**Minutes of the**

**Mailers\' Technical Advisory Committee**

**November 5, 2003**

###### U. S. Postal Service Headquarters

**Ben Franklin Room**

**Washington, D.C.**

**First Day**

**Welcome**

**John Wargo, Postal Chair**

**Marty Emery, Postal Vice-Chair**

**Bob O'Brien, Industry Chair**

Bob O'Brien called the meeting to order, welcomed the members and
guests. Marty Emery echoed the welcome and introduced new MTAC members:

Peter Chaires, Executive Vice President of the Florida Gift Fruit
Shippers Association

> Allan Adler, Vice President, Legal & Government Affairs of the
> Association of American Publishers

Peter Grottini, representing the Association of American Publishers

Anne Commander, representing the National Association of College and
University Mail Services

Dave Overly, representing the Classroom Publishers Association

Bob O'Brien presented a special recognition to Ken Cowell, who served as
Postal Vice Chair for two terms (1996-1997 and 2002-2003). He will
retire after 30 years with the Postal Service.

John Wargo presented a special recognition to Wayne Tinch, a member of
MTAC for 31 years with near perfect attendance at meetings (he missed
one for medical reasons). Stephen Owen, Association Executive for the
Classroom Publishers Association, accepted the plaque for Mr. Tinch.

**Overall Business Update**

**John Nolan**

**Deputy Postmaster General**

Mr. Nolan stated that Postmaster General John Potter would be testifying
on the Hill during the day, probably covering a range of issues,
including the President's Commission report. The primary issue at the
Postal Service, however, is the Civil Service Retirement System
legislation, and particularly the military retirement costs and the
escrow account. The original legislation reduced costs by \$3 billion
annually, which has resulted in debt decreasing from \$14 billion to
about \$7 billion. The hard question for the next few months is the
military retirement expense of about \$1.5 billion a year, and whether
mailers should pay for military service retirement for Postal Service
employees who served in the military before becoming employees of the
Postal Service. About 90% of the expense occurred before 1970 and the
Postal Service has affirmed its position that those costs should be paid
by the Treasury Department. Additionally, no other federal entity is
being asked to pay these costs.

The second issue is the escrow account. The legislation allowed debt
reduction for the first two years, delay the rate case in the third
year, a plan that the Postal Service endorsed. The law required the
Postal Service to make a proposal for disposition of savings after the
third year. However, the Postal Service believes there will be no
savings after the rate case (in 2006) since the retirements costs will
be eliminated in that rate case. Since rates will decrease by the amount
of the retirement costs, the Postal Service will not receive that
revenue and therefore cannot put it into an escrow account. Nonetheless,
the way the legislation is written, the "savings" must be placed in an
escrow account. If that provision of the law remains, it will require
including the estimated \$3 billion into the 2006 rate case, and that
would require a rate increase of 5.4% just to cover that cost, aside
from any other rate case considerations. That is a substantial increase
and the Postal Service will work with the Congress to resolve the issue.

Although these two issues will overshadow most other issues for the next
few months, there is the response to the President's Commission
recommendations, and continuing focus on service performance (which has
been better than ever recently), enhancing Confirm, supporting flats
automation and working to increase productivity. An interesting
statistic is that the total productivity of the last four years combined
exceeds the combined total productivity of the prior 28 years. That is
the result of both Postal Service efforts to cut costs, and industry
cooperation in preparing mail that is handled more efficiently within
the Postal Service operations. As co-chair of the Mailing Industry Task
Force, Mr. Nolan reported that the president of the National Association
of Letter Carriers is interested in participating in the process of
improving business for everybody involved.

Mr. Nolan commented that the issues raised by the President's Commission
were valid, some from a fresh viewpoint, and the Postal Service is
working to respond to the report and the recommendations. There are some
challenges related to the concept of third-party involvement in issues
such as employee compensation and regulation of the Postal Service.
Although the Postal Service has taken a measured approach to the
response, Mr. Nolan stated that this is a time for collecting and
analyzing information from outside stakeholders in anticipation of
developing a final position. As these issues are resolved within the
Postal Service, there will be communication with customers and other
interested groups. Finally, Mr. Nolan reiterated the importance of
communications all along the way since both the Postal Service and the
industry partners have similar interests -- infrastructure, operational
processes and so on -- and the best success will depend on serving both
interests.

During discussion, Mr. Nolan explained that the dramatic short-term
improvement in productivity was the result of a confluence of factors --
acceptance of automation, efforts by industry to respond to automation,
and a new mindset among Postal Service managers concerning the
importance of service.

Concerning the military and escrow account issues, Mr. Nolan explained
that the rate case required in the third year must be initiated in the
spring of 2004. Whatever the decision, the financial requirement must be
reflected in that rate case. It is not practical to develop three rate
cases in parallel, one for each possible alternative. Therefore, the
Postal Service has made and will continue to make a strong effort to
explain the deadline to those involved in the process. Much of the
Congress (which is supposed to act within 180 days of the USPS report)
seems to understand it.

Finally, Mr. Nolan commented on the United Parcel Service move to act as
a consolidator, noting that the Postal Service cannot refuse service to
any entity. He said there would be continued Postal Service support of
commercial consolidators through information sharing.

**Intelligent Mail and Address Quality (IMAQ)**

**Charlie Bravo**

**Senior Vice President, IMAQ**

Charlie Bravo presented a brief update on IMAQ, noting that the ultimate
objective is to develop a single information-rich barcode, which will
include much of the information required by multiple codes used now.
There has been a long-standing program in the Postal Service to obtain
patents on innovations. The IMAQ group has 18 active patent
applications, filed for five in the last year and has five more in
process.

The strategy for the Intelligent Mail program includes three elements
--to uniquely identify mail and unit loads, to develop appropriate
infrastructure to support the process, and to enhance address quality.

In addition to marketing Confirm as a great benefit to mailers, the
Postal Service extensively uses Confirm for internal purposes --
payroll, mailings from Memphis, improvement of operations and service.
By the end of November over 1,000 employees will be trained to use
Confirm as a management tool. To allow better integration of Confirm
with the industry processes, there is a Mail Technology Study under way
that will identify what customers can and cannot do economically and
reasonably. It is already clear that, for mailers, the 2D barcode will
be both difficult to implement and costly. Therefore, the Postal Service
is looking at the 4-State code, which is used by other posts. The code
has 31 characters that would accommodate, for example, the international
standard ID, service ID, subscriber ID, unique ID and an 11-digit zip
code. Tests will determine whether the 4-State code will work and
whether the height can be reduced to match that of the POSTNET code.
Some infrastructure changes will be required.

The flats ID code sort program employs the 4-State code, and the
packages and bundles sorting program will also rely on an international
standard, the UCC/EAN 128, which offers certain advantages over current
codes. It is easier for the readers to locate, and includes robust error
correction (not just error detection as with POSTNET).

In the area of address quality, database improvement starts with the
change of address. An OCR-readable change of address card has been
developed which the PARS equipment will be able to handle. The form is
cleaner and has instructions attached to the card that are more visible.
Nonetheless, the best change of address goes through the Internet,
because the addresses can be instantly cross-checked with the database.
It is also the fastest route for a new address into the database. In
August, ten percent of all COAs were completed online.

Mr. Bravo underscored the advantages to mailers of using the currently
available Intelligent Mail services (mainly Confirm), one of which is a
substantial saving. From 48 users last year, there are 168 users today.
In the next few months the Confirm training of employees will be
completed, the Postal Service will share the results of the Mail
Technology Study, release a public version of the Intelligent Mail plan
(including definition of a strategy for reducing UAA mail), and release
a RFP for Intelligent Mail devices that will be able to read 2D codes
and capture signatures.

During discussion, there was a suggestion that the COA form include an
extra address line, and a comment that the Postal Service should
consider the importance of name changes (marriage/divorce, a legal
change of name, a hyphenated name, professional names, etc.). Commenting
on tray labels, which currently can only designate where a tray is
going, an enhanced label is under development with 24 digits of
information, which will allow tracking.

[Please click here to view the presentation](../MTAC1103/MTAC-bravo.ppt)

**Mail Technology Strategy Study**

**Jeff Freeman**

**Manager, Mail Technology Strategy**

Jeff Freeman reported that the Study was nearly complete. He expressed
appreciation to MTAC for helping the team locate the proper people to
talk to about the study. Although the final report is not ready, it was
clear early on that some mailers would have difficulty printing the
2-dimensional bar code. The Study included site visits to evaluate
capabilities and equipment, interviews with major technology vendors
(software, equipment) and looked at current research available in the
literature. The major focus, however, was the Study survey looking at
volume bulk rate mailers. The survey sample included various types of
mailers, large-medium-small mailers, and various account types, with the
objective of getting a reasonably representative distribution of
responses from the various types.

The Study seeks to identify the profile of mail entering the Postal
Service, what kinds of codes are used, how addresses are placed on the
mail piece, what technologies are being used in each respondent
location, and whether barcode readers are used internally. The survey
allows mailers to comment on barriers and challenges, the internal
information processing environment, and anticipated changes (new
technology, new/different processes).

Mr. Freeman commented on results to date. Screening calls have been made
and survey sent. Informal (not analyzed or verified) results indicate
that ink jet printing is predominantly used, followed by laser (and a
few dot matrix), a substantial number of mailers use labels and a
majority print unit load labels in house. Few of the mailers have
experience with advanced barcodes, and about half uniquely identify mail
pieces and unit loads. The survey should be completed by December, with
the final report available by the end of January.

[Please click here to view the
presentation](../MTAC1103/jeff%20freeman.ppt)

**New Opportunities**

**Marty Emery and Bob O'Brien**

Marty Emery commented on the objective of improving MTAC communications
-- faster posting of the detailed minutes, rapid posting of speaker's
PowerPoint presentations, as well as CDs for distribution to the press,
and a more continuing communications process about activities of MTAC
between meetings. There will be an effort to create more formal reports
of the product of each work group as its final report becomes available.
There are 201 active Postal Customer Councils and many of the MTAC
information releases will be sent to the PCCs. Finally, there will be a
quarterly report that includes projects, programs, accomplishments and
plans for the future.

Mr. Emery discussed an aspect of the purpose of MTAC:

> The Mailers Technical Advisory Committee (MTAC) is a joint effort
> between mailers and the U.S. Postal Service to share technical
> information, advice and recommendations on matters concerning
> mail-related products and services in order to enhance customer value
> and expand the use of these products and services for mutual benefit.

Pointing to the last phrase, "and expand the use of these products and
services for mutual benefit," he linked the MTAC responsibilities and
resources to the Postmaster General's charge for the Postal Service to
focus on volume and revenue growth. He expressed the opinion that there
are untapped assets in MTAC that would contribute to the accomplishment
of that charge. A partnership between the Postal Service and various
components of MTAC may contribute to creating new opportunities for
mailers and their customers. He welcomed ideas that the USPS and MTAC
could jointly pursue to grow hardcopy mail volume and ideas to break
down barriers that prevent growth. Ideas will be channeled to Jerry
Whalen, USPS Vice President, Sales for review.

Bob O'Brien noted that this was not a new aspect of the purpose, but one
that is now more important because of the trend to lower volumes (both
for the Postal Service and many mailers) and higher costs.

During discussion, there was a comment that, for the benefit of those
who are involved in the PCC meetings, it would be helpful to publish a
point of contact at MTAC for information about MTAC. Marty Emery agreed
to enhance the linkage between MTAC activities and PCCs nation-wide.

[Please click here to view the
presentation](../MTAC1103/MTAC%20Opportunities.ppt)

**Product Redesign**

**Nick Barranca**

**Vice President, Product Development**

**Don O'Hara**

**Manager, Product Redesign**

**Bob O'Brien**

Nick Barranca reported that his group had committed to meet with the
Steering Committee on a more frequent basis (monthly, even if by
teleconference). The key initiatives have been identified and there is a
commitment to assess the effort required to achieve those key objectives
(a detailed work plan).

Bob O'Brien noted that the foundation for any new or redesigned products
must be laid now for implementation in the 2006 rate case. The Steering
Committee will be involved in the process through the monthly meetings.
He noted that the Key Initiatives document was available at the meeting,
which reveals five areas of concentration -- First-Class shape-based
rates, cost-based rates for Periodical and Standard Flats, other
Standard Mail and Periodicals initiatives, address quality and parcels.
The Postal Service does not intend to reconvene the work groups; the
Product Redesign office will provide updates to the work group members,
Steering Committee and associations.

Don O'Hara noted that the Postal Service would not implement any changes
that would increase rates before the 2006 case, but would consider ideas
that would not affect rates. The effort to begin identifying ideas for
the 2006 rate case began in the fall of 2003. He summarized some of the
ideas, including the shape-based First-Class Mail pieces (specifically
the 2-ounce non-letter mail). There will be a major focus on cost-based
rates for Periodicals and Standard flats, and some effort to determine
desirability of charging each publication for its own forwarded and
returned pieces rather than the current practice of imbedding these
costs in overall Periodical rates. The per piece fee would provide an
incentive for improving address lists. The Address Quality work group
arrived at specifications for improving address quality that will be
considered for the 2006 rate case. All the detailed work on these
proposals, such as quantitative market research and cost analysis must
be complete by the end of May in order to be included in a rate case
filing for implementation no sooner than 2006.

There are a number of ideas that do not require PRC action, including an
increase in the minimum size of 5-digit Standard flats packages from 10
to15 pieces for pieces weighing 5 ounces or less and allowing
co-palletization and co-mailing of Periodicals, Standard, and BPM flats
no more than ¾ inch thick.

Mr. O'Hara commented on the product of an initial meeting with
saturation mailers, the concept of allowing high-density and saturation
mailers a break on rates if an established mailer demonstrates a
significant increase in volume. That is, the mailer would pay the
regular rate for the number of pieces historically mailed (and perhaps
the same rate for a small, normal growth in sales), but would be allowed
a lower rate on mail volume that exceeds the historical norm. Additional
investigation will be needed to determine wither this concept is both
attractive to a wide spectrum of high-density and saturation mailers and
can be put into a form that is administratively practical.

In the area of parcels, Mr. O'Hara mentioned several ideas such as
developing a Priority Mail "open and distribute" discount and creating a
Priority Mail flat rate box that would provide the same convenience as
the current flat rate envelope (a single rate for whatever the container
would hold). There is also consideration of drop ship rates for library
and media mail.

Finally, Mr. O'Hara discussed a chart illustrating the effects of
implementing the 15-piece minimum noted above using mail.dat information
from 23 live mailings. The chart showed that over half the savings were
due to situations where one or more small 5-digit bundles could be
absorbed within an existing 3-digit bundle. When a new 3-digit bundle
had to be created, savings were smaller, as expected, and actually went
negative when only a few 5-digit bundles were available to make-up the
new 3-digit bundle. This suggests that the direct incentives and
flexibility inherent in cost-based rates will probably generate more
cost savings than cost-based rules, even if the rules are considerably
more complex than those used today.

[Please click here to view the
presentation](../MTAC1103/MTACDon%20Ohara.ppt)

**Planned Changes to the USPS Data Collection Systems**

**Rick Prescott**

**Manager, Revenue and Volume Reporting**

Rick Prescott explained that his office was responsible for the Revenue,
Pieces and Weight Report (RPW) and the Origin/Destination Information
System (ODIS). ODIS collected mail characteristics (including volume)
with a focus on mail transit time (service performance). External
First-Class Measurement replaced the service functions in 1991, although
some offices continue to use ODIS for specific purposes. Data has also
been used occasionally to support rate case issues. The ODIS process was
to select sampling points (mail exit points - MEPs) and sample a portion
of all mail in that MEP (e.g., every x piece delivered).

The RPW system collected data on single mail piece categories -- postage
revenue, volume and weight/dimensions \-- using the same sampling unit
as ODIS (the MEP) for larger post offices plus consolidating originating
units (COUs) which provide data from retail windows. There was a
separate sampling process for smaller post offices. Since the MEPs
sampling units were identical, there was a potential to merge the two
surveys, especially since an outside consultant had faulted the
reliability of the sampling process related to the smaller units and the
COUs. They were eliminated in the new system.

The decision was made to merge, rules and definitions were aligned,
procedures were simplified so that sampling was easier, required less
training and could be accomplished with fewer errors. The merged system
was satisfactorily tested in eight districts, and implemented in October
2003. No disruption in the continuity of data from either system is
anticipated.

[Please click here to view the
presentation](../MTAC1103/ODIS-RPW%20MERGER%20-%20MTAC%20Briefing.ppt)

**MERLIN -- Address Accuracy Verification**

**John Sadler**

**Manager, Business Mail Acceptance**

John Sadler announced that address accuracy (barcode string analysis)
will be added to MERLIN. The MTAC work group met with an industry group
in October to discuss the first phase of the implementation -- detection
of gross errors in zip + 4 and delivery point applications. The first
step is identify specific errors (such as 0000 or 9999 add-ons, and
applications of sequencing numbers incrementally or decrementally ),
which will not be eligible for a barcode rate. The implementation date
is January 1, 2004.

The work group will continue to meet, to discuss a second phase, to look
at a valid street address add-on with an associated error tolerance, and
a possible phase three to look at finest depth of code. Implementation
of these phases may take up to a year.

[Please click here to view the
presentation](../MTAC1103/JohnMTAC11-04.ppt)

**Update on Corporate Automation Plan**

**Bob O'Brien and Skip McGill**

Bob O'Brien reminded the MTAC that the Corporate Automation Plan focuses
on the flats automation, the little remaining on letters (delivery point
packaging and flats sequencing system), and parcels. Since the last MTAC
meeting, a steering committee has been formed (Bob O'Brien and John Rapp
as co-chairs). Other members include John De Piazza, Vince Giuliano, Joe
Lubenow, Joyce McGarvy, Anita Pursley and Val Scansaroli from MTAC; on
the Postal Service side the members are Charlie Bravo, Nick Barranca,
Tom Day, Henry Pankey and Paul Vogel.

The goal of the steering committee is to assist in developing an
automation strategy that meets the needs of the Postal Service and its
customers. Specifically the objectives are to facilitate communications,
to insure maximum mailing industry input, and to coordinate formulation
of appropriate MTAC work groups. The first meeting was held just before
the MTAC meeting, and there will be regular meetings between MTAC
meetings.

Skip McGill reported that DPP and FSS proposals had been received from
various vendors in September and awards are imminent for a number of
contracts for concept and simulation programs. The steering committee
has agreed on the need for creativity and design flexibility. Vendors
are encouraged to develop solutions for flats larger than those
currently handled on the AFSM100 and AFSM1000 and those solutions appear
to be a near-term possibility. There was an FSS test during the summer
on a specially-modified AFSM100, putting flats in delivery order
sequence and the test was successful (although final analysis has not
been completed). Additional tests are planned and, in the end, the
economics of FSS and DPP must work to be accepted. Delivery day,
critical entry times and drop point impacts are still uncertain, driven
by machine design. There is qualitative market research under way to
learn about the impact of various packaging for ad mail, for both
businesses and residences. There will also be quantitative market
research farther down the road.

[Please click here to view the
presentation](../MTAC1103/MTAC%20Automation%20planf.ppt)

[Please click here to view the minutes from the initial meeting of the
Executive Steering Committee for the Corporate Automation Plan -- Phase
2](../MTAC1103/SC%20minutes%20Nov4-03.doc)

**Enhancing Confirm (Work Group \# 80)**

**Martin Bernstein and Paul Bakshi**

Martin Bernstein reported on the activities of the work group since the
last meeting. Several sub-groups were established to work on
opportunities -- the training and certification team, the reports team,
the pre-shipment team, the scan performance team and the futures team.

The training and certification team has developed an overview module and
a certification program to insure consistent customer training. The
training and certification has been completed with the first customer.
The certification program included quality of barcodes, the pre-shipment
notification, mail preparation and induction, and finally the quality of
the scanned data interpretation. The advantages of certification include
the reliability of standard data and increased diagnostics and analytics
to help resolve delivery issues. There is also the ability to generate
shared reports. The reports team helped launch the shared reports.

The pre-shipment notification team worked on improving that process,
which involved mail tracking, improved editing and search capability,
better file format testing process, enhanced error notification and
enhanced pre-shipment quality indicators.

The scan performance team looked at improving stop-the-clock operations,
definitions of scan performance, specified scan rate performance
qualifiers and developed data quality indicators. There are two reports
available -- the Confirm Problems Report and the Mailer Quality Report.

Finally, the futures team looked at alternative architecture for Planet
codes, and supported the 4-State barcode program, which should
ultimately replace the POSTNET code.

[Please click here to view the
presentation](../MTAC1103/MTAC%20Team%20Confirm.ppt)

**Design Guidelines for Flat-Size Mail (Work Group \# 77)**

**Joyce McGarvy and George Hurst**

Joyce McGarvy described the beginnings of this work group, with the
Postal Service on one side of the table and the industry on the other.
Steadily both sides began to understand the needs of each other and the
fact that recommendations to improve the handling of flats would benefit
both sides. In the end there was a unified voice that created both the
guidelines and the concept for bringing the message to the Postal
Service and the industry.

George Hurst explained that the work group looked at ways to reduce
problems on the sorting line -- jams, damaged flats, mis-sorts and
mis-feeds. The aim was to develop recommendations that could be
voluntarily accepted by mailers to help their product move through the
system without delays or damage. The format of the report was
standardized to explain the regulation concerning the mail piece, the
work group's recommendation and a rationale, and it would all be
explained in simple language.

The work group looked at six problem areas (adding a glossary as the
sixth part of the recommendations). The areas of interest were: the mail
piece structure (weight, dimensions, flexibility); bound, unbound and
folded flats; saddlestitching; covers (design, weight, friction,
finish); and polywraps.

The report is complete and a CD has been produced to help both the
Postal Service employees and the mailers understand the issues involved.
\[The CD was shown and is available on request.\]

A special award was presented to the main on-screen players, Joyce
McGarvy and Val Scansaroli, plaques bearing the Humphrey Bogart stamp
for male performer and the Audrey Hepburn stamp for female performer.

[Please click here to view the
presentation](../MTAC1103/MTAC%20Pres%20design.ppt)

**Flats Container Development (Work Group \# 71)**

**Joe Schick and John Brown**

John Brown briefly discussed the work group's charge, which was to
evaluate the development of flats containers that would move mail
directly from the mailer to the flats sorter, eliminating as much manual
input as possible, and reducing the number of changes required to the
current mail preparation process. The work group did recognize several
improved containers, but current presort requirements are obstacles to
effectively using these containers (especially the need to fill the
trays to maintain tray integrity). Nonetheless, the work group will
develop a final report, including recommendations, that will be a
resource for a follow-on work group that will be established to look at
the ancillary considerations -- alternative methods of sequencing
various presort categories on pallets, the possibility of using the
Christian Science Monitor's test of flat tubs, and amendments to the
regulations to increase the number of pieces/weight in a presorted
package of flats.

Bob O'Brien presented a letter of appreciation from MTAC to Ralph Walker
for his 46 years of service to the country the last 36 of which were
with the Postal Service. Mr. Walker recalled that Reader's Digest
originally urged the Postal Service to use pallets, which then weighed
60 pounds. Today millions of lightweight plastic pallets are being
purchased by the Postal Service.

[Please click here to view the
presentation](../MTAC1103/Flats%20container.PPT)

**Update on Postal Automated Redirection System (PARS)**

**John Keegan**

**Manager, Automation Equipment and Acquisition Management**

John Keegan described the PARS program as a unique project that looked
for ways to automate each of the labor intensive processes used to
forward mail. The three main areas of focus are redirection of mail
pieces, automating the change of address form data entry and the mass
printing of the nation's PS form 3547 address change notification at the
Memphis National Customer Service Center.

The current forwarding system that relies on the destination carrier to
recognize that an addressee has moved will give way to a system that
scans the address at the outset, compares it to the national database,
and immediately separates the mail piece to send it to the proper
address. The PARS technology actually short-circuits the traditional
circuitous and costly route of an undeliverable letter being forwarded
to a changed address. The PARS scan on the mail processing equipment
captures mail in the normal mail stream, compares the delivery point
address to the National Support Center database in Memphis, and if it is
a valid move, immediately prepares a forwarding label. The mail then
goes from the originating post office directly to the destinating post
office and is delivered to the new address. Mail that needs a carrier to
determine if a person has moved is sent through to them for verification
(ex. individual moves, etc.). All the pieces of forwarded mail are sent
to a modified delivery bar code sorter, called a CIOSS, for labeling.

The Advanced Forwarding Reader (AFR) is the software engine that
drastically reduces the amount of labor required to forward a piece. The
unit contains the software that recognizes various information on the
mail piece -- address, mail class, return address, ancillary
endorsements and ACS data -- anything it cannot discern is referred to a
keyer for clarification. John stressed the importance of properly
endorsing mail to obtain the full benefits of the automated process.

The change of address data entry will also be implemented nationwide.
The change of address cards (PS form 3575) have been redesigned to allow
for easier OCR scanning. The forms will be scanned at one of 84 CFS
units and the information that cannot be read by the OCR will be keyed
by operators at one of four remote encoding sites. The process includes
a separate operator verification of each form.

Other improvements in change of address technology include improvement
of the address correction notification to mailers (PS form 3547). What
is now done manually at each of the Computerized Forwarding Sites is now
consolidated electronically and printed on a sheet-fed printer capable
of producing over 800,000 cards a day. This state of the art printer
located in Memphis, automatically sorts and loads the pieces into
5-digit trays.

The first article test has begun and appears to be on track. The test is
being conducted in Lake Mary, Florida. Phase I deployment will begin in
January with 53 PD&Cs, 40 CSF sites and 20 RECs. Phase I should end in
September 2004, when Phase II will begin for the remaining PD&Cs and CSF
sites. The Phase II deployment will be complete in October 2006.
Engineering is also pursuing a contract in 2004 for including the Flat
mail in PARS.

[Please click here to view the
presentation](../MTAC1103/Redirection%20systems.ppt)

**Flat Mail Preparation Optimization (Work Group \# 81)**

**Joe Lubenow and Tony Mazzei**

Tony Mazzei briefly discussed the 5-digit package scheme for flats and,
after some field experience, noted for the mailers that machinability is
an important aspect, as well as avoiding mail pieces that are at the
edge of AFSM100 criteria and may not run well. This is important
especially if the mail is time sensitive. Most of the issues have been
resolved, and the 3-digit scheme is next on the agenda. There has been
some confusion about the L007 (5-digit in bundles) and the L001 (carrier
route bundles on a scheme pallet).

The 3-digit scheme runs multiple bundles on the AFSM100, a primary
sortation. The benefits from the 3-digit scheme include increased bundle
size (which decreases the number of bundles), which reduces labor input.
The wheels have been put in motion to implement the 3-digit scheme, with
notification to the field, placing the issue on the Manager of
Operations Support agenda. The 3-digit scheme should have data by the
next MTAC meeting.

The work group is working on co-palletization and co-packaging, aware
that industry is more interested in the latter, which offers the benefit
of improved flats stream, and reduction of sacks (with a concomitant
reduction in bundle breakage). There are some concerns about acceptance
and verification, minimum package size, the possible distraction from
the cost-based efforts, and the fact that industry appeared split on the
issue (although that concern seems to be moving to more consensus).
Within the Postal Service there are some operations issues to resolve
related to handling standard pallets at all ADCs.

Mr. Mazzei commented on periodical firm bundles, noting that the firm
bundle is treated like carrier route mail, bypassing the AFSM100 and
going directly to the delivery unit. A concept being looked at is
putting the 5-digit firm bundle on the L001 5-digit container.

Finally, he reported on the APPS. Five new width-modulated barcoded
presort labels were introduced and the effective date for use will be
April 1, 2004. A subgroup, mainly Postal representatives, was formed to
look at APPS issues such as maximum character length, space allowance
for the OEL and other issues. The subgroup needs industry representation
and, once properly balanced, the subgroup will develop ideas for testing
and, finally, development of a proposed rule for comment. There is one
issue that mailers must approach -- address visibility on the top mail
piece in bundles. There are a number of packaging guidelines (no rubber
bands or string, strap before shrinkwrapping), and the work group will
consider the guidelines to arrive at requirements and the lead time
required to react.

[Please click here to view the
presentation](../MTAC1103/flat_tonymazzei.ppt)

**Minutes of the**

**Mailers\' Technical Advisory Committee**

**November 6, 2003**

###### U. S. Postal Service Headquarters

**Ben Franklin Room**

**Washington, D.C.**

**Second Day**

John DePiazza called the meeting to order and introduced Ralph Moden,
who discussed the Civil Service Retirement System (CSRS) funding issues.

**USPS Reports to Congress on Public Law 108-18**

**Ralph Moden**

**Senior Vice President, Government Relations**

Ralph Moden discussed legislation adjusting the potential overfunding of
the CSRS pension fund. The legislation resulted in a near-term "savings"
for the Postal Service, which is being applied to debt reduction for two
years and delays a rate increase in the third year. After 2005, however,
the "savings" must be captured through the rate process and be held in
an escrow fund unless directed otherwise by Congress. The legislation
requires a report from the Postal Service on how the "savings" should be
used.

Concerning the escrow requirement compliance with the Act will require
that the financial burden of the escrow be included in the next rate
case. Therefore, the Postal Service has recommended the elimination of
the escrow requirement and the corresponding need to increase rates to
cover it. If the Postal Service must fund the escrow and pay the
military retirement costs, this alone would require a rate increase of
5.4%, over and above any increases that would be related to normal
operating costs and inflation .

The new law also requires the Postal Service to pay the \$27 billion
military service costs of CSRS covered postal employees and retirees.
The Postal Service has objected on the grounds that 90% of the military
service was performed before 1971, before the Postal Service existed;
and no other federal entity is being asked to consider such a payment.
The Postal Service has offered a proposal calling for the elimination of
the military service contribution by the Postal Service and redirecting
payments to cover the prefunding of employee retirement health benefits.
While this proposal would have an additional rate impact of 1.5% - 2%
above and beyond normal operating costs and inflation, it would address
a substantial long-term financial obligation.

Under the legislation, Congress may "revisit" the new law once GAO has
submitted an analysis of the Postal Service's proposal on "savings" as
well as those from the Postal Service, Treasury and OPM pertaining to
responsibility for funding the costs associated with military service.
The GAO report is due to Congress at the end of November for both the
"savings" and military issue. On the "savings" issue, the Act calls for
further congressional consideration within 180 days following the
submission of the GAO report. Since it is impractical to prepare three
rate cases in parallel, the Postal Service has emphasized to all
involved the importance of a decision before the end of May 2004.

Mr. Moden briefly discussed the status of postal reform, the subject of
a Senate hearing on November 5 at which the Postmaster General
testified. He said the Senate Governmental Affairs Committee hearing
went well, with support for the Postal Service and the Postmaster
General. The CSRS and military obligation were also discussed.

[Please click here to view the
presentation](../MTAC1103/MTACpl108-18nov62003ralphmoden.ppt)

**The Latest on MOVE Update**

**Angelo Wider**

**Manager, Finance Administration**

Angelo Wider reported that a joint USPS/MTAC work group conducted 8
meetings involving 41 individuals from the Postal Service and industry
to look at MOVE Update and the reduction of UAA mail. He noted that it
was becoming more and more evident to all parties that there is value in
reducing UAA mail and improving delivery service in general.

The work group identified and discussed a number of issues -- lack of
knowledge, ambiguous rules and policies, inconsistent enforcement, stale
statistics, certification, the need for deficiency assessments, the
impending rule change, point of contact and quality/timeliness of COA
data.

The work group agreed on two recommendations: the need for an
awareness/education campaign and the implementation of the National
Revenue Assurance Initiative Review. The consensus was based in part on
the feeling that those in compliance should not be penalized for those
who failed to insure compliance.

The recommendations were submitted in January, the final report in
February, and internal Postal Service training began in February
followed by a major communications program that began in March. Although
reviews were begun in March, they are the basis for discussion and
education, and thus far deficiencies have not been assessed.

Mr. Wider stated that he and others had made a large number of
presentations around the country, most well received. He noted that
there was a lot of buy-in coming out of the effort. There is a new pub
(363) that explains the various aspects of MOVE Update, the use of a
compliance document (Form 6014), and a major internal training effort.
He described a restructuring that eliminated the traditional revenue
assurance program and the revenue assurance analysts. The function is
under the Internal Control Group. There was a mailing to bulk mail
centers and commercial mailers emphasizing the importance of MOVE Update
and compliance and that mailers must have a good (demonstrable) process
in place. He indicated that the time has come to comply or anticipate
assessments.

Finally, Mr. Wider discussed the way that a request for documentation
(demonstrable process) comes about, which begins with leads from CFS
units that are filtered through a process to confirm that there is a
potential problem. Once identified as a problem, the owner of the mail
is contacted for clarification of the process (including documentation).
However, there are some cases when follow-up hits a stone wall -- no
response. Mr. Wider explained that current thinking is to escalate
notification (second/third notices), make a site visit, refuse
additional mail, and charge full rate for any mail presented. He invited
comments on the scenario that would make the most sense.

Comments from members included the following: The sequence should be
notification, site visit, full rate in advance. Refusing the mail is not
really an option if the mailer is willing to pay full rate. There should
be a reasonable time (a week or so) to comply. Set up a system to make
sure that the Postal Service is contacting the correct person in the
organization for action. Letters sent to mailers should be certified.
Take into consideration that the mailer may be using third party
providers and, although the prime company may be ultimately responsible,
there should be some mechanism for drilling down to the proper level.
The volume that a mailer puts through the system should also be a
factor. If an individual must pay full rate, there should be a mechanism
to refund the difference if there is prompt compliance. There may be a
difference in quality between in house lists and purchased lists
(although Mr. Wider noted that the Postal Service has no control over
that and the source of the list would probably not be an ameliorating
factor).

Mr. Wider thanked the members for their comments, adding that the
responses demonstrate the complexity of the issue.

[Please click here to view the
presentation](../MTAC1103/MTAC%20Sub-Committee%20November%205-6.%202003Angelowider.ppt)

**Package Services -- Upcoming Changes**

**Jim Cochrane**

**Manager, Package Services**

Jim Cochrane described a new product, launched in October, Parcel Return
Service, a complementary product to Parcel Select. Designed for large
shippers and consolidators, who are regularly in the BMCs and post
offices, this service holds returned packages for pickup at certain
facilities. Mr. Cochrane discussed the importance of returns to
companies that sell products online and in other ways that result in
shipment out and inevitable return of a certain number of pieces. Online
buyers are predicted to double in the next four years (to about 63
million households). Typically, vendors do not handle returns well,
which results in a larger cost than necessary (a huge cost nonetheless).
Statistics are exceptionally varied; commercial survey companies publish
estimates of total returns from 100 million pieces up to 700 million
pieces annually.

The Postal Service handles a large number of returns regardless of how
the shipper originally sent the product out. However, if competitors
bundle their offerings it could negatively affect Postal Service volume.
One advantage for the Postal Service is level of service -- Priority
Mail when getting the return back is important to the shipper; slower
package services or even capturing the item for disposal if return is
not worth it to the shipper. The return label allows the shipper to
choose the level of service, a label that can be inserted in the shipped
product package or printed from a shipper web site. The real challenge
for the Postal Service is the inertial tendency to return the item via
the same carrier that delivered it. The competitive opportunity may be
in the pricing, which includes consideration of package work share.

Mr. Cochrane explained that the Parcel Return Service that was filed is
a two-year experiment, partly because the data on returns is so
unreliable. The experiment will develop its own data to be used in the
justification for the final filing. There are three aspects: Three rates
(Reverse Delivery Unit, Reverse Bulk Mail Center, and a bound printed
matter rate); bulk pick-up by shipper at RDU or RBMC; and no
transportation or weight-and-rate requirements. The charge is a flat
rate for an item up to 70 pounds, and the only requirement is to notify
the shipper that a pick-up is required. Because the shipper must be
willing to pick up packages from any BMC, it is appropriate only to the
larger shippers. The ability to pick up at RDUs is limited during the
experiment, but those available represent about 85% of destinating
packages.

Mr. Cochrane discussed the comparative rates, demonstrating that the
shipper can realize a substantial reduction in returns costs and the
Postal Service can actually increase the bottom line contribution over
the traditional return processes. He discussed some of the details of
the process, the requirement to pick up within 48 hours, the RDU
automated payment process, the slightly different label requirements,
and a limitation of 20 participants in the first year and 10 more the
second year. Mr. Cochrane indicated that additional large shippers are
welcome to apply

On another topic, a long-advertised requirement will become effective
January 10, 2004, to convert to UCC/EAN 128 barcode on packages to be
eligible for discount. There are several symbologies available, but the
purpose is to move toward barcode uniformity. About 85% of current
discounts are already for the UCC/EAN barcode. Mr. Cochrane discussed
some of the issues related to the larger code, which he felt would be
resolved in a timely way.

[Please click here to view the
presentation](../MTAC1103/Jim's%20MTAC%20Presentation%20-%2011-6-03jim.PPT)

**Facilities Datamart**

**George Wright**

**Manager, Finance & Administration Systems**

George Wright described the progress made in developing a single
facilities database, which will have information about 40,000 Postal
Service facilities (including land parcels). Equipment will be in a
separate database, linked by a facility identification code. The
greatest challenge to completing the database is the requirement to go
through every related system in the entire Postal Service, match the
facilities in each system with the Facilities Datamart, and validate
that the data is consistent. There are over a hundred such systems and
it will take several more months to complete that process.

There are two products currently available for users -- one is a
"snapshot" of the facilities database that is delivered to users on a
CD, and the other is the Drop Ship Assignment System that is closer to
real time, since changes that occur within a facility are included. By
December, the data from both products will be integrated into the
facilities database (even though the final process of conforming the
various data systems will not be completed until April 2004). By
February, data entered in the DSAS database will be integrated into the
facilities database and a single product will emerge, which will provide
online access to the system.

During discussion, Mr. Wright commented on the challenge of continual
updating of the data, which requires designating ownership of each data
item so that any change is entered in the system. The same will be a
part of the equipment database.

[Please click here to view the
presentation](../MTAC1103/MTAC_11-06v1-03georgewright.ppt)

**Postal One! Postage Payment & Statements -- Approach and Design (Work
Group \# 84)**

**Dan Minnick and Larry Goodman**

Larry Goodman discussed the importance of looking through the mailer's
eyes as technology solutions are developed. It is also important that,
as the various systems emerge, they have the ability to communicate.
Postal One! continues to participate in the electronic exchange. Over
3,000 postage statements are in the electronic exchange process, with a
revenue base of about \$105 million in the last week. On February 29^th^
the next major release of Postal One! comes out, the most comprehensive
release to date. Although not every site will be converted, it will take
less than two months for the change to become fully national. In effect,
Postal One! will have arrived and most of the programs in the Postal
Service will be able to leverage Postal One!

Dan Minnick explained that the purpose of this work group is the final
step in completing electronic postage statement, processing and payment
for all mail classes in the Postal One! system. The process will require
all of the interested parties, especially including the mail owners (who
should not rely on the software vendors to represent them). The work
group will develop a specification for electronic postage statement
processing. The approach will rely on identifying process and specifying
the gaps and requirements needed to complete the Postal One!
environment. The procedure will be to develop a comprehensive model that
will serve to create the specific models applicable to each class of
mail. The comprehensive model may contain more elements than any single
class would require. The work group will initially focus on Standard
Mail, followed perhaps by Periodicals.

Mr. Minnick commented that, although it appears that the computer will
do all of the work, it is still critical to include the human factor,
especially in the process analysis to reach the final objective and a
number of conference calls and meetings are scheduled. Interested
individuals are urged to participate, especially mail owners, who have
been in short supply in previous discussions.

During discussion, Mr. Minnick clarified that the work group will
provide the Postal Service with the concept for creating the models for
the various classes of mail. The Postal Service will write the code. It
is not anticipated that the development of the models will be strictly
sequential, but Standard Mail is seen as a first priority.

[Please click here to view the
presentation](../MTAC1103/MTAC_update_Nov03larry%20goodman.ppt)

**Mail Irregularity Feedback (Work Group \# 55)**

**Joyce McGarvy, Pat Killeen and Sue Redman**

Pat Killeen described the recent history, a limited pilot in the spring
that concluded in June, followed by an expanded pilot that began on
August 1. There are 17 sites -- 4 BMCs, 9 P&DCs and 4 DDUs, plus others
involved are the BSN, the BMEUs and mail owners. The expanded pilot has
looked at an improved data entry interface, the issue status and
resolution management process, and the Postal One!/ BSN data exchange.
The report volume has increased, 365 reports since October 1 involving
120 BSN issues. There are some systems issues that will require
attention as well as the long-standing ownership of mail and entry point
issues.

The feedback during the pilot has been positive -- identifiable
improvements in service, good information and timeliness, and improved
reporting. The expanded pilot is almost complete and appropriate
software modifications will be available by January, with national
implementation by March 2004.

Susan Redman briefly described the increased reporting volume, with
different kinds of problems being reported. The original pilot revealed
piece problems, while there are more bundle problems in the expanded
pilot. There is enthusiasm for the project and participation is good. A
video was developed that explains the program to the processing
facilities. Online training was also included in the expanded pilot,
which received good reviews. Suggestions for improvement will be
incorporated in the training module.

[Please click here to view the
presentation](../MTAC1103/MTAC%20NOV%206joyce%20Mcgarvy.ppt)

**First-Class Business Mail Measurement System (Work Group \# 83)**

**Ken Metroff and Maryellen Clark**

Ken Metroff commented that the work group has worked well with the
Consumer Affairs Office. The objective was to develop a reliable
business mail measurement system at a reasonable cost. Reliable means
acceptability by the Postal Service, and that formats were common for
the mailers. Since business mail is not included in the EXFC, and the
business mailers represent over 80% of First-Class volume, the work
group felt that a system in conjunction with the EXFC would be the most
logical route to follow while trying to ascertain how best to utilize
Confirm (especially since a number of the major mailers are already
using Confirm).

The work group looked at the certification process, which appears to be
acceptable, as long as a First-Class focus could be part of the process.
The work group is looking at sample design and the stop-the-clock
process, taking what Work Group \# 80 has developed and adapting it to
the First-Class requirements -- sampling size, reports, etc. The Postal
Service has developed some specifications that will be discussed by the
work group in January.

During discussion, it was noted that EXFC is concerned mainly with
incoming mail, and city pair data has never been available. Hopefully,
the Business Mail Measurement system would include that kind of data.
Mr. Metroff agreed, adding that outgoing mail data would be useful.

[Please click here to view the
presentation](../MTAC1103/MTAC_%2383_%20General_Sessionkenmetroff.ppt)

**Parcel Delivery Performance Measurement Effectiveness (Work Group \#
82)**

**Bob Fisher and Chris Finley**

Bob Fisher reported that the work group developed requirements for
manifest quality indicators, divided into two areas -- one, the same
manifest pieces arriving on different days; the other, a comparison of
the arrival of product to the mailer-provided date of mailing. When EVS
comes along, the 8125 will be eliminated and the work group has
developed some methodologies to start the clock in that environment.

The Data Warehouse implementation has been delayed, with initial reports
available in mid-February and the manifest reports will be available in
mid-March. There are some issues with the 8125 scanning compliance now
and the work group is looking at that area.

There are two phases to the work group process. The first is to
improve/develop common data reports and reporting processes, and the
second is to develop a process for communication and feedback of using
the data to improve service.

[Please click here to view the
presentation](../MTAC1103/MTAC%2082%20Nov6billfisher1105.PPT)

**Adjournment**

The meeting was adjourned at 11:20 am.