE**      **DESCRIPTION**                         **VOLUME**   **PRICE**

  059999PCCFAIS     Lockbox Services - Image Services per                 
                    Document Scanned                                     

  059999PCCFADCA    Lockbox Services - Data Captured --                   
                    Alphanumeric                                         

  059999PCCFADTM    Lockbox Services - Data Transmission --               
                    Maintenance                                          

  059999PCCFASD     Lockbox Services - Safekeeping &                      
                    Destruction                                          

  059999PCCFANSPB   Lockbox Services - Non-Standard                       
                    Processing -- Balancing                              

  101099215/215B    Special Depository Service -Variable    808           
                    SF-215/215B                                          

  1010995515        Special Depository Service -Variable    153           
                    SF-5515                                              

  400699DR&C        Global Information Reporting-Deposit    193           
                    Reporting & Compiling                                

  05031Z            Lockbox Deposit Reporting - Automated   362           
                    -- Bundled                                           

  05032Z            Lockbox Deposit Reporting - Manual -    8             
                    Bundled                                              

  050331            Lockbox Deposit Reporting - Custom      1             
                    Output                                               

  100000            Branch Deposit                          1             

  100200            Check Deposit Processing                3             

  100210            Encoded Checks - On-Us                  1,561         

  100212            Encoded Checks - Local Clearinghouse    753           

  100213            Encoded Checks - Local Fed              3,219         

  100214            Encoded Checks - Other Fed              29,640        

  100215            Encoded Checks - Fed RCPC               547           

  10021Z            Encoded Checks -- Bundled               9,538         

  100220            Unencoded Checks - On-Us                1             

  100222            Unencoded Checks - Local Clearinghouse  2             

  100223            Unencoded Checks - Local Fed            21            

  100224            Unencoded Checks - Other Fed            56            

  100225            Unencoded Checks - Fed RCPC             6             

  100230            Checks Deposited - MICR Reject/Repair   17            

  100310            Non US Collection Item - US             3             
                    Dollar/Non-US Dollar Outgoing                        

  100400            Return Item Processing -- Regular       47            

  100401            Return Item Processing - Special        2             
                    Handling                                             

  100402            Return Item Processing - Reclear Item   140           

  100420            Return Item Notification -- Manual      4             

  100440            Return Item Notification -- Custom      14            

  100502            Deposit Adjustment Processing -- Checks 1             

  151351            Check Image Capture                     2,394         

  151353            Check Image -- CD ROM                   1             

  350000            Funds Transfer System Maintenance       17            

  350103            Outgoing Fedwire Transfer -             1             
                    Automated-Freeform -Straight-Thru                    

  350300            Incoming Fedwire Transfer               227           

  350320            Incoming Book Transfer                  11            

  350399            Incoming USD International Wire         1             

  350411            Funds Transfer Advice - Manual --       1             
                    Credit                                               

  350412            Funds Transfer Advice - Manual -        10            
                    Debit/Credit                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         

                                                                         
  ----------------- --------------------------------------- ------------ -----------

**WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_ Region 2 \_\_\_ Region 3 \_\_\_ Region 4 \_\_\_ Region
5 \_\_\_** Page iiii of iiii

  ------------- --------------------------------------- ------------ -----------
  **TMA CODE**  **DESCRIPTION**                         **VOLUME**   **PRICE**

  350521        Drawdown Request - Fedwire Transfer     132           

  350560        Funds Transfer Investigation            2             

  350711        SWIFT Message - Incoming - Internal     1             
                Transfer                                             

  359999        Undefined Wire and Other Funds Transfer 9             
                Services                                             

  400000        Info Maint - Terminal/Network -         16            
                Previous Day -- Summary                              

  400001        Domestic Info Maint -                   26            
                Terminal/Network - Previous Day --                   
                Detail                                               

  400003        Domestic Info Maint -                   6             
                Terminal/Network - Intra Day -- Summary              

  400004        Domestic Info Maint - Terminal/Network  24            
                -Intra Day -- Detail                                 

  400110        Domestic Information - Loading - High   192           
                speed                                                

  400224        Domestic Reporting - Terminal/Network - 71            
                Intra Day -- Detail                                  

  40022Z        Deposit Reporting Bundled               276           

  400822        Information Services Administration -   72            
                Customer ID -- Storage                               

  401000        Information Services Software --        1             
                Maintenance                                          

  409999        Undefined Information Services          153           

  40TTTT        Total Information Service Charge        174           
  ------------- --------------------------------------- ------------ -----------

**The volume figures provided in this template are for evaluation
purposes only. The template volumes do not reflect projections for
future business, nor are they intended to reflect actual current
business activity. FIs submitting responses to this IEI expressly
acknowledge, without recourse, that volumes short of the numbers
provided in any template, in any region (or regions in the aggregate),
during the term of the new GLN will not provide grounds for an upward
price adjustment in any case at any time. Volumes of business and levels
of compensation are not guaranteed.**

**SPECIALIZED** **WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_** **Region 5 \_\_\_** Page i of iiii

  ------------- ---------------------------------------- ------------ -----------
  **TMA CODE**  **DESCRIPTION**                          **VOLUME**   **PRICE**

  010000        Demand Deposit Account Maintenance       1             

  010100        General Account Activity - Debit Posting 1             

  010101        General Account Activity - Credit        17            
                Posting                                               

  010310        DDA Statement - Manual - Hard Copy       1             

  010320        DDA Statement -- Custom                  1             

  010400        Account Analysis - Automated --          1             
                Maintenance                                           

  010600        General Account Relationship             1             
                Assistance - Inquiries/Request                        

  010610        General Account Relationship Assistance  1             
                -- Copies                                             

  0107ZZ        Special General Account Services --      1             
                Bundled                                               

  050000        Wholesale Lockbox Maintenance            1             

  050002        Wholesale Lockbox Maintenance-P.O. Box   1             
                Rental                                                

  050100        Wholesale LBX Remittance Processing      2,097         
                (non-scans)                                           

  050101        Wholesale LBX Remittance - Machine       1             
                Readable Item -- Matched                              

  050110        Wholesale Lockbox Detail Sort-Alpha      3             

  050111        Wholesale Lockbox Detail                 109           
                Sort-Functional/Divisional                            

  050112        Wholesale LBX Document Handling - Rough  4,941         
                Sort                                                  

  050113        Wholesale Lockbox Detail Sorting - Fine  3             
                Sort Numeric                                          

  050115        Wholesale Lockbox Document Matching      829           

  050116        Wholesale LBX Document Notation          432           

  050117        Wholesale Lockbox Stapling-Attach        394           
                Document                                              

  050119        Custom Lockbox Special Handling          3,318         

  05011A        Wholesale LBX Photocopy                  517           

  05011B        Wholesale LBX Special Photocopy          394           

  05011D        Wholesale Lockbox Date Stamping          85            

  05011E        Wholesale Lockbox Return Envelope        181           
                W/Remittance Assoc                                    

  05011F        Wholesale Lockbox Return Envelope        749           
                W/Remittance Unassociated                             

  05011G        Wholesale Lockbox Destroy Envelopes      302           

  05011H        Wholesale Lockbox Flatten Invoice        712           

  05011I        Wholesale LBX Hand Open Mail             1,130         

  05011J        Wholesale Lockbox Special Stamping       580           

  05011K        Wholesale Lockbox Reinsert Detail in     23            
                Envelope                                              

  05011L        Wholesale LBX Delivery Preparation       15            
                Charge                                                

  05011M        Wholesale Lockbox Correspondence         107           

  05011N        Wholesale LBX Paid In Full Verification  381           

  05011P        Wholesale LBX Special Handling (define   59            
                each w/suffix)                                        

  05011R        Wholesale LBX Image                      1,055         

  05011RCK      Wholesale LBX Image -- Check             1             

  05011RINV     Wholesale LBX Image -- Invoice           1             

  05011RDOC     Wholesale LBX Image -- Document          1             

  050120        Wholesale Lockbox Data Capture - Fixed   1             
                Charge                                                

                                                                      

                                                                      

                                                                      

                                                                      
  ------------- ---------------------------------------- ------------ -----------

**SPECIALIZED WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page ii of iiii

  --------------- ---------------------------------------- ------------ -----------
  **TMA CODE**    **DESCRIPTION**                          **VOLUME**   **PRICE**

  050121          Wholesale LBX Data Capture - MICR Line   151           

  050122          Wholesale Lockbox Date Capture -         8             
                  OCR/MICR Line                                         

  050124          Wholesale LBX Data Capture - Numeric     3,187         
                  Single Entry                                          

  050125          Wholesale Lockbox Data Capture -         236,341       
                  Alphanumeric Dual Entry                               

  050126          Wholesale LBX Data Capture -             41,018        
                  Alphanumeric Single Entry                             

  050129          Wholesale Lockbox Data Capture --        58            
                  Automated                                             

  050130          Wholesale LBX Early Release              1             

  050131          Wholesale LBX Multiple Payees            3,729         

  050133          Wholesale LBX Multiple Output Locations  1             

  050134          Wholesale Lockbox Custom Detail Assembly 318           

  050135          Wholesale LBX Stop File Processing       1             

  050136          Wholesale LBX Custom Programming         1             

  050137          Wholesale Lockbox Custom Programming     1             

  05013A          Wholesale Lockbox Merchant Card          9             
                  Processing                                            

  05013B          Wholesale LBX Cash Payment Processing    1             

  05013F          Wholesale LBX Non Standard Processing    27            

  05013FSTAMP     Wholesale LBX Non-Standard Processing -  211,300       
                  Spec Stamp                                            

  05013FPASSPRT   Wholesale LBX Non-Standard Processing -- 110,683       
                  Passport                                              

  05013FPHOTO     Wholesale LBX Non-Standard Processing -  27,964        
                  Photo sizing                                          

  050199          Special Wholesale Lockbox Services       5             

  050300          Lockbox Deposit                          10            

  050301          Lockbox Deposit- Ticket Preparation      9             

  050309          Lockbox Batch Processing                 52            

  050310          Lockbox Deposit Reporting - Automated    1             
                  Total                                                 

  050311          Lockbox Deposit Reporting - Automated    1             
                  Detail                                                

  050320          Lockbox Deposit Reporting - Manual --    1             
                  Total                                                 

  050321          Lockbox Deposit Report - Manual Detail   1             

  050329          Lockbox Deposit Reporting - Wire         1             
                  Automated Fixed                                       

  050331          Lockbox Deposit Report - Custom Output   1             

  050400          Lockbox Information Delivery - Auto      1             
                  Maintenance                                           

  050401          LBX Information Delivery - Automated --  7,750         
                  Transmission                                          

  050403          LBX Information Delivery - Automated --  1             
                  Tape                                                  

  050405          LBX Information Delivery - Automated -   1             
                  CD ROM                                                

  050409          LBX Information Delivery - Automated --  8             
                  Diskette                                              

  050410          Lockbox Information Delivery - Manual    30            
                  Postage                                               

  050412          LBX information Delivery - Manual        24            
                  Expedited Mail                                        

  050413          LBX Information Delivery - Manual -      23            
                  Courier/Messenger                                     

  050500          LBX Reject Items - Exception Handling    1             

  050510          Lockbox Reject Items - Customer          1             
                  Specified Handling                                    

  050520          LBX Reject Items - OCR/MICR Repair       4             

  050530          LBX Reject Items -- Unprocessable        34            

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        

                                                                        
  --------------- ---------------------------------------- ------------ -----------

**SPECIALIZED** **WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page iii of iiii

  ----------------- ---------------------------------------- ------------ -----------
  **TMA CODE**      **DESCRIPTION**                          **VOLUME**   **PRICE**

  050600            Lockbox Document Storage -- Retention    354           

  059999            Undefined Lockbox services               2             

  059999SAS         SAS 70 Audit                                           

  059999PCCFARSM    Lockbox Services - Paper Check                         
                    Conversion - Detail Sort - Rough Sort                 
                    Manual                                                

  059999PCCFAIS     Lockbox Services - Image Services per                  
                    Document Scanned                                      

  059999PCCFADCA    Lockbox Services - Data Captured --                    
                    Alphanumeric                                          

  059999PCCFADTM    Lockbox Services - Data Transmission --                
                    Maintenance                                           

  059999PCCFASD     Lockbox Services - Safekeeping &                       
                    Destruction                                           

  059999PCCFANSPB   Lockbox Services - Non-Standard                        
                    Processing -- Balancing                               

  101099215/215B    Special Depository Service -Variable     9             
                    SF-215/215B                                           

  1010995515        Special Depository Service -Variable     2             
                    SF-5515                                               

  400699DR&C        Global Information Reporting-Deposit     2             
                    Reporting & Compiling                                 

  05031Z            Lockbox Deposit Reporting - Automated -- 4             
                    Bundled                                               

  05032Z            Lockbox Deposit Reporting - Manual -     1             
                    Bundled                                               

  100000            Branch Deposit                           1             

  100200            Check Deposit Processing                 7             

  100210            Encoded Checks - On-Us                   3,642         

  100212            Encoded Checks - Local Clearinghouse     1,758         

  100213            Encoded Checks - Local Fed               7,512         

  100214            Encoded Checks - Other Fed               69,161        

  100215            Encoded Checks - Fed RCPC                1,278         

  10021Z            Encoded Checks -- Bundled                22,255        

  100220            Unencoded Checks - On-Us                 2             

  100222            Unencoded Checks - Local Clearinghouse   6             

  100223            Unencoded Checks - Local Fed             50            

  100224            Unencoded Checks - Other Fed             130           

  100225            Unencoded Checks - Fed RCPC              13            

  100228            Check Encoding Surcharge                 1             

  10022Z            Unencoded Checks -- Bundled              1             

  100230            Checks Deposited - MICR Reject/Repair    40            

  100299            Check Processing -- Undefined            1             

  100310            Non US Collection Item - US              8             
                    Dollar/Non-US Dollar Outgoing                         

  100400            Return Item Processing -- Regular        110           

  100401            Return Item Processing - Special         4             
                    Handling                                              

  100402            Return Item Processing - Reclear Item    327           

  100420            Return Item Notification -- Manual       8             

  100440            Return Item Notification -- Custom       33            

  100502            Deposit Adjustment Processing -- Checks  3             

  151351            Check Image Capture                      5,587         

  151353            Check Image - CD ROM                     1             

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          

                                                                          
  ----------------- ---------------------------------------- ------------ -----------

**SPECIALIZED WHOLESALE LOCKBOX PRICING TEMPLATE**

Check the Applicable Region for Which this Pricing Proposal Applies:

**Region 1 \_\_\_** **Region 2 \_\_\_** **Region 3 \_\_\_** **Region 4
\_\_\_** **Region 5 \_\_\_** Page iiii of iiii

  ------------- ---------------------------------------- ------------ -----------
  **TMA CODE**  **DESCRIPTION**                          **VOLUME**   **PRICE**

  350000        Funds Transfer System Maintenance        1            

  350300        Incoming Fedwire Transfer                2            

  350320        Incoming Book Transfer                   1            

  350521        Drawdown Request - Fedwire Transfer      1            

  359999        Undefined Wire and Other Funds Transfer  1            
                Services                                              

  400000        Domestic Info Maint - Terminal/Network - 1            
                Previous Day -- Summary                               

  400001        Domestic Info Maint - Terminal/Network - 1            
                Previous Day -- Detail                                

  400004        Domestic Info Maint - Terminal/Network   1            
                -Intra Day -- Detail                                  

  400110        Domestic Information - Loading - High    2            
                speed                                                 

  400224        Domestic Reporting - Terminal/Network -  1            
                Intra Day -- Detail                                   

  40022Z        Deposit Reporting Bundled                3            

  400822        Information Services Administration -    1            
                Customer ID -- Storage                                

  409999        Undefined Information Services           2            

  40TTTT        Total Information Service Charge         2            
  ------------- ---------------------------------------- ------------ -----------

**The volume figures provided in this template are for evaluation
purposes only. The template volumes do not reflect projections for
future business, nor are they intended to reflect actual current
business activity. FIs submitting responses to this IEI expressly
acknowledge, without recourse, that volumes short of the numbers
provided in any template, in any region (or regions in the aggregate),
during the term of the new GLN will not provide grounds for an upward
price adjustment in any case at any time. Volumes of business and levels
of compensation are not guaranteed.**

# APPENDIX 4

## GLOSSARY OF GENERAL LOCKBOX TERMS

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GLOSSARY OF GENERAL LOCKBOX TERMS

**Adjusted Earnings Credit Rate (AECR)** -- Or the Adjusted Analysis
Earnings Rate (AAER). The rate used to calculate imputed earnings on
Treasury Time Balances (TTB) and Demand Deposit Accounts (DDAs). FMS
adjusts the Earnings Credit Rate (published as an annual rate) to a
monthly rate and uses it to determine the imputed earnings on the TTB
and on deposits held overnight in DDAs at the QLP.

**Agency** -- An organizational unit of the U.S. Government or
recognized agent thereof. For the purposes of this document, an agency
is a Federal Government user of lockbox services.

**Agency Location Code (ALC)** -- A unique four- or eight-digit number
assigned by FMS to identify agency stations and offices on agency
accounting reports and documents.

**Audit Trail** - Deposit information printed on the back of checks and
payment documents.

**Authorized Agency Official (AAO)** -- the official of a Federal
Government agency authorized to act for and bind the Federal agency
under a memorandum of understanding (MOU).

**Authorized Bank Official (ABO)** -- the official of the FI authorized
to act for and bind the FI under a Designation and Authorization of
Financial Agent **(**DFA), memorandum of understanding (MOU), or similar
agreement.

**Authorized Treasury Official (ATO)** -- The Financial Management
Service (FMS) official authorized to act for and bind the U.S. Treasury
regarding U.S. Government lockbox collections. Currently, the ATO is the
Director of the Cash Management Directorate, FMS, U.S. Department of the
Treasury.

**Automated Clearing House (ACH)** - A batch processing,
store-and-forward system used by FIs and the Federal Reserve to
distribute electronic debit and credit entries to the accounts of FIs.

**Automated Clearing House (ACH) File Cutoff** -- The time each banking
day at which CA\$HLINK II ceases to designate deposits reported by QLPs
as ACH file items. The cutoff time is set at 8:00 p.m. Eastern time (ET)
on Banking Day 1.

**Availability** -- The percentage of 0-Day, 1-Day, and 2-Day funds, as
assigned by the QLP, contained in Federal agency deposits.

**Banking Day** -- The part of any business day on which an office of a
bank is open to the public for carrying on substantially all of its
banking functions.

**Bank Management** -- The process of reporting the QLP's monthly
service charges in a manner determined by FMS for compensation purposes.
(See the Treasury Financial Manual, Volume V, Chapter 3000, and Section
3055 for specific details.)

**Batch Range** - Any groupings of more than one block. The QLP will
determine batch size.

**Block** - A grouping of 100 documents or less, sequentially numbered
00 through 99.

**Business Day** -- A calendar day other than a Saturday or Sunday or
any days defined as a holiday in the Federal Reserve Holiday Schedule.
The QLP will adhere to this business day definition unless stated
otherwise in an MOU/SOW.

**Candling** - Process of using a light machine to scan envelopes prior
to destruction to ensure that all contents have been removed.

**CA\$HLINK II** -- FMS system used by QLP to report agency deposits for
credit to the Treasury's account. The system creates electronic funds
transfers to move funds from the QLP to the Treasury's account at the
Federal Reserve Bank of New York (FRBNY).

**CA\$HLINK Deposit Report** -- The funds and accounting information
contained on the deposit report form for a given deposit date, as
reported by each authorized depositary to CA\$HLINK II.

**Central Reporting System (CRS) -** An FMS system that will enable
Federal agencies to more effectively manage the financial transaction
information resulting from FMS' collection processes. This effort will
greatly improve the way government agencies collect, analyze, and
redistribute financial transaction information.

**Check Lister** - A tape similar to a calculator tape that lists the
sequence number and remittance amount processed with totals.

**Check Truncation** -- If and when authorized by law, the process of
removing an original paper check from the check collection or return
process and sent to a recipient, in lieu of such original paper check. A
substitute check or information relating to the original check
(including data taken from the MICR line of the original check or an
electronic image of the original check), whether with or without
subsequent delivery of the original paper check.

**CIRA (Central Image and Research Archive)** - An online central
repository for all Paper Check Conversion (PCC) electronic check images
with associated financial information and other agency data that may be
captured at the time of the transaction. This system allows agencies or
QLPs to access check images as well as generate reports.

**Classification Key** -- Key elements within remittance documents for
use in reporting Governmentwide accounting data into CA\$HLINK II.

**Compensating Balance** - A balance placed at a financial institution
in the Treasury Time Balance account. Compensation is made through the
imputed earnings on the investable balance using the earnings credit
rate. The investable balance includes a Treasury Time Balance held by
the QLP in a separate non-interest-bearing account expressly for this
purpose and (where appropriate) collected balances from lockbox
deposits.

**CA\$HLINK Account Number (CAN) -** A unique three-digit number used by
financial agents to identify their reporting location for CA\$HLINK II
collection deposit reporting purposes.

**Cutoff Time** -- a predesignated time beyond which transactions
presented or actions requested will be considered the next bank day's
business.

**Demand Deposit Account (DDA)** - An account maintained by the Treasury
at the QLP for crediting agencies for lockbox deposits.

**Deposit Date** - The banking day on which the QLP posts deposits to
the Treasury's DDA for the agency, prepares SF 215 Deposit Tickets with
the voucher date assigned, and reports the deposits into CA\$HLINK II.
On the deposit date, the QLP receives settlement for remittances
transmitted electronically, i.e., via ACH or Fedwire.

**Depositary Compensation Securities -** Non-marketable securities
issued by the U.S. Treasury to FAs as an investment vehicle that will be
used for investing funds maintained in the Treasury time account.
Compensation is made by means of the interest accrued on these
securities, which is paid to the FA on a monthly basis.

**Depositary or Designated Depositary** - A bank or other financial
institution that has been designated by FMS to receive monies for credit
to Treasury.

**Designation and Authorization of Financial Agent (DFA)** - Upon
selection as a QLP, an FI executes a DFA with FMS. The DFA designates
the FI as a financial agent of the United States and details the legal
requirements, relationships, and expectations of FMS with respect to the
provision of general lockbox services.

**Direct Payment -** A payment to the FA reimbursing it directly for
banking services it provided. This payment, either an ACH or Fed Wire
transaction, is made on a monthly basis.

**Document** - Any printed form, notice, or document received at the
lockbox processing site.

**Document Locator Number** **(DLN)** - A control number assigned to
every document and check input through the remittance processing system.
It is used to control, identify, and locate processed documents.

**Earnings Credit Rate -** Or the Analysis Earnings Rate (AER). The
3-month Treasury Bill Auction average (Investment) rate used to compute
the imputed value on compensating balances, average daily immediately
available funds, and average daily uncollected funds.

**Expedite Funds** - When FMS asks a QLP to expedite funds, all funds
deposited shall be credited to Treasury's account for the Federal agency
on the same day as deposit and transferred to Treasury's account at the
FRB on the same day. To expedite funds means to accelerate the deposit
from the day after deposit to the day of deposit as defined in the
Treasury Financial Manual, Volume V, Chapter 3000, and Section 3050.

**Federal Funds Rate (FFR)** - The daily interest rate at which reserves
are traded among commercial banks for overnight use. The daily effective
FFR is applied to the principal amount of a funds transfer delay to
determine the amount of interest assessed a QLP. The daily FFR is
published in the Federal Reserve Statistical Release (H.15) weekly.

**Financial Agent (FA)** -- An FA is a qualified Financial Institution
that is designated an agent by and enters into an agreement with the
Financial Management Service, as principal, to provide various types of
essential banking services.

**Financial Institution (FI**) -- An FI is any institution eligible
under 31 CFR 202.2 to be designated by the Financial Management Service
as a Financial Agent to provide various types of essential banking
services.

**Funds Transfer Date** (also known as Transfer Date) - The calendar
date funds are moved from the QLP to the Treasury's account at FRBNY.
Unless specified otherwise by FMS, the transfer date for an Expedite
account is the deposit date, and the transfer date for a Non-Expedite
account is the business day following the deposit date.

**Funds Transfer Delay** - The difference in time between the
agreed-upon funds transfer date and the actual funds transfer date,
measured in whole days, from the QLP to the Treasury's account at the
Federal Reserve.

**Header Information** - Information key-entered at the beginning of a
block of documents that will be valid for the entire block of documents.

**Imperfect Document** - Remittance or document items that do not meet
the criteria of a perfect document and require additional perfection or
correction before depositing.

**Internal Credit Tickets** -- An internal accounting document of a QLP
that is prepared to represent a credit entry to the Treasury's DDA at
the QLP.

**Internal Debit Tickets** -- An internal accounting document of a QLP
that is prepared to represent a debit entry to the Treasury's DDA at the
QLP. These debits are the result of returned items or other adjustments.

**Internet Matching -** The process of matching a paper check received
at a lockbox location with associated remittance information, such as
completed forms, that has been submitted online at the Pay.gov Web site.

**Investable Balance** - The amount of dollars the QLP has available to
invest. The Investable Balance consists of (1) the Investable TTB to be
placed by FMS in a separate non-interest-bearing time deposit account
with the QLP, and (2) the Treasury Average Daily Collected Balance
(TADCB) in the DDA. The value derived by the QLP from the interest-free
use of the Investable Balance over a sufficient period of time is used
as the source of the QLP's compensation for providing required services.

**Invitation for Expressions of Interest (IEI) -** The solicitation
document covering the process by which interested FIs may bid to become
a QLP and containing the technical requirements and criteria that must
be met for consideration.

**Julian Date** - A system of numbering the days of the year
chronologically from 001 through 365 (or 366 on leap years) used as the
6^th^, 7^th^, and 8^th^ digits of the Document Locator Number.

**Leap Year -** During leap years, when making monthly calculations, the
QLP should use 29 days for February. When making calendar year
calculations during leap years, the QLP should use 366 days.

**Lockbox (paper) -** A post office box established by the QLP for the
purpose of receiving paper-based payments to a Federal agency.

**Lockbox Depositary** - A QLP designated under 31 Code of Federal
Regulations (CFR) Part 202 as a depositary and financial agent of the
U.S. Government, which meets the qualifications set forth in the
Treasury Financial Manual, Volume V, Chapter 3000, Section 3020 and
which is authorized by FMS to perform financial services known as
lockbox services for Federal Government agencies.

**Lockbox Services -** The term used herein to describe all categories
of financial services provided by QLPs. Lockbox services include:

> **Basic Depositary Services** -- those services that Federal agencies
> would receive through a Treasury General Account (TGA) at a commercial
> bank or the FRB.
>
> **Standard Lockbox Services** -- those services necessary for a
> Federal agency to process remittance documents and update its internal
> accounts receivable system.
>
> **Ancillary Lockbox Services** -- those services that go beyond
> Standard Lockbox Services, as determined by FMS, and do not
> necessarily accelerate deposit of funds to the Treasury. The agency
> will pay for Ancillary Lockbox Services as explained in I TFM Bulletin
> No. 94-07, Responsibility for Payment of Lockbox Account Costs.

**Memorandum of Understanding (MOU) -** A three-party agreement
detailing the specific General Lockbox Services to be performed for a
Federal agency by a QLP. The MOU is executed by the QLP, FMS, and the
agency either upon a successful bid for business by the QLP, or upon
appointment by FMS of the QLP to perform General Lockbox Services for a
Federal agency.

**Multiple Checks** - Two or more remittances submitted along with one
document.

**Multiple Remittance Documents -** Two or more vouchers or documents
submitted for one check.

**Non-Scannable Document** - A document [does not]{.underline} possess a
perfect pre-printed machine-readable line of remittance information to
apply to a remitter's account, i.e., reproduced, handwritten, or
altered.

**Paper Check Conversion -** The process of converting a check into an
ACH debit entry transaction when the check imager reads the bank account
(MICR) information from the bottom of the check and stores an electronic
image of the check. The bank account information is then compared
against a database to verify that the account is in good standing.

**Pay.gov -** A Government-wide transaction portal managed by FMS that
offers a suite of electronic financial services to assist Federal
program agencies. Pay.gov's services rest on four cornerstones:
collections, forms acceptance and direct billing, access control, and
reporting.

**Perfect Document** - A document that [does]{.underline} possess a
perfect, pre-printed, machine-readable line of remittance information to
apply to a remitter's account, i.e., is [not]{.underline} reproduced,
handwritten, or altered.

**Product Code Category** - A standard six-character designation
(suffixes may be added) that represents a specific and defined product
or service the QLP performs to support financial services for Federal
agencies. The Treasury recognizes the codes published by the Association
for Financial Professionals (AFP), formerly the Treasury Management
Association.

**Qualified Lockbox Provider (QLP)** -- A QLP is a designated Financial
Agent that becomes a service provider within the General Lockbox
Network. A QLP may bid on or be assigned business within the General
Lockbox Network, depending on the availability and location of that
business.

**Received Date** - The actual calendar date, including weekends, that
documents and remittances are received at a lockbox (timeframe 12:00
a.m. -- 11:59 .m.).

**Redeposited Item** - An item that cannot be collected by the QLP upon
first presentment and is redeposited into the agency-specific Treasury
DDA for second presentment and collection (see **Returned Item**).

**Retail Lockbox** -- A remittance that includes a scannable document;
generally high item

volume/low dollar value flows.

**Remittance Document Imaging -** A digital electronic representation of
a remittance document. This process eliminates forwarding paper copies
of remittance documents to the agencies, which facilitates retrieval of
document and payment information much faster. QLPs have the capability
of sending files to the agencies on a daily basis.

**Remittances** - Any cash, check, draft, or money order drawn on and
payable through FIs in the United States.

**Reserve Ratio** - The standard percentage of funds in DDA and TTB
accounts that cannot be invested by the QLP due to Federal Reserve
requirements. The reserve requirement ratio is determined by the FRB.

**Returned Item** - An item that cannot be collected by the QLP after
two presentments and is returned to the agency for disposition (see
**Redeposited Item**).

**Scanline** - A line of machine-readable information that is
pre-printed on a document and systematically scanned for payment and
entity information.

**Scannable Documents** - One that possesses the line of
machine-readable information that a Federal agency prints on payment
documents or documents.

**Settlement Date -** The date on which the QLPs or their correspondents
are scheduled to be debited or credited by the Federal Reserve for the
exchange of electronic entries through the ACH.

**SF 215 Deposit Ticket (SF 215)** - The Treasury form prepared by a QLP
with totals of checks and other negotiable instruments to credit the
Treasury's DDA at a QLP for a specific Federal agency (see **Voucher**).

**SF 5515 Debit Voucher (SF 5515)** - The Treasury form prepared by a
QLP to debit the Treasury's DDA at a QLP for a specific Federal agency
to offset the account for a deposit adjustment (for example, returned
item) (see **Voucher**).

**Specialized Lockbox** - May have the characteristics of retail or
wholesale lockbox; generally, the business rules that guide processing
are more complex.  Additional documents received, other than the
remittance, may require review that is more detailed.  There may also be
higher physical and personnel security requirements required for
specialized lockbox applications.

**Split payment** - A single check that is received for more than one
document and/or more than one remitter.

**Statement of Work (SOW)** - A document detailing the lockbox
processing requirements of a Federal agency.

**Transaction Date** - The date an agency uses to determine timeliness
and calculate penalties and interest, if any, for delinquent payments.
The transaction date is always in Julian form; it is the date
remittances are received and/or processed by the QLP.

**Treasury Average Daily Collected Balance (TADCB)** - (Also known as
Treasury Average Net Collected Balance) - Standard formula for all QLPs
to use to calculate the amount of availability of funds compensation due
on a monthly basis (see Treasury Financial Manual, Volume V, Chapter
3000, Section 3070.10). The Treasury Average Daily Collected Balance is
calculated using both the actual and guaranteed availability of funds
percentages as prescribed in Section 3070.20.

**Treasury Financial Manual** - The manual issued by the Financial
Management Service containing procedures to be observed by all FAs,
Federal agencies, and FRBs with respect to payments, collections,
central accounting, financial reporting, and other governmentwide fiscal
responsibilities of the Department of the Treasury.

**Treasury Time Balance (TTB)** - The amount of funds Treasury has
deposited with the QLP in a non-interest-bearing time account to
compensate for financial services performed by a QLP. The TTB may also
be referred to as the compensating balance.

**Treasury Web Application Infrastructure (TWAI) --** The distinct
architecture that supports a Web-based platform for FMS' electronic
applications for its core business processes, such as ASAP, GWA and
future projects. The TWAI is supported by the FRBs and is designed to
maintain a high level of security and flexibility for FMS and its
clients.

**Unprocessable** - Any document, item, or correspondence that cannot be
processed by the QLP.

**Value of Funds (VOF)** - The value of earnings on Funds Transfer
Delays and Voucher Delays. VOF are assessments for not crediting or
transferring funds to the Federal Government timely. The VOF method is
the basis for calculating compensation adjustments (see Treasury
Financial Manual, Volume V, Chapter 3000, and Section 3065).

**Voucher** -- Any of the four following documents:

-   SF 2l5 - Standard agency deposit ticket

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-   SF 2l5A - IRS deposit ticket

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-   SF 215B - U.S. Customs Service deposit ticket

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-   SF 5515 - Debit voucher

**Voucher Confirmation** - An SF 215, SF 215A/B, or SF 5515 voucher that
is signed or stamped by an officer of the QLP "confirming" an increase
or decrease in the Treasury's DDA balance.

**Voucher Date** - The banking day a QLP prepares a Deposit Ticket or
Debit Voucher to effect a credit, debit, or adjustment to the Treasury's
DDA for an agency. For returned items, the QLP shall use the date the
returned item is received as the voucher date. For all other deposits,
the QLP shall use the original agency deposit date as the voucher date.

**Voucher Delay** - The difference in time, measured in whole days,
between the voucher date and the deposit date. The delay in reporting
vouchers to CA\$HLINK II) results in the delayed transfer of funds to
Treasury. The voucher delay earnings are calculated according to the
formula set forth in the Treasury Financial Manual, Volume V, Chapter
3000, and Section 3065.

**Wholesale Lockbox** -- Remittances may or may not have a scannable;
generally, there are one or more documents in addition to the remittance
that require some form of data capture that require more manual
handling.  Often, more payers are corporate remitters.

[^1]: FMS also reserves the right to assign specific Federal agency
    collection flows to a non-QLP, or to an out-of-region QLP, if it
    believes it is in the best interests of the Federal government to do
    so, or if requested to do so, in writing, by the Federal agency for
    reasons that include, but are not limited to, maintaining the
    continuity of Federal agency operations, security concerns, or other
    exigent circumstances.

[^2]: FMS reserves the right to modify the configuration of the GLN
    Regions and/or the states assigned to the GLN Regions at any time
    during the IEI competition, or during the term of the GLN, upon a
    determination that it is in the best interests of the United States
    to do so.

[^3]: Capitalized terms and acronyms not defined herein have the meaning
    set forth in the SOP.

[^4]: Each PCC system can process up to 2,000 items a day depending on
    the complexity.

[^5]: The need to manually sort items may be eliminated by evolving
    technology, consistent with governing law. When the need to manually
    sort items is substantially reduced or eliminated, FMS expects to
    receive the benefit of downward price adjustments.

[^6]: As of the Effective Date of this DFA, the Draft Chapter 3000 of
    Volume V of the TFM, attached hereto as [Attachment D]{.underline}
    is incorporated by reference. Once the draft is finalized and
    published, the final, published Chapter 3000 shall be deemed
    incorporated by reference herein.