# COMPLIANCE STATEMENT

This Attachment contains a statement of the manner in which the Postal
Service has supplied the information requested in sections 193 and 195
of the Commission\'s Rules of Practice and Procedure (39 CFR §§ 3001.193
and 3001.195). These rules are applicable under 39 U.S.C., 3622(f), as
enacted by the Postal Accountability and Enhancement Act, Pub. L. No.
109-435, 120 Stat. 3198. Section 3622(f), for the mail categories that
are the subject of the Request, provides that: "Proceedings initiated to
consider a request for a recommended decision filed by the Postal
Service during that 1-year \[transition period\] shall be completed in
accordance with Subchapter H of chapter 36 of this title and
implementing regulations as in effect before the date of enactment of
this section."

Where information required by these rules is not included in direct
testimony or exhibits of the Postal Service\'s witness, it is contained
in the Request or its attachments, or has been incorporated by reference
in the Request, testimony, exhibits, or attachments made available to
the Commission in Docket No. R2006-1. Alternatively, if it is
subsequently determined that the Postal Service has not fulfilled any
particular filing requirement, the Postal Service reserves its right
thereafter to request waiver of such requirement.

RULE: 193(b)

REQUIREMENT: This rule requires that a copy of the Negotiated Service
Agreement be filed with the Request.

A copy of the Negotiated Service Agreement is filed as Attachment F to
the Request.

RULE: 193(c)

REQUIREMENT: This rule requires a description of the proposed rates,
fees, and/or classification changes, including proposed changes, in
legislative format, to the text of the Domestic Mail Classification
Schedule and any associated rate or fee schedule.

Attachment A to this Request includes the proposed additions to the
Domestic Mail Classification Schedule. Attachment B sets forth the
proposed additions to the Rate Schedules.

RULE: 193(d)

REQUIREMENT: This rule requires a statement describing and explaining
the operative components of the Negotiated Service Agreement, and
requires that this statement include the reasons and bases for the
components in the Negotiated Service Agreement.

The statements required by this rule are contained within the testimony
of witnesses Ali Ayub (USPS-T-1) and Richard D. Jones (BAC-T-1).

RULE: 193(e)(1)

REQUIREMENT: This rule requires an analysis of the effects of the
Negotiated Service Agreement on Postal Service volumes, costs and
revenues in a one year period intended to be representative of the first
year of the proposed agreement. This financial analysis shall:

\(i\) set forth the estimated mailer-specific costs, volumes and
revenues of the Postal Service for that year, assuming the then
effective postal rates and fees absent the implementation of the
Negotiated Service Agreement;

\(ii\) set forth the estimated mailer-specific costs, volumes, and
revenues of the Postal Service for that year which result from the
implementation of the Negotiated Service Agreement;

\(iii\) include an analysis of the effects of the Negotiated Service
Agreement on contribution to the Postal Service for that year (including
consideration of the effect on contribution from mailers who are not
parties to the agreement);

\(iv\) utilize mailer-specific costs for that year, and provide the
basis used to determine such costs, including a discussion of variances
between mailer-specific costs and system-wide average costs; and

\(v\) utilize mailer-specific volumes and elasticity factors for that
year, and provide the bases used to determine such volumes and
elasticity factors.

If mailer-specific costs or elasticity factors are not available, the
bases of the costs or elasticity factors that are proposed shall be
provided, including a discussion of the suitability of the proposed
costs or elasticity factors as a proxy for mailer-specific costs or
elasticity factors.

The analysis required by this rule is contained within the testimony of
witnesses Ali Ayub (USPS-T-1) and Richard D. Jones (BAC-T-1).

RULE: 193(e)(2)

REQUIREMENT: This rule requires that, if a Negotiated Service Agreement
is proposed to extend beyond one year, the request shall include an
analysis of the effects of the agreement on Postal Service volumes,
costs, and revenues in each subsequent year of the proposed agreement.
This financial analysis shall:

\(i\) identify each factor known or expected to operate in that
subsequent year which may have a material effect on the estimated costs,
volumes, or revenues of the Postal Service, relative to those set forth
in the financial analysis provided for the first year of the agreement
in response to Rule 193(e)(1). Such relevant factors might include (but
are not limited to) cost level changes, anticipated changes in
operations, changes arising from specific terms of the proposed
agreement, or potential changes in the level or composition of mail
volumes;

\(ii\) discuss the likely impact in that subsequent year of each factor
identified in Rule 193(e)(2)(i), and quantify that impact to the maximum
extent practical; and

\(iii\) estimate the cumulative effect in that subsequent year of all
factors identified in Rule 193(e)(2)(i) on the estimated costs, volumes,
and revenues of the Postal Service, relative to those presented for the
first year of the agreement in response to Rule 193(e)(1).

The analysis required by this rule is contained within the testimony of
witnesses Ali Ayub (USPS-T-1) and Richard D. Jones (BAC-T-1).

RULE: 193(f)

REQUIREMENT: This rule requires an analysis of the impact, over the
duration of the Negotiated Service Agreement, of the agreement on:

\(1\) competitors of the parties to the Negotiated Service Agreement
other than the Postal Service;

\(2\) competitors of the Postal Service; and

\(3\) mail users.

> The Postal Service shall include a copy of all completed special
> studies that were used to make such estimates. If special studies have
> not been performed, the Postal Service shall state this fact and
> explain the alternate basis of its estimates.

The analysis required by this rule is contained within the testimony of
witness Ali Ayub (USPS-T-1).

RULE: 193(g)

REQUIREMENT: This rule requires a proposal for a data collection plan,
which shall include a comparison of the analysis presented in Rule
193(e)(1)(ii) and 193(e)(2)(iii) with the actual results ascertained
from implementation of the Negotiated Service Agreement. The results
shall be reported to the Commission on an annual or more frequent basis.

The proposed data collection plan is contained in the testimony of
witness Ali Ayub (USPS-T-1). If the Commission subsequently concludes
that this data collection plan does not fully comply with the
requirements of this rule, the Postal Service reserves its right
thereafter to request that those requirements be waived.

RULE: 193(h)

REQUIREMENT: This rule requires seven sets of workpapers to be filed
with the Request.

There are no workpapers in this case.

RULE: 193(i)

REQUIREMENT: This rule requests one or more certifications stating that
the cost statements and supporting data submitted as part of the formal
request, as well as the accompanying workpapers, which purport to
reflect the books of the Postal Service, accurately set forth the
results shown by such books. The requested certification is to be signed
by one or more representatives of the Postal Service authorized to make
such certification.

The certification is submitted as Attachment C to this Request.

RULE: 195

REQUIREMENT: This rule states that Postal Service Requests for baseline
negotiated service agreements shall include:

(1) A written justification for requesting a Negotiated Service
    Agreement classification, as opposed to a more generally applicable
    form of classification; and

(2) A description of the operational bases of the Negotiated Service
    Agreement, including activities to be performed and facilities to be
    used by both the Postal Service and the mailer under the agreement.

These requirements are discussed in the Request, and within the
testimony of witnesses Ali Ayub (USPS-T-1) and Richard D. Jones
(BAC-T-1).